Economic rationalism - Global Action Int

"To have died and left this world a better place is nobler than to have died a mere consumer."
Lyn Vickery.

Australians work the second longest working hours of all the OECD countries after South Korea. 50% of Australian workers take no holidays whatsoever or reduced holidays.
Dec 2002

If you feel as if someone snuck in and ripped twenty years worth of work and savings out of your life, this page will explain why! The answer is ECONOMIC RATIONALISM AND GLOBALISATION! Just read on

                     The process of deregulating the Australian economy began in 1983.
                     Australia was copying the blueprint laid down by Margaret Thatcher in
                     the UK and Ronald Reagan in America.

                     The process began under the Hawke-Keating governments, starting with
                     deregulation of the financial system. Subsequent Coalition governments
                     have continued the process. Economic rationalism has a number of
                     elements.

                     It was promised that the deregulation of the financial system would lead
                     to lower interest rates and charges to consumers, and would allow in
                     foreign capital investment to boost economic growth and our standard
                     of living. Neither happened.

                     The deregulated banks have become investment houses, more
                     interested in lending to and managing the funds of the top end of town.
                     They have slashed their staff and services to the small customer and
                     applied a whole range of fees and charges. The effective interest rate
                     (when fees and charges are included) on loans to family farmers and
                     small businesses is between 9.5% and 13%.

                     The deregulated financial system has not boosted manufacturing and
                     agriculture. It has been used for speculation and to buy imported goods
                     as manufacturing industry has contracted. Today we import over $57
                     billion worth of manufactured goods more than we export.

                     The result is a $294 billion net foreign debt as of September 2000. This
                     debt has seen a loss of confidence by the international financial markets
                     in Australia and caused the Australian dollar to sink to record lows. In
                     2000, this was as confirmed by reports of leading financial institutions
                     like the Hong Kong and Shanghai Banking Corporation (HSBC); the US
                     financial giant Solomon Smith Barney/Citibank; USB Warburg (AFR,
                     October 26, 2000).

                     Should there be a further loss of confidence in our ability to repay this
                     debt, Australia could face a mass flight of foreign capital, precipitating
                     the sort of acute economic crisis that crippled Thailand, Malaysia, South
                     Korea and Indonesia in 1997-98.

                     Just as a bank effectively owns the home of a householder who can't
                     repay the mortgage, it is the foreign financial markets and the
                     International Monetary Fund which will ultimately set our economic
                     policies if we cannot service the foreign debt. In effect, they can tell us
                     to sell off our banks, to double our taxes and halve our welfare to repay
                     debt.

Hence, the rising foreign debt threatens, not only our standard of living,
but Australia's economic sovereignty.

                     National Competition Policy has been responsible for the wholesale
                     privatisation of public utilities like electricity, gas, airports, railways,
                     telecommunications, government banks, government insurance offices
                     and orderly marketing boards for eggs, sugar and dairying. Many other
                     government bodies have been corporatised or required to operate on a
                     pay-for-service basis.

                     Certainly some enterprises do not need to be government-owned or
                     regulated, but many do, for the common good of either those in the
                     industry, or the society as a whole.

                     • The privatisation of Telstra has seen the erosion of services to rural
                     and regional areas, and the axing of staff to the point where the
                     company's long term competitiveness is threatened - all in the name of
                     maximising short-term profits.

                     • Privatised electricity companies have cut staff and maintenance and
                     run down their infrastructures. In New Zealand this led to a major power
                     breakdown that blacked out Auckland for weeks.

                     • Deregulated agricultural industries have seen farmers forced to
                     compete by boosting production allowing powerful supermarket chains
                     to slash the price to farmers. Concern for farmers has reached the point
                     where even the head of Woolworths, Roger Corbertt, now says that
                     agriculture is in crisis (Stock and Land, December 14, 2000).

                     Free trade policies have seen the slashing of tariffs, the emasculation of
                     anti-dumping laws, the loss of government preferential contracting to
                     Australian industries and the weakening of Australia's quarantine
                     regulations.

                     Many manufacturing companies have moved offshore, been bought by
                     foreign-based multinationals, or simply closed down. It is one thing to
                     remove protection to and assistance for extremely inefficient industries;
                     it is quite another to refuse to have an industry policy to encourage
                     new, competitive replacement industries to provide jobs and incomes to
                     workers and families. Such is the blind faith that economic rationalists
                     have in the free market.

                     Labor market deregulation is a euphemism for breaking the power of
                     unions so as to shift workers onto work place contracts, cut wages and
                     conditions and shift increasing numbers of workers into casual and
                     part-time work.

                     The argument is that economies do better and workers, while suffering
                     displacement and possibly lower wages in the short-term, end up better
                     off in the long-run.

                     This policy line received a strong push worldwide when the Organisation
                     for Economic Cooperation and Development (OECD) published its Jobs
                     Study report in 1994. However, in 1999 the OECD's leadership was
                     embarassed when the organisation's labor deparment issued a report
                     that found:

                     • many countries with regulated labor markets had lower unemployment
                     rates, more stable jobs and less labor turnover than those countries
                     with deregulated markets;

                     • that innovative and flexible working practices, considered necessary in
                     the age of rapid technological change, are more likely to be introduced
                     by those companies that work closely with trade unions.

                     >From the trade union leadership there have been only muffled protests.
                     Many have become resigned to the effect of globalism - of their union
                     members being forced by Labor and Liberal government deregulation to
                     compete with low-wage countries.

                     Union leaders have failed to get even a Labor government to implement
                     effective industry, banking, taxation and trade policies, to build new
                     industries and to help exporters gain a competitive advantage against
                     their foreign rivals.

                     Ironically, the Labor Party, the self-styled representative of the
                     workers, at its year 2000 National Conference voted for "free trade" not
                     "fair trade".

Economic rationalist policies are now profoundly affecting Australian
businesses, workers and the fabric of Australian society."

Globalisation - would the last business to leave Australia please turn out the lights.

The following are excerpts from an article published in the Financial Review's Christmas special, December 22 - 26, 2000, by Alan Kohler:

"There is an unpleasant realisation beginning to creep over corporate Australia that it is getting harder to think of good reasons for staying home. For executives and professionals, Australia is no longer the magnet it was. It used to be called a brain drain, but now whole corporations are preparing to leave.

"Australia's marginalisation is entering a new phase: being ignored by the world is galling enough but Australian companies with global ambitions are beginning, a little guiltily, to do the same. Veteran company director Stan Wallis warned in the past week that there would be an exodus of Australian companies unless Something Is Done - and there is every sign he is right, as National Australia Bank prepares to follow Rio Tinto in becoming a London-based dual-listed company and several others are said to be packing their bags.

"One of the core competencies in running a major corporation is the ability to take advantage of industry rationalisations and opportunities for business growth. In other words, deal-making.

"No matter how good or senior the local branch manager is, there is no substitute for the boss being on the ground and able to know what's happening and react quickly. Deals happen every day in the clubs, restaurants and boardrooms of Europe and the US - it is the way that companies grow and develop. It is very difficult for an Australian chief executive to muscle in on the action by telephone from the other side of the world, or from a strange hotel room.

"That consummate communicator, Rupert Murdoch, understood this first. Not only did he move to the US, he became a US citizen to improve his ability to do deals unhindered. More and more Australian chief executives, frustrated by late nights and early mornings on the phone, and still feeling left out, are coming to the same conclusion.

"Globalisation is without doubt the number one issue for Australian businesses as the new century begins, and the difficulty of running a global business from Australia is the number one problem associated with it. Indeed the prospect of becoming so marginal a player in the global economy that even our own companies can't stay here, raising the prospect of a spiral of irrelevance, has snuck up on Australia."

Now perhaps you understand why you are getting nowhere in life. Now you understand why GLOBAL ACTION applauds and supports efficiency, energy, enterprise and prudent business management, but rejects the mindless steamrollers of globalism and economic rationalism.

But where did Reaganomics and Thatcherism spring from? To find out the answers to that read the works of Professors Friedrick Hayak (Socialism is a straight road to serfdom!) and Milton Friedman.

Where Keynes brought us inflation and eventually stagflation, Hayak's writing - taken to the extreme by others as usual - led to mindless economic rationalism.

Good economics is about balance. About quick responses to changing economic trends and new, often unforeseen, factors. About small, nimble, wise government - but above all it is about vigorously acting in the best interests of the people at all times.

In certain areas of the world economy private enterprise does deliver the goods far more efficiently than the dead hand of government control and bureaucracy. On the other hand there must always be a powerful umpire to guard the interests of the people - once this balance is tipped in any direction economic failure, hardship and eventually ruin will follow.

It is the energy of individual people that makes the world economy function. Demotivate or disadvantage the people and as sure as day follows night the economic progress of whole nations will soon stall.

Finally, a word from Ronald Reagan himself "We must not look to government to solve our problems. Government is the problem!"