Thread: A primitive economy.

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 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?

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?

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 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’.

Jimbur,

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

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.
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

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

Robert E. Looney

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

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.

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.

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

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.

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.

Originally Posted by Lyle

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.

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