A primitive economy. [Archive]

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artme

5th February 2014, 06:12 PM

Is Australia in danger of becoming one of the world's primitive economies??

We have lost, or are going to lose, most of our manufacturing ability and much
of our computer work is now outsourced. It looks as though our ability to can
fruit is going to be lost.

This is the country that was the third to launch a satellite, the one that first developed
digital technology, only to have it shelved because of a timid government. We have
skited much about our solar research and development, but has it got us anywhere?
We seem to be too bloody stupid or laid back to adopt more green technology.At one
time we had an aircraftindusrty

What do we do at the moment? I contend that we are a nation of hunter/fisher gatherers.
We dig blood y great holes in the ground to gather coal , ion ore and iron ore. We fish the
ocean. We gather wheat and wool and we gather up cattle for export.

How do we overcome this position??

BobL

5th February 2014, 06:41 PM

I don't think canning peaches is any sort of real manufacturing is just primary produce processing like refining alumina into aluminium or copper or gold ores into metal (whoops it looks like I didn't put a tick against Al)
Manufacturing involves substantial value adding like motor vehicles or electronics.

Anyway, for those that are interested here are the numbers.
The ticks are essential primary production
Only two of the top 10 are not primary production.
#4 is the income from international students - this is not going to last forever either as countries with insufficient educational institutions increase the number and quality of their own educational resources.

http://www.woodworkforums.com/attachment.php?attachmentid=303018&stc=1

wireliner

5th February 2014, 07:12 PM

Interesting to see natural gas up there! OK, here is an energy resource we have in abundance. Please don't say it will run out tomorrow, it won't! Use it to develop clean, renewable energy while we can. Bob,mate, we still are the lucky country. The cure for cancer will come from us. Technology is a hidden asset now days but it is still there.

artme

5th February 2014, 07:41 PM

Agreed Bob, canning is not exactly manufacturing in the true sense.

However it seems utterly ridiculous to have what was once a thriving
and important rural/regional industry die, thus effecting the lives of
hundreds, if not thousands. The orchardists will remove trees, as
happened in the MIA when Leeton closed. Where then do we get our fruit?
Much will be imported from sources of dubious quality and hygiene.

When Golden Circle closed in Brisbane the idea was to can in NZ. Is it really
better economy to ship raw products to another country and import the
processed product back?? This is what has happened to car manufacturing
and iron production here.

I was listening to Paul Howes today as he addressed the National Press Club.
An interesting and rather illuminating speech, to say the least. I am very much
of the same view as he is. Our industrial relations system has a huge amount
to answer for. He talked of the sea-sawing battle between unions and business
and while I didn't get to hear all the questions it was apparent that, from at least
one early question, positions are so entrenched that we never get away from
the warfare, or the "them and us" mentality.

steamingbill

5th February 2014, 07:51 PM

How do we overcome this position??

I dont know - keen to see some debate - some suggestions

As long as there are countries where labour is much cheaper, then I believe attempting to do any value adding manufacturing would be difficult without some sort of artificial govt controlled protection.

Will there be a period of "levelling" of standards of living ? Lasting a couple of decades ? Wages and standards of living in previously 'poorer' countries catch up to Australia/Britain/Canada/USA/Europe/What countries have I missed out ? - With less people working for $10 per day then there will be less incentive buy foreign goods because its no cheaper ? If its not possible to import something for cheaper than we make ourselves then there is incentive to make things here.

I backpacked around Indonesia 33 years ago and the Indonesia I saw on TV a few nights ago was nothing like what I remembered. Big surprise.

Are there niche markets that are worth exploring - ie trying to do something to incredibly high quality so that people know that products are expensive but don't mind because of stunning quality ? Vaguely remember 20-30 years ago this idea being promoted as a model that had worked in Norway or Denmark or Sweden

Have read a few posts recently about Australian businesses struggling against foreign competition - have seen some posts from some people on this forum running businesses but having difficulty matching internet shopping prices.

In the spirit of the Euro, should there be a "Worldo" ? A single currency all over the world might sort out some of the banking business based on money changing and futures that makes huge profits but adds little value - Naive I know but a thought nonetheless.

Are we short of people ? - Is there a critical mass of people required in order for us to be "self booting" and "self sustaining" cycling our own raw materials around an internal economy ?

So in short - I havent got a clue and would really like to see some opinions from people with appropriate experience in economics/business/manufacturing ............ ummmm is that why we elected those politicians ?

Anybody recommend any good web pages on this topic ?

What did Germany do to be such a strong economy ?

Bill

BobL

5th February 2014, 08:39 PM

Anybody recommend any good web pages on this topic ?
If you want to see how we sit relative to other economies this is a very interesting website.
It's called the "observatory of economic complexity" and displays graphically imports and exports for 127 countries
The Observatory of Economic Complexity :: Australia Exports, Imports and Trade Partners (http://atlas.media.mit.edu/country/aus/)
It also generates and plays time based series - (e.g. The Observatory | What does Australia export? (2010) (http://atlas.media.mit.edu/explore/tree_map/export/aus/all/show/2010/)) The data stops at 2005 but it is still very interesting

Australia ranks 78th - ie we lack diversity and export too much of one type of thing and we export to much to just a few countries.
If and when things go pear shaped economically we will have limited resilience compared to other countries.

What did Germany do to be such a strong economy ?
Located in the middle of a large market
Already have made and have ongoing massive govt and private investments in infrastructure (roads rail airports ports etc)
Invest in (technical) education and take it seriously
Innovative
Savings mentality
Hard working
Sensible levels of Govt spending and control especially in finance
Low levels of corruption
And they do this with a 19% GST
Not litigation free, but lawyers are very limited in what they can cream off from cases thus reduces frivolous litigation.

Big Shed

5th February 2014, 09:04 PM

artme

5th February 2014, 11:00 PM

You might add to that list of what Germany does better:

Unions in "partnership" with employers and government, not the old English adversarial system of us against them (scr*w the bosses or scr*w the workers in other words).
They have learned that they depend on each other for prosperity.

This is almost exactly what Paul Howse was saying, not in relation to Germany in particular, but as a means of ensuring industrial stability, improving productivity
and remaining prosperous.

Lyle

6th February 2014, 07:22 AM

I think a long hard look should be taken at 'penalty rates'.
Work styles have changed.
If you work in an industry where your core work hours are say 10.00Pm to 06.00Am 5 days a week then I do not believe you need to have penalty rates!
If you are required (asked) to work "over' those times then yes some form of overtime rate should apply.
But your core hours should only be at the standard award rates.
Penalty rates are a reason many businesses do not prosper.

Working mums who want the taxpayer to subsidise their childcare. Another bugbear. If you cannot afford the costs then either don't work and stay home and look after your own child, don't get a huge mortgage based on dual incomes.
In other words live within your means and plan ahead.

That should get a few comments.

Sebastiaan56

6th February 2014, 07:41 AM

As an employer I categorically state that it is not penalty rates, not for me anyway. Staff on-costs, well thats a different matter. Super, various types of leave, insurances, etc add up to 40% on to the wages bill in my business.

But it is not the wages that are the problem IMO. The problems are scale and access to markets. We compete with companies in countries with much larger populations and much shorter distances to market. Tighter margins mean you need to sell more and we haveplenty of everything here. It is just plain difficult in a country of 25 million to compete with countries that are multiples of our size. Personally I have been watching this decline for decades. I cant see any way of stopping it.

BobL

6th February 2014, 09:23 AM

While we're talking about Germany here are their typical penalty rates
A normal work day is 8 hours a day, above that 25% overtime applies up to 10 hours above that a mandatory rest period applies
No Saturday Penalty rates
Sundays and Holidays are @ 50% overtime.

MAPLEMAN

6th February 2014, 09:38 AM

Work for peanuts till we drop dead into our graves..what a wonderful world :C,So then ,if every worker took a pay cut immediately,would the cost of living REALLY come down?? I don't think so!!The net result would be more hardship for the average Joe...MM:2tsup:

Big Shed

6th February 2014, 09:48 AM

This is almost exactly what Paul Howse was saying, not in relation to Germany in particular, but as a means of ensuring industrial stability, improving productivity
and remaining prosperous.

I think Mr Howes has had a conversion on the road to Damascus:rolleyes:

He is, and always has been, a very radical unionist of the old school. He wasn't even democratically elected to his job but anointed by his predecessor, Bill Shorten.

He is the very man that fancied himself as a non-elected king and queen maker and the main instigator in the downfall of 2 of our elected Prime Ministers.

I don't think I would trust too much of what Mr Howes says, he tends to say things to further his own ambitions, not in the interests of his own members or indeed in the interest of the nation.

steamingbill

6th February 2014, 12:01 PM

Is Australia in danger of becoming one of the world's primitive economies??

<Snip>

What do we do at the moment? I contend that we are a nation of hunter/fisher gatherers.
We dig blood y great holes in the ground to gather coal , ion ore and iron ore. We fish the
ocean. We gather wheat and wool and we gather up cattle for export.

How do we overcome this position??

Germany has already been discussed, how about the rise of Japanese manufacturing after WW2 ? How did that work, didnt they have very little in the way of natural resources as raw materials. Any other examples out there ?

Bil

Big Shed

6th February 2014, 12:44 PM

Germany has already been discussed, how about the rise of Japanese manufacturing after WW2 ? How did that work, didnt they have very little in the way of natural resources as raw materials. Any other examples out there ?

Bil

The rise of manufacturing in Japan was fuelled largely by American dollars after WW2, it was in the US interest to rebuild the Japanese economy as a bulwark against Communist China.

They did the same in Germany, remember the Marshall Plan? In this case it was to build a bulwark against Communist Soviet Union.

artme

6th February 2014, 12:47 PM

Yes Fred, one of the reasons I sat and watched/listened to Howse was because I know a little
of his history, down to being a keen singer of "The Internationale".

I was quite stunned by the approach he took but it was an enlightened one considering his left
wing leanings and thorough backgrounding in the union movement since the age of 18. maybe
your road to Damascus conversion analogy has some substance to it.

Already the hackles have been raised by government and industry spokes people. I think his idea
of a grand compact may have already been scuttled.

One point I did wonder about was his oblique reference to the state of industrial relations in the USA.
He views that as the labor force and the bosses getting on for the good of all. I wonder!:?

artme

6th February 2014, 12:50 PM

Bill, I believe much of the rise of the Japanese after the war was to do with
the drive by the Americans to change the whole nature of the country.

Maybe we should pick a barny with the US so they can help us to re-construct!!:D:D:D

Big Shed

6th February 2014, 12:54 PM

Evanism

6th February 2014, 02:01 PM

Is Australia in danger of becoming one of the world's primitive economies??

Australia is an emerging economy. We might be economically strong but we have the hallmarks of a primitive emerging economy...I.e no manufacturing industry, reliance on raw material exports, minimal trading partners (3 cover 90%), unskilled labour (mining), a large current account deficit and a rapid uncontrolled rise in consumer prices (housing).

We are subject to the successes of our partner economies for exports.

We won't BECOME one of the great primitive economies, we ARE a primitive economy.

We have lost, or are going to lose, most of our manufacturing ability and much
of our computer work is now outsourced. It looks as though our ability to can fruit is going to be lost.

This is simply a reflection of the anti-business, protected market duopolies that really govern this country. There IS NO competition. Small business is disincentivised. Technology in all forms is driven off shore. Those businesses that do remain are reliant on subsidies for their very existence. Licensing and rent-seeking behaviours dominate business and investment. Protectionist policies guarantee monopolies. Taxes are complex and finally, socialism is the underlying support structure for all businesses that are not mining oriented.

The ASX reflects this.

This is the country that was the third to launch a satellite, the one that first developed
digital technology, only to have it shelved because of a timid government. We have
skited much about our solar research and development, but has it got us anywhere?
We seem to be too bloody stupid or laid back to adopt more green technology.At one
time we had an aircraftindusrty

What do we do at the moment? I contend that we are a nation of hunter/fisher gatherers.
We dig blood y great holes in the ground to gather coal , ion ore and iron ore. We fish the
ocean. We gather wheat and wool and we gather up cattle for export.

How do we overcome this position??

Australia is doomed. Let me restate this...Australia is utterly, completely and irretrievably doomed.

It cannot be fixed...it can be delayed and it will look "fixed" but the market will force the recorrection.

The real rot set in in the 80's. This is studied at Uni in economics. Australia has an insanely complex tax system, intense bureaucratic inertia, a paralysed government (regardless of party, it's a reflection of our system) an ageing population, a demographic nightmare and personal levels of debt that are the highest in the world.

It is discussed at almost infinite length on the many free newsletters from The Daily Reckoning. Authors have published on this too, especially Harry Dent. While they are "doom enthusiasts" they outline their positions with clarity and conviction.

You would be right to think my words are pretty strong and they are. I'm typing this with a cool head and not trying to look like I'm ranting. BUT, it's time people opened their eyes and saw what was really happening...not from the government news, papers and TV, but from businesses, household debt (look at the huge number of debt management ads on TV. Hhhmmmm?????) and rapid industrial contractions we are seeing daily (mine closures, infrastructure pullouts, Holden, ford, Toyota, spc....that's only this week). Just read the financial news and ask yourself "why". Ask why all these things are happening.

Join your own dots.....you can feel it in your guts. You know you can.

The volume of money heaved around by our government during this process will be spectacular. All levels of Government will be bailing out everything left right and centre. Families will be issued with enormous cheques. Taxes on the wealthy will hit 75%. Government tax collection will be fuelled by angry mobs demanding "they" pay "their fair share".

Unemployment will go stratospheric, we will experience a very rapid series of hyperinflation/debt-deflation events, followed by a long term unstoppable bi-flation recorrection (basic item prices rise, capital items universally deflate).

These last two events will level the playing field, but it will be written about for a thousand years.

It makes me sad and I hope it doesn't end this way. But, hope won't solve the problem, only the markets can and the markets are now controlled by interventionist agendas.

artme

6th February 2014, 04:07 PM

An interesting view Evan. Not sure I agree with all you say but the general pessimism you express is certainly warranted.
Where are the subsidies you talk of? One thing this country has done , and other countries have not, is to abolish subsidies and tariffs.

I think a number of things have cost this country dearly over last 40 years, and governments on both sides are to blame.
We are going to have to grit our teeth and suffer a huge amount of pain and angst if the country is to be sorted out.

Looking at Economies like China, planned, and India -not so deliberately planned - we can see that both have benefited
from very low wages and a vast workforce. These are luxuries we don't have.

Brasil is an interesting case. It has a young population and a low wage large workforce. It is moving ahead rapidly despite massive
corruption and a staggering burden of bureaucracy. For instance they have the 3rd largest aircraft manufacturing operation in the world.
Of course they help themselves with tariff barriers and huge imposts for sending money out of the country _ something like 23% for overseas bank transfers.

Argentina has a crap economy but at least they manufacture motor vehicles on a pretty fair scale.
Chile, like Australia, relies heavily on mining for its income. I can't say much about other Sth. American countries except that Paraguay is quite stable.

The big benefit for these countries is market size and the fact that they have pretty good trade agreements.

Another affliction for this country is greed. Many years ago now I saw a (4 Corners ?) program in which the case of an electronic control box for a Caterpillar
diesel engine was used to illustrate this point. The manufacturer in the States got $12. The part here cost $480.!!

steamingbill

6th February 2014, 04:57 PM

Australia is an emerging economy. We might be economically strong but we have the hallmarks of a primitive emerging economy...I.e no manufacturing industry, reliance on raw material exports, minimal trading partners (3 cover 90%), unskilled labour (mining), a large current account deficit and a rapid uncontrolled rise in consumer prices (housing).

We are subject to the successes of our partner economies for exports.

We won't BECOME one of the great primitive economies, we ARE a primitive economy.

Hey Evan,

Until I read the above I always thought we were something more than an emerging economy, maybe a declining economy, however if it is the case surely Artmes question becomes "How does an emerging economy grow ?"

I guess most emerging economies would have far lower wages and standards of living than we do ? Are the rest of the Commonwealth countries similar to us, that is emerging economies that used to be stronger ?

Do we need a heap more people to give us a critical mass that will make and buy things from itself ? We've got the raw materials and the potential to feed ourselves.

I get the daily reckoning and stopped reading it as I thought it was all "scary scary scary but wait ! buy our newletter and YOU will be okay."

I dont particularly follow politics so forgive the naive question - Where should I look to find the relevant policies and wise thoughts on this issue from the various political parties ? WHats the right terms to put into a google search ?

Australian Labour Party Manufacturing Policy - this gives some interesting hits

Australian Liberal Party Growing the Australian Economy -this too gives some hits

Off to play with Google for a while ............. EDIT ........................... I found this http://www.innovation.gov.au/industry/manufacturing/Taskforce/Documents/SmarterManufacturing.pdf

Am wading through the exec summary, its a bit verbose for a summary ...................

Bill

Evanism

7th February 2014, 03:57 AM

"we're from the government. We are here to help".

These according to Ronald Raygun are the 9 most terrifying words in the English language.

Steamingbill, the government is never the answer. Regardless of policies, whether benign or otherwise, will be overtaken by greed, manipulators, rent seekers and favouritism. Churchill said basically this when he said that democracy is the least worst form of government (as well as a 5 minute conversation with the average voter will show how bad an idea it is).

Government is ultimately a means of trying to correct the failures of the market.

I don't subscribe to politics, as a generalisation, simply because they become mainstream. They try to accommodate everybody and this fails. Democracy is a terrible system of delivering outcomes as it leads to public debt and entitlement.

Look at The Greens. Their basic idea when they started was simple: stop destroying stuff, look after the environment, it matters. Now they are basically communists pretending to be environmentalists. They will fail.

Like greenpeace. Same thing. The originator left as it was taken over by "Ratbags". They tried to ban Chlorine. It is an atom. They honestly tried to ban part of the periodic table.

Liberals are trying but will ultimately fail because they cannot accommodate small business, creative destruction and the evolution of ideas. Their mindset is narrow. I can tell you more but this isn't the place.

Labor, well, less said of them the better. Communism is a proven failure. Handouts leads to corruption and free public money....well, we all saw the result of the kids in charge of the candy store.

How does an economy emerge? Simple. Almost trivial.....IT MAKES THINGS.

It makes high end, technological items that met a market demand at a market price.

This isn't about iPhones when I mean tech. It's biochemistry, sciences, technical manufacturing, aerospace, consumer goods, education, art, design, focus of mind.

It isn't about consumerism, but As BobL pointed out: limiting rent seeker behaviour (lawyers), education, hard work, savings (there is a trap there too), manufacturing, economic diversity, non reliance of government subsidies.

Once these are genuinely put in place then genuine growth occurs. A society grows and becomes richer, both materially and monetarily (not "dollars", whatever they are), culturally sophisticated and resilient.

Unfortunately, we...the west, us...Australia, have become lazy with the easy option of selling the stuff we rape from the land. We are not the clever country, or smart, or sophisticated. We are a farm. A hole in the ground. A woodchip supplier!

This country has been taken over by The Bogan. A selfish, uncultured, uneducated, entitled, government handout recipient. Opinion without education, rich without effort, uncultured ("I dun gon to Bali!") and expectant that the government will provide all their answers...like mum and dad would....

We have lost our way.

There is too much inertia to correct it willingly. The market will do it. It will be a white hot seering agony that will burn everyone in the process. Some will become rich, but the vast majority will become vastly poorer. The market can be held back for a time, it can even be controlled to an extent, but it can never be tamed. It reverts all back to the mean.

It is a reflection of nature itself. We can no more control the market any more than we can ban chlorine.

Ergo, Australia is utterly doomed. Doomed to be the worlds quary. Forever suppliers to the Chinas of the world and the buyer of Other People's Stuff.

.

rob streeper

7th February 2014, 09:03 AM

It sounds as though the feelings in Australia are similar in many ways to the popular sentiments among the middle class here.

I just finished a very interesting book by Vaclav Smil entitled 'Made in the USA: The Rise and Retreat of American Manufacturing'. Smil presents a chronological perspective of the origins, rise and decline of the manufacturing base of the US. He attributes part of the decline to the commonly accepted idea that off-shoring of low skill manufacturing is part of the normal development of an advanced economy but he also details the precipitous declines in many areas of high tech manufacturing. He points to the tax advantage that the US government confers on overseas corporate profits as a major force in the decline.

I see other drivers, the most fundamental of which is: High tech manufacturing relies on the existence highly skilled and highly educated workforce and producing such a workforce takes time. In addition, high tech manufacturing depends heavily on intellectual property, discoveries and know-how that is the product of the skilled workforce, call it 'intellectual capital'. Producing intellectual capital also takes time and is subject to the vagaries of happenstance.

Capital on the other hand is seeking the maximum return in the shortest possible time. For example in the form of quarterly revenue and earnings reports. The creation of a skilled workforce and intellectual capital takes years to decades or in some cases generations. For instance, Gregor Mendel did his pioneering experiments on inheritance in peas between 1856 and 1863. Watson and Crick published the structure of DNA in 1953. The first wave of biotechnology companies came around in the 1980's. Would any modern investor put money in a century long development cycle?

Investors in the US have been driving a steady trend of disinvestment in research in many areas, it is just too uncertain and has too long a time scale to attract their interest. The drug companies here have been dumping R&D programs and personnel for at least 15 years. These functions are now being outsourced to India and China along with raw materials and finished product manufacturing.

As a result students in the US are often finding that their skills are not wanted as the market for them has disappeared while they are in school. The US is heavily focused on extractive industry, especially hydraulic fracturing for gas and oil. There has been a shift in employment from productive occupations to so called service jobs - unfortunately the bulk of this service is waiting tables, stocking shelves and other customer service occupations. The average wage in the US has now regressed to levels of the 1980's. The middle class is dying. Walmart, one of our major retailers and the biggest private employer in the world, recently lowered its projected earnings because they expect the recent government decision to decrease food aid to the poor will cut into their bottom line. It has also been reported that Walmart pays its workers so little that many rely on public assistance and food aid to get by.

Overall, I see that the dictates of capital are driving the US economy down and likely yours too. I feel that the US is headed to a more primitive economy, much like that described by Charles Dickens.

artme

7th February 2014, 11:11 AM

rob streeper

7th February 2014, 11:30 AM

Rob, from what I read and the commentary I hear on TV and radio you have confirmed my general thoughts about both economies.

I wonder what influence on the flow of capital and the constant chasing of ever higher profits is provided by TV reports and the greater
access to detailed stock market and financial analysis. Couple this with an ever increasing desire to be rich and famous and we are on a
very slippery slope indeed.

I think the advent of high speed information technologies is the key enabler for high returns of investments. Even a century ago there were stock tickers that enabled traders to work off of the trading floors and now we have high speed traders who operate on milli/nanosecond timescales. These companies actually jockey for prime real-estate that is closer to the exchanges so that they can get an edge on others by being just a little closer and therefore faster.

I also see the loosening of capital controls, such as the North American Free Trade Agreement and the Trans-pacific Partnership as methods by which capital can more easily transit and thereby overcome national boundaries and laws.

I wonder if the money managers' model may be to raid the economy of a country, extract all of its accumulated value and then flee the jurisdiction.

In the early 2000's our then vice President, Dick Cheney, re-denominated a significant portion of his assets to euro's from dollars. This happened when the euro was still trading at about $0.80US. Shortly thereafter the euro was up to $1.25US. Now of course he didn't exploit his position to get some inside information now did he?:no: All perfectly legal.

BobL

7th February 2014, 12:52 PM

Evanism

7th February 2014, 02:13 PM

I wonder if the money managers' model may be to raid the economy of a country, extract all of its accumulated value and then flee the jurisdiction.

This is the Carry Trade. It's a huge part of how the banks operate here. They have a massive dollar position that regularly unwinds violently so they hedge with other currencies. When they increase in value, the banks sell, often causing another violent price change. The AUD is one of the most traded currencies in the world, which is madness. We are a country of 23 million.

We have also had a spectacular example of a raid.

It was called the Myer Debacle. Effectively, one of our biggest retailers was privatised, stripped for cash, loaded up with debt, floated and an enormous sum was creamed off and sent to tax havens on the very day of the float. Offices were closed and private jets left the country the next morning. It was one of the most spectacular acts of corporate bastardry I've ever witnessed.

It put a tear in this capitalist eye. Purely magnificent.

rob streeper

7th February 2014, 02:29 PM

In terms of Exports there is a BIG difference between the US and AUS.
In the following diagrams the main manufacturing areas are coloured in pink and blue, the rest is basically primary products.
This is 2010 data so if anything the Australian situation is probably even worse

http://www.woodworkforums.com/attachment.php?attachmentid=303299&stc=1

There are many similarities in other aspects of the economies like, huge imports of trashy stuff from China, wasteful energy usage and rampant consumerism.
As well as major manufacturing industries the US also gets external income from services and other products like education, software and entertainment so it has a much more diversified economy than AUS.

Hi Bob,

I agree, in many of the ways in which economies are quantified the differences between Australia and the US are enormous. As I mentioned in my above post, there is one element that is not well accounted - the intellectual capital of society. I know my definition is crude but I think the concept captures the essence.

I am reminded of a documentary I watched recently. In it a US factory owner was interviewed. The company formerly made plywood. The business functions were outsourced to China and the equipment was sent over to them too. The company employees trained their Chinese successors. The owner said that he was selling product cheaper than it could be made here and indeed at the cost to make it in China. He made his money however through a 17% subsidy (kickback) from the Chinese government. Thus his equipment and the experience of his employees had effectively been exported to China. I don't believe that the accounting presented above includes such exports.

Smil wrote that one of the major US exports to China was waste paper. Now one could argue that waste paper is the byproduct or waste product of an intellectual service economy but through a different lens it could also be seen as a scrapper/scavenger collecting the refuse of a dying economy.

Australia is different. Your country is closer and you have a lot of the feedstocks that Chinese industry needs. I see similarities in that extraction is extraction, whether it is the intellectual capital of a society or it is coal and iron ore.

Cheers,
Rob

rob streeper

7th February 2014, 02:31 PM

This is the Carry Trade. It's a huge part of how the banks operate here. They have a massive dollar position that regularly unwinds violently so they hedge with other currencies. When they increase in value, the banks sell, often causing another violent price change. The AUD is one of the most traded currencies in the world, which is madness. We are a country of 23 million.

We have also had a spectacular example of a raid.

It was called the Myer Debacle. Effectively, one of our biggest retailers was privatised, stripped for cash, loaded up with debt, floated and an enormous sum was creamed off and sent to tax havens on the very day of the float. Offices were closed and private jets left the country the next morning. It was one of the most spectacular acts of corporate bastardry I've ever witnessed.

It put a tear in this capitalist eye. Purely magnificent.

Sad thing is that everybody excepting the capitalists and the politicians they employ get the hind tit and the bail-out-bill as happened here with our "too big to fail banks".

BobL

7th February 2014, 03:31 PM

. . . I don't believe that the accounting presented above includes such exports. . . . .

Unless outsourcing a process to another country generates a net direct $ return from that country (e.g. licence fees for using IP) I can't see how that is considered as an export.

Aside from giving away IP voluntarily there's lots of illegal IP transfer, software and media piracy comes to mind.

Not that I am a Microsoft fan or that BG needs any more money, but at one stage in the late 1990s there were something like only 9 times more Windows PCs being sold worldwide than there were Windows licences.

rob streeper

7th February 2014, 03:45 PM

Unless outsourcing a process to another country generates a net direct $ return from that country (e.g. licence fees for using IP) I can't see how that is considered as an export.

Aside from giving away IP voluntarily there's lots of illegal IP transfer, software and media piracy comes to mind.

Not that I am a Microsoft fan or that BG needs any more money, but at one stage in the late 1990s there were something like only 9 times more Windows PCs being sold worldwide than there were Windows licences.\\

Outright theft is a problem too of course. I am however talking mostly about the willing transfer of know-how/IP/IC. Such transfers undoubtedly have value but are not counted as exports. I argue that if the value of such items of knowledge were counted or, more properly, accounted then the value of exports could arguably be much higher. I would imagine the same holds for Australia and Europe. It is much easier to co-opt, borrow, buy or steal existing IP than it is to invest the time, funds and effort needed to create it de novo.

steamingbill

7th February 2014, 07:54 PM

ABC news site has an story regarding Mr Howes followed by forum discussion

Beyond the straitjacket of unions vs business - The Drum (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2014-02-06/green-a-new-accord/5241714)

artme

7th February 2014, 08:47 PM

MAPLEMAN

7th February 2014, 08:52 PM

I painfully watched Mr Howes speech on the A.B.C the other day.Couldn't change the channel as i was gobsmacked listening to his verbal fart :oo:..putrid,putrid man.I must be from another planet if this chump is human...MM:2tsup:

Big Shed

7th February 2014, 09:00 PM

Thanks for that post Bill!!!:2tsup::2tsup::2tsup:

I hope others will see why I was so interested in this address by Paul Howes.

Let's hope his "road to Damascus conversion"( See Fred's post) is permanent.

Well Art, I would say that his conversion has more to do with advancing the political career of Mr Howes than it has to do with advancing industrial relations in this country.

He is working very hard to invent a new image after his rather disastrous foray in to the political big time.

artme

7th February 2014, 09:56 PM

I, like a number of you probably are, am wondering if he is a leopard trying to change his spots, or simply a chameleon
trying to camouflage himself.

Still, one of the most intriguing and interesting speeches I have heard in a long time.

BTW; loved Clarke and Dawe last night!!!1

rob streeper

10th February 2014, 02:36 AM

The US National Science Foundation recently released a report discussing world trends in R&D, education, high technology manufacturing and so on. See nsf.gov - S&E Indicators 2014 - US National Science Foundation (NSF) (http://www.nsf.gov/statistics/seind14/).

Interesting numbers come out of this.

Between 2003 and 2012 Chinese high-tech manufacturing increased five-fold. China's share of global R&D went from 8% to 24%. The US leads with 27%. How long will it be before China's 4.5-fold demographic advantage puts it into the leading position?

Among persons holding doctoral level science and engineering degrees 37% are employed by firms having 100 employees or less. Approximately equal numbers are employed in academics and businesses. I interpret this as showing that big business, i.e. business that are established and have built up their product lines, employ a minority of research workers. Thus big businesses are focused on extracting the value of IP, not creating it. The average age of US researchers is also increasing and the median is 44 years old. South Korea doubled and China tripled the number of researchers they educated between 1995 and 2007. The US number increased by 36% and that of the EU increased by 65%.

The US still spends twice as much on R&D as does China, but the trend is downward in the US, Japan and the EU and strongly upward in China for global share of R&D expenditures.

From my preliminary reading I perceive that the East is catching up rapidly to the West. Given the much larger population of China I predict that, as its stock of researchers matures and achieves full potential, China will come to dominate the areas of enterprise that we think of as high-tech.

Evanism

10th February 2014, 05:37 PM

Toyota to exit Australian, 30,000 jobs could go (http://www.canberratimes.com.au/business/toyota-to-exit-australian-manufacturing-2500-jobs-to-go-20140210-32cl3.html)

If there is any doubt now, I'll eat my old work boots.

This country is now officially doomed. The collapse is going to be vicious.

chambezio

10th February 2014, 06:09 PM

I have no idea how big the economic problems are for Australia. What I do see is NO rain, HOT weather and no sign of rain. The cocc\kies around here are doing it tough and they have been for a while. This hot dry spell will have repercussions as we get into the colder months. The first will be a shortage of grain. It is so dry they can't plant winter crops because there is no moisture available. I am talking in the Tamworth area. I know we are not alone!! Other states would be in a similar problem. The levels of meat animals is also going to fall due to no feed.
As far as the car market goes .....should we rest some blame back onto the government (either Labor or Liberal) They should not allow imported cars in to under sell the local product. We are digging Australia up and sending it overseas at an astonishing rate and what are we left with?
The Australian economy can not suffer tens of thousands of workers on benefits. Who will raise the money needed to pay them? Are we heading for another Depression like the 30s had? (Might be sooner than we think)
Our politicians need to get some long term direction to get Australia on a better level of productivity in every sector! (Ok I will wait outside in the shade for the black unmarked car from ASIO to pick me up and take me to the salt mines)

artme

10th February 2014, 07:40 PM

So the car industry and SPC called for government assistance - free money - and both were knocked back.

Bill Shorten, the invisible man, screams his face off and accuses the government of all sorts of destructive behaviour.

Has the said Mr. Shorten said anything aout the mining industry here in Qld. where thousands have lost their jobs?
Has he suggested we subsidize mining? Don't recall a word from him on these losses.

I was talking to a jewellery shop owner a few days ago.As she said, no one subsidizes her or will offer her money to
keep her business alive.

Where do the subsides and handouts begin and end??

I can see us getting into the position I saw last time I was in the States where in some places virtually every shop in some
shopping centres was closed. People were walking the streets with signs saying they would work for food.

As for tariffs, well who knows what would happen if they were reintroduced??

Big Shed

10th February 2014, 08:38 PM

The trouble with Govt subsidies is that they are just not viable.

Today there was a news item on the ABC web site about a report in to the ethanol for fuel subsidy started by the Howard Govt. The report was commissioned by the Labor Govt and their conclusions make interesting reading

E10 consumers missing out on full subsidy discount, ethanol report finds - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2014-02-10/ethanol-industry-subsidies/5249520)

One of the really telling lines is this one:

"The report estimates the three ethanol producers employ about 200 workers combined, costing taxpayers between $545,000 and $680,000 per job. "

as well as this one:

"For an E10 blend the program provides an effective excise differential of 3.8 cents per litre compared to a litre of regular unleaded petrol," it says.

"However, in 2012-13 the Australian Competition and Consumer Commission estimated that the average E10 price discount at the bowser was approximately 2 cents per litre - suggesting that around 40 per cent of the excise rebate was not being passed through to motorists."

What all that really means is that Govts of any persuasion should not get in to the business of shelling out money to create and/or save jobs because almost without fail it is a doomed exercise.

Big Shed

10th February 2014, 08:42 PM

What Mr Shorten conveniently forgets is that Ford Australia announced in May 2013 it was closing their Broadmeadows and Geelong plants.

Ford Australia to close Broadmeadows and Geelong plants, 1,200 jobs to go - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2013-05-23/ford-to-close-geelong-and-broadmeadows-plants/4707960)

I could be wrong but I don't think Mr Abbott was Prime Minister then, or was he?:roll:

steamingbill

10th February 2014, 10:14 PM

Some interesting discussion and points on this topic made on the ABC program Q&A on Monday night - might be possible to watch reruns on the internet if you are interested.

rob streeper

11th February 2014, 12:39 AM

The trouble with Govt subsidies is that they are just not viable.

What all that really means is that Govts of any persuasion should not get in to the business of shelling out money to create and/or save jobs because almost without fail it is a doomed exercise.

When your government becomes beholden to capital you have lost the game.

In West Virginia there was recently an industrial chemical spill. The chemical is used to process coal. Very little was known about the toxicity of this chemical (4-methylcyclohexanemethanol (http://en.wikipedia.org/wiki/4-methylcyclohexanemethanol)) because the manufacturer was not required to test it, a failure of government. The chemical spilled into the local river which supplies drinking water for the down stream population. The residents could not use the water for weeks and had to rely on bottled water for all of their needs. The bottled water supply ran out early. Now the residents have seen their water bills go up Despite Not Using Water, West Virginians Say Water Bills Have Spiked Since Chemical Spill | ThinkProgress (http://thinkprogress.org/climate/2014/02/07/3267811/west-virginia-water-bills/?).

In 2010 our Supreme Court in the case known as 'Citizens United' decided that corporations could donate unlimited amounts of money to political campaigns and politicians. The Justices decided that such spending was a form of 'speech' that was protected from government control under the US Constitution. Thus we now have a situation where the forces of capital can exert tremendous and disproportionate influence over our elections.

In 1986 our Congress passed and President Reagan signed into law the Emergency Planning and Community Right to Know Act of 1986. this act and others require the users and suppliers of chemicals to produce a document known as a Material Safety Data Sheet or MSDS. In the MSDS all known hazards and the physical and chemical characteristics of a compound are to be reported. The act has since been diluted to the point that most MSDS's are useless. No information is typically provided for the composition of products that are mixtures. Only the most rudimentary information and warnings are provided such as 'do not take internally' or 'flammable' etc.

These two forces combined have exacerbated the problems in West Virginia. Little to no toxicological information is available in the MSDS for MCHM and thus the possible health effects are almost completely unknown. Why has this happened? Big coal bought the politicians. The politicians watered-down the public safety laws and somebody 'accidentally' dumped the chemical in the river. Now about 1/4 of the state of West Virginia has poisoned drinking water.

Unfortunately situations like the one in West Virginia are anything but unique. Take the global warming situation. Australia is having major problems as I write but in the US there is a large segment of the population that does not believe man-made climate change is real. We teach creationism along side evolution to children in science class in the public schools here.

When your government becomes more responsive to money than it is to your vote then you can expect nothing but trouble. We have been sold.

artme

11th February 2014, 08:28 AM

Good post Rob, although I don't see what the teaching of evolution has to do with things.

One problem i see with repulican systems of government is that all laws and decisions become
rooted in the constitution and that leads to to the sorts of troubles you have outlined. We end up
with a plutocracy and not a democracy.

rob streeper

11th February 2014, 09:46 AM

Good post Rob, although I don't see what the teaching of evolution has to do with things.

Sorry about that - major error arising from various interruptions. The point I am getting at by my, now corrected, comment above is that the political leaders here are beholden to Kapital and that as part of an increasingly overt campaign to intellectually impoverish the populace they have allowed creationism to be taught alongside evolution in the public school science classes. Casting doubt on global warming science is another major campaign by Kapital.
If people are taught to reflexively doubt the major conclusions of science then they can be easily lead anywhere by those harboring evil intent. He who controls the past controls the future. He who controls the present controls the past.

Big Shed

12th February 2014, 01:10 PM

rob streeper

12th February 2014, 02:08 PM

This makes sobering reading

http://thenewdaily.com.au/news/2014/02/12/miracle-australian-car-makers-lasted-long/

Note that with all the grandstanding and finger pointing about who is to "blame" for the demise of the car industry in Australia, 2 major manufacturers (Mitsubishi-2008 and Ford-2013) announced they were closing down under a Labor government and 2 (Holden and Toyota) under a Coalition government.

I think what you are seeing in Australia is a manifestation of capital or Kapital seeking the highest return.

If you are an investor what are you going to put money on: An investment that returns 5%/yr over 20 years or something that turns over 30% in a year? Manufacturing complex items like cars takes a lot of long term investment. iPhone apps, entertainment software and the latest internet gimmicks turn over profits quickly. Automobile plants are long term commitments and the yields are just not high enough to satisfy the current expectations of the capital managers.

A stable society is the ultimate in long term investment - we all want that to be permanent. Unfortunately it doesn't make enough money to be worth investing in to those who control the money.

Big Shed

12th February 2014, 02:20 PM

rob streeper

13th February 2014, 03:35 AM

I think it is a bit more prosaic than that Rob.

What we are seeing here is a bunch of big corporations committing industrial black mail on governments, both state and federal. When the gravy train eventually runs out, as it always does (even politicians eventually see the light) they pick up their bat and ball and go play the same game elsewhere.

In the case of Mitsubishi they packed the whole kit and caboodle in to containers (using imported Chinese casual labour) and shipped it to China, where that equipment is now producing cars again. All they left behind was an assortment of empty buildings that the state government paid for anyway.

The same will happen with the Holden and Toyota machinery.

Of course, once the public investment goes away or expires the corporation moves on to the next favorable municipality or country.
The company that makes Ramen noodles, Maruchen, will build a production facility here. They are going to create roughly 600 jobs, the majority of them minimum wage, in return for some sweet tax incentives to the tune of about $2mln./yr for five years. The cost of living here is lower than any other city of similar size in the US so the future employees will be somewhat higher up the socioeconomic ladder than they would be in other parts of the country. Once Maruchen uses up their tax break and has depreciated their equipment against their income taxes there is a good chance they will move on and the city will be left with an abandoned industrial space, possibly with some worn-out noodle making equipment as a bonus.

steamingbill

13th February 2014, 09:17 PM

Evanism

13th February 2014, 09:41 PM

MORAL HAZARD

This is a disaster. A biblical humungoeous total and comple social and economic disaster.

Moral Hazard is the worst imaginable economic outcome for any government or economy.

It was used today to bail out Qantas with a debt guarantee. Can you image it! A government backed debt guarantee! The Qantas board and management now have a FREE TICKET to run the company into the ground with a guaranteed bailout! This turkey is targeted, shot, deheaded, defeathered, boiled, served and carved and NOW they are asking who wants the dregs/gravy????

They just admitted that they cannot pay their debts.

Every trader in the country is going to rip the absolute s%#t out of Qantas over the next two months.

The INSTANT I saw this pop up on my Bloomberg stream I shorted the absolute s#}t out of all the longs.

What an absolute profit on a plate to the jackals.

See my earlier posts. Moral Hazard will eviscerate this country.

artme

13th February 2014, 10:49 PM

Perhaps we are just doing what other countries, states, local councils do.

Doesn't make it right but to some extent it is understandable.

Dennis Napthine is riding on a very thin, and probably unsustainable
majority. I hate to be cynical but................

Evanism

13th February 2014, 11:35 PM

Artme, you raise a good point.

Everyone has friends. Good friends, very good friends and some are family.

Brother in law gets into a tricky situation and needs a few grand. Cool. Pays it back in 6 months. After all, we love him...

But what if brother in law owns 6 leveraged properties, borrows uncontrolably and doesn't even bring a lettuce to the Sunday BBQ?

Moral hazard is pure evil. Please take some time to really research it. People like me can rant and rave, but until it hits the taxpayer (congratulations, you just paid the CEO of Qantas a bonus!) then you remain ignorant.

Be informed. Please please please be informed.

rob streeper

14th February 2014, 02:12 AM

They are going to create roughly 600 jobs, the majority of them minimum wage, in return for some sweet tax incentives to the tune of about $2mln./yr for five years.

A quick calculation shows that the tax benefit for the Maruchen noodle plant is equivalent to the yearly wages of 132 workers at minimum wage ($7.25) assuming that they work full time every week of the year. Must be nice to have the state pay the wages of a quarter of your workers for five years. The local government will apparently also be doing some road upgrades and maintenance in support of the noodle factory.

artme

14th February 2014, 07:29 AM

Some years ago in Leeton, where there was a cannery, and where I owned an orchard, the local
council was approached by a large transnational about setting up a factory that would process
maize and other grains.

The carrot was employment and a guaranteed outlet for farmers' produce. Now the local ALP
councilor screamed blue murder when it was suggested that the council owned land on an
already paved, curbed and guttered street complete with water supply and sewerage be given
to the company.

End result was that the company went elsewhere.

Now, do we buy jobs because this is what it amounts to or do we be cognisant of the fact that all the
local businesses that were already established there had to pay their own way??

I personally think the council made the right decision. One for those who stand up to rich bullies.

Evan, I think your horror with the QANTAS decision is entirely justified. However, this is the result of
other companies and countries doing what we won't and of perhaps poorly and emotionally framed laws.

Greg Ward

14th February 2014, 04:09 PM

I'm a little surprised about the reaction to the purported Qantas deal.

If as a nation we want to have Qantas as a 'majority' locally owned entity rather than a market listed company with no ownership restictions, then we have to be prepared to stand by our wish.

If instead, we determine that support is not a national necessity, we should allow Qantas to have the same ownership rules as other listed companies, then we let her fly away to play with the other free flying airlines.

Greg

steamingbill

14th February 2014, 04:52 PM

MORAL HAZARD

Every trader in the country is going to rip the absolute s%#t out of Qantas over the next two months.

The INSTANT I saw this pop up on my Bloomberg stream I shorted the absolute s#}t out of all the longs.

Hey Evanism,

To what extent will you and all your friends shorting Qantas form a self fulfilling prophecy ?

I dont understand very much about shorting - is this correct ? Effectively you sell shares that you do not yet own in the hope that the price will go down and then you buy them at the lower price in order to give them to the person who bought them from you before you owned them ?

Bill

artme

14th February 2014, 04:57 PM

The issue of QANTAS is a vexed one. It is our national airline and some pride is at stake.
It was a government owned entity that was floated on the stock market with the proviso
that it would have a majority of Australian owned shares.

Since the float Aus has become more and more a "free market economy". This means we
are competing on an uneven playing field. QANTAS has to be run as a business while other
airlines, such as Singapore, operate as government owned entities and can be continually
propped up. They can employ whatever staff they choose from wherever and pay them
wages well below what QANTAS is obliged to pay. They can service their fleet at any place
in the world. Remember the kerfuffle when QANTAS wanted to have servicing done overseas???

I sometimes think the rest of the world plays us for suckers. The moral high ground is alright
until your pockets are empty.

Sebastiaan56

14th February 2014, 08:25 PM

artme

14th February 2014, 11:28 PM

Quant as had no problems raising funds 5years ago, the current management have a bit to answer for IMO.

That said Warren Buffet did the numbers and on the whole the airline industry has never made money. None for me thx...

Airlines have long been held to be a status symbol and so emotion gets mixed up in the decision making.

Big Shed

15th February 2014, 05:18 PM

Harking back to the car industry and all the doom sayers predicting the imminent demise of our Australian way of live, I happened to borrow an electronics magazine from our local library this morning, Silicon Chip Dec 2013.

In it was a Publisher's Letter (http://www.siliconchip.com.au/Issue/2013/December/Publisher%27s+Letter) discussing whether the car industry in Australia should be subsidised.

Given that this written well before the Holden decision by Abbott and Hockey I thought it showed very good judgement on the part of the author.

I particularly liked his analogy to the Australian electronics industry and how it was decimated by the 1973 Whitlam Govt decision to cut tariffs by 25% across the board, resulting in job losses of "probably more than 100,000".

Interesting reading, goes to show that life goes on and economies adjust to shocks. Maybe Mr Shorten should be sent a copy?

rob streeper

16th February 2014, 03:52 AM

All of the talk currently occurring in Australia reminds me of the national conversation we have been having here in the US over the past 30 years. In the 90's there was talk of moving to a 'knowledge economy' heavily weighted with high technology businesses. Labor costs were cited as being a key driver of the de-industrialization of the economy. The first to go were the textile mills followed by the auto production plants. Labor cost and inefficiency, i.e. lazy abusive union members, were cited as the reasons that these industries were sent overseas. The publicly touted role of the management was as saviors of the industry by routing out inefficiency and waste - it all turned out to be a lie. It wasn't that union members were sabotaging their own livelihoods, it was management that was seeking ever greater profits by simultaneously reducing labor costs, reducing their corporate taxes, and reducing the quality of the products by using cheaper raw materials. For instance, I have a set of t-shirts that I wore in school. They are 'Made in America' BVD brand shirts. I recently found a couple of them in a box in the attic and put them back in use. I also have a set of t-shirts recently purchased from a large warehouse store. The difference in quality is striking. My 25 year old shirts retain their elasticity and integrity while my one year old big-box shirts look like rags. Given the tides of fashion I realize that most people will not be wearing 25 year old clothes to the office but t-shirts for working around the house are another thing. I wish now I had bought more of the good ones 25 years ago. Likewise with Levi's blue-jeans. They were formerly made here in San Antonio. Even with the heavy work I do as a hobby a pair could last two or three years before the knees split and they cost $8 to $15. The San Antonio Levi's plant shut down about ten years ago. Now they cost $30 to $40 and I am lucky if I don't ruin them in a year.
Cars are another story. The unions were blamed for the low quality and high prices of American cars. At the same time every safety or efficiency innovation was decried by auto company management as a stake to their hearts. Now General Motors is the third largest auto maker by volume in the world behind Toyota and Volkswagen. Turns out that management was largely responsible for the decline of their world market share. They resisted innovation and upgrading their plants until they were so obsolete that they were no longer economically viable. Detroit, once considered a major industrial center, is now a wasteland with nearly a third of its' residential properties in ruins.
Blame needs to be put where it is due: Greed. Greed by management, shareholders and their craven collaborators in government.
And what of the 'knowledge economy'? Let's face it - not everybody has the inclination or ability to become a knowledge worker. Society has to provide jobs for everyone, not just the high-tech thinkers. Do you want to live in a society where people are considered dispensable or useless on the basis of their aptitudes?

jimbur

19th February 2014, 11:33 AM

I didn’t want to get involved in this thread for a number of reasons. I dislike mysticism in any form be it reading tea leaves, auras or the market. The nation most enamoured of the free market and the workings of the ‘invisible hand’ still finds it necessary to have anti-monopoly laws! Another reason is that any suggested remedies can be misconstrued as belonging to a particular political grouping. Besides that, I know enough of economics to realise that simplistic answers are usually not the answer. I think I finally decided to put my toe in the water when I saw frozen Nile perch from Tanzania for sale in Woolworths. Not that I resent Tanzania earning export income, but the logistics and logic of freezing and shipping from a country with a life expectancy of less than 61 years to the freezers in a small town in a food rich country escape me. I can’t see the fishermen earning much as their share.
Anyway back to the original question. Many years ago I was sent a paper on mineral/oil economies written by Robert Looney. (unfortunate name but genuine). He was concerned with third world countries and the ways in which mineral/oil wealth acted as a brake on national development rather than a stimulus. It was far easier for them to import than to develop industries. This was over thirty years ago and though Australia was hardly in the same position I remember thinking that our reliance on extractive industries carried the same risk.
Whatever we might think, Australia is too small to matter on the world stage. Our currency can be manipulated easily as can the shares in companies. We are already seeing the results of oligopolies and oligopsonies both in the retail and the primary production sector. Farmers are increasingly dependent on single buyers for their produce.
Most of the companies today dealing with mineral wealth are multi/trans-national and are not interested in individual national development but merely in extracting as much profit as possible for the shareholders. Their executives are paid many times more than our so-called decision makers and can draw on huge amounts to pursue decisions which suit them. Some countries are supposed to be amenable to bribery; in ours (hopefully) it gets results by selling their version of development to a group whose main [I]modus operandi consists of selling dreams themselves, namely politicians. Stupidity rather than cupidity!
Any protection that was afforded by the tyranny of distance has been wiped out by the massive cargo ships available today, again owned of course by overseas companies.
The Australia we look back on (probably with rose tinted spectacles) was the creation of post-war policies driven by a vision of what this country should become after the long ride on the sheep’s back. Most of the methods used are seen as anathema today, tariffs, credit restrictions and government intervention in large scale projects, physical such as the Snowy River hydroelectric scheme and scientific such as the development of the CSIRO. However flawed, there was a genuine shared vision of an egalitarian society.
We hear so much of sovereign borders and so little of what Australia is and should be. Border security but not food security; a future fund but not an examination of how our mineral and oil resource exports should be balanced against our future needs. Society’s needs are being increasingly seen as a problem that will be solved by the free market – user pays and bugger the hindmost. Worse still, poverty is even being seen by many as demonstrating a lack of character rather than a lack of opportunity.
National identity is being redefined by an hour or two on Anzac Day and the ability to chant “Oi, oi oi” at sporting events. Sending a ‘hero-gram’ sponsored by some media organisation or other is hardly a substitute for the ‘vision splendid’.

steamingbill

19th February 2014, 12:40 PM

Jimbur,<snip>

I read your post with some interest. Would be grateful if you could give me a hand with a couple of things, if you could please ? NOt asking you to discuss anything any further.

I've googled richard looney economics oil 3rd world and variations thereof but cannot find the paper you refer to - can you give me some other keywords to include that would help me find a relevant site please ?

Any good websites or books that you can recommend that discuss possible futures for Australia ?

Bill</snip>

jimbur

19th February 2014, 01:07 PM

Bill, Nowadays he's professor Robert E Looney and I think has something to do with the US Navy. Putting his name in google should give you a list of his papers which of course are many by now. I can't dig my copy out without turning the study upside down, and then again it might be in a filing cabinet in the shed.:C
Possible futures is more difficult as each political grouping seems to have their own version of where we are and how to get out of it. The biggest problem is that doom and gloom and/or extreme solutions sell more books and have more adherents.
oops got his name wrong Robert not richard:
http://relooney.info/Bob-Looney-CV.pdf

jimbur

19th February 2014, 01:25 PM

Bill, I think this was the article:
Determinants of Third World mineral-oil economies external debt Robert E. Looney

rob streeper

19th February 2014, 04:21 PM

Jim,

I have also been surprised at things I have seen in the market. Recently I was given a couple of sheets of birch faced plywood. On the edge was stamped 'Made in China". It prompted me to wonder at the economics of shipping a piece of plywood from China to Texas. If I were to try to mail such a thing I am sure that, even if possible, the shipping would be astronomical. How can such an anomaly exist? What are the hidden factors?
I think that the west has been bought. Nations are no longer sovereign, they are beholden to those with money, i.e. capital. The politicians facilitate in the furtherance of their self interests. Free trade agreements? Bull, I think that such initiatives simply remove barriers to the free flow of capital and the powers that it wields.
In philosophy classes I was required to read Marx. At the time I rejected it as unrealistic utopinaism and I still reject his prescriptions for socializing the means of production but I must give him credit as being a keen observer of mid-19th century England. He and Dickens both saw the same society and both reacted with revulsion. Thus I think Marx was correct in his appraisal of how the world of his time worked. Capital ruled all and the political process was its servant. In the US I feel that we are having a similar episode. History never repeats itself of course but the parallels are to me striking. These days however the average American is so poorly read and ill educated that they have no knowledge of these times and therefore can not see the present in historical context.
Unfortunately it seems that the forces of capital are pillaging Australia too. As I said above, the discussions you are having there remind me of those I heard in the 70's and 80's here.

Cheers,
Rob

jimbur

19th February 2014, 04:58 PM

Rob, I remember talking to a businessman who had been doing business in Russia (when it was still the USSR). According to him they were using Marxist economics -talking about surplus value etc - as prescriptive, not descriptive as it was.
One of the most important works of the time was written by Engels. "The condition of the working-class in England". It is largely ignored being tainted as it were by association.

artme

20th February 2014, 07:41 AM

rob streeper

20th February 2014, 12:02 PM

Artme and Jim,

I always hesitate to mention Marx or Engels because in the current reactionary climate I live under in the US. Invoking them frequently invites trouble such as being labeled 'sum kinda com-you-nist' simply for discussing their works or ideas. I see that you, and perhaps Aussies generally, have benefited from a more liberal and extensive kind of education than we have here and I find it refreshing.

Cheers,
Rob

jimbur

20th February 2014, 12:22 PM

Rob, It's a sad situation when many of the formative ideas shaping modern life are ignored because of the race, creed or perceived political colouring of the authors. I'm not talking of the US in particular here, it seems to be world-wide. If we don't understand where the ideas come from and what preconceptions are behind them we're heading for an intellectual dark age.

artme

20th February 2014, 04:05 PM

Oh so true Jim!!

I don't consider myself to be as erudite as many I know, but I sometimes shake my head in wonder
at the general ignorance of others.

Our 24 year old son has a very inquiring mind. He reads Time magazine and does a huge amount of reading
on the internet He opened my eyes to the true concept of anarchy because of a Uni. assignment he was doing.
In return I can still show him that I have knowledge of things he doesn't. I am just glad he is not an ignorant
among us and is willing to learn.

kiwigeo

21st February 2014, 10:49 PM

If you work in an industry where your core work hours are say 10.00Pm to 06.00Am 5 days a week then I do not believe you need to have penalty rates!
If you are required (asked) to work "over' those times then yes some form of overtime rate should apply.
But your core hours should only be at the standard award rates.

That should get a few comments.

Have you ever tried staying awake at 3am in the morning? Humans are not supposed to be awake at this time of the day. Studies have proved that prolonged periods spent working outside normal hours of waking are not good for mental and physical health. IMHO people who are regularly required to work these hours are entitled to some form of monetary compensation.

acmegridley

22nd February 2014, 12:00 AM

rob streeper

22nd February 2014, 12:26 AM

Have you ever tried staying awake at 3am in the morning? Humans are not supposed to be awake at this time of the day. Studies have proved that prolonged periods spent working outside normal hours of waking are not good for mental and physical health. IMHO people who are regularly required to work these hours are entitled to some form of monetary compensation.

Studies showing increased incidence of breast cancer and heart disease have been published. I know that I have read of an initiative to give hazard pay to night workers has been floated, perhaps by the Danish.

rob streeper

22nd February 2014, 12:32 AM

Heard an interesting interview with Alan Jones and some farmer from Wyoming in the US, who had been bought over by one of the anti fracking lobby groups.The gas companies just marched onto his land and started setting up wells and fracking s..t out of the place, and as a result he now has wells all over his property ,he can't raise cattle as the water is undrinkable it is full of methane gas, they have to truck fresh water in daily,and there is a permanent smell similar to diesel fuel which permeates the air,when asked about showering he said the authorities told him to leave all doors open when he was showering,to prevent the build up of methane gas (not b...dy likely, given that the outside temps. have been minus 10 to minus 25 during the day!!)
Is this the shape of things to come? I will make further enquiries as to when and where he is lecturing as I would be very interested to hear more from him:((:((

We have a great deal of fracking going on just south of San Antonio. Recently we were returning from a trip to Houston and the air was rank with fuel, rather like the smells surrounding oil refineries I remember from my youth.
All of our water here comes from wells. When fracking first started here I installed a whole-house carbon filter in our water feeder. The other day I tasted water direct from the tap from a non-filtered source and it was horrible. It did not taste of petroleum but it was very bad.

Evanism

22nd February 2014, 01:25 AM

Ah yes! Marx, Dickens, Engels,Hegel. What a quartet of great observers and writers!!

Hegel had very interesting views on rights, obligations and choices and I think these are often overlooked
when discussing politics and economics. For instance Hegel's point of where do your rights impinge on my
rights is an oft overlooked and extremely valid consideration that ought to be put in the front of the minds
of decision makers - at any level. Alas we see the results of this not being the case all around us.

What really worries me is the tendency of conservative politicians to repeatedly want to wind back the clock
to a new kind of laissez-faire economics. This is precisely what the aforementioned writers were so distressed
by.

Marx is interesting. As we enter a post-scarcity society this will become more common. It is not the best option though.

A true lasses-faire economy is the best option overlaid with a mix of Individual Mutualism combined with a Basic Wage movement.

This isn't communism, as yanks spit out as a vituperative, but a simple division of lesser resources to stop poverty. Let the rich be rich for they work for it, but eliminate the negative social impacts of poverty and very negative American-Style conservative capitalism.

My views on taxation are also similar. ALL taxes are evil and must be abolished. They only encourage over-governance, waste, cronyism and resource misallocation (which is the real crime).

artme

26th February 2014, 11:15 PM

Evanism

27th February 2014, 01:54 AM

Ye gods Evan!! You really are a radical!!!

I'm going to have brain fade trying to decide if your ideas are floated as a challenge, a joke or are workable in some way.!!!

Personally I have no objection to taxation. I object to the fact that my money, and that of others, is needlessly squandered.

( That's a start on your observations)

Shhh, Evanism on the board, I'm in Secret Squirrel mode here :)

Many of my ideas are brought from areas that are destroyed by war.... Japan post ww2 with MacArthur, West Germany after the war...hong kong. These areas were destroyed on an apolocolyptic scale. Other areas used established governance and it took years to grow out of poverty. The three listed used a decisively different model...almost anarchy, zero government regulation, non existent taxes, free enterprise on a scale never before seen nor since replicated sprung forth. Full employment ensued where people were sucked in from every region and country. Crime evaporated. Business and investment went ballistic. I'll see if I can find the study. It will blow your mind, guaranteed.

I hate all forms of taxation. Every cent of tax is forcefully removed under threat of retaliation from productive enterprises and individuals and used/squandered by unaccountable non-competitive governments to support their own agendas.

I VERY FIRMLY believe the market, the true market, not what we have now, supplies all solutions and the right price. Taxation, government interference and subsequent inflation will always destroy wealth and surprises creativity.

Look, I'm not ignorant. My ideas and the ideas of other thinkers will go nowhere. Government is its own self perpetuating nightmare and people ultimately want to be controlled. They talk of maintaining their own destinies but this is a populist delusion.

It's my primary goal never to rely on a government, it's "services" or really be any part of the machinery. No, I'm not a Survivalist or one of those north American gun toting government hating whack jobs.

BTW, I'm a Buddhist....so I'm not supposed to get worked up about this stuff...but when someone says " the Labor party does such a good job of...." we'll, I just want to kill something!

artme

27th February 2014, 09:15 AM

After the war it was possible for this sort of scenario to work. A type of anarchy did exist to make this possible.

If we loosened the strings in today's circumstances I fear the "big boys" would simply take over. It would not be anarchy,
it would be a slaughter of innocents!!

Unions and their political offshoots arose to fight the unfair, and unnecessary, practices of the companies and their bosses.
In more recent times the results of unfettered industrial practices have forced governments to act in order to protect the
environment.

Now if thtat means Market regulation, then I am all for it!!!

jimbur

27th February 2014, 12:03 PM

For the first few years after the war Germany had very slow development. However, the US became extremely worried about communism and decided that Europe would make a good bulwark. So the Marshall plan was devised pouring money into the destroyed industrial areas. There was the secondary subsidy of allied troops being stationed there and spending hard currency. It also served to thumb the western nose at the eastern bloc by setting it up as a role model for capitalism versus communism.

artme

27th February 2014, 04:11 PM

Yes , the Marshall plan and a similar type of plan in Japan were responsible for the rapid recovery and expansion of both economies after the war.

In some ways Germany was advantaged by the fact that it had to start virtually from scratch with manufacturing. Much of their capability had been utterly
destroyed by allied bombing and the Russians simply removed whatever they could and carted it off to Russia.

To get rolling the Germans needed new machinery and this meant more modern machinery and methods. Contrast this with the older and well protected machinery in Britain.
Both japan and Germany had very industrious populations also, and this no doubt helped their efforts.

The USA was an entirely different case. It was the only nation that came out of the war richer than it went into it. It's massive industrial capacity was unscathed by the war.
In fact, as a supplier to other nations, the war actually pushed the expansion and modernization of the US economy and means of production. They were the only nation in a position to take full advantage of the situation in peacetime.

Complicating Britain's effforts was it's desire to cling onto empire, but we won't go there.