March 26th 2005

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Articles from this issue:

COVER STORY: EDITORIAL: Indonesian President in Australia

CANBERRA OBSERVED: Behind the skills shortage in the not-so-clever country

FOREIGN TRADE: The perils of bilateral trade agreements

SCHOOLS: Teacher unions enforcing the gender agenda

SPECIAL FEATURE: Murder and insurrection: Lance Sharkey in Singapore

BIOETHICS: UN backs ban on human cloning

OPINION: Cutting the abortion rate - the political options

THINKERS: Philosopher of greed: Ayn Rand

STRAWS IN THE WIND: Dicing with our future / China rampant / Double standards?

INTERNATIONAL LAW: Behind the Timor Sea Treaty dispute

HONG KONG: China's man in Hong Kong quits

ASIA: Australia has role in great power contest

PAKISTAN: What role should Islam play in Pakistan?

Unemployment only five per cent? (letter)

How can we save our schools? (letter)

Urban riots a 'wake-up call' (letter)

BOOKS: FEWER: How the new demography of depopulation will shape our future

BOOKS: NELSON'S PURSE, by Martyn Downer

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Dicing with our future / China rampant / Double standards?

by Max Teichmann

News Weekly, March 26, 2005
Dicing with our future

Dr Peter Brain's lecture on the possible future facing the Australian economy, hence society (News Weekly, March 12, 2005), raises many important issues. Thus, it included remarks on the migration of "50,000 of our best and brightest" from Australia every year - something about which News Weekly has been expressing great concern. Brain also had some pungent observations about the ageing baby-boomers, who are going to find their retirement to be nothing like as affluent as they had been assured. We could have a new class of shabby genteel, to join the swelling numbers who have already reached that status via mid-life retrenchments or confiscatory divorce settlements.

Social mayhem

A boom based on asset price inflation, backed by massive borrowing, can produce - following upon a collapse in property prices, in particular - social mayhem.

Something like this happened economically in Japan in the 1980s and '90s when everyone invested in property: banks and business as well as citizens - even the country's large and hitherto sacrosanct pension funds were roped into the game. The Nikkei index reached 39,000, if I remember it right, then collapsed. It was said that if the index fell below 13,000, Japan would be ruined. It actually fell below 10,000 and now bumps around 11,000. The number of banks and businesses technically bankrupt are uncountable, and only the most ingenious accounting was able to conceal the reality. But Japan took a decade to recover - despite strong export performances. But given the rising challenge of China and India, one might be concerned for Japan's long-term future.

But in our case, the fall-out could be worse - more like the collapse of the 1890s. The new Land Boomers - with Victoria yet again leading the way.

Christopher Lasch had things to say on this mentality, in the 1970s. Describing medium-size cities like Melbourne - which were not growing very much and just gradually losing national and general significance - the city fathers, i.e., the rich gamblers, went in for great programs of public building (galleries, conference centres, stadia, monuments and other costly schemes) in order to "put the city's name on the map". Art, entertainment, saturation levels of spectator sport and tourists would solve things. In reality, the aesthetic guts were torn out of the city. Massive indebtedness ensued, and heavy migration out of the place, the result of fewer and fewer career opportunities, so degrading the city's quality of life - heard that phrase lately? - that it no longer seemed like home.

A property slump would mean cheap houses and many forced sales. One desperate short-term remedy is to flood the place with migrants - "businessmen", "students", etc - irrespective of the effects on the overall economy, or the society. Which include its basic services, its environment and its water availability. If this tactic were to be intended, it is the economics and politics of despair. After all, the property market is already being propped up and inflated by Asian investment/occupiers, such that in Sydney, perhaps 50 per cent of sales are coming from this source. This is where you've got your asset inflation. Australian buyers are not reckless souls, just desperate to get a house.

By the way, this not a story about the collapse of capitalism, or the end of the West as we know it - a Marxist fairytale, perhaps. But it is a possible scenario whereby a large section of the population suffer possibly severe hardship and cultural shock; whereby a substantial new section of the citizenry are effectively neutered - marginalised - possibly for the rest of their lives. They would have little to leave their children, except rueful memories and a sense of failure. Like the generation of the 1890s Depression, or the Anglo-American economic disasters of the 1930s.

Capitalism has suffered these kinds of failures before, so probably would weather this one. We will be told it is the price of Progress, or Growth ... and you can't make an omelette without breaking eggs. Just another piece of social engineering that went wrong.

Halving our manufacturing

Perhaps economic rationalism wasn't such a good idea; perhaps reliance on exports and free trade wasn't such a brilliant insight. As to halving our manufacturing industries - well ... the problem here is that our big exporters don't like anything which smacks of protection, for it could affect their sales. Of course, they're nearly all foreign-owned, send most of their profits out of the country, and employ quite a small labour force. But that's the Modern World ... according to Them.

These powerful people have been having their way since the Accord - compliments of the ALP - and it doesn't seem to matter now which party is in office. (This is not true of many other areas of policy, by the way).

We are going to need an entirely new vision for Australia if we are to alter this age-old and once more widening gap between the rich and powerful - with privileged access to the ear of the state (where they do not actually "own" it) - and the rest of us. The latter being the forgotten - or the soon-to-be-forgotten - people.

Now that the contemporary relevance of Left and Right - public versus private - has dimmed, we are in a sense back at the beginning of Federation, when Free Trade and Protection were the opposing poles. Once again, they should be central to our future debates, for they really are competing visions, with dramatically different outcomes.

China rampant

Just as we saw most of the world totally at sea, with the sudden appearance of militant Islam and the entry of international terrorism onto centre-stage, so we are watching world leaders twisting and turning as to what to do about the rise of China - militarily, politically and perhaps most fateful, economically.

One group is receptive to virtually anything which China does or suggests, because they judge her to be anti-American, thus certain to erode American influence. They seem to think that this will benefit them. Others have been trying to construct joint approaches, regionally or even globally: but so far with small success. Others, such as the US and to some extent Australia, have been pursuing unilateral or multilateral strategies. The UN, as always, is irrelevant.

Australia has a difficult road here, for we are caught up, and in potentia deeply involved in all the strands of Chinese activities: political, military, economic and ideological. We have been trying to keep the strands apart - to treat each as though it had no connection with the others.

But the Chinese won't let us. For them, all these elements are as one; just as they were for the other communists when they were expansionist, and the Nazis. This is making the construction of a China-Australia trade deal pretty hard going, for other processes, all in operational mode, cast large shadows over the proceedings.

It would be no exaggeration to describe China as an ongoing threat to world peace and stability in the light of her behaviour with respect to Taiwan and her leading role in advancing nuclear proliferation in some of the most dangerous parts of the world.

As I write, the passing of a law, whereby China has just conferred upon herself the right to attack Taiwan if that country attempts to secede, is their boldest move yet.

It is designed to provoke the Taiwanese yet again; to confuse and divide the West; and to demonstrate the impotence of the UN.

This process of softening up, by frightening the victim and those wishing to help the victim; then relaxing, talking sweet reason and offering economic concessions to some of the victim's supporters ... then turning the screw again, is reminiscent of the way the Nazis did business. It prepares everyone for "the inevitable". Which was not inevitable.

Pakistan has just admitted that she supplied to Iran centrifuges which are for making atomic weapons, as she had also supplied Libya and North Korea. She in turn had constructed her warheads from a Chinese design and more recently received sophisticated missile technology from China to bring her up to India's level.

In these ways, China has pinned down India, her main continental competitor, and helped stoke the fires of anti-US and anti-Western conflicts throughout the entire Middle Eastern area. This has the effect of engaging and distracting America, who has to stay in the area. Whereas China doesn't.

Having dealt with the Europeans for so long, China understands their political class; as did Hitler. So, just at this point of Chinese breast-beating and nuclear perfidy, the EU is pressing to lift the arms embargo on China, with France and Germany leading the way.

Only in Germany, the Christian Democrat opposition have just put up an amendment to block this renewed arms traffic, and is inviting the governing Social Democrats' coalition partner, the Greens - those renowned supporters of peace and critics of arms trading - to support them. Were the Greens to do so, the EU policy change will not take place. Another moment of truth for the German Greens - lovingly unreported here. But China thinks we will all buckle in the end.

Double standards?

The disadvantages of this Australia-China free-trade treaty, which is a creature not at all like the American model, have already been noted in News Weekly. I'll just say that our food, clothing and textile industries - which still produce $7 billion a year, despite cheap foreign imports taking 70 per cent of the market - will be the first casualties.

Then, much, if not most, of our manufacturing will follow. Everyone knows this, and this is before we factor in the coming challenge of India.

But on the other hand, China wants a staged go-slow on reducing her tariffs against agricultural imports: for, as one of our newspapers actually said, "Think of those thousands of Chinese rural workers who would lose their jobs."

Perhaps those future Chinese unfortunates should be the responsibility of the Chinese, just as our disadvantaged - present and future - are ours. For no one else is going to help them.

  • Max Teichmann

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