This month's Bulletin

Globalisation has created unprecedented wealth and resources, while at the same time triggering a spiral of pauperisation that has widened income gaps within and between countries. Globalisation also tends to undermine national protection of workers' fundamental rights, which are being steadily weakened in many countries.

Faced with the negative impact of globalisation, public opinion has become increasingly distrustful of the multilateral financial and trading system. The WTO, IMF and World Bank, as well as the multinationals, are the target of mounting criticism, as fear among populations grows in face of a globalisation over which they have no control. [Bill Jordan, ICFTU General Secretary, in Trade Union World, 11 November 2001]

What is needed is a recognition that the financial system is out of control, that globalisation is acting as an agent of price destruction, and that modern capitalism is inherently unstable and prone to ever-more serious crises. True confessions, in other words. [Larry Elliott, Guardian Weekly 20-26 December 2001]

Fascism should more properly be called corporatism, since it is the merger of state and corporate power. [Benito Mussolini - quoted by Lewis Lapham, AFR 4.1.2002]

More Terrorism as US Dominates?

The Soviet Union collapsed because of internal contradictions inherent in its economy, imperial overstretching, and an inability to reform.

Chalmers Johnson warns that all of these factors are also at work in the US, which was always richer than Russia and therefore may take a bit longer to collapse. Bush cannot afford his imperialism, and globalisation has spread the recession to all the important centres of economic power… The most serious problem the US faces is its refusal to alter its foreign policies… especially globalisation policies. Given its overwhelming military might, the opponents of the US can attack it only through asymmetrical means - i.e., so called terrorism. The result will be more terrorist attacks on America at home and abroad. [Chalmers Johnson, president of the Japan Policy Research Institute in California, and author of ten books on Japan's economy and US foreign policy, in The Australian, 26.12.01]

The War Against Terrorism

Afghanistan is just the beginning of the war against terror. There are other terrorists who threaten America and our friends, and there are other nations willing to sponsor them. [President Bush, addressing soldiers at Fort Campbell, as reported in The Age 23.11.01]

The Bush doctrine raises serious concerns that it is a licence for neo-fascism. Unless wiser counsel prevails, the 21st century could precipitate the world into mayhem. [Vera Butler in her Newsletter Nov-Dec.2001, of the Australian International Studies Association.]

Geopolitics, Oligarchs, and Oil in Central Asia

Kazakhstan, stretching from the Caspian Sea to China, celebrates its first decade of independence. After a traumatic birth during the chaotic dissolution of the Soviet Empire, this vast resource rich country has established itself as a sovereign state, and laid the groundwork for a thriving market economy. Over the last two years its economy has grown at 9 and 13% respectively, with strong flows of foreign investment into Caspian oil and gas projects.
Critics of President Nazarbayev say the regime has shown signs of reverting to its authoritarian Soviet roots in recent years, with power and wealth heavily concentrated in the hands of the president, his family and a small group of oligarchs. Kazakhstan's other big neighbour, China, is also increasingly interested in sharing the oil boom. Talks about a new 2000 km pipeline have taken on a new urgency with the discovery of big new fields in the Caspian. "For us, happiness is multiple pipe lines", said Grigory Marchenco of the central bank, who is pleased that the first big pipeline runs through Russia but is largely owned and managed by international companies. [Anthony Robinson, Financial Times, London, 17.12.01]

The Good Oil on the War Against Afghanistan

The American media has conducted a systematic cover-up of the real economic and strategic interests that underlie the war against Afghanistan, in order to sustain the pretence that it emerged overnight, full blown, in response to the terrorist attacks of September 11. The speedy victory of the US-backed forces reveals careful planning, and preparation by the American military, which must have begun well before the attacks on the World Trade Center and the Pentagon… The truth is that the US intervention was planned in detail and carefully prepared long before the terrorist attacks provided the pretext for setting it in motion. The US ruling elite has been contemplating war in Central Asia for at least a decade.
If the 1991 dissolution of the Soviet Union provided the opportunity for the projection of American power into Central Asia, the discovery of vast oil and gas reserves provided the incentive… American oil companies have acquired rights to as much as 75% of the output of these new fields, and US government officials have hailed the Caspian and Central Asia reserves as a potential alternative to the dependence on oil from the unstable Persian Gulf region. US Special Forces began operating there in 1997, training for intervention.
The major problem is how to get the oil and gas from this landlocked region to the world market… The pipeline route was pushed by the US based Unocal oil company which was negotiating with the Taliban regime. These talks ended in disarray in 1998 when US embassies were bombed in Kenya and Tanzania. Osama bin Laden was held responsible, and in August 98, the Clinton Administration launched cruise missile attacks on alleged bin Laden training camps in eastern Afghanistan. The US government demanded that the Taliban hand over bin Laden, and imposed economic sanctions.
The US increased pressure on Afghanistan warning that it would hold its government responsible for any further terrorist acts by bin Laden. The Clinton administration and the President of Pakistan are said to have agreed on a joint operation to kill Osama bin Laden in 1999. This attack was aborted on 12 October 99 by a military coup d'état. The Clinton administration had to settle for a UN Security Council Resolution that demanded the Taliban to turn over bin Laden to the "appropriate authorities".
According to the Washington Post (18 Nov.01), the CIA has been mounting para-military operations in southern Afghanistan since 1997, including the deployment of a secret paramilitary unit, which began combat on 27 Sept. It is said to have about 150 fighters, pilots and specialists - veterans retired from the US military. This means that the US spy agency was engaged in attacks against the Afghan regime for more than a year before the destruction of the World Trade Center. Hence, there is a strong possibility that bin Laden, far from launching attacks on the World Trade Center… was launching a pre-emptive strike in response to what he saw as US threats. [article by Patrick Martin, editor@wsws.org 20.11.01]

Those Who Pay the Piper Call the Tune

Globalisation has created new kinds of transnational audiences and interests, but no global politics. States remain the main political actors. There is little global law and there is no global police force… The transnational organisations created after World War II…are relatively weak; when they do undertake large projects they do so under the tutelage of the richest states, especially the USA. The new global movements… are providing one answer to the absence of global politics by pressing what they see as popular demands on the rich states, transnational companies and international financial institutions... Rich countries have disproportionate influence on the international financial institutions, e.g. on the World Bank and the IMF, seven seats are reserved for the main shareholder countries, the other 176 member states sharing the remaining 17. Consequently, on the WTO the USA, the European Union, Japan and Canada have disproportionate influence… The underhand deals done in and around the trading system are a reflection of the continuing power of the rich countries and corporations. What is at issue is a louder voice for poor states in the governing structures of the World Bank, the IMF and other global strategies… plus greater procedural clarity. [John Lloyd, AFR 30.11.01

Making the World Secure for the Forces of Finance

Globalisation urges nations to ally to make the world secure, not for the forces of democracy, but for the forces of finance… Insistence on that naïve prescription has ravaged the natural world, ignored the legitimate needs of the poor, and fed the greed of a privileged few. Any economist not actively crafting a paradigm to reverse these trends is lending support to a globalised form of finance fundamentalism.[Based on Jeff Gates' testimony to UK Parliament's Select Committee on Economic Affairs, 8 October 2001, in Post-autistic economics newsletter, issue No. 9, 20.10.01]

Globalisation Makes it More Difficult to Check Corporate Misconduct

The Australian Securities and Investments Commission oversaw a 7% rise in new major investigations last year but a slight fall (5%) in successful litigation. The regulator witnessed a 26% rise in complaints about corporate misconduct, to 7,000 instances. Its chairman said that its working was becoming more complex because of the globalisation of markets. Its biggest "scalps" during the year included George Balos, sentenced to 11 years for defrauding investors, and Geoffrey Dexter, sentenced to 10 years for defrauding investors of $1.2 million. [Anthony Hughes, SMH 30.11.01]

Corporate Fraud Detection Privatised

Corporate fraud cost Australian companies $4 billion last year, but police are retreating from investigating crime often perpetrated by trusted executives. Agencies of accounting houses are eclipsing police in the fight against corporate crime. In three years the five biggest houses have head hunted many of the country's most experienced fraud squad detectives. Their private police force total 174, surpassing the fraud squads of the Victorian, NSW and federal police. Corporate fraud costs $4 billion a year, and police have to concentrate on "core crimes". The rapid expansion by the big five firms was forced by the long delays in police investigation, and the increase in internal fraud, which now accounts for 80% of all corporate fraud. The average fee for an investigator is $250-300 an hour, and an investigation can easily cost $500,000. [Philip Cornford, SMH 1.12.01]

Corporate Social Responsibility? (C.S.R.)

The high priests of the Reaganite and Thatcherite revolutions are no longer in power. But they haven't gone away. Worried that their legacy is threatened by dangerous notions such as corporate social responsibility, which threaten the supremacy of the market, a coalition of rightwing think tanks and commentators are fighting back. The most cogent recent statement of this view comes from the former chief economist of the OECD, David Henderson, in a pamphlet published by the New Zealand Round Table. He argues that widespread adoption of CSR would undermine the market economy… Henderson and his allies do not deny that a country's quality of life is judged buy more than its gross domestic product. But their point is that it is not for firms to decide what is in the public interest; that is a task for politicians, they say. [Charlotte Denny, Guardian Weekly 15-21 November 2001]

Challenging Imperialism The new battle lines have been drawn: trade equals freedom, anti-trade equals fascism. Our civil liberties, our advances, our usual strategies - all are now in question… Bush's "coalition" does not represent a genuinely global response to terrorism but the internationalisation of one country's foreign policy objectives - the trademark of US international relations… Now seems a good time to challenge the forces of both nihilism and nostalgia… showing that it is possible to challenge imperialism while embracing plurality, progress and deep democracy. [Naomi Klein, SMH 8.12.01]

The Urge to Merge

The Federal Government's forthcoming inquiry into the Trade Practices Act and its administration, comes as corporate Australia "braces itself for another frantic year of takeover activity after last year's record $76 billion worth of deals". The number of mergers considered by the ACC rose by 20% over the number in 2001, as many firms took advantage of weaker corporate profits and battered share prices to consolidate. Of the 260 mergers considered by the commission last year, only 13 were questioned. Of these, 10 were approved unconditionally… Of the major corporate deals of 2001, several significantly enhanced the market power of the nation's biggest companies… Business organisations continue their unrelenting campaign for a watering down of the merger law and the scrutiny of its administration. [Damon Kitney, AFR 11.1.02]

Fiscal Stimulus Needed in Australia Soon?

Australia is only now starting to feel the impact of a year of weak global growth. It will also take a while before we feel the benefit of the global recovery…. What will power the Australian economy in the second half of next year… when the housing boom is over and trade is a drag on growth? Consumer spending should keep running along - but against a tide of weakening employment… A solid round of fiscal stimulus may be called for… The danger, as always, is that it will be delivered too late. [Alan Mitchell, AFR 8.12.01]

The End of the Era of the Economist?

World growth for the year 2002 looks like being headed for the lowest level for a decade, but the Australian economy is in a relatively strong position. Australia faces lower growth, but an outright recession is unlikely… There is less international travel, a retreat to home entertainment, and a jump in bank deposits, as people seek safety. The last few decades have been the era of the economist, but people's minds are now being brought back to what is really important… People are changing the way they look at the trade off between economic outcomes and their total well being. [Barrie Dunstan, AFR 11.12.01]

Manufacturing Industry Still Growing

The number of Australians working in manufacturing industry has remained stable over the past decade at over a million, making this sector the second largest, after business services. New areas of manufacturing crating jobs have been established - many are in small firms involving high skills, such as those involved in making hearing aids. By contrast in W.A. there are several large projects based around the construction of drilling platforms for development of the North West shelf. The most recent survey of the sector (December 01) found that 11 of the 12 categories were growing - the exception being printing and publishing. [Andrew Fraser in The Australian 26.12.01]

Australia Plans Stricter Controls on Auditors

The government is considering banning auditors from joining the boards of companies they have audited within the previous two years… The move would bring local regulation closer to that in the USA, and follows a string of recent high profile corporate collapses in Australia. This has led to allegations that auditors should be more rigorous. The latest report said that auditors should be banned from joining company boards for two years, and close relatives of company directors should not be allowed as auditors. The Labor opposition has been pushing for more stringent regulation of auditors for some time, and should bring in new requirements adopted by the USA and being considered in the European Union. [Virginia Marsh, of Sydney, in Financial Times, London, 5.10.01]

Big Wheels and Big Money

Mitsubishi Motors wants Australian taxpayers to contribute an extra $140 million to guarantee the future of its struggling local subsidiary. Over 3,000 workers are employed at the two Adelaide plants; 20,000 jobs around Australia are indirectly linked to these plants. Daimler-Chrysler, now the world's third biggest car maker, runs Mitsubishi after acquiring a 37% stake last year. [Michael Millett, SMH 12.12.01]

The Selling Off of Australia Continues: The Golden Hand-shake

About half of Australia's gold reserves will end up in foreign hands following the latest wave of rationalisation in the industry. If current bids are successful, 40% of Australia's gold reserves will be held by foreign companies, according to the chief executive of the Australian Gold Council. He said the weak local currency had made Australia's assets cheap. Australia's biggest gold producer, Normandy Mining, is in the middle of a $4 billion takeover tug-of-war between Anglo Gold of South Africa and Newmont Mining of the US.[Michael Weir, SMH 13.12.01]

The Norwegian Dilemma

Norway is a small, oil-rich country, with all too little industry outside of oil, shipping and fishing and virtually no multinationals. It lacks strong private investment institutions or powerful industrial families like the Wallenbergs of Sweden. Without regulations its companies could easily be gobbled up by foreigners. Already 28% of its stockmarket is being held by foreigners. One banker summarised the situation thus: If you want international investors to participate in your markets, it is very difficult to have such odd rules. But if you take those rules away, everything Norway has will get bought. [Chris Brown-Humes and Valerie Criscione, Financial Times, London 4.10.01]

Regulations Sometimes Necessary?

Normal competitive forces do not operate in some industries. These include "natural" monopolies such as electricity, gas, telecommunications, airports and rail. In these industries governments have taken the view that regulation should be applied as a proxy for competition to prevent monopoly pricing… In Australia the available evidence suggests that regulators have been careful to balance the needs of investors and users so that efficient investment is not discouraged. There is compelling support for the view that the regulatory framework on offer in Australia is entirely reasonable… In the absence of regulation, upstream and downstream businesses are at the mercy of the monopoly provider. Regulation eliminates monopoly pricing and provides opportunities for other businesses…[Professor Allan Fels, Chairman, ACCC in a letter to AFR 14.12.01]

The Future of the Company

The joint stock company is in a state of rapid evolution. Most big American companies have shifted their production systems from high volume to high value, and have flattened their management hierarchies to make themselves nimbler and fitter… Big companies have been losing ground… but the joint stock company is still the best and easiest structure for individuals to pool capital, refine skills, and pass them on. But it will surely become ever less corporate… The state still has enormous influence over the corporate sector, but governments are ceding ever more of their own territory to profit making institutions. … Yet governments are increasingly using regulation to force companies to pursue what used to be their own social ends. Firms are now being regulated by governments in ways intended to clean up the environment and balance social inequality… Politicians are discovering that it is cheaper to get companies to do their work for them. [The Economist 22.10.01]

Resentment of US multinationals

Debora Spar, head of the business, government and international economy unit at Harvard, points out that resentment of US multinationals has a long history. In the late 1970s they were not loved; there were charges of "Coca-Cola capitalism"… It is the same thing this time around but companies are going to have to think long and hard about how they are perceived outside their home market and the extent to which they are symbols of America and global capitalism.[Simon London, Financial Times, UK, 25.9.01]

Greed Taking Over from Prudence?

Looking behind the causes of the rash of collapses in 2001, a complex pattern emerges: low inflation, widespread discounting, and an aggressively active price regulator, led to a general lack of pricing power, and in some industries, outright deflation. More expensive imported inputs (because of lower currency), lower productivity, and steady wage growth all helped to create enormous pressure on profit margins… The huge increase in chief executive salaries during the past five years, and the way they are now tied to a company's share price, has meant that being a CEO is now the equivalent of winning the lottery. Greed is taking over from prudence, and getting out after a few years with a healthy payout is increasingly all that matters.[Alan Kohler, AFR 21.12.01]

Globalisation reducing prices?

The continuing process of globalisation is causing the world prices of many manufactured goods to fall rather than rise… The prices we pay for our imports are falling faster than the prices we get for our exports… What seems to be happening is the "commodification" of many mass-produced goods - their prices tending to move up and down in response to the global business cycle, and decline over the longer term. The main cause seems to be the establishment by multinational companies of a lot of plants in newly industrialised countries in East Asia… Many of these plants were set up by the Japanese… Something similar has been happening in Mexico with US companies there which now account for about half Mexico's exports. [Ross Gittins, SMH 12.12.01]

Mammon

Bully the weak and suck up to the strong - it's a widespread business principle and the banks exemplify it. Do you ever get the feeling that the bank would really just as soon not have you as a client? You are right. What the banks secretly want to do is shut up all their regional offices, fire the staff and settle into airconditioned rooms in the City and play the game of "restructuring". [Alan Clark, The Australian 28.12.01]

Banking On It

More than half the banks' revenue from credit cards comes from the hidden fees the banks charge shopkeepers who accept credit cards… These merchant service fees average 1.8% of the value of all goods and services bought using credit cards…they total $1.5 billion… These fees are the revenue the banks make even if everyone paid their credit card in full every month. [Ross Gittins, SMH 19.12.01]

Banker Workers March Through Sydney

A thousand bank workers marched through Sydney streets to demonstrate outside Westpac's annual general meeting, and there was a similar protest in Melbourne outside the National Australia Bank. Demonstrators drew attention to the generous salary package of Westpac's chief executive officer of $100,000 a fortnight. This was the first co-ordinated strike action across three banks for almost 20 years. [Matt Wade, SMH 14.12.01]

Central Banks Like Ducks?

If you want early warnings about recessions… the best way is to ignore private forecasters and watch what the central bank does: how often and how hard it cuts interest rates. But when you watch it… turn down the sound… ignore its confident, comforting words, and keep your eye forcussed on the hand that pulls the lever. At times like this central bankers are like ducks on the waves: serene above the surface: paddling like hell underneath. [Ross Gittins, SMH 3.12.01]

Off-shore Banking in the Pacific

The biggest money spinner in the Pacific island of Nauru is off-shore banking. For as little as $25,000 (US) anyone can set up a bank there without setting foot on the island. Some 400 people have done so, and registered in the tiny local post office. There is next to no regulation,. [Nauru also sells citizenship - a useful last resort for evading extradition). Out of a total population of 12,000, some 4,000 are foreigners. Australians serve as managers, doctors and engineers. Chinese run the restaurants and shops, and other Pacific islanders do the dirty work in the mines. Australia declared Nauru uninhabitable and offered to resettle the population on a deserted island off the coast of Queensland, but the Nauruans opted for independence. Their biggest money spinner is now off-shore banking. A task force of the Group of Seven rich nations identified Nauru as one of 15 countries deemed uncooperative in its fight against money laundering. Big Western banks will no longer handle transactions involving Nauru. Its days as a banking haven are numbered; its latest money making scheme, however, is to hire itself out as a detention camp for would-be immigrants to Australia.[The Economist 22.12.01]

Business Delusion?

Big business is behaving as though we are in a recession. Companies have fired thousands of workers. … But the latest business survey revealed a late-year upswing in confidence and orders. Yet business is reluctant to hire more staff or increase investment… the psychology of Australia's big company executives certainly seems overly pessimistic… Perhaps big business is too obsessed by its day-to-day share price and is becoming disconnected from the real economy. [Editorial in The Weekend Australian 15-16 Dec. 2001]

What Shall It Profit a Man?

The Australian Taxation Office has accused the Big Five accounting firms of trying to profit by revealing secret tax information…They are involved in numerous consultation forums with the ATO… Its deputy commissioner said it would not allow practitioners to exploit the knowledge gained through consultation. [Alexander Fabro, AFR 11.12.01]

This Year…Next Year - Sometime?

The Tax Commissioner, Michael Carmody, will target promoters of tax avoidance schemes as a priority this year, and is seeking tough new legal powers… The Tax Office sought these last year, but was unsuccessful. [Allesandra Fabro, AFR 3.1.02]

Foreign Debt Record

Australia's foreign debt is at a record 50% of GDP. Hence the 20 year low for the current account deficit was welcome news, except for the fact that the sharp narrowing of that deficit was due to three years of falls in equipment investment. Low global interest rates have also held the net income deficit to remain in check. Company profits have been falling for the last five quarters, but the risk for Australia is the ability to service the debt when the interest cycle turns and global rates move up. [ Stephen Koukoulas, AFR 30.11.01]

Reporting Experts

Independent expert reports have become an increasingly common tool in hostile corporate actions in the Australian market, sparking debate about their usefulness. The Australian Securities and Investments Commission plans to crack down on the commissioning and formulation of "independent expert" reports for takeovers and mergers, because of growing shareholder scepticism about their credibility.[Stewart Oldfield, AFR 17.12.01]

Apathetic Australia

The true third force of Australian politics is the "don't cares". Although voting is compulsory, over a million did not vote at the last election. A further million over the age of 18 were not even on the rolls. Thus 2.26 million people did not vote - one in every six adults - hence apathetic Australia swamps the swinging voter. [SMH 12.12.01]

A Narrowing of the Parliamentary Class?

Politics is becoming less attractive to those with the talent to allow them maximum choices. The decline in the ethos of the "public service", the low regard in which the public holds its politicians, and the intrusiveness of the media are some of the reasons. This affects both sides of politics. [Michelle Grattan, SMH 14.12.01]

Political Delusions

The Government's biggest danger…is to start to believe its own media and hype… In the election strategy the processes of genuine economic and social reform were sacrificed… Although our economy is still doing relatively well, we are grappling with the first synchronised economic downturn since the mid-1970s. [John Hewson, AFR 14.12.01]

N.I.M.B.Y. (Not in my backyard)

Premier Bob Carr warns that Sydney is expanding too fast and too far… He has been largely ignored… The pace of growth has picked up… We head towards 5 million people… the city is eating its hinterland… Stand in the way of Mammon, of bigger and faster, and you might get run over. The suburbs are greening, the city is grand, and a brown haze hangs over sub-Babylon. [Paul Sheehan, SMH 12.12.01]

Who Shall Regulate the Regulators?

Building regulations in NSW are to be investigated following revelations that up to one third of new residential buildings may be faulty, that regulation appears to be failing, and illegal work increasing. The Upper House Democrat, Dr. Arthur Chesterfield Evans, said NSW needs a regulation system that excludes builders with bad records. The Greens MLC, Ian Cohen, said he was being deluged with complaints about the relationship between private building certifiers and builders. [Gerard Ryle, SMH 14.12.01]

Computer Related Injuries

Over two thirds of office workers report discomfort with using their computers. About ten per cent of these become disabling, but the effects take 10 or 15 years to show. The sheer volume of hours spent at the computer puts people at risk. Email is replacing face-to-face communication. Longer working hours and the threat of unemployment can make the situation worse. [Dan Kaufman, SMH 4.12.01]

Banking Over the Bar

A national study on women's health shows 31% of 23-28 year olds "binge drink". Women in the age growth 18-23 are the highest risk drinkers, as their figure rises to 70%… Young women speak of the relentless pressure to drink after work and at weekends - this is especially so in the traditionally male dominated banking and finance sectors. It is a stress reliever. And it is also about meeting people in high places. A lot of deals are done over the bar.[Danielle Teutsch, Sun-Herald 23.12.01]

New Words for Unemployment: Consolidations and Retrenchments

The challenge for governments and regulators is to manage the wave of consolidations and retrenchments… Demand will not rise quickly to absorb excess supplies. Supply must adjust. Hence business leaders want fewer restrictions on their power to consolidate, and the ability to sack workers more easily. [Alan Kohler, AFR 28.11.01]

The Commercialisation of Australian Universities

The Howard Government insisted there was no university crisis, and attacked vice-chancellors who complained, as incompetent. Liberal members of the Senate inquiry into higher education simply rejected the mass of evidence pointing to serious problems after the commercialisation of the universities. But the university sector was deeply shaken by the events of 2001, and there have been some disturbing casualties. These include exposure of the festering sores of soft marking, plagiarism, and cheating, which have damaged the reputation of all Australian universities, especially abroad… Academics should no longer regard themselves primarily as scholars in pursuit of the truth, but as employees of organisations that sell a product and have an image to protect. [Clive Hamilton, executive director of the Australian Institute, in SMH 11.1.02]

Keep Out the Priests *

Religious schools discriminate against people on the basis of their beliefs. They give preference to those who adhere to their particular form of religion, often requiring a letter from a priest attesting to parents' devotion… Every religion believes it has a monopoly on truth. By paying for religious schools, the state is spending taxpayers' money to help schools promote one set of beliefs over another…Britain already has 7,000 state-funded religious schools. That is 7,000 too many. The government will not make British education better by promoting these establishments, and it will make British society worse. [* Title as in The Economist 8.12.01]

Aviation: A Declining Industry?

Air traffic in the USA fell by about 25% in late 2001. The number of Americans flying across the Atlantic is down by over 30%. The big airlines are flying 40% down, losing $10-15 million per day… The situation in Europe is no better - Swissair and Sabena have collapsed since the terrorist attacks. Other big carriers such as British Airways and KLM are being driven into losses… Revenues and profits per seat have been falling because of greater competition springing from deregulation. American and European airlines have sacked about 200,000; Boeing plans to cut a further 30,000.[The Economist 24.11.01]

The High Cost of Inhaling

The King Faisal Specialist Hospital in Saudi Arabia is suing 10 international tobacco firms for $US 10 billion in compensation for treating lung disease. The hospital's lawyer said it was also asking $5 billion for the actual cost of treatment. Further suits are planned in American and Swiss courts. Tobacco giants admitted at UN hearings last year that smoking cigarettes was dangerous and addictive, but defended their right to sell and advertise them. [SMH 5.12.01]

The Hollowing Out Of Japan

In the first half of this year Japan's trade surplus was 36% lower than in the previous year. If Japan fails to nurture new competitive manufacturing industries there is a danger that the trade surplus will continue to shrink and eventually reverse into deficit. The economic minister, Takenaka, calls the new wave "hollowing out" - the biggest issue facing the country. Japanese corporations are now concentrating investment in China; there are now 300 Japanese electronic firms in China, compared with 32 a decade ago. Overseas production now accounts for a quarter of Japanese manufacturing. Every item of its large basic clothing stores is made in China. Japan's ruling Liberal Democratic Party and its powerful Ministry of Agriculture have squandered the unrivalled excellence of the postwar Japanese economic miracle, to support a shrinking, inefficient, and frequently corrupt and resource intensive agricultural sector… Farmers - thanks to a gerrymander , are a powerful force keeping the LDP in power. [Andrew Cornell, AFR 12.12.01]

Slump in East Asia

Western newspapers fret daily about the likely scale of the recession in America, Japan, and possibly Europe. Yet these economies look positively perky compared with much of East Asia. Singapore's GDP fell by 5.6%, and Taiwan's by 4.2%. Output has also fallen or is stagnating in Malaysia, Hong Kong and Thailand. Even China has not escaped the slowdown. The East Asian economies are among the most open in the world and are also big producers of electronic equipment. It is no surprise that they have been hit hard by global recession and the collapse of American investment in information technology. [The Economist 24.11.01]

Argentina: From Capitalist Pin-up to Basket Case: A Bad Omen for Free Markets?

Argentina could produce intellectual contagion in the form of market-oriented policies in all developing countries, according to David Hale, global economist for the Zürich Group. When Argentina became the world's biggest debt defaulter…it walked away from something much larger - an idea. For a decade, Latin America's third biggest economy was the continent's free market pin-up boy, the showcase for the "made in USA economic model. But now the country's president has repudiated it because it has led to the desperation of millions of Argentines. American economist Paul Krugman calls it a disaster for Argentina and for US foreign policy. [Peter Hartcher, AFR 11.1.02]

When the US Sneezes Australia Catches Cold

The US economy is officially in recession, and has been so since March. Australian employment has declined by 0.7% over the last seven months. After a ten year expansion - the longest for over a century, the boom is dead. The US economy is the single best predictor of Australia's prospects. With the US now joining Japan and much of Europe in recession, the coming months will surely test just how recession proof the modernised Australian economy really is. [Dr. Justin Wolfers, a former Reserve Bank official, now at Stanford University.

The New Economy

Prominent sociologists see the redefinition of work and social welfare as two of the central dilemmas confronting contemporary societies… They are pre-occupied with societies that can no longer provide work in the old industrial way or under conditions of earlier forms of collective solidarity. The fundamental problem which most recognise is that modern societies are too fragmented culturally to reconstitute a "collective consciousness…" Hence the political and economic preoccupation with the new "third ways" and new forms of community to meet the challenges of rampant individualism… In short, their policy objectives revolve around the task of constructing a "sociologised economy" of crisis management. The "new economy" is sociologically grounded in the highly fluid and contradictory conditions of national and global culture, technological and political transformation, disintegration and reconstruction.[Boris Frankel, Arena Magazine April-May 2001]

The Anodyne of War

As a means of quieting the distemper of the press, nothing works as well as the anodyne of war. Caught up in the memory of a tale told by Homer or Rudyard Kipling, the keepers of America's conscience gladly smother the peepings of dissent and quickly learn to stuff a sock into the mouth of an impiety. Show them a cruise missile or a map, and they become more ferocious than the generals. [Lewis Lapham, AFR 4.1.02]

Postscript - Happy New Year?

It will be a tough year for the economy, Australian companies and workers in 2002. Corporate collapses, defensive mergers and a raft of litigation all point to a time of punctured optimism… Few companies are hiring, many are sacking - and capital expenditure is being reined in. [Geoff Elliott, The Australian (Business Sector) 1 January 2002]