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Monday Message Board

June 16th, 2003

It’s time for your comments on all topics. As always, civilised discussion and no coarse language please.

I’d be interested on views about the way forward (if any) for Federal Labor.

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  1. June 16th, 2003 at 11:46 | #1

    In the Spectator of 7.6.03 (http://www.spectator.co.uk) there was some wrong headedness about the value of globalisation to developing countries. I wrote them a longish letter about it, but as they are unlikely to print it both from its length and from its not fitting their established ideas I thought I’d give it a run below before I get around to putting it on my own site. Here it is:-

    In the latest Spectator, Johan Norberg has told us roughly the right thing for the wrong reason – and similar reasoning in Banned Wagon has pointed in quite the wrong direction.

    Yes, all the things Johan Norberg states about benefits from globalisation to workers in third world countries are correct. Only, that has very little to do with whether that is helping. The catch is, the workers are not the ones at the bottom of the heap in those countries as the poor there aren’t workers yet – and without all sorts of proper markets, matching property rights and good governance, the marginalised don’t end up being promoted into being beneficiaries any more than they did with us during the Highland Clearances or the Enclosure of the Commons. And countries without proper markets, property rights and good governance are the kind there are.

    What Johan Norberg did not look at was what new Nike factories cost the people who don’t work there. As it happens, that’s practically nothing – so his conclusions are correct overall despite his reasoning being incomplete, and Nike is indeed a benefactor there. But it’s another story with exported cash crops like rice, coffee and cotton, which he touched on and which were the thrust of Banned Wagon.

    What happens with those is just what that notorious dry Nassau Senior analysed in the 1830s, when he showed that absentee landlords did not hurt manufacturing England but did hurt agricultural Ireland. A multiplier means that people there needed to export even more and ate into their own subsistence requirements; the cost of living rose disproportionately, even as non-cash subsistence dwindled. So paid workers and cash crop farmers, compradores and cottiers, do indeed get better off – but the peripheral workers start to starve. Yes, their cash incomes rise, but their subsistence resources vanish; it’s like the story of Ruth and Boaz, only with Boaz not even knowing that Ruth the gleaner would perish as he ceased to leave gleanings while he grew rich with new ways.

    This ought not to happen, but it does: because the marginalised don’t have property rights in the resources they used to have, and so aren’t compensated for their loss (poor institutions in those countries); because there are kleptocrats there, not all being like Boaz but rather like the rich man in the parable who took the poor man’s ewe lamb (poor governance); and because of something from outside, from our new world order. That something is the way we don’t really compensate these countries for the change.

    What ought to happen, roughly what happened when Britain invested overseas a century ago, is that real funds flow out and make new roles appear. Nassau Senior’s nasty scenario never happened then, because absentee ownership of foreign investments was matched by making those investments in the first place – as those funds went overseas they made the very new opportunities that were needed. The Argentine ended up with railways as well as exporting beef, and nobody starved from losing subsistence because they found new jobs arising.

    But now is different. Now the US dollar is the world reserve currency, and as it is a fiat currency a large part of the funding corresponds to printing new dollars and isn’t really making new investments at all; it’s just mobilising local resources and acquiring existing investments. This has the effect of moving food from mouth to mouth and not making new opportunities at all – you can’t simply say the poor ought to take the Nike jobs, as not enough appear. If you apply Johan Norberg’s reasoning to these countries now, it all looks good as this or that peasant makes good – but it leaves the marginalised out of the accounting, as they get squeezed off the edges with nowhere new to go.

    It is a sad final irony that charitable groups are even now agitating for these countries to be thrown open to wider agricultural export opportunities. As things are, without first arranging for those new jobs to arise in step, that can only condemn the poorest of the poor to even worse.

  2. June 16th, 2003 at 12:33 | #2

    Federal Labor still has a good chance, no matter who’s leading. Howard’s gloss is not permanent. Politics is a fickle game and I would not be surprised if Howard was unelectable in 1 year.

  3. Me No No
    June 16th, 2003 at 20:39 | #3

    24601 is right. It’s nothing like the state premiers who lead polls by 20 percent. The government leads polls by between 2 and 8 percent. All it takes for the ALP to win is .. well, to win more votes. It can easily happen.

  4. June 16th, 2003 at 21:05 | #4

    Crean is electable if he sticks together a coherent policy package, regardless of the prefered PM polls.

    The coalition lead on a two-party prefered basis seems pretty slight from what I can tell.

  5. wmb
    June 16th, 2003 at 23:36 | #5

    The ALP might, following a recent suggestion, adopt the vision of tolerance, on the basis elections are won by winning the middle ground, not standing for the margins.

  6. malatesta
    June 17th, 2003 at 10:26 | #6

    Will Labor ask the questions that make people uncomfortable and unrelaxed?
    Like who benefits from this? -
    New research has revealed nearly 120 children a day are getting hooked on cigarettes in Australia.
    Didn’t Labor talk about a commission for children? Isn’t that the domain of Australian of the Year Fiona Stanley?
    When will she get stuck into the tobacco industry, the Murdochs and excise-dependent governments?
    Answer: never, because they are her benefactors.
    So, is Labor willing to do a GG on more Howard-preferred “top” people?
    If Labor genuinely wants to attract support through skilful differentiation, then it must put all Howard appointments under the knife, and expose why he put them there.

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