About Me

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The Author Erik’s family emigrated from Britain to the island State of Tasmania then lived in the woods. The family home schooled, helping to pioneer the home education movement in Australia. The Blog …explores ways to create a sustainable and just community. Explores how that community can be best protected at all levels including social policy/economics/ military. The Book Erik’s autobiography is a humorous read about serious things. It concerns living in the bush, wilderness, home education, spirituality, and activism. Finding Home is available from Amazon, Barnes&Noble and all good e-book sellers.

Monday, 14 October 2013

USA Financial Crisis – Lessons, Responses, and Social Engineering in Australia


 
It would be an understatement to say that the US is having financial difficulties and an overstatement to say that the end is nigh. The US government spends each day significantly more money than it receives in taxes or other revenue. It plugs the gap with borrowings which mostly take the form of bond auctions that are mostly bought by the Chinese. The Americans pay interest on the bonds which is fixed, not by contract, but by the market. In order to meet its interest bills the US sells more debt, that is, it borrows more money.
 
Think of it like having a credit card, not being able to pay the interest, but then getting another credit card to pay the interest on the first credit card… The technical term for this is ‘bankruptcy’ or ‘insolvency’. Under Australian company law, a firm behaving this way would be wound-up and the directors jailed for insolvent trading. On the other hand if you are the world’s biggest economy with the world’s biggest military you get to write your own rules – to a point. The point at which people stop buying bonds is the point at which the US has to either provide capital to itself (print money) or live within its means.
 
People are still buying bonds so at the moment the US can continue to borrow from its children by pushing itself into a debt spiral, plus printing money (quantitative easing), plus devaluing its currency and hence the real value of its loans (a subtle form of default).

If this guy was a company director in Australia he would be jailed for insolvent trading.
 
 Clearly this is unsustainable but the good news is that the fiscal crisis is solvable. If a business cannot pay its debts it sells off assets, cuts costs, and finds ways to increase revenue. There is plenty for Congress to cut back on without increasing the number of homeless. The US spends as much on Offence – ahem, I meant ‘Defence’ as all of the rest of the planet combined. In addition there are vast black budgets for all manner of vaguely security related projects that never see congressional review and are rarely acknowledged. There are nine official security/intelligence agencies – seriously – nine! Then there are the massive bail-outs to the people who caused the GFC. Then there is the ‘global war on terror’, then there is the domestic war on dissent – ahem, I meant ‘homeland security’. Then there are domestic subsidies to uncompetitive industries; then there is vast rorting by defence contractors of which this link provides one example.
 
The US could halve all of these budgets and still be armed to the teeth. It could then tax the rich, move wealth down to the middle classes to encourage spending and investment, build the economy and pay down debt. It might take 20 years of careful and painful budget management but there is no fundamental reason for the US to go insolvent….but it probably will in some form some-time soon.
 
The Americans may have put man on the moon but we have health care, and we won the America’s Cup, and we actually know how to do counter insurgency….
 
What lessons are we in Australia learning from this? To be honest, Aussies tend to be a bit smug about these sorts of things. The Americans may have put man on the moon but we have health care, and we won the America’s Cup, and we actually know how to do counter insurgency…. but we shouldn’t be too smug too soon.
 
If we dig a little, many of the maladies affecting the US can be found in operation in Australia. Here is a short list:
·         A breakdown in Parliamentary oversight and ministerial accountability for – well – anything at all really.
·         An inefficient taxation system that punishes the middle classes but subsidises the very wealthy.
·         An expensive, incompetent, and corrupt Defence and intelligence bureaucracy.
·         Pointless subsidies to uncompetitive industries (e.g. cars and coal).
·         Loss of productive industries through foreign ownership or unfair foreign competition.
·         Loss of government revenue through privatisation.
·         Excessive foreign ownership of the economy and consequential capital flight.
·         A culture of outsourcing.
·         Failure to invest in education and R&D at levels comparable with the OECD.
·         Blind faith in market mechanisms to solve complex social, economic, and environmental problems, leading for example, to a national housing crisis.
The good news is that we do have a half sensible social security system, compulsory superannuation, affordable health insurance, a better regulated financial system, and though we are highly indebted we do not have a debt crisis.
 
…crisis is on the way
 
However crisis is on the way. Treasury and health departments around the country have been warning for two decades that we cannot afford our ageing population. The real economy is shrinking, the tax base is shrinking, and our economy, from cars to call centres to higher education, is being outsourced. The true impact of this has been camouflaged somewhat by the mining boom but won’t be for ever. On the mining boom, for every dollar of mineral wealth produced about 11 cents stays in the country. Trans-national corporations pay five per cent tax. In real terms I pay fifty per cent. Basically we are giving away the national wealth for ‘mirrors and beads’. The message from academics and others is clear: our fiscal path is not sustainable.
 
So what to do? Well, the State has been doing plenty but hasn’t told you what or why. In the short term there have been nasty cuts to higher education, science, and single parents – stuff that Australia’s lumpen proletariat don’t really care about. The longer term stuff is about social engineering….. which is why if you want to stay at home to parent your kids in this country you get really screwed.
 
My wife isn’t eligible for the Superannuation co-contribution (government subsidy to low income superannuation accounts) because she is not waged. While there is a small tax rebate for families, there is no income splitting for married couples so the tax policy is systemically anti-marriage. The new government will institute a generous paid parental leave scheme – for working women only. Parents who work are eligible for subsidised child care. Parents who save the State this burden and care for their children at home get nothing. When my wife met our (then) local senator to point this out she was told that it was government policy to “encourage” women into the workforce to help the economy. Not for any other reason. When it was suggested that the economy is supposed to be there to support families rather than the other way around she got a look which suggested that two planets had just made contact.
 
I once attended a briefing by Treasury officials in which the need to increase productivity was explained in these terms: a birth rate of 2.3 per couple is necessary to maintain a stable population. Australia’s birth rate is 1.7. That is not enough productive people to pay for everyone’s retirement so in addition to micro economic reform (aka making it easier to do business within the country), we need to get all the women into the workforce.
 
At this point I suggested that if women were supported at home to have their babies instead of being forced into the workforce the birth rate might increase. This was followed by a tense silence, like I had farted during a eulogy, and the Treasury official resumed talking as if I wasn’t there.
 
The other aspect of social engineering is immigration. During the war Australia’s population was seven million. Now it is 23 million, a 300 per cent increase in 60 years. Rudd wanted to increase to 30 million and this has been advocated by business interests. It’s not so much ‘populate or perish’ as ‘grow the economy or perish’. Bottom line: it’s cheaper to import skilled migrants than to support Australian women to be mothers and train their off-spring. Australia’s mothers can work; we’ll put the kids in childcare, and import more workers. I doubt whether those in the Left who spruik multiculturalism as a moral value actually realise that they are serving a neo con business agenda…..but back to tax.
 
Australians like the good life but we expect fiscal conservatism from our leaders – and we punish those we perceive as borrowing too much. In Australia a borrower like Obama would simply not have got elected; so how to plug the fiscal gap? Australia is a vastly wealthy country but most of it heads off-shore to line the pockets of the already vastly wealthy. The answer touted by business via various think tanks and research institutes is to increase GST (Goods and Services Tax currently ten per cent) by half as much again and become a high taxing nation – but only for those in the middle. Heaven forbid we keep our national wealth at home.
 
New models of 'family' may better serve the economy of the future
 
The traditional, some would say God given, model of family is now at odds with our socially engineered economic model.
 
All this tax is of course inflationary and puts further pressure on families. One solution is to re-model the family to better serve the economy.  A strong traditional family unit in which economic interests are subordinate to moral and social interests is potentially more resistant to economic control. Better to have isolated units of production and consumption – a largely androgynous society, in which sex is entertainment, relationships are disposable, and children are raised by the next ‘significant care giver.’ There is increasing tension and incompatibility between the traditional, some would say God given, model of family and our socially engineered economic model. Enter gay marriage.
 
Now for the first time in the history of Western Civilisation we are being conditioned to believe that ‘mother’ ‘father’ ‘man’ and ‘woman’ are redundant concepts and any ‘significant other’ will do as parent, even if the ‘significant other’ is fairly transitory.  In this context gay marriage – something that a minority within a minority group of two per cent of the population want - suddenly becomes important. That’s not because it’s a social justice issue.  The marginalisation of GLBT people has always been a social justice issue with multiple complex facets. Rather the “marriage equality” issue is a wedge that can drive a broader social agenda to tear down traditional models.
 
Australia weathered the previous GFC pretty well – but our Keynesian response cost us our national savings. We are now poorly position to weather another global storm. Should the US debt debacle result in a melt-down in the near future expect more radical ‘solutions’ from the business think tanks – but don’t expect them to look out for your family.
 
 
 
Tag line: US financial crisis, debt crisis, Tea Party debt, Obama Debt, marriage equality, Goods and Services Tax increase, US treasuries, US bonds, Abbott paid parental leave scheme, FEMA, martial law in US
 
 

Monday, 7 October 2013

Election 2013 - is there Life Under Abbott?



Why Labor and the Left Lost the Unlosable Election

Labor and the Left lost.


World heritage areas and national parks are no longer safe, marine reserves may be repealed, environmental protections will be gutted, renewable energy will be targeted in favour of coal, climate science has been junked, the Great Barrier Reef is in jeopardy; chainsaws are revving up for a final assault on Tasmania’s forest strongholds. Environmentalists and other truth speakers will be purged from the civil service.


Election night - Abbott wins the election for the Tories

This should have been the unlosable election for progressives. Under a Labor government Australia weathered the GFC better than any other nation in the OECD. We kept a AAA credit rating. We tackled carbon and the sky didn’t fall in, costs didn’t skyrocket and our industries didn’t close. In fact lots of people got jobs in renewable energy and our superfunds invested in them. True, Labor was taking water over 'boat people' but then Labor Prime Minister Kevin, in a tactically brilliant move, pulled the rug out from under Abbott and sent them all the PNG. So why did Abott win?

 
The talking heads have dissected every tactical error in the Labor campaign but ignored the deeper issues. As someone whose social circle includes political candidates for both the Greens and Family First; my lesbian neighbours, the politically correct, Liberal voting business men, and conservative evangelicals, I would like to offer an explanation.


Basically, Australian’s don’t like Wowsers. In the early days of settlement (OK invasion for those on the Left), we had Wowsers. They were usually religious people who harboured a great personal horror at the thought that someone somewhere might be having a good time. They preached against drinking, whoring and gambling, and exhorted husbands to be faithful. In short, they were regarded as a pain the arse.


No one listens to religious people much in Australia any more but nature abhors a vacuum and the Left has rushed to fill it. Let me put it this way:


What if urban working class blue collar red neck Australia doesn’t want multiculturalism - or at least object to the wholesale taking over of suburbs by defined ethnic groups? What if many Australians don’t want gay marriage? What if people actually want the freedom to speak their mind without being reported on, fined, reprimanded, or sacked? What if people don’t want homosexuality promoted as a life style choice through the school system? What if most people deep down would prefer Caucasions to remain a statistical majority? What if people wanted recidivist sex offenders jailed for life or shot? What if most Australians just don’t want more refugees or other migrants flooding into the poorer parts of crowded cities? What if some migrants' cultural values (wife burning and clitorectomy for example) are not in-fact compatible with our values? What if some people think that being a mother is as valid as being an employee? What if we all did become human at some time prior to passing through the birth canal? Is it OK to encourage mothers to have their babies instead of aborting them? What if closing down an entire industry in the top-end and pissing off a well-armed and hungry nation of more than 200 million people to satisfy some animal rights activists wasn’t very smart?  What if some people are really worried about their teenage kids if drugs are legalised? Are people who hold those views bad people?


According to the Left they are. And that’s why the Left lost.


It’s not so much that the educated middle classes have a different set of values from most Aussies. It is that they are utterly condescending and disparaging in the way they put their values forward. Forget dialogue. Forget respect. Having received an electoral thumping the Greens have just discovered that being ‘right’ doesn’t get you elected, being popular does. Forgot to listen - whoops!


The majority of Australians would relate to most if not all of what I just wrote. To them it’s common sense. For them there is a real sense that we are losing our country, losing our morals, and losing our way. Who is ‘right’ and whether these things are objectively true is beside the point.


To make the divide greater those who implement policy seldom have to live with the consequences of it. Blue collar workers have no choice but to live with, or be pushed out by, migrants with whom they compete for jobs. The latte set don’t have to put up with ethnic gangs, are safe in their suburbs, and would never send their kids to public schools filled with ethnic students. When the Northern Territory cattle industry was decimated no-one in the Australian Public Service lost their job.


This divide climaxed recently with the proposal by human rights lawyer and refugee advocate Julian Burnside that Australia’s entire refugee intake should be housed in the Island State of Tasmania. He reasoned that Tasmania started out as one big penal colony so why not send all of Australia’s refugee boat arrivals there? We are talking anywhere up to fifty thousand traumatised people in a State of half a million centred around two large towns. Having dropped that bomb shell Julian flew home to his wealthy urban life. Hmmm. Didn’t seem to have occurred to him that Tasmanians may not want to become again another vast penal colony, or that the social fabric is already stretched, or that we would need to build a whole new hospital, or that we might have spent a hundred years trying to break free from the past.

Tamania is home to many refugees from many places, as well as economic migrants like my parents who emigrated from the UK. Migrants are a welcome and valuable part of our community. There are practical limits though to any society's capacity to absorb large numbers of people from other cultures. Julian is entitled to his views – it’s just that he doesn’t live here and he didn’t ask anyone.  See here.

Not to be outdone local Greens leader Nick McKim then rushed off to his Party to endorse Julian’s suggestion as party policy. That’s OK, it’s just that he is a member of Cabinet and a leader in a coalition government that is ‘on the nose’ and, um, he didn’t consult with the community first.


So where to from here? If we want to build a civil society, whether from the left or the right we need to stop lecturing and start building bridges. We need to care as much about boorish beer swilling blue collar working people as we do about refugees. It’s going to be tough. The Green movement is going to have to abandon the Greens and their social agenda and campaign again as a-political patriotic Australians for the environment. The Left are going to have to BBQ some sacred cows and the right are going to have to grow up and realise that the 'market' isn't going to solve our problems on its own. The market is after all about maximising private profit which is not a benevolent activity.


The Greens can represent the far far left if they want to, but in so doing they need to accept the reality that eighty per cent of Australians will never vote for them. However eighty per cent of Australians still care about the environment and about climate change. Right now Australia needs a movement for the environment from across the political spectrum, not just a manifestation of the social left which is today's environmental movement.

Tag line: Julian Burnside Tasmanian refugee proposal, asylum seeker policy, Christine Milne election, Tony Abbott climate change, Labor election 2013, secondary boycott laws, SLAPP, Greens human rights, gay marriage, marriage equality,