Thought for Thursday

My AFR piece today subscription required is about oligopolies (industries with a few dominant firms) and why they can be such a pain to deal with. It was prompted by a particularly painful experience with one of the major banks, and begins

Although the two airlines policy was the subject of many analytical studies, it was perhaps best summed up by a cartoon that ran in the 1980s (as I recall it was by Pryor in the Canberra Times). An employee of one of the duopolists, dealing with an irate customer, is on the phone to his opposite number at the ‘competing’ airline, saying: ‘Bloke here says he’s going to take his business elsewhere – you take care of him will you, Macca?’.
In the language of academic political theory, the irate customer was trying to exercise both ‘voice’ and ‘exit’ and failing in both endeavours.

It’s a real longshot, but if any readers remember the cartoon and can point me to the original, I’d be very grateful.

Update Loads of fun in the comments section, especially for those with an ANU connection.

Stupidity is always with us

In sad times, there are always those who provide us with innocent diversion. Here’s the full text of a letter from one of our elected representatives to the Financial Review (subscription required

French are inherently treacherous

I agree with Gregory Viscusi (“US attacks on France ignore the facts”, AFR, March 25), that it is probably disingenuous to say France is against the war on Iraq purely on commercial grounds. After all, the French are inherently treacherous.

They betrayed Joan of Arc one of their greatest, who liberated France to the stake, and obviously they have not changed since 1431.

Julian McGauran ,

Senator, National Party, Victoria.

Ain't gonna study war no more

I’ve decided not to post anything more about the war for the moment. I can see nothing but disaster ahead – huge Iraqi casualties, both military and civilian, then a long and bitter occupation, with the likelihood of substantial Coalition losses over time in subsequent ‘counter-terrorist’ actions.

Unfortunately, I also can’t see any way of averting this outcome. A withdrawal, leading to victory for Saddam, would be an even greater disaster than what can only be a Pyrrhic victory for the Coalition. If there is some sort of possible compromise, I have no idea what it is.

Life, and especially war, is unpredictable. Perhaps things will take a sudden turn for the better. I hope for a quick end to war and bloodshed, even though I see no reason to expect it.

Every day, another falsehood

My observation that “One of the most striking features of the war so far has been the fact that, on a wide range of issues, Iraqi official statements have been a more reliable source of information than those of the US and allied governments” drew some derision from my friendly nemesis, Jason Soon, though he did not give any counterarguments. Following the same line, Catallaxy contributors Heath Gibson and Jack Strocchi reproduced as fact British reports of an uprising in Basra, despite denials not only from Iraqi officials but from the much more credible Al-Jazeera. The same reports predicted an imminent British assault in support of the rising.

A day later, the British defence minister, Geoff Hoon is quoted as saying the situation is ‘unclear’, and there has been no move to assist the putative rising with ground troops, as opposed to shelling. Either the Shias have been left in the lurch yet again or, as seems more likely, the original reports were bogus, just like:

The crowds cheering the liberation of Safwan
The Scud attacks on Kuwait
Saddam’s death
The effortless victory at Umm Qasr
The effortless victory at Nasariyah
The chemical weapons factory at Al Najaf
The surrender of entire Iraqi divisions
The 8000 prisoners taken in the first two days

This would be bad enough if these falsehoods were the product of deliberate propaganda aimed at shoring up public support. The worst of it is that the Coalition leaders believe them and act on them, producing yet more disasters.

And as I write this comes the news of a Coalition hit on a crowded market in Baghdad – shades of Sarajevo.

Word for Wednesday: Globalisation (or Globalization) definition

Globalisation is one of those ‘vogue’ words that suddenly become ubiquitous. They are used in all sorts of contexts by all sorts of people. They seem to promise understanding of the ills and hopes of the day, and yet no one seems to know precisely what they mean. In the 1960s, ‘alienation’ was such a word, while ‘systems’ and ‘structural’ had their vogue in the 1970s.

Undoubtedly the word of the 1990s is ‘globalisation’. It has been used to explain everything from the fashion for baseball caps worn backwards to the decline of the welfare state. It has been represented both as the culmination of human history and as a regression to the 19th century. But in all its forms, globalisation is a crippling and disabling concept. It implies that in future, every aspect of our economic and social lives will be determined by impersonal global forces over which we as a community have no control.

Although no precise definition of such an elastic term is possible, globalisation refers in essence to the growth in international flows of goods, services and especially capital that has taken place since the 1970s.

Two different stories are commonly told about globalisation. The first story is basically about technology. Globalisation is commonly claimed to be the inevitable result of technological changes and, in particular, the striking innovations in computing and telecommunications that have taken place since the 1970s. These developments, it is claimed, have made possible a massive growth in international financial flows, and the development of highly sophisticated international financial markets which form the basis of a new global economy. This story is nonsense. The world economy was far more globalised in 1900 than 1950 and instantaneous links between financial markets were established with the laying of the trans-Atlantic telegraph around 1870.

Whereas the technological story of globalisation ignores the global economy of the 19th century, the neoliberal story presents the 19th century as an economic golden age to which we are about to return. In fact, for neoliberal true believers, the entire 20th century may be seen as a mistake, a statist interruption of the natural development of the free market economy.

According to the neoliberal story, the 19th century economy based on free movement of goods, capital and labour produced strong economic growth and was generally beneficial. However, some groups, such as workers in industries threatened by competition from imports, generated a backlash against globalisation which led to the widespread adoption of tariffs and restrictions on migration. The end of globalisation was completed by the suspension of free capital movements during and after World War I. According to this story, we are only now returning to the true path of a free-market economy.

In this story, globalisation per se is less important than the imperative of a return to free markets. Globalisation goes hand in hand with domestic free-market reform.

Opposition to ‘globalisation’ does not necessarily imply support for economic or cultural nationalism. The term ‘internationalism’ is far older than ‘globalisation’ and connotes a democratic and progressive position of support for international cooperation. The same position is sometimes summarised in the pejorative phrase ‘transational progressivism” (adherents are more briefly referred to as “Tranzis”).

Blogging and TV

Along with James Morrow and Gareth Parker, I’ve been interviewed for a possible 7:30 Report segment on blogs and the war, presumably to be aired when the straight war news has slowed down a bit. Mick O’Donnell, the ABC journalist also mentioned that he might interview Gianna, and some US bloggers.

Actually, I don’t think that the war is a topic where blogs have a comparative advantage. The traditional media are the primary source and are devoting huge analytical resources to it. Blogs are better for longer-running stories where careful analysis and public domain research are the strong point. An exception is the Baghdad blog of Salam Pax. Assuming (as I have no reason to doubt) that this is a genuine insider’s account, it is better than anything that visiting journalists can do. If it is a work of fiction, it’s a compelling one.

Al Najaf

The story of a chemical weapons plant found at Al Najaf received wide coverage, the subsequent Pentagon statement that claims were ‘premature’ received a bit less, and this item seems to have run only in the Financial Times so far.

Department of Defense officials said on Monday that no evidence of chemical weapons production had been found at a facility close to the southern Iraqi town of Najaf occupied by US forces on Sunday

. It’s still possible that Saddam has some chemical weapons stashed around Baghdad for a last stand. But if so, it’s clear that, even in these extreme circumstances, deterrence is still working. The claim that Saddam’s weapons presented an imminent danger to the US or to Iraq’s neighbours has already been refuted by events.


In military terms, the Coalition setbacks of the past few days don’t appear very significant. But this is essentially a political war and politically things are going very badly. There is little sign that the Coalition forces are regarded as liberators, even in Southern Iraq where it was expected that they would be welcomed with open arms by the mainly Shia population. While the anti-war camp can say ‘I told you so’, this is scant comfort. We will all have to live with the consequences of a war which is rapidly becoming one of conquest rather than liberation.

The only thing that could make the situation much worse is large-scale civilian casualties. These are most likely to arise, as they have in the past, not from the direct impact of bombing but from starvation and disease. Such an outcome is already threatened in Basra where the water supply to much of the city has been cut off following the destruction of the power plant at the main water supply station. So far, there has been no serious response from the Coalition leaders to this potential disaster.

If there is to be any chance of a successful peace, the Coalition must take all necessary measures to ensure that water supply to Basra is restored, even if this means lifting the siege of the city.

Wishful thinking

One of the most striking features of the war so far has been the fact that, on a wide range of issues, Iraqi official statements have been a more reliable source of information than those of the US and allied governments. Within the first day or so of the invasion, US sources on the spot in Southern Iraq were claiming the capture of towns like Nasiriya and Umm Qasr, the surrender of entire Iraqi divisions and predicting the imminent fall of Basra. Meanwhile, Iraqi officials in Baghdad were denying all this and claiming that their forces were fighting on. Even for someone as skeptical of US official pronouncements as me, it did not seem difficult to tell who had the facts on their side and who was merely blustering.

But as it has turned out, the Iraqis were right on all these counts, while the US was wrong. The Iraqi claims may have been just lucky guesses but it seems more likely that their communications have not been disrupted to the extent that the US has claimed.

On the US side, there’s no reason to suppose that the claims were deliberate lies or military misinformation. The most plausible explanation is less sinister but in many ways more disturbing. Throughout the journey to war, the US Administration has displayed wishful thinking on a massive scale, leading to uncritical acceptance of anything that seemed to reinforce its self-belief. The easy credulity that was given to the forged documents supposedly showing Iraqi purchases of uranium from Niger and the clumsily doctored and plagiarised analysis of Iraqi intelligence put forward by Blair’s spin doctors are two of the most notable examples, but there are many more.

The most critical piece of wishful thinking is the assumption that the armed forces of the US and UK, which have been bombing and starving Iraqis for the last decade, will be welcomed as liberators when they finally defeat Saddam. The argument that Saddam’s defiance was responsible for the bombings and that his corruption was responsible for the devastating impact of the sanctions, plays well in Washington thinktanks, but I imagine the view of the average Iraqi is much closer to ‘a plague on both your houses’.

Second thoughts on shock and awe

Having long feared the adoption of a ‘shock and awe’ strategy in Iraq, I assumed the worst when large-scale bombardment of Baghdad began a few days ago. ‘The worst’, in this context means a strategy designed to terrify the population into submission either by inflicting substantial casualties or knocking out services like electricity and water. In fact, the reports from Baghdad so far suggest that, while massive in scale, the bombardment was tightly focused on targets like government departments and Saddam’s palaces, and that civilian casualties have been limited. This is a good thing, and gives at least some hope that the war will not turn out disastrously badly.

On the other hand, while technologically impressive, this kind of attack does not seem to have generated much shock or awe and nor was it likely to. Everyone knew that the US had the capacity to flatten Saddam’s palaces and assumed they would do so. That included the regime which appears to have evacuated most of the obvious targets in Baghdad itself, although the situation may be different with the Republican Guard perimeter defences.

The strategy of striking at symbolic targets associated with the regime, and of attempting ‘decapitation’ would be an effective one if (as some commentators have assumed) the regime is so much hated that the majority of people would actively support an invasion as soon as it appeared safe to do so. But so far, that does not appear to be the case. No doubt most Iraqis hate Saddam, but there’s little evidence that they have any love for Bush.