Category: Democratic Capitalism Australia

TPP – A Way to Preserve First-Mover-Advantage

The TPP is presented as opening up trade between the Pacific nations, but the sub-text is preserving first-mover-advantage.

TPP – Staying at the Top

The main thrust of the TPP is intended to extend the rule of law to cover intellectual property. A secondary purpose is to stop nations from passing laws that hurt an already established advantage in the market place. In other words, to preserve whatever first-mover-advantage has already been earned (or achieved by whatever means).

It may not have been the clearly thought through intention of the legislators, but the outcome is to ensure that nations that are already poor remain relatively poorer than the richer nations.

In Australia, we have the naive dream that we will be a supplier of intellectual goods to Asia. If this dream is realized, what is the result for Asia? Are all Asian supposed to be satisfied with supplying cheap consumer goods to Australia, while the Australians supply the more expensive and more profitable intellectual goods to Asia? At least, if the TPP deal is agreed in the USA, then Australians will be able to hang onto whatever first-mover advantage it has, and the Asians will be the poorer as a result.

The USA is beginning to feel the first winds of change resulting from the availability of cheap Asian goods. Its leaders also have a dream of hanging onto their hard-won first-mover advantage, which they hope will ensure that alternative jobs will become available from those that are lost. This, of course, is a forlorn hope, as current experience with structural unemployment in the USA has already shown.

Nevertheless, despite the weakness of the case for even more free trade, the intention of the TPP is to ensure that the developing and emerging nations will remain on the teat of the West for intellectual property for as long as this can be sustained, thus keeping them relatively poorer than the West.

First Mover Advantage

Any newly emerging nation would know that an existing first-mover-advantage is very difficult to overcome. It was an issue faced in the USA during the 19th century, when the cloth and clothing manufacturers on the US east coast found that they could not compete on a “level playing field” with the British manufacturers. Those politicians in the US who wanted to build up a US manufacturing industry argued for the imposition of tariffs. Eventually the advocates of the so-called American System, which involved introducing tariffs, won the political argument, and the USA went on to become a manufacturing power-house. As a consequence, UK manufacturing dominance came to an end. It was a hard-fought fight, even though it is obvious to us now that the advocates of the American System were in the right.

China has its own strategies for overcoming first-mover-advantage. This involves a combination of tariffs, subsidies and other protective measures to support its developing and established industries. It is also claimed that the Chinese use industrial espionage and the blatant stealing of secrets to leap-frog the hurdles standing in the way of developing high-tech industries. The TPP is designed to counter both of these, at least within the developing nations that are signatories to this deal.

So, if tariffs and cheating are not open as a means of overcoming first-mover-advantage what are the options for developing nations? If anyone knows what they are, please comment on this post.

Fraudulent Arguments for Free Trade

Advocates for Free Trade often argue that it lifts poor nations out of poverty. This is only partially true; and has a very limited impact. The wages in Bangladesh for textile workers have increased from $1 day to $2 day as a result of increased exports of finished garments. Yet any attempt to push wages higher, towards Western standards, is met the fierce resistance from the textile manufacturers. They probably use the argument that an increase in pay like that will make them noncompetitive. So unless Bangladesh can come up with new industries in which they can compete, so that there are other opportunities for the Bangladeshi people to gain work at higher pay, it looks like the future for wages in Bangladesh is likely to stop at a maximum of $5 day.

Also, the advocates of Free Trade are unlikely to be the workers who will be the first to be displaced in Western nations. If Western nations can claim to be virtuous by opening their industries to fierce competition from Asia (and from Mexico and South America), it is not the advocates of this policy that will bear the cost: it is the ordinary workers on those nations. These are the workers who are unlikely to get jobs in the “winner-takes-all” high tech jobs, such as in Apple and Google.

Another fraudulent argument for Free Trade is to cite China as a shining beacon. Certainly it has benefited from the opening of trade in Western nations. But it has made the most of this situation by protecting its own industries at the same time. With this protectionism (and possibly cheating as well), it is unlikely that China would have been able to move hundreds of millions of workers from farms to the cities. It is not Free Trade on its own that has helped China to develop. It also required the Chinese government to look after the interests of its own people.

TPP is a Moral Fraud

The TPP is advocated on the basis that it will help developing nations to develop. In fact, what it is designed to do is to entrench privilege. This is not the privilege of entire nations, but rather the privilege of corporations. It is not privilege of all corporations that is being protected: it is the privilege of those corporations that have an edge that makes them the best in the world.

I don’t want my world to be come a place in which only the “very best” or most successful have a reasonable share in its abundance. I want a world in which everyone has a fair chance of success, and a reasonable opportunity for each to share in the success of his or her own nation. That is why agreements like TPP are an anathema to me, along with anything that reduces the power of democratic governments to shape their societies according the needs and aspirations of their own peoples.

Do you agree?

Same-sex marriage – Australian plebiscite

Fiercely contested social questions, like same-sex marriage, are rarely the basis of voters’ decision-making during an election, but they can be.

Why a Plebiscite?

A plebiscite was chosen by the Liberal and National party room as a way of giving the NO vote a chance of winning.

However, from a theoretical point of view, a plebiscite is not without merit. Parliaments are mostly elected on economics, foreign affairs, and very importantly, on competence. Same-sex marriage does not fit in this set of criteria.

In addition, the advantage of a “people’s vote” on this matter is that such things are uncomfortable for many politicians to discuss. This is because most politicians want to be preselected and elected on economics and competence. Mostly, they do not want to stand or fall on social questions.

The cost of plebiscite is trivial – about $10 per working person. The significance is great – changing norms that have existed for over 2000 years in the western world.

Who will win the same-sex marriage plebiscite?

The advocates for same-sex marriage believe that, with the ALP virtually purged of those who oppose that change, and the minor parties in favour of that change, they reckon they will win if it comes down to a conscience vote of Liberals. So the ALP, Greens and Nick Xenophon Team are against a plebiscite and for a parliamentary vote.

The opponents of same-sex marriage hope that a plebiscite will see the measure defeated.

Neither the proposers, or the opponents of same-sex marriage have made their case clear. Both parties discuss the matter in the ether. For proposers it is all about love, but in a non-sexual context; for opponents it is all about preserving the ideal of a heterosexual couple bringing up a family.

Dysfunctional Arguments

One suspects that the underpinning proposition for male proponents of same-sex marriage is to achieve community acceptance of sodomy / anal sex. I believe that they do not talk about this in public or private because they do not think that the community will look favourably upon that proposition. So it could be argued that many male proponents hide their real agenda behind the mantra, “Our love should be acknowledged!” For most female proponents of same-sex marriage it would appear to a genuine case of arguing for acceptance of their relationship, combined with a certain defiant militancy.

For male and female opponents of same-sex marriage it is definitely about sex. Having lost the argument that sodomy should be a criminal offense, they are not prepared to use this as an argument, on the grounds that they will be labelled as “out of touch bigots.” However, an objection to sodomy lies at the root of the case against same-sex marriage, combined with a real attachment to the heterosexual relationship as the basis for nurturing families.

Possible outcome

For Christians, this is a particularly difficult question, since same-sex relationships, without sex, have been an important part of the Christian experience since earliest times. This idea even goes back into the Old Testament, with the relationship between David and Jonathan being a particularly important example (even though some have, without any evidence, claimed this to have been homosexual). So there should not be any question for Christians of acknowledging love between people of the same sex.

For Christians, sex outside of marriage is not allowed. It is considered to be a moral failure. In addition, each person is expected to only have one sexual partner during their whole life (except in the case of the partner dying), just as Jesus taught. Taking this a step further, there is no place in the Christian life for heterosexual promiscuity or for sodomy. However, there is a place for loving and committed relationships between people of the same sex. However, the debate over same-sex marriage has left no place for this Christian standpoint: it is consigned to dust bin of “elite thinking.”

Therefore, if the same-sex plebiscite goes ahead, it is likely that it will be lost.

However, a parliament vote formalizing same-sex relationships, yet without appearing to endorse sodomy as a normal part of life, is likely to receive bi-partisan support.

In a democracy, it is a question of the achievable, and of achieving a reasonable consensus. On this question, we are far from that point.

 

 

 

Australian Exceptionalism is alive and well

In an entertaining article in The Australian, 17 Sept 2016, Paul Kelly discusses the idea of Australian Exceptionalism.

According to Kelly, the idea of Australian Exceptionalism goes back to Alfred Deakin, PM 1903-4, 1905-8 and 1909-10. It included control of immigration, protection of industry and wage arbitration, leading to (or arising out) a sense of egalitarianism.

Apparently, Paul Kelly, Peter Costello, Henry Ergas and William Coleman (an economist at ANU) all want to smash Australia’s egalitarianism in the search for a now elusive platform of “reform.” However, those who support Democratic Capitalism love the Australian sense of egalitarianism, and would dearly love to bring these blind economic reformers to their senses.

Immigration

There is only a minority of people in Australia who want to throw open our borders, like the US did at the beginning of the 20th century, and say, “Whoever wants to come, come now!” Australian know that their precious and hard-fought-for “exceptionalism” could not stand in the face of millions of uninvited arrivals. Europe now knows the same thing: it learnt that lesson the hard way.

Protection of Industry – $A

Australia now knows that its hard-won industrial base cannot survive (and has not survived) an over-valued currency. Led by the Reserve Bank of Australia, the nation has made every reasonable effort to bring the currency down to a more manageable level.

The relative value of the $A is not divinely or even particularly rationally set. It is a balance between those who want to buy $As and those who want to sell $As. As the Central Bankers of the world continue their ridiculous plan to revive their national economies by cutting interest rates, their national economies dive into a hole. This is because they are obsessed with a zero-tariff regime (but they haven’t worked yet that this is the source of their problems).

Tiny Australia is at the end of the line. We have to cut our interest rates in order to slow down the flow of funds into the country in order to stop our currency becoming overvalued. Yet there is little we can do to make investing in Australia less attractive. It is a safe haven for hot money from Asia; and the Australian economy is better run than any other G20 nation. Who wouldn’t want to invest in Australia, or live here for that matter? (A few, like Germane Greer!)

So, industry protection can be established indirectly by managing the exchange rate. This can be done with measures designed to make it harder to invest in Australia. (We have enough of our own money to fund all existing Australian businesses – we didn’t need to sell the Melbourne ports to China and other overseas buyers.) The RBA can also keep interest rates low, in order to discourage hot money chasing higher interest rates in this nation.

Protectionism – Tariffs

Industry protection can also be established by re-introducing tariffs. Yet with the current exchange rate regime, a uniform tariff of 20% on all goods is likely to over-cook the economy. However, an increase in all tariffs up to 10% is certainly worth examining. If that is too difficult to accept or implement, then an implicit 20% tariff on all goods and services being purchased by an Australian government authority could be introduced.

In regard to services, establishing a 20% “International Outsourcing Tax” would offset the massive cost differential hurdles of current international outsourcing. These include: Payroll Tax, Superannuation, generous leave arrangements, health and safety regulations.

Wages Policy

Some reform is certainly needed in the industrial relations area. Here a new government could take advantage of the “reforms” implemented by Julia Gillard under the Fair Work regime. The result or her reforms is that there is no longer any real need for unions in the wages area, since the government sets minimum wages for every class of work.

Now there is only a place for unions in negotiating enterprise agreements, conditions and in health and safety. These can also go if Fair Work takes over these roles and gets rid of the rorts currently supported by unions. These include employment-destroying double time penalty rates for Sunday work.

Fair Work Australia could also be prohibited from promoting union membership.

Egalitarianim

It would be a great loss if Peter Costello’s vision for Australia, invoking the perceived need for hyper-competition for the nation’s businesses, became the order of the day. If only the best-in-the-world can thrive in his Australia of the future, we can say goodbye to social cohesion, and hello to the dysfunctional situation currently found in so many American towns and in north of the United Kingdom.

May heaven preserve us from this kind of future.