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Sunday, May 9, 2010

Australian Left Renewal Conference - May 29-30


This week at Left Focus we're promoting the Australian Left Renewal Conference - to be held in Sydney at the end of this month.  (May 2010)  Feel welcome to follow the URLs included in the text below for more information...

Perhaps the most important conference on the future of the Left in Australia in years...  Read on...

Australian Left Renewal Conference


weekend May 29-30, 2010

University of Technology Sydney Building 2

Broadway, Sydney

Democratic responses to the social and ecological failure of global capitalism


International Left responses to the global crises

Alliances between environmentalists and unionists that show the way forward


The Left and its strategic direction


12 Workshops and 4 Participatory Forums


International speakers - from the Philippines, Venezuela, India and South Africa

Be part of the change!

Follow the URL below for Program

http://www.search.org.au/news-events-publications/conference-program-from-global-crisis-to-green-future-may-29-30-2010

Follow the URL below for Registration Form

http://www.search.org.au/archives/1542

The SEARCH Foundation’s program of ‘left renewal’ has convened Roundtables in Adelaide, Hobart, Launceston, Melbourne, Brisbane and Sydney over the last three years. This national conference will bring all those efforts together and reach out to more people across movements, organisations and political parties.

The national conference will focus on two levels of change – addressing the global crisis and the need to move to a green future, and the need for the left movement in Australia to change and renew itself as part of
that process.

The Cosmpolitan Civil Societies Research Centre, set up in 2007, is an interdisciplinary research initiative at the University of Technology, Sydney, that brings together scholars from a range of disciplines in the broad social sciences and humanities to investigate the practices that are crucial in enabling social cohesion and change in cosmopolitan societies.

Organised by the SEARCH Foundation & the Cosmpolitan Civil Societies Research Centre, UTS.

Cosmopolitan Civil Societies Research Centre

Level 3, MaryAnn House,

645 Harris Street

Ultimo NSW 2007

ccs@uts.edu.au

SEARCH Foundation

Level 3, Suite 3B, 110 Kippax St

Surry Hills NSW 2010

http://www.search.org.au/

admin@search.org.au

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Sunday, May 2, 2010

Poverty forces Australian Single Mothers to return to Activism


pls scroll down for article



above: Flyer for Melbourne demonstration May 6th for the rights of single mothers and their kids

Activist, Helen Said demands a fair go for single mothers and their families amidst unfair laws surrounding welfare and work.  Please show your support if you can by attending the rally - or if that is geographically impossible - by passing news of the rally to your friends and through your networks...

From Helen Said, single mother activist

Single mothers are to stage their biggest protest this decade at 11 am on Thursday 6th May in the Bourke Street Mall, Melbourne. The Council of Single Mothers and their Children’s Action Group have planned the rally to coincide with the Mother’s Day shopping frenzy. Calling for an end to poverty for single mother families, the Action Group is urging members and supporters to “dress in style” for the theme “Mothers Day Breakfast in Bed.”

Welfare to Work legislation and changes to the Child Support Payment formula, introduced by the Howard Government in 2006 and retained by the Rudd Government, have plunged many single mother families into dire poverty. ACOSS describes single mothers and their children as “our poorest families.” Single Mothers and their children are now the largest single group of homeless people in Australia. CSMC have experienced a massive increase in demand for food vouchers, shelter and assistance with back to school fees since the implementation of these changes.

Under Welfare to Work, women who separated from their partners after July 2006 are put on New Start Allowance rather than Parenting Payment Single. New Start is a lesser payment with a lower earning threshold before payments start being reduced. Single mothers on both New Start and PPS are classed as “Job Seekers with a part time work requirement”.

As “Job Seekers”, single mothers are forced to either work or search for work 52 weeks of the year, even if they satisfy Centrelink work requirements. There are no aftercare or holiday programs for secondary school children, which means that children as young as eleven are being forced to fend for themselves whilst Mum is pressured to work, under threat of losing her benefits. If a single mother doesn’t find a permanent job with paid holiday breaks it is technically illegal for her to take a holiday with her children. If a mother in casual employment takes time off work for any reason she is expected, as a “job seeker”, to apply for new jobs even if she has a job to return to. This puts more stress on her family and wastes employers’ time with bogus job applications.

The only way a single mother on income support can take a break from the part time work/jobsearch treadmill, for her own health and wellbeing, is to apply for an exemption, often by getting a doctor to declare that she is suffering from an anxiety related medical condition. My own observation as an activist, witnessing the increased pressures on single mothers, is that the “happy housewife pills” of the 1960’s are set to become the “post-separation medication” of the new century.

New Child Support Payment rules reduce the amount of money single mother families receive from their children’s fathers if the children spend increased time with Dad. Whilst this is works out well in families where Dad eagerly contributes to his children’s wellbeing, it has disadvantaged those children whose fathers refuse to foot the bill for their education, recreation or everyday needs.

Welfare to Work legislation was introduced during a period of labour shortage under the Howard Government. Traditional welfare agencies and other employment services are contracted to administer “one size fits all” services to the unemployed and under-employed. Injured workers, mothers returning to work and unemployed school leavers are forcibly lumped together in “job search training” classes regardless of their reasons for being out of work. In some cases these classes have disrupted existing work arrangements and caused people to lose their hard won part time jobs. Some of these employment service providers force job seekers to make ten “job contacts” a day under threat of losing their benefits. In my own case, one of these agencies rewrote my resume, without my knowledge or consent, saying that I was “physically fit for manual work” (when in fact I was a 50 year old university graduate) and put this bogus resume on a nationwide employment database.

Welfare to Work treats single mothers as a reserve army of labour, forcing us to take up menial jobs during labour shortages and granting us “retraining opportunities” when times are tough. Through classifying single mothers as Job Seekers, the nexus between single mother benefits and pension status has been all but broken, hence the government’s decision to deny single mothers the last pension increase in favour of these elusive “retraining opportunities”.

My own experience of such “retraining”, after spending ten years at home with a special needs child, was a seven week “taster course” in teachers aide training accompanied by an empty promise of a traineeship, when in fact underfunded schools are forced to advertise that “junior wages apply” and reject older applicants. After lobbying from unemployed students, the “taster course” was then followed by the offer of a free Cert III course from the Australian Education Industry Centre, which itself received no government funding, and consequently went into receivership half way through our course. This left many single mothers, older job seekers, disabled job seekers and new immigrants in limbo, back at the mercy of the Centrelink sausage machine.

Welfare to Work isn’t working. It has placed many single mother families in dire poverty whilst enabling employers to exploit single mothers as cheap labour in transient jobs. The Council of Single Mothers and their Children has been forced to return to the activism of forty years ago, when unmarried mothers fought for the right to keep their babies rather than giving them up for adoption. Single mothers have now been left with no choice but to take to the streets and protest against this government’s policies during an election year.

nb: the details for the coming single mothers' rally in Melbourne May 6th are above.  Scroll up for details - and PLS attend to show your support if you can!

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Sunday, April 25, 2010

The Meaning of ANZAC Day



above: The Shrine of Remembrance in Melbourne, Australia.  Built originally to commemorate Australia's fallen in World War One.

ANZAC Day is the day on which Australians remember those fallen in war.  In this article Tristan Ewins considers the real meaning and relevance of that day.

by Tristan Ewins

ANZAC Day is a day of remembrance for Australia and New Zealand: a time of reflection upon the involvement of those countries in terrible wars. Specifically, the term ‘ANZAC’ is derived from the words “Australian and New Zealand Army Corps”: the military organisation within which Australians and New Zealanders fought in World War One. http://en.wikipedia.org/wiki/Anzac_Day

All in all almost 80,000 Australians and New Zealanders died during the First World War: and many more still were terribly maimed, or left with grievous psychological scars.

The day has also developed to be considered a day of remembrance with regard to all wars and conflicts in which Australia and/or New Zealand have been involved. It should also be mentioned, therefore, that in the Second World War almost 30,000 Australians died. And tens of thousands suffered terrible cruelty as prisoners of war – especially of the Japanese. http://en.wikipedia.org/wiki/Military_history_of_Australia_during_World_War_II

More recently annual commemorations of the Gallipoli campaign in Turkey have seen tens of thousands of Australians undertaken a ‘pilgrimage’ to ANZAC Cove. The bloodbath of Gallipoli has been established as a cornerstone of Australian identity.

Australians have also been involved in conflicts in Korea, Vietnam and more recently elsewhere – including Afghanistan and Iraq.

In modern times AZNAC Day has been developed into a day whose meaning and significance is hotly contested.

Australian academic Marilyn Lake has contributed to a book: ‘What’s Wrong with ANZAC?’ - along with Henry Reynolds, in which she dares to criticise the ‘ANZAC legend’. Her views were expressed recently and concisely, also, in an op-ed in ‘The Age’ – a Melbourne newspaper.

Lake criticises the ‘coming of age’ narrative: the idea that Australia needed its ‘baptism of fire’ to prove itself in the horrors of war, and thus take its place amongst the nations. But instead Lake sees a way beyond what she calls ‘the AZNAC myth’:

“until we have the courage to detach ourselves from the mother country, declare our independence, inaugurate a republic, draw up a constitution that recognises the first wars of dispossession fought against indigenous peoples. Thus we can truly make history in Australia.” http://www.theage.com.au/opinion/fight-free-of-anzac-lest-we-forget-other-stories-20090422-afb5.html

For Lake, ANZAC is a myth which excludes women: essentially “[locating] our national identity in the masculine domain of military warfare.” Further she sees the ANZAC story as eclipsing other narratives: of struggle against war and oppression, racism and sexism; and “the democratic social experiments and visions of social justice that once defined Australia.” http://www.theage.com.au/opinion/fight-free-of-anzac-lest-we-forget-other-stories-20090422-afb5.html

As many of us would have expected, the reaction from the dominant right-populist elements in Australia’s media has been one of apparent outrage and indignation.

Neil Mitchell from radio 3AW in Melbourne might be considered a liberal in comparison to Melbourne Talk Radio’s Steve Price, but on April 21st he went so far as to say about Marilyn Lake and other contributors to ‘What’s wrong with ANZAC?’:

"I think today there is screaming proof that some academics should be legally required to get a real job, in the real world, and be legally required to keep their mouth shut…. A bunch of academics have announced today that ANZAC day is past its use-by date and is just an exercise in male bonding which is not diversified enough for modern Australia… For heavens sake, what do they want, do they want marches for vegetarian lesbians?” http://www.3aw.com.au/blogs/3aw-generic-blog/is-anzac-day-past-its-useby-date/20100421-stj7.html

Mitchell’s treatment of the matters raised by Lake and others is regrettable as it trivialises the critical issues raised in ‘What’s wrong with ANZAC?’ concerning colonialism, and what Lake has called “the militarisation of Australian history”. His response also needs be called into question in that it challenges that right to dissent and free criticism which really ought to be at the heart of our identity as a liberal democracy.

As Lake observed in an interview with Mitchell, though – also on April 21st – war destroys men. Many Australians who experienced war in the 20th Century were so deeply scarred not only in their bodies – but also in their hearts and minds - that not only did they not march on ANZAC Day, but they tried to avoid even talking about those experiences.

For now, though, we will consider the Australian experience in World War Two.

There is no problem in solemn commemoration of the costs of war. And indeed we should remember that in the Second World War Australians played a vital role in fighting fascism in Europe and North Africa, and ending Imperial Japanese domination and oppression of Asia and the Pacific.

From my own perspective, my grandfather served in Singapore during World War II as a Corporal in the 8th Division Australian General Hospital. My grandfather did not wield a rifle. Rather he was an ambulance driver whose job it was to save lives. Apparently his bravery in the face of fire, rescuing the many wounded, was such that his mates would later quite earnestly insist he deserved a Victoria Cross. In military history, however, this kind of bravery is seldom recognised.

In the heat of battle my grandfather’s leg was shattered by gunfire. He was taken prisoner by the Japanese, and witnessed incredible cruelty during his many years in Changi POW camp. Beatings and torture were common. POWs were subject by Japanese guards to cruel and unusual punishments, and summary executions under the most brutal of circumstances. I have been asked by family not to go into details as “the men wouldn’t want it”. But while I’ve accepted this, I do still hope somehow the full story will come out – and for survivors to receive the recognition they deserve from the Japanese government.

In Changi food was scarce also. Prisoners were sometimes fed banana skins – and if they were lucky a handful of dirty rice. Malnutrition, and conditions such as beri beri, malaria, dysentry and infections were common.

Australian and other POWs were also used as slave labour – even when they were obviously ill or wounded. Thousands thus were to die in captivity.

Specifically, my grandfather had contracted beri beri and malaria while a POW in Changi. Beri beri was generally caused by a lack of Thiamine (B1) in the diet. The most visually obvious symptom was extreme swelling, including of the stomach. (akin to images many people will have seen of starving children in Africa) Symptoms included paralysis, mental and emotional disturbance, awful pain, vomiting: with the risk of heart failure and death. http://en.wikipedia.org/wiki/Beriberi

Women also endured suffering and brutality in Changi at the hands of the Japanese. One such Australian was Vivian Bullwinkle, a nurse in the 13th Australian General Hospital. http://www.awm.gov.au/exhibitions/fiftyaustralians/5.asp

Attempting to flee Singapore, Bullwinkle’s ship was sunk by Japanese bombers. Some of the survivors managed to make their way to shore: but none would have anticipated what happened next. First male survivors were bayonetted. Thereafter, Japanese troops gathered the women together and ordered them to wade into the ocean.

What followed was a barrage of Japanese machine gun fire. All the women were thus slaughtered: with the exception of Bullwinkle herself, who while injured (shot in the hip), feigned death. Fortunately, when later captured by other Japanese soldiers, these did not know of the atrocity, and Bullwinkle was formally taken as a prisoner of war. (POW) http://www.vivianbullwinkel.com/documentary.html

The next few years were to be a living hell. Eight of her nursing colleagues where to perish of starvation. But Bullwinkle survived. After her liberation, Bullwinkle committed herself to nursing, and worked to raise awareness about Japanese wartime atrocities. http://www.vivianbullwinkel.com/documentary.html

The point of these stories is to emphasise the extent of the endurance amdist suffering of Australian POWS: soldiers and nurses. The spirit of mateship, especially: of camraderie between soldiers in intolerable conditions; ought never be forgotten. For women, these stories are also crucial: the Second World War was a time of transformation and of perseverance amidst hardship for women as well as men. ‘Total war’ mobilised and impacted upon the lives of women as never before.

There are some who look upon these stories as relics of a past-age: of a ‘White Australia’ which no longer holds resonance. But if we insist on an inclusive narrative of Australian history: why should these stories be excluded? And why ought Australia’s diverse communities – welcomed into the Australian nation – not take these stories also as their own? That is: a narrative which emphasises solidarity between ordinary people – even in the worst of circumstances?

But this ought never be distorted into a nationalist device which glorifies war as ‘the making of men’ or ‘the birth of nationhood’.

There is a danger that uncritical celebration of Australia’s military traditions and history could well give support to those today who seek to legitimise Australian participation in unjust wars in the here and now – by reference to such sentiment.

It is troubling even today to hear talk of the First World War as a ‘fight for freedom and democracy.’ These kind of rationalisations, it should be remembered, were employed by the Germans as well. In reality the war was a struggle not only for domination of Europe, but to carve up the world into spheres of influence; spheres of imperialist exploitation. In World War One soldiers of the Australian Dominion fought for the interests of the British Empire.

We should never forget the suffering and the sacrifices of Australian men and women in wartime. And we should celebrate and sustain traditions of solidarity even in the worst of circumstances. Furthermore, again to this day there are survivors of, and families of those who experienced war-time atrocities: who have waited decades for recognition by a Japanese government that remains in denial.  Even today – with time running out – these people deserve justice.

But also, we need to recall the human costs of war in the broadest sense: that war ought only be a last resort in the face of oppression and conquest which threaten our lives, our rights and our liberties. And even then we need be aware that there are those would appeal to such values: but behind whose rhetoric there lies cyncial geo-politics.

To conclude, regardless of the importance of Australian wartime stories, we should take seriously claims by Marilyn Lake and others of a “militarisation” of Australian history.

The narrative of Australian history needs to be broader: telling also of Australian egalitarianism and democracy; and also of the struggle for recognition and justice amongst Australia’s many-varied communities.

The fight against fascism was a crucial one, but we should not harbour illusions about the nature of other conflicts: allowing them to be rationalised behind a veil of nationalism.

Behind mock-populist outrage about the contributions of Marilyn Lake and others there is a debate that needs to be had about Australian identity and history. We should never forget - but we ought never abandon our critical faculties either: especially when it comes to matters of war: of human suffering, and of life and death.

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Sunday, April 18, 2010

'Battlelines' - what’s Tony Abbott really about?

 
above: an image of Tony Abbott
For those interested in understanding the political thinking behind the politically-resurgent Tony Abbott, they could do worse than to read about the “Abbott agenda” as proclaimed by the man himself in his manifesto, Battlelines.

Abbott begins by proclaiming himself “the pragmatist”. “Ideology”, after all, has become something of a dirty word in western democracies - associated with such “evils” as socialism: compared with which neo-liberal practice is “objectively” sound economic management (please note the irony).

By contrast Abbott portrays his “pragmatism” as a fluidity of policy responses to political and economic contingency: but for which conservative values remain fixed. And in this context - Abbott sees conservatism in the sense of respect for Western traditions and institutions as both wise and practical.

For Abbott “Ideologues want to impose their values on others” while “pragmatists want to solve … problems as long as the cure is not worse than the disease” (p.xi).

While this is a clever piece of rhetorical posturing, critical minds might point to the dominance of neo-liberal ideology in Australia and world-wide without care for the real world consequences.

Interestingly, Abbott raises the opposition between compassionate conservatism and the kind of ruthless neo-liberalism that cares nothing for the social consequences of austerity (pp.xii-xiii). Here the author juxtaposes the “[single-minded] cutting [of] public expenditure … striving to deliver smaller government” to “compassionate conservatism, stressing solidarity with those who are doing it tough” (pp.xii-xiii). By this reckoning the “social fabric … has to be respected and preserved”, while individuals should enjoy such circumstances that they are “empowered, as far as reasonably possible, to live the life that he or she thinks best” (p.xii).

Abbott’s proclaimed support for those doing it tough might be traced to the influence of the Democratic Labor Party (DLP) early on in his life. While the DLP helped shut Labor out of government for decades, and to this day retains a socially-illiberal outlook, its Catholic origins were such that there remained a measure of compassion for workers, and for the poor (p.10).

Regardless of whether this stance is a political ploy, or whether it echoes Abbott’s true sentiment, Abbott is captive to the Liberal political machine. The Opposition has tried to undermine the stimulus without regard that this would compromise the recovery from the global financial crisis. They have fear-mongered about tax and trade unions. Ruthless neo-liberalism remains the dominant current within the parties of the Australian Right - and should the Coalition be elected later this year, it is very likely that this would be reflected in policy.

This opposition between “compassionate conservatism” and what I call “ruthless neo-liberalism” is one that Abbott attempts to dispel later on, but for those of us interested in interrogating the contradictions of the Australian Right, the issue demands greater attention.

We will return to this theme later.

Abbott attempts to mould an image of conservative and liberal impulses as interlocked and complementary. He emphasises this again and again.

But there are other conflicts at work also. Even within the broad gamut of liberalism, there is division between social liberalism (concerned with social justice) and economic neo-liberalism (utterly indifferent to it).

For Abbott there is the practical imperative to reconcile competing currents in the parties of the Australian Right to present the kind of “united front” needed to win the confidence of voters. And there is also the need for Abbott to pitch his message broadly, to maximise his support base.

For his own part, Abbott does not show respect or recognition for many of the marginalised and the oppressed. He speaks of his experience in student politics: mocking his then-rivals on the Left as being typified by an outlook of “Land Rights for Gay Whales” (p.12).

There remains within Abbott a sense of injustice - perhaps even outrage - at the marginalisation of Conservative forces within the broader student political sphere at that time. As he writes: “the student paper wouldn’t print conservative arguments” (p.13).

Fast forwards to today and the Conservative parties in government passed legislation (so-called “Voluntary Student Unionism”) which hindered student self-organisation, and especially the position of the Left. This also had the added impact of draining the lifeblood of student culture from campuses all over the country.

Here, it must also be emphasised that the position of the Left has itself been broader than the “identity politics” held up to ridicule by Abbott. Student poverty and the imposition of increasingly onerous fees have for decades been flashpoints of concern for the student movement.

Perhaps student culture and organisations should have been more inclusive. But the extreme outcome of voluntary student unionism which, in effect, shut down student organisations was never a legitimate answer.

Abbott attacks unions often in Battlelines raising that same “bogey” which has figured in conservative fear-mongering in Australia since time immemorial.  But workers need self-organisation to have the industrial strength to bargain effectively and maintain wages, conditions and rights. Weakened unions, combined with deregulated labour markets means exploitation and a poor deal for workers.

WorkChoices took away unfair dismissal provisions; took away the “no disadvantage test” in enterprise bargaining; removed the right of workers to withdraw their labour except under the strictest of circumstances; and outlawed “pattern bargaining”. Removal of the right to pattern bargaining in itself promised a race to the bottom in wages and conditions for Australian workers.

It says something of the real underlying sources of economic and political power in Australia that much of the WorkChoices agenda has been maintained by Rudd Labor- despite broad opposition among the public. The legitimate electoral power of ordinary Australians has not been able to stand against the economic power of an aggressive employer lobby.

The only hope ordinary Australians have of reversing the long-term trend is to organise independently. But the critical point, especially with a Federal election looming later this year, is that Abbott cannot be trusted on industrial relations.

Labor is torn between its union base, and the pressure applied by employers, but the Conservatives and neo-liberals still want to crush the union movement, and will not be nearly as inhibited. Should the Conservatives get their way, ultimately there would be no labour movement to resist their agenda into the future.

Conservative disdain for the rights of workers in Australia dovetails with a broader scepticism about social and distributive justice. Abbott makes the usual noises about “soaking the rich” only being able to be taken so far (p.80). And for Abbott spending cuts were justified in order to “allow lower taxes” and “give more incentive to people who could create wealth” (p.81).

But the truth is that under the Howard government - in which Abbott was a key Minister - the tax mix became increasingly regressive. There was the Goods and Services Tax (GST). Massive superannuation concessions were provided which mainly benefitted the wealthy, and there was regressive restructure of income tax; with the tax free threshold remaining fixed. These policies impacted against those on lower incomes.

Low taxes and small government do not necessarily mean a “bigger economic pie”. All workers create wealth regardless of incentives in the form of tax cuts. In reality, it is possible to gear the economy to something approximating full capacity without gross exploitation, a gutted public sector, or ever lower and more regressive taxes.

In the coming Federal election Labor could do worse than to challenge the Liberals on the issue of distributive justice, engaging with Henry Tax Review recommendations, and restructuring the tax mix in favour of most Australians - especially for the most vulnerable.

Abbott himself is incredulous that families on combined annual incomes of $150,000 are considered “rich”, and thus opposes means-testing benefits such as the Private Health Insurance rebate (p.94).

But most families are not receiving incomes in this vicinity. To provide for the educational, welfare, infrastructure and health-related needs of ordinary Australians - and especially the most vulnerable - restructuring and targeting the social expenditure mix could be vital. And for deep and meaningful progress, tax reform would need to target a broad enough cross-section to fund the necessary social expenditure programs.

In his “manifesto” Abbott concedes that Australia’s conservatives were wrong to oppose Medicare. As long as bulk billing is not “absolute” or “total”, there remain, as he says, “price signals in the system” (p.143). But government subsidies make most general health services affordable for all. Basically “collective consumption” via Medicare works better and is fairer than the free-for-all of US-style health care system.

In the same spirit, Abbott needs to be open minded about social wage expansion. Provision of “universal dental care through Medicare”, which Abbott identifies as having cost $4 billion if it was implemented in 2007, should receive bipartisan support (p.144).

While Abbott identifies such a program as being very expensive, a practical Opposition Leader would not obsess about small government (p.144). The Australian economy, after all, is valued at well over $1 trillion. Rather, they would realise that collective consumption provides better value for taxpayers and consumers, and provides access on the basis of genuine need for people who would otherwise be excluded.

Should Abbott genuinely prefer to adopt a “compassionate conservative” persona - as opposed to one of “ruthless neo-liberalism” - he could do worse than engage with these issues, and break the taboo against progressive tax and social expenditure reform.

Drawing to the conclusion of this critique, it must be conceded that there are many dimensions of the “Abbott manifesto” that I have not covered. But I will try and make some observations prior to closing.

In Battlelines Abbott continues to support positions which could be at best described as controversial for the Australian public.

He tries to justify Australian participation in the Second Gulf War despite questions surrounding its legality, and the false pretences (for example, “weapons of mass destruction”). And he does not acknowledge the terrible and enduring human cost.

He supports increasing the retirement age to 70 without recognising the difficulties this would mean for manual workers, or for older Australians to re-skill. This is also aside from the “human dimension” in this context. Even if taxes must rise to support an ageing population, after a lifetime at work older Australians should have the freedom to develop their human potential. Possibilities include study, civic activism, engagement in creative arts, and quality time with family.

He supports “punitive welfare”, especially “work for the dole”, appealing to “dark and judgmental” tendencies in the electorate. This is without addressing the failure of student payments and job search allowances to provide even for the bare necessities. And when students work part-time to support themselves the distraction could compromise their study.

He lauds the centrality of civil society as opposed to the state, yet he provides no account of the Howard government’s bullying of charities, threatening to revoke their tax-free status should they criticise government policy.

For those desperately ill who cannot afford potentially life-saving medication not included in the Pharmaceutical Benefits Scheme (PBS), he refers to their pleas as “political blackmail” (p.5). What price a person’s life?

Truly practical politics would balance collectivist and individualist impulses and currents; and would balance and mediate between civil society and state.

By contrast, it is neo-liberal ideology which blinds the Conservatives - and to a lesser extent Labor - to the benefits of a democratic and mixed economy; a strong social wage and progressive tax system; and robust protections for the rights of workers.

But again, and in conclusion: should Tony Abbott fully embrace the “compassionate conservative” persona over that of “ruthless neo-liberalism”, this could precipitate a “political sea change” of benefit to workers, and also for those most vulnerable.

THAT would be a worthwhile legacy.

Battlelines by Tony Abbott, Melbourne University Press, Melbourne, Australia, 2009.

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Sunday, April 11, 2010

Wage-Productivity Gap Caused Crisis


Economist, Boris Anisimov argues that there is more to the world economic crisis than meets the eye. In fact, stagnating wages are impacting upon demand, with ramifications for economies the world over. 

By Boris Anisimov

Many speak of the current crisis as a financial one, which means that the source of all the problems is believed to be in the way the financial system is functioning. I have joined the ranks of those who are of an opinion that the roots go deeper than the financial sector. In fact, an analysis from the standpoint of political economy reveals that there is much more to the crisis than meets the eye. A different set of disparities than publicly acknowledged is becoming more obvious.

The “Global Wage Report: 2009 Update” issued by the International Labor Organization on November 3, 2009 mentioned years of stagnating wages relative to productivity gains as one of the reasons for the current economic crisis. This echoes conclusions by Dr. Ravi Batra (an economics professor at Southern Methodist University), Mikhail Khazin (a Russian economist and publicist), William I. Robinson (a sociology professor at the University of California) and Karl Marx himself.

“Productivity” and “wages” are not financial concepts – they deal with the economic situation rather than financial markets and banking regulations. The above mentioned sources point out that the current crisis is an economic one first of all. Let’s look into this more closely.

The wage-productivity gap concept is rarely brought up in modern textbooks on economics, but in fact it should be because the economists I have mentioned see this disparity as the main cause of the crisis. The wage-productivity gap is the gap between the real wage and labor productivity, the real wage being the purchasing power of an average salary. Productivity is the main source of supply, whereas wages are the main source of solvent demand. If productivity rises faster than the real wage, then supply rises faster than demand, the result being a crisis of over-production. Some economists prefer calling it “over-accumulation”, but that does not change the essence of the problem.

In other words, wages are only part of the costs that a capital owner has to incur. The ultimate cost of a good or service will be higher than the wage that the business owner pays to his/her employee to have that good or service produced. Let me simplify it even more - if all the employees in a particular country put their wages and salaries together, they will not have enough money to buy all the goods and services that they have produced. The same principle applies when we talk about the entire world economy.

Each time the wage-productivity gap widens, the economy has no other choice but to contract because of overproduction. This occurs on a regular basis in the form of crises (the Great Depression is a perfect illustration). A long-term solution would be to find new markets and boost demand thereby. Thus, availability of new external markets becomes vital for the stability and predictability of profit-making, but when that availability is limited for any reason, finding new markets can be quite costly and troublesome.

That is why back in the 1970’s when another depression-like crisis became obvious, a less costly solution was found - it was decided to raise demand to the level of supply by means of more aggressive credit expansion (this applies to both government debt and household debt). The abolition of the gold standard was in line with this logic (the excess of the global money supply over the golden bullion was becoming obvious anyway) thus making it possible for governments to increase money supply and keep interest rates down. In the case of the US dollar, as long as active international involvement was maintained, the excessive money supply could be moved abroad thus reducing inflationary pressure on the US markets.

Debt can temporarily postpone wage-productivity gap problems. As productivity rose, debt had to increase as well unless wages were to rise. An exponential global increase of debt puts the entire global economy (not just its financial sector) in jeopardy because it is obvious that the credit system will have to explode one day. Household debt grew from $705 billion by the end of 1974 (60% of disposable personal income) to $14.5 trillion by mid-2008 (134% of disposable personal income).[41] During 2008, a typical US household owned 13 credit cards, with only 40% of households able to carry a balance.[42] U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990’s to 73% during 2008, reaching $10.5 trillion.[43]

In these circumstances, boosting demand any further by means of credit became impossible. The model of economic development based on artificially-boosted demand, constantly-increasing money supply and the lowering of interest rates has collapsed – the credit bubble did explode in our faces. The dependence of manufacturing and the service sector on credit for the last 30 years made them just as vulnerable as financial institutions. The growing interdependence of markets worldwide spilt the problems over to other countries. This is how we got the current global ECONOMIC crisis.

Banks have frozen their lending in fears that the falling consumption will make any investment unprofitable thus lowering the chances of getting their money back. The response from the governments worldwide is quite predictable – they went to save the credit system, the hardest-hit sector of the economy, in hopes to boost credit thereby increasing national debts. It is now estimated that the US national debt is going to hit the GDP level (approx. $14 trillion) in 2010. The national debts of countries like the UK, France and Germany are expected to reach 90% of GDP. Thus, 2010 may see an unprecedented number of government defaults as the debt-to-GDP ratio for some smaller countries has already exceeded 100%.

Until the wage-productivity issue is addressed, no actual recovery is possible. Any financial measures recently undertaken by governments of different countries will temporarily “numb the pain”, but they are of no avail when it comes to addressing the very essence of the problem. Politicians and corporations have been viewing developing markets for growth opportunities, which seems like an attempt to find new external markets now that domestic markets in developed countries are unlikely to be able to boost consumption significantly any time soon. This can also address the wage-productivity issue, but developing markets are not yet ready to lead a consuming lifestyle typical of US consumers. So finding new markets ready to “spend, spend, spend” may take some time.

In the mean time, potential negative economic developments in the near future are still possible. Back in the times of the Great Depression, consumers did not have so much debt, which leads us to a conclusion that we are now in a greater mess. This in fact may turn into a systemic crisis, the possibility of which is deliberately concealed by corporate management, politicians and media for obvious reasons by confusing cause with effect.

It must be remembered that business news that we hear on the radio or watch on TV often reflect only one side of the economic reality, the side that transnational banks and corporations are interested in. That is why the recent rallies on stock and commodity markets thanks to government-boosted liquidity have been presented as signs of an inevitable recovery. In fact, for some companies the increased liquidity is a blessing considering the fact that most developed economies are greatly reliant on financial speculations and debt-driven consumer spending to make profits. Such companies believe (and do their best to convince others including politicians) that the mere availability of liquidity will encourage more credit and pull the entire world out of the economic troubles. The small positive signs that we have seen lately in fact may lift up the spirits of corporations, but as for the common people the situation is still grave. While banks and corporations enjoy protection from the governments, common people’s investments and jobs are in serious danger – they are likely to continue losing both (as for developed countries, savings are meagre anyway).

Since debts are assets for the financial system, writing off household debts will be a scary step to take since massive collapses of credit institutions will be inevitable. Besides, the powerful Wall-Street lobbyists will be more willing to shoot themselves in the head than allow any write-offs to occur. But any measures that do not address the wage-productivity gap will only be beating about the bush and continue to confuse cause with effect. The re-introduction of gold- or silver-backed currencies will be of little help as well. Thus, it is rather difficult to come up with a solution when the entire economic model caves in. This only proves that the existing economic paradigm (including college courses in economics and MBA’s) that serviced that model must change as soon as possible.

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nb:  More of Boris Anisimov's work can be found via the URL below:

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Sunday, April 4, 2010

Finally! US Health Care Reform

Driving the Traders from the Temple




Above: Barack Obama

Barack Obama has had greater success on health reform than other US Presidents spanning back decades. The gains are significant: but as Wes Bishop argues, the task of building a public health system still remains before him – and before his fellow progressive Democrats.  As this article is published during Easter, the use of Christian imagery is appropriate: especially given the confounding resistance of Conservative 'Christians' to health reform vital for the poor and the vulnerable.  Callous indifference to the needs of the vulnerable was not the way of Jesus, and Easter is an appropriate oppportunity to push that message.

By Wes Bishop

In the time of Christ it was reported that in front of the Jewish Temple in Jerusalem a porch stretched out in front of the structure and was the home of many a businessman, entrepreneur, and con-artist. These individuals would hope to make a profit off of the faithful as they made their way into the temple to worship. According to scripture this infuriated the pious Jesus who took it upon himself to rid the temple of these traders. In the Gospel of Matthew it is reported that Jesus used force to drive the merchants away turning tables over, yelling, and throwing objects.

The Spanish-Greek painter El Greco famously depicted the biblical scene in his masterpiece Christ Driving the Traders from the Temple. The scene for El Greco served a double meaning for the scene of Jesus chasing away the greedy from the faithful was not only viewed as a historic occurrence but also an allegory of what needed to be done in society and specifically the Catholic Church. For in the time of El Greco, as in the time of Christ, and in many ways our own modern world, it was perceived by many that the desire to make money hindered people from seeing what was truly important in life.

In our modern world, where western capitalism reigns as the king of economics it is near heresy to question the mantra that “greed is good.” We, especially citizens in the United States, are told that greed is good because it works. It keeps people on their toes, it grows the economy, it harnesses human ingenuity and takes societies to new, unprecedented heights.

This was largely the argument that was being made for the past year as Congress and the newly elected President sought to bring reform to the American health insurance industry. On a daily basis appeals to the ideas of greed, free market capitalism, and laissez-faire economics were heard on such outlets as CNBC, FOX, and a host of other radio personalities while calling any proposed measures of health insurance reform a breach of liberty and a slide into dark socialism.

Yet, when all was said and done these voices were ultimately ignored and for the first time in American history the blockade of health insurance reform was broken and legislation was passed.

The health insurance reform law is far from perfect. As the legislative process dragged itself out on Capital Hill approval ratings for the President, the Congress, and Republican opposition all began to slide as voters became increasingly angry at the inability of politicians to make good on promises made in the past campaign. Yet, poll numbers for politicians was not the only thing that was damaged. As compromise upon compromise was made much needed reform measures were lost.

These blatant inconsistencies and painfully apparent sweeteners, that were added to appease certain members of the Congress as well as the titans in the pharmaceutical and health industries, will eventually have to be taken back up in another reform battle. This battle will be one that will once again test the resolve of liberal statesmen and women, and the common idea that no one should be punished or financially ruined because of health problems.

However, much has been made about the shortcomings of the new law, and much more time has been spent on the various personalities and political implications the law has. Instead of rehashing these points it would be much more productive to look at what has been accomplished. For the first time ever a President and Congress have been able to take up the cause of health insurance reform and actually win. Never before has this occurred. From Theodore Roosevelt, to Franklin Roosevelt, from Truman to Johnson, from Nixon to Clinton this has never occurred before.

For the first time American companies will not be able to charge an individual for insurance only to drop that individual because they become ill. That is now illegal. No longer will a child be able to be denied health insurance because of a pre-existing condition. That too is now illegal. And for the first time tens of millions of Americans will be able to afford health insurance.

Like it is said above this law is not perfect. The pharmaceutical industry was able to buy off and threaten enough politicians so that the ability to buy medication across the border with other countries remains impossible for many. Illegal immigrants, humans in every sense save for the bigotry of borders, will not be able to reap the benefit of many of these reforms even if they pay into it. Abortion, a perfectly legal medical procedure, hangs somewhere in legal limbo as the right for a woman to choose what she does with her body is continually assaulted by a vocal percentage of the population.

Finally, there was the causality of the Public Option, which brings this essay full circle to the opening mention of Jesus and El Greco. One of the persistent criticisms of health insurance reform is that by forcing companies to cover individuals with pre-existing conditions, and by forcing companies to pay for their clients when they become ill, the government will effectively bankrupt these institutions.

No argument is made that people with pre-existing conditions and the sick do not need health insurance to cover the cost of health care. The argument is instead that private industry is not adequate in providing a necessary service to a people of a country. The answer then is simple. Just as capitalists were not the answer in the time of Christ to help people connect with God, so to are capitalists not the answer in assuring the health of a citizenry.

In the spirit of capitalism though it is only fair to keep competition alive, therefore it is time to create a public option where individuals have the free choice as to whether or not they want to take their chances with a private firm or whether they want to have a plan that is backed by the collective might of the American government.

Undoubtedly, this reform measure will be met with much resistance and rancor. The individuals who make a fortune off of the industry will fight tooth and nail to preserve their way of wealth. It will therefore be the responsibility of the citizenry, the saviours of any democracy, to chase the traders from our temple which is and always will be the halls of our legislative centers.

The snows of winter do not melt in the span of a single spring day, but we have seen with this current government that reform is possible. We must continue the push for reform, and paint our own act of chasing the greedy away from our temple.

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Saturday, March 27, 2010

One comrade doth not maketh a movement...

above:   Once seeming to promise much, for many Peter Garrett has failed to shine as a politician.

In this political commentary piece, Geoff Drechsler questions inclinations in the Australian Labor Party (ALP) to turn to 'high profile' 'celebrity' candidates.  For Drechsler the real business of politics is in grassroots mobilisation and cultural struggle.  If Labor is ever to return to the 'front foot', it is a lesson its leaders must learn...

by Geoff Drechsler

The recent spectacle of Peter Garrett failing federally, and Minster Madden’s current travails in Victoria, highlight a longer term issue that the labour movement and Left needs to wary of - specifically the incapacity of individuals alone to be a catalyst for any meaningful change. And more generally how to achieve reform and change while participating in existing political structures and institutions.

Both these individuals seem cut from the same cloth. Both have celebrity status: Garrett as a rock singer in band Midnight Oil, and Madden as a professional sports player. Also, both have previously professed to have held more left wing philosophical positions than their current political affiliations: Garrett as an almost Nuclear Disarmament Party senator in the ‘80s and Madden as an associate and rumoured one time running mate for former left wing independent federal member, Phil Cleary. Both now are the personification of moderate Labor (with the exception of the odd reunion concert appearance for Garrett). For a while there has been press gallery gossip that each saw themselves taking responsibility for more important roles in the future sometime (though Garrett would want to be a patient man in light of recent events), and most importantly neither have been associated with any kind of dissent or alternative agenda within caucus or the broader Labor Party since their arrival in parliament.

For this exercise, there is no need to consider the commitment of these individuals to social change (being left wingers we have faith in human nature and we willl give them the benefit of the doubt and assume that they both have “the fire in their belly” still). The real issue is whether or not they, as high profile progressive individuals alone, can be the catalyst for any sort of meaningful change in the direction of the currently cautious Labor governments that they are part of. Unfortunately, the answer to this question is a resounding “no”. What is needed is, first, political education and discussion followed by the dissemination of ideas, with activists engaging party members and supporters through campaigns around achievable goals.

In the broader community, any sort of left wing agenda or program is going to be filtered through an increasingly right wing media who owes us no favours. This undermines the process of reform as with a diluted or confused message it becomes more difficult to mobilise supporters around goals and achievements. This is more concerning in a period of declining party membership of left and centre left parties (with the exception of the Greens), breaking the ability of a political organisation to directly contact its members and supporters and mobilise them.

Also, all of this can be seen as part of a broader process of ‘presidentalisation’ occurring in Australian politics, where, like America, the media, and therefore the broader community focuses on the one individual, currently Rudd. While the author would not wish to suggest the Prime Minster is not capable of carrying out this solo role (all evidence suggests he is well suited intellectually at least), ultimately this practice undermines the likely longer term success of his government as a reforming government, and creates issues regarding continuity in the wake of his departure. There are countless examples of other left of centre leaders who have variously enjoyed significant personal popularity at times, but have stayed too long - Helen Clark in New Zealand, Tony Blair in the United Kingdom etc.

Furthermore, any meaningful process of change will last significantly longer than the period of any one particular individual’s term of office or tenure. It is not unreasonable to assume that any significant programme reform would take a generation to implement and show results (Sweden as an example) in an advanced capitalist society, be it thoroughgoing social democracy or of a more Marxist orientation. Alas, also locally unfortunately, rolling back all of the mad, bad and sad things that the Liberals did in the previous ten years will take a lot longer than one term in the Australian context too.

Even a majority of left wing MPs in a parliament, without significant grass roots activity in wider civil society through familiar allies, like the trade union movement and party activists, is unlikely to get far in the context of an advanced capitalist society. Those who favour the status quo have had the opportunity for plenty of practise preserving it. Ultimately, it comes back to creating a political culture of participation, not because we have some predilection towards internal democracy (we should have that too for other good reasons) but because the first step is “getting the message out” and spectators are only ever that - spectating.

As the refrain from the classic ‘80s Redskins tune goes "Take no heroes, only inspiration..."


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Sunday, March 21, 2010

When the Labor Party Dreams – Class, Politics and Policy in NSW 1930-32,


above: The author of the book under review - Dr Geoff Robinson.   Dr Geoff Robinson is an Australian political scientist and historian.  He teaches at the Geelong campus of Deakin University and blogs on Australian and international politics

A review by Geoff Drechsler of a book by Geoff Robinson

Robinson, Geoff, ‘When the Labor Party Dreams - Class, Politics and Policy in NSW 1930-32’, Australian Scholarly Publishing, 2009


It seems so unfamiliar for Australia. The means: strikes, rallies, angry public meetings. The end: imagined utopias of plenty. Fast forward to now: stage managed sound bites; free market feast followed by unemployment famine as capitalism lets the world down again and people start to ask why. The author, like many others in his generation of political activists, thought that Australian history was limited to the ho hum of federation, but this book shows that there was a time when the great philosophical clashes of the 20th century played themselves out in Australia: when Australia was a programmatic pacesetter for the international Left, rather than a reluctant follower. And that all of this unfolded within sight of the Sydney Harbour Bridge.

Geoff Robinson’s “When the Labor Party Dreams - Class, Politics and Policy in NSW 1930-32” by Australian Scholarly Publishing is an excellent account of the period of the last Lang government: a period of Australian history that has attracted many attempts at examination and consideration, be they in print or documentary or drama.

Geoff Robinson's book stands out primarily for two reasons. The first is that Geoff has a background as a Labor activist. He has been inside the belly of the beast, and he employs new historical methods to get down to look at the sympathies of different social groups. The result is a history of the every day: the experience of the masses rather. And he avoids being mesmerised by high politics. In the past, the larger than life Jack Lang has loomed large over other efforts to look at this period and overshadowed attempts look at the day to day.
Most significantly, this book addresses a key theme that still challenges left governments around the world today: and that is the contradiction of a government that wants to change capitalist relationships of production and accumulation, while operating within the capitalist system itself. On one hand capitalism and its failings drive a desire for change amongst the Left and its working class supporters. But on other hand capitalism and its successful operation are linked to material prosperity and employment. After all, redistributive taxation relies on production for its success. The Lang government is very important because it represents the most conscious effort by any government in Australian history, so far, to change prevailing social and economic
arrangements. This sets Lang apart from the contemporary incrementalists in modern Labor.

The acceptance by modern Labor of the market driven privatisation / deregulation "small government" model, which is universal across the Australian political spectrum now, makes contemporary Labor’s position on economics indistinct from the position of their conservative opponents. The key policy differences now lay in environment, social and IR policy. In the 1930s, economic policy was one of the key areas of policy difference between the two major parties, particularly in NSW. Lang, and NSW Labor more generally, were unconvinced that free market solutions would mean socially just outcomes for their constituents or create the kind of society they wished for. The Great Depression had also only emboldened advocates of socialist ideas in the party, who had been active since the 1920s. But we should remember not to see the world through rose tinted glasses though, Prime Minister Scullin, Lang's Federal Labor contemporary in the ‘30s, opted for very orthodox economic solutions himself in the face of the same crisis.

The other contrast between Lang’s government and contemporary Labor is that Lang had few qualms about favouring supporters, or would be supporters, while in power, as opposed to the softly softly consensus politics of contemporary Labor.

Many of the conservative detractors of government intervention in the economy have always painted the activist approach as some Sovietesque grand monopolistic endeavour that seizes whole sectors of the economy. It’s worth looking at the practice of other Labor governments in the early twentieth century, many before Lang, can still be see today in institutions such as Medibank Private, was a desire to achieve 'fairer' outcomes in the context of the operation of the market. This was usually in the form of a tripartite board or non-monopolistic government backed competitor. The interesting thing about this approach was that the stakeholders that NSW Labor played to were not always the most obvious: and sometimes it faced the dilemma of multiple sympathetic parties with competing interests too. For example, in agriculture, NSW Labor favoured the producers and the consumers and tried to squeeze ‘unproductive’ middle men.

When considering Lang historically, we need to remember to look beyond the volatile domestic political situation and the precedent of his sackingm by Governor Game, the first of two sackings of elected governments in Australian history. We need to remember the international historical context too. At this point the famous ground breaking Swedish and British centre left governments that led later to the rise of the post-war welfare state were only just struggling to consolidate their hold on power. Meanwhile the Soviet Union was still in its first decade, the horrors of collectivisation and other catastrophes not known to the wider world yet. The failure of orthodox economics had also led to the rise of Keynesian economics too during the same period. And after all, Australia did have the first elected left government in the world in the late 19th century - so Lang’s actions were followed all over the world. Though the Depression was heartbreaking for millions of working Australians, Australia had been the richest country in the world at the end of the nineteenth century, and still enjoyed relatively high living standards in the 1920s. Despite the affluence at this time, Australia was still a hotbed of union activity and left wing politics.

The other forgotten aspect of the history of Lang and his government is that it also represents the most successful 'minor' party in Australian history. While Lang and his supporters came very much from the labour mainstream, under the extreme challenges of the Depression, they chose to break with Federal Labor nationally and follow their own course.

Lang's failing, ultimately, came from two things: first his failure to build a broad enough coalition to maintain power. The organised working class was a significant player in 1930s Australia - but union membership, even amongst working class Australians still hovered around the 40% mark. Though in some sectors, like agriculture, it was almost non-existent. The largest economic players, and employers, were in the public sector but most workers worked in small factories in the private sector and identified their employer’s success with their own material well being. His inability to deal with the bugbear of unemployment, a key issue for his core constituents, also didn't help the longevity of his government. This highlights the challenges of a left wing government under capitalism again. While Lang ultimately failed, the fact that he and NSW Labor were courageous enough to try make their utopias a reality sets him apart from the stuff of modern Australian politics.

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above:  Photo of the book under review

Sunday, March 14, 2010

Australia in Afghanistan: Is the war counter-productive?


above: the author, Justin George

Justin George argues that Australia's involvement in the war in Afghanistan is compromising rather than enhancing its national security...  Similar questions face other countries.

by Justin George

With the release of the Australian government's Counter-Terrorism White Paper and its admission that Australia is at risk of 'homegrown' terrorism, the logic behind Australia's involvement in Afghanistan has been severely weakened.

Only months earlier the Rudd government was announcing Australia's continuing commitment to war against the Taliban and Al-Qaida in Afghanistan, reiterating the tired line of 'its better to fight them over there than here' that has been touted as justification for Australia's involvement in a war that it had little need to join.

While Australia joined under John Howard's Liberal government, Kevin Rudd's Labor government has happily continued involvement in the 'good' war in Afghanistan in comparison to the 'bad' war in Iraq. However public support for the Afghanistan campaign has dwindled since it began in 2001 and with this release of the Counter-Terrorism White Paper the war seems to not only have made Australia a target from external groups but it has managed to create threats within Australia through its involvement. However, the White Paper itself while it clearly identifies what the threat is, it does not identify the reasons why such threats have targeted Australia.

By reading between the lines, the White Paper has announced that the Afghanistan war and Australia's wider contribution and decision to join the so called 'War on Terror' has made the country less rather than more safe .

While many of the news reports on the White Paper released have focused on announced heightened security measures to be introduced at airports such as biometric and thumb scanners and threats from a variety of groups in the Middle East and North Africa, none of the reports have examined the more pressing and important question of ‘why?’.

Australia now faces an increased threat from home and abroad: but what connections are there between these threats and Australia's support and involvement for the 'War on Terror', the Afghanistan & Iraq Wars and even its ever growing unilateral support for Israel within the region?

All of these issues have gone largely unreported of late in Australia, yet they remain the key causes that drive and enable fundamentalist groups to recruit and indoctrinate in the areas of conflict and within Australia.

The Counter-Terrorism White Paper's solution to these issues is not one of critically evaluating Australia's role in helping the fuel and create jihadist and resistance activity, but one in which the only response to terrorism seems involve enlarging the powers of Australia's security agencies and border protection schemes.

These concerning measures fail to address the causes of terrorism; merely responding to the symptoms, the violent attacks and attempts that come from a range of issues and conditions of which current Australian foreign policy directly contributes.

With all these factors along with the wider damage to lives and infrastructure in the Middle East, continued involvement by Australia in the 'War on Terror' particularly Afghanistan, seems like the biggest cause of our apparent growing insecurity.

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http://www.dpmc.gov.au/publications/counter_terrorism/docs/counter-terrorism_white_paper.pdf
“extremists who follow a distorted and militant interpretation of Islam that espouses violence as the answer to perceived grievances” (Counter-Terrorism White Paper 2010: Securing Australia,

p.ii);  It is interesting to note within the paper itself, the word 'war' appears only once and not in relation to Australian involvement in the Afghanistan and the famous phrase 'War on Terror' does not appear at all.

Sunday, March 7, 2010

Recovery requires Redistribution

above: the author: Tim Bending

A post-Keynesian take on the causes of the crisis, and on hopes for recovery

"An orderly unwinding of today's massive debts and imbalances will only be possible through a recovery of demand, and one that is not fuelled by debt. "

by Tim Bending, 16 February 2010

The global economic crisis is popularly blamed on the recklessness of bankers, and on the financial de-regulation and loose monetary policy that allowed them to be so reckless. The cause of the crash is found to be human error in medium-term economic management. The characteristic position of the centre-left is therefore to demand tougher controls, to ensure that such an accident doesn't happen again.

If there is a centre-left ideal, in fact, it is perhaps to return to a happier period in Capitalism's history: the postwar years of social-democratic, Keynesian consensus, when unemployment was low and prosperity more widespread. The whole "Anglo-Saxon" model, from Reagan and Thatcher onwards, is seen as an unfortunate deviation from good economic management. We could, and should, just turn back the clock. But could we? And would the re-regulation of finance be enough?

There is a viewpoint that sees the "Golden Age" of capitalism as dependent on a number of conditions that created strong aggregate demand. The origins of the current crisis are seen in the passing of those conditions from the late 1960's to the present, leading to a long period of underlying stagnation, excessive savings and unsustainable bubble economics. Such an interpretation of post-war economic history would lead us to certain conclusions: that re-regulation will not restore demand and is not enough; that the key to restoring demand, and therefore to sustainable recovery, is the creation of an economically fairer society; and that, in the long term, we may face questions about the viability of our current financial system as a tool for managing ageing societies with increasingly saturated consumer markets.

Explaining capitalism's "Golden Age"

This viewpoint is exemplified by a recent book: The Great Financial Crisis: Causes and Consequences by John Bellamy Foster and Fred Magdoff (Monthly Review Press, 2009). It is a collation of articles tracking the latest crisis from 2006 onwards. Their work is based on that of liberal, "post-Keynesian" socialists, Paul Baran, Paul Sweezy and Harry Magdoff, from the 1960's through to the 80's. In 1966, while mainstream economics congratulated itself on having solved the problems of unemployment and instability, Baran and Sweezy argued (in Monopoly Capital) that such periods of relative prosperity are the exception in industrialised capitalist economies, rather than the norm. The "Golden Age" of capitalism – an "Age" that lasted a whole two decades – was created by a conjunction of conditions that sustained strong aggregate demand.

To an extent, these conditions were a hangover from the Great Depression and the Second World War. They sustained both strong state spending, and a what Keynes called a high "propensity to consume", which corresponds to a low relative desire for savings. These conditions included an accumulation of personal savings after the war years, state spending on the cold war, and relative financial security, thanks to economic stability and the welfare state. They also included relatively low income inequality thanks to low unemployment, high relative wages, and welfare state policies. Poor people tend to consume more of their incomes than rich people, so decreasing inequality takes money away from those most likely to save it (the rich) and gives it to those most likely to spend it. The "Golden Age" also followed a long period, since 1929, when consumption had been weak, but in which technology and production techniques advanced considerably. It was a time of lifestyle-changing consumption for ordinary families; a time when they bought their first car, their first suburban house, their first washing machine and television. The big difference people could make to their lives through consumption was arguably an important factor stimulating consumer demand. In Europe and Japan, the postwar years were also a time of massive rebuilding for both firms and households.

The "Golden Age" becomes leaden

In the late 1960's the situation began to deteriorate. The first critical change may have been the gradual saturation of consumer markets. People had their cars and suburban houses. Buying a second car, house, washing machine or television, just doesn't provide the same utility as buying the first one. This is the same reason why rich people tend to save more; the more stuff we have, the less we benefit from buying each new thing. Consumption, as a strategy for achieving happiness, suffers from diminishing returns. Another gradual change, not yet mentioned, is the ageing and increasing life-expectancy of populations in industrialised countries: Saving is encouraged by rising expectations of future retirement and care needs. As the "perfect storm" of demand-stimulating conditions subsided through the 1970's, the leading industrialised economies returned to a state of stagnation, what economist Joan Robinson called the "Leaden Age".

But why should an increasing desire for savings, relative to consumption, lead to lower growth? Foster and Magdoff rather gloss over this, yet it is the key point of contention between Keynes and neo-classical economics. The latter has a habit of assuming that increased savings must be converted into increased productive investment leading to increases in output, employment and demand. But it is not necessary to get into the circular arguments about Say's Law (that "supply creates its own demand") to see that savings can have other places to go, and must not necessarily contribute to growth.

A second possible outlet for savings is hoarding. Stuffing cash under the mattress is more an allegorical problem than a real one, but banks building up reserves is more significant. Theoretically, in the long term, this should have little effect on demand as monetary policy or deflation should be able to restore liquidity, but in the short-term it can hurt demand. Keynes, in fact, really focused on the short-run possibility of excessive savings and falling demand tipping and economy into recession, and the possibility that a market economy may not be able to correct such an imbalance for extended periods of time, as in the Great Depression. Hence he promoted counter-cyclical deficit spending by governments to prevent economies getting too far out of balance in the first place, and to dig them out a of hole when they did. But here we are talking about a long-term decline in the "propensity to consume" which is a different kind of problem. Hoarding does not seem to be the long-term "escape valve" for excessive savings that have built up.

A third possibility is investment that leads to a decline in output. Savings can be invested in increasing productivity to cut costs and protect profits, yet without increasing output. Such investment can absorb savings yet lead to a reduction in employment, demand and even output, fuelling a recessionary spiral.

A fourth is asset price inflation. Savings may be invested speculatively, inflating asset price bubbles (e.g. in real estate or shares). Cash savings are exchanged for a promise of future wealth. This promise turns out to be false for all those holding the assets when the bubble inevitably bursts. Demand can be expected to decline in the future when people find out they are not as rich as they thought they were, and as they increase saving to compensate for the savings they suddenly find they don't have. Asset price inflation thus has the effect of maintaining demand in the present (cash savings are returned into circulation), at the expense of demand in the future.

A fifth is consumer borrowing. This is closely linked to asset price inflation because of the use of assets such as houses as collateral. Lending for consumption converts one person's savings into the disposable income of another. Again, this maintains demand in the present at the expense of demand in the future, and is thus unsustainable. In the future, there must either be a shift from borrowing to debt repayment, impacting future demand, or borrowers must default. Default means that the promises of future wealth bought with cash savings turn out to be false, also impacting future demand.

A last outlet for savings is public borrowing. This is not a direct effect of increasing savings, but a knock-on effect of declining demand. It is almost automatic when tax returns fail to meet expectations, but deliberate when governments attempt to ride-out downturns they hope are merely cyclical. Again, the effect is to bring forward demand from the future.

There is thus no law that more savings will lead to more useful investment and more growth. This attractive scenario is theoretically possible, but arguably increasingly difficult for mature industrialised economies. It depends on growth being consistently high enough to absorb rising savings, irrespective of the rate of technological advance and population growth. There is little room for external shocks like the oil shocks of the 1970's. It also depends on a high degree of business confidence; "entrepreneurs" must play a "prisoner's dilemma" game in which they must base their decisions upon a prediction of what other entrepreneurs will do. In this game, the best outcome for all players occurs when all bet on growing demand, and therefore invest in expanding output. Yet in betting on such growth, players also risk ending up with the worst possible outcome: investing in expansion just before a slump. The outcome all depends on what the other players do. In this context, it is quite rational for all players to bet on decline and invest defensively in cutting costs and protecting profits without expanding output.

Demand is borrowed from the future

So what actually happened? Foster and Magdoff are at their best in tracking the long-term trends that followed, focused on the US. The key trend, taking-off in the 1980's, has been a massive accumulation of debt by households, firms, financial institutions and (in the case of the US) government. Total outstanding debt in the US rose from 154% of GDP in 1970, to 373%, or nearly $53 trillion, at its latest peak in Q1 2009 (http://www.federalreserve.gov/releases/z1/Current/, table L1; http://www.gpoaccess.gov/eop/tables10.html, table B-1).

This trend has been accompanied by the rise of the FIRE sector (Finance, Insurance and Real Estate). In the decade of the 1960's in the US, the financial sector accounted for an average 15% of domestic corporate profits. The 2000-2008 average was 35%, peaking at 43.8% (http://www.gpoaccess.gov/eop/tables10.html, table B-91). This period has also seen massive asset price inflation. The evidence for the systematic, unsustainable over-valuation of assets is the worsening series of crises. We can list the stock market crash of 1987, the US Savings and Loans Crisis (1989-91), the Asian financial crisis (1997-8), the dot.com crash (2000) and, of course, the "sub-prime" crisis. Each time, so far, governments and central banks have been able to play their function as lender of last resort and have re-floated/inflated the markets, principally through a monetary policy of providing ever cheaper credit.

It is clear that the leading industrialised economies have suffered from a persistent, long-term excess of savings over and above the amount that the weakly growing "real economy" has been able to absorb. Instead, these savings have fuelled asset price inflation and consumer borrowing. The effects have been felt differently in different countries. This has probably been partly due to differing and evolving cultural attitudes to saving and indebtedness. In the United States, the UK, and other countries like Spain and Ireland, this flood of excess savings has fuelled a debt-driven consumer boom. The rich in these countries have got a lot richer and have saved like never before, while well-off professionals have saved heavily for retirement. Meanwhile, lower income groups – groups who are still struggling with life-changing consumption milestones like owning your own home – have been encouraged to borrow to an unprecedented degree. Levels of personal debts that would have been culturally unacceptable as recently as the 1970's have become an everyday fact of life.

In Japan, by contrast, inflated markets in real-estate and shares burst terminally in the early 1990's. Since then, Japan has been mired in stagnation, with the state unable to curb savings and stimulate demand. In Germany, bubble markets never really got off the ground. Both Germany and Japan have suffered from persistent high domestic savings and weak domestic demand, and have only achieved moderate growth through export to the consumer-boom countries like the US. China is more paradoxical. Its level of development would suggest unsaturated consumer markets, yet development has been very unequal and its culture, like that of Germany and Japan, seems to promote savings. China, like Germany and Japan, has weak domestic demand, a high savings rate and export-led growth. All three have lent a large proportion of their savings to the US and other trade-deficit countries. The US and UK have seemed obsessed with consumption. Indeed, there was a consumption-led boom. But nonetheless, this consumption has simply been fuelled by the excessive savings of others. Demand has been high, but it has been demand brought forward from the future.

These trends are obviously unsustainable. So far, governments and central banks have always been able to
prevent collapse, but with interest rates at rock-bottom and unprecedented quantitative easing failing to provide much stimulus to the real economy, monetary policy appears to be running out of ammunition. The last remaining option for governments is deficit spending, though some, like Greece, are already facing difficulties financing their deficits. It remains to be seen how long markets will finance the deficits of the major industrial economies.

What is to be done?

If this viewpoint is correct, it will have three main implications:


1. Re-regulation is not enough. The current crisis is not a simple result of policy errors. It was not caused by the behaviour of financial institutions or the de-regulation of what they do. I think it is safe to suppose that this de-regulation took place because it was in the short-term interest of politicians and their backers to facilitate the emerging trends, with little understanding of the long-term consequences. Tighter controls of the financial sector, including measures to curb asset price inflation, would be desirable. They might increase the likelihood that future savings are invested in the real economy by reining in the alternatives posed by speculation. But even this would do nothing to ensure that the real economy offers attractive investment opportunities. Until that happens, non-debt-dependent growth will be elusive.

2. Recovery requires redistribution. An orderly unwinding of today's massive debts and imbalances will only be possible through a recovery of demand, and one that is not fuelled by debt. For three decades, demand has been stimulated by huge transfers of wealth, both from the rich to the poor and from savings-oriented countries to consumption-oriented ones. The problem is that the money must be paid back. But demand can just as well be stimulated by a redistribution of wealth that does not need to be paid back. While we cannot fully re-create the conditions that helped create capitalism's "Golden Age", we could turn back the clock on the growing economic inequality of recent decades. The tools for doing this include legislation (minimum wage, caps on bonuses, etc.) and a more heavily redistributive fiscal system. The latter could also seek to stimulate demand through state spending on infrastructure (e.g. a Green New Deal) and through seeking to create greater financial security in the face of old age, unemployment and ill-health, reducing the desire for personal savings. It needs to be emphasised that such measures cannot be financed by public borrowing, but only by more progressive taxation. We are not talking about a cyclical problem to be addressed by anti-cyclical deficit spending, but a structural problem requiring a structural response.

3. In the face of ageing populations and saturated markets, a more radical rethink may be needed. A fairer version of capitalism might yet breath life into the moribund economies of the West, but for how long? It would begin by helping the poor to catch up on consumption, but would end up making us all richer and all more inclined to save. The problem of ageing societies will not go away. It is not clear that our current financial system is well suited to managing this situation.

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