Welcome to the Great Australian Scab Grab

I’m not telling you anything that you don’t know when I observe that Australia is in the grip of the greatest economic scab grab of my lifetime. By that I mean that the national economic pie is being torn apart by the multitudinous grasping hands of rent seekers. MB does it’s best to chronicle the frenzy but, honestly, it’s impossible to keep up. Here’s a list off the top of my head of those interests currently deploying their all to rip out a slice:

  • banking (obviously) is fighting a much needed royal commission;
  • real estate has embarked upon a vast anti-negative gearing reform agenda;
  • super industries are in uproar over a minor pull back their concessions;
  • grey groups are the same;
  • the taxi industry is enraged and campaigning against disruption;
  • pathologists are threatening ballot box strikes;
  • pharmacists are the same;
  • oil and gas is outraged at meaningless national interest tests;
  • mining has all manner of complaints: royalties, diesel rebates, demands for inquiries;
  • steel is seeking a future;
  • farmers are screaming for support versus screaming supermarkets;
  • unions are howling against penalty rate reform;
  • its raining defense pork;
  • its raining infrastructure pork.

This outlandish scab grab is universally aimed not at winning business, nor competing successfully but at policy protections to secure or preserve economic rents. Why has the great scab grab come about? I see eight reasons.

1. A Federal Election

We should expect a rising chorus of locusts during a federal election especially as the economy and budget sink further into post-mining boom troubles. The pressure is on to repair the budget balance and that means cutting back on concessions or raising new taxes. But, I put it to you that this is the least important driver of the frenzy; a flash point if you will. What is more important is why the budget is such a powerful driver of rent seeking in the first place.

2. Bad economic structure

This is the more important reason behind the centrality of the budget to business and thus the push for rents. Australian spruikers like to sell the economy as “diversified” but this is rubbish. At its base, Australia has only two economic drivers: houses and holes. Mining delivers national income and banking leverages it up to spread the wealth. Everything else follows these two. That means that these two industries have limitless power over policy. Disruption in one equals disruption to the entire nation.

Moreover, with half of export income (a lot more than that for external sector profits) driven by a largely foreign-owned mining sector, the corporate taxes and royalties in the budget are the primary mechanism via which Australia collects the income derived from its natural resource endowment. The stock market and wages do some too but it is the budget that is the great redistributor via low taxes for households.

In the case of the banks, the relationship between budget, national interest and private profit is even more compromised. The banks fund (create!) the entire Australian current account deficit. The budget guarantees these same offshore borrowings. Any division between the two is purely for show.

3. Banks and miners showed us the way

There was a kind of elongated tipping point when all of this became de rigueur. The GFC bailout of the banks and subsequent disguising of the fact was a red rag to the rent seekers. It declared to all with the eyes to see that the Australian government had passed through the ‘markets golden age’ that began in the late eighties and was wide open for bailouts.

Then mining showed these hungry rent seekers the way with the anti-resources rent tax campaign of 2010 which, with a just a few million dollars of advertising spend, initiated a coup d’état that enabled it to write its own tax code, literally in the Cabinet Room of Parliament House.

4. Bad market structure

But these two industries were operating on fertile ground. After decades of mergers and acquisitions, the wider Australian economy is extraordinarily over-concentrated with oligopolies operating in every major sector. Shadow Assistant Treasurer Andrew Leigh spoke of this in last week’s John Freebairn Lecture:

Like a large tree that overshadows the saplings around it, firms that abuse their market power prevent newer competitors from growing. They hurt entrepreneurs and often reduce the scope for innovation. Consumers suffer through higher prices, lower quality and less choice.

But some of the benefits of market power invariably go to the people who run the firms. At the time of his secret meeting at the All Nations Hotel, Richard Pratt was the third richest person in Australia.

But aren’t moguls who made their money through wielding market power the exception? What about the story of ingenious entrepreneurs creating value for the community? Such examples do exist – think of Boost Juice founder Janine Allis, Red Balloon founder Naomi Simson, Atlassian founders Mike Cannon-Brookes and Scott Farquhar and Bing Lee founder… Bing Lee.

Alas, when it comes to the wealthiest Australians, breakthrough innovators are not the norm. Analysing how the richest Australians made their money, Gigi Foster and Paul Frijters estimated that just 5 out of 200 had become rich primarily by inventing a new product or service.[i] Far more commonly, the most affluent operated in industries with limited competition, or significant reliance on government decisions.

[i] Paul Frijters and Gigi Foster, ‘Rising Inequality: A benign outgrowth of markets, or a symptom of cancerous political favours?’, Grattan Institute, 2015.

Capturerewgwe

Precisely. Such market structure inherently lends itself to rent seeking over competing.

5. A bought and paid for media

I’ve chronicled extensively the business model links between Australia’s media duopoly of Newscorp versus Fairfax and their respective real estate businesses. It must be said, however, that that is symptom rather than cause. Digital disruption is the real driver as old media business models of expensive journalism cross-subsidised by advertising disintegrate. In their place we find “churnalism” which relies upon low costs, junior writers reproducing press releases and editorial for sale.

For Fairfax this new model has no corporate memory, bugger all analytical power and, indeed, seeks user generated content because it is free, including from the very entities that newspapers used to hold to account. As such it has a become a barely filtered gusher of rent-seeker porn. What journalists are left are swamped by this material and constantly threatened by management Hell-bent on cost reductions eventually looking for greener pastures. Over time only the chaff remains.

The Murdoch half of the duopoly now operates as a straight mouthpiece for a simplistic “free markets” agenda deliberately conflated with existing businesses not competition and therefore anti-market. It has aligned this worldview with the Liberal Party side of politics completely so there is an echo chamber between a political and media power wrapping extant monopolies in protective but closed loop of logic.

In short, one side of the media is now hopelessly broken and the other side transformed into a rent-seeking foghorn.

6. Sub-altern psychology

Such as it is, Australiana tends strongly towards populism. By that I mean it very much values the appearance of fairness more than it does the actuality of it. So long as a leader can project the appropriate values of being a decent bloke, lover of sport, can rub shoulders down the pub and hang shit on foreigners then he could probably walk away with the crown jewels and a pat on the back.

I’m a bit of a blokey sort myself and totally get the appeal of an identity that privileges individual over class. But, truth be told, such a culture is easily manipulated. We see it all of the time in bogan baiting public relations campaigns by corporations and political parties that successfully prod battlers into acting against their own interests.

Ironically, in historical terms egalitarian culture derives from a sub-altern history of colonisation by imperial betters. As such it is not a milieu of self-regard that asserts its needs and pursues them in the open. It is psychology born of bitter deprivation, abuse and entitlement when opportunity presents itself. Under pressure it tends to revert to such very quickly and the Nanny State is both the loathed parent and longed-for safety net.

Don’t get me wrong, I love being an Aussie. We have some fine moments when we come together as a people. But, the market economy is never more than skin deep among Aussies with reversion to the mean of pulling favours from or for your mates never far away.

7. The endless boom

That is partly where out endless boom has sown the seeds of its own destruction. Running for so long without recession has fed and fattened Aussie entitlement like a goose hooked up to lard-pumping pipe.  We  now internalise all good fortune as the fruits of competence. We all now expect to be rich. And if it is not delivered we expect there is someone else to blame for it. We claim the good and blame the bad and, as a country, we are denuded of the ability to admit when things need to be fixed via simple hard work and mutual sacrifice.

Some of what we see above as rent-seeking is not cynical. It is the behaviour of the righteous, those who earned their payoff, and now want to keep it come what may. That that dividend was always in part an illusion, paid for by later generations of Aussies, is not something that even occurs to many. The boom has promised luck and riches to all of Australia and the endlessly repeated moniker of 24 years without a recession is its talisman.

So, as we head into the double structural headwinds of both peak debt and the end of the China boom, history tells us not to roll up our sleeves but to roll the dice. We won’t work harder nor smarter, we’ll look to India to buy more dirt. We won’t add value to our endowment with manufacturing, we’ll be blessed by a “dining boom” as the mining boom goes bust.

Pampered and fluffed and full of our own success we’ll expectantly await our next windfall.

8. Political corruption and conclusion

Into this mix you then throw a ruthless and inept leadership class.

As a small, open economy with a large resources endowment, over-concentration and Banana Republic dynamics are a perpetual risk. Over the course of Australian economic history our prosperity has waxed and waned around periods of good policy that resisted the natural trend towards consolidation, rent-seeking and external imbalances and periods of bad policy when unscrupulous leaders exploited the divisiveness of same for their own ends.

We enjoyed a good period of policy from the 1980s through the millennium but since then it has been a steady decline towards grasping self-interest in leadership, radically narrowing ideologies and short term compromises in the name of power.  We’ve now reached a point where a standing prime minister is thrilled to share his seal with the lowest of low rent-seekers in real estate agents and thinks he can get elected by doing so!

This breeds its own dividend of like-minded thinking in the polity as we all give up on any mutual purpose in the mad dash for our own smashed piece of economic pie. There’s no meritocracy to it. There’s no liberalism in it. It’s a kind of cleptocratic suicide mission that has us all scrambling over one another to beg for one more economic crumb.

Both political parties have contributed mightily to this outcome. The Labor Party mishandled its post-GFC bailouts and allowed itself to be rolled by mining. The Liberal Party has become a parody of its underlying values, celebrating whichever rent seeker will give it the greatest electoral advantage.

There are good people that would like to change it on both sides but it’s like an oil tanker with no captain and it is likely that there will be no turning it before it sinks on the rocks ahead. That’s the scary thing about it. The Great Australian Scab Grab has only just begun. As the fight over the budget turns to the fight over the ever-declining economy…well…we ain’t seen nuthin’ yet!

Comments

  1. What pharmacists grab?

    I know of all the other corrupt interests listed.

    It is not raining infrastructure, it is raining immigrants – cheap labour from the 3rd world to make it bloody hard to get a job.

    I wonder if the novated lease handouts are continuing.

    • Tassie TomMEMBER

      LOL – I’ve got no idea how “novated leases” ever made it into tax law.

      And I love the term “bogan baiting” – I’m going to use that in future.

      • Mining BoganMEMBER

        I’ve just spent a week amongst a group discussing their new leases. Hooligan Holdens. Porsche, Audi and Bimmer 4WDs. Mustangs galore. Every two years a new entitlement in the driveway. Novated leasing is to the moon. I did note that the new ‘Dreamer’s Corner’ in South Hedland is much bigger. The old one was too crowded in 2009. Oh, and it’s straight across the road from the FMG camp. Hmmm…

        Still relying on houses too. Plenty of ten house retirement plans being thrown about. Sentiment is waning but they don’t know what else to do. Carnage awaits.

      • I know Tassie

        they get rid of a modest meals entertainment allowance and keep novated leases for bmw’s, mercs etc

        great logic

      • I wonder if it was originally sold as a way of supporting the local vehicle industry by way of increasing demand for new cars?

      • Can someone explain how this novated lease rort works? A colleague at work has a brand new massive SUV Volvo, that and his negative gearing regime seem to be all the rage. I keep telling him to downsize he doesn’t need a car that big (recently divorced and only has kids every other week) but he insists it’s costing him nothing.

        I recall looking at novated lease options and it just wasn’t worth it…. I drive a 2008 Suzuki Jimny, good on fuel and cheap to run… No tax break though.

        *Edit ok did a quick Google, why on Earth can I purchase a car using pre-tax income? That’s almost as stupid as negative gearing….

        What purpose did this serve? Was it originally designed to boost local car sales?

      • So it is not so much pharmacists but pharmacies?

        Government determining how many pharmacies there can be within 2km of an existing pharmacy.

      • I don’t know about your laws in full, but in NZ I, for instance, couldn’t own a pharmacy, or number of them, and just employ a pharmacist to be at the counter. They all have to be actually owned by a pharmacist (it keeps the price of them up!). They do collaborate as brands (UniChem etc) for bulk buying purposes, but they are a closed shop stifling competition and keeping outsiders at bay.

      • ErmingtonPlumbingMEMBER

        Mostly when I read the word Competitive, I think race to the bottom. Nobody wants to be “Ripped off”!
        The personality trait of obsessively endeavoring to get the “best price” carries its own kind of “Scabbieness”

      • Yep EP…. it always sound good when taking price until its your life that becomes the focus… and some wonder why there is so much fraud… its the last tool in the chest…

      • Mostly when I read the word Competitive, I think race to the bottom. Nobody wants to be “Ripped off”!

        The personality trait of obsessively endeavoring to get the “best price” carries its own kind of “Scabbieness”

        Here’s the thing EP, and you should know this if you run a business. You can charge a premium for your product or service, if it’s justifiable for higher value by higher quality, more convenience, or some other attribute. And people will pay that if they think it’s worth it.

        Government regulation artificially limiting the supply is not adding value at all. If anything it distorts the provision of that product or service in a way that provides worse outcome for the consumer.

        But hey, it’s great if you happen to have a business already in that space. As an Australian business owner I’m sure that you’d love similar regulation in your industry.

      • Aussie pharmacies are disastrously overpriced and uncompetitive. I can order OTC stuff on eBay that is 10x cheaper than the best price I can get from a bricksnmortar store.

        I keep wondering why others don’t do the same….. ❓

      • R2M…

        Not to worry the robots won’t need drugs… not to mention Drug Corporations in America are one of the biggest recipients of subsidies and tax breaks…. but yeah… ev’bal Monopolists Chemists…

        Disheveled Marsupial… more walmartification…. gezz that worked out great in the end…

      • Then enlighten me R2M… I thought your comment was based on lower price is the end all be all for the consumer… not that things like TTP et al will give IP rights a wide open barn door to do as they please once dominate market share is achieved.

        Disheveled Marsupial…. then there is the drama with all the IP consolidation mobs out there… duty to the Corporatist future mate….

      • FeknameMEMBER

        @skippy I will give it a go. I think R2M might be saying that the pharmacy monopoly has lost its power because online pharmacies are now very abundant. That is the best I can come up with after reading his answer a few times. Might be a joke in there about trusting meds from the internet? Or an observation that pharmacists should be the owners for quality control..I have no idea.

      • Fekname…

        Its just the same Walmartification w/ some digital service… more monopolies… and less competition w/ less wages and job security…

        Disheveled Marsupial… file under self interest…

  2. ceteris paribus

    National interest anyone? Ask not what your country can do for you but what you can do for your country? Create deep value for national prosperity rather extracting the proceeds?
    Nah! Don’t be silly. Rent seekers and tax refusalists abound, extracting any wealth they can and ripping off the common treasure house of health, education, research, public infrastructure and utilities, environmental health and sustainability, sovereign resources and community cohesion and trust.
    Love the pig out photo. Love the sentiment of the piece.

  3. I think today’s election result in Austria marks a turning point.

    90,000 immigrants in 1 year (2015) made the voters so angry that they voted for an openly anti-Islam MP to be the next PM.

    He even wore a nazi sunflower in 2013.

    Geert is surely next.

    One can only hope that UKIP is genuinely anti-immigration and not just wanting to swap immigration from Eastern Europe for immigration from South Asia.

    • Being on the frontline defending Christian Europe against the Ottoman Caliphate for over two centuries, including two great battles to defend Vienna from the Caliphate (1529 and 1688) and much fighting thereafter to preserve the West in alliances with other powers like Poland, the Italian states and Spain, leaves a very deep memory.

    • Ronin8317MEMBER

      The ‘lunatic left’ continues on a platform of promoting national suicide by painting calling who is against uncontrolled immigration as ‘racist’. These kind of headline is why Austrians are voting for Nazism again.

      http://www.dailymail.co.uk/news/article-3484307/Teenage-migrant-rapes-Austrian-mother-52-immediately-caught-police-insisting-took-phone-number.html

      It does not matter when the majority of asylum seekers are law abiding. It only takes a few bad incidents to ruin the image for everyone. In a country of 8.5 million, 90K refugees per year, on top of the existing immigration, is simply madness.

      • That’s one of the oddest crime stories I’ve ever read, kind of like an assassin deliberately leaving their driver’s licence on their victim, possibly with a note saying ‘If anyone wants me, I’ll be at this address…’

    • Rusty PennyMEMBER

      “One can only hope that UKIP is genuinely anti-immigration and not just wanting to swap immigration from Eastern Europe for immigration from South Asia”

      When looking at the waist lines of UK women, perhaps an influx of Eastern European women could do wonders for British morale.

      • Most immigrants entering AUS are male. There is no requirement that 51% of foreign students in AUS be female.

        Immigrants are stuffing up the gender ratio along with the unemployment rate!

      • Rusty PennyMEMBER

        We’re importing sausage in other words?

        Man, why isn’t there a focus on “equal outcomes” here?

    • Hilarious how the extreme or alt right and many more moderate, claim demographic suicide, due to ‘immigrants’ overtaking christian Europeans….. christian observation and participation have plummeted, while churches cling to dodgy politicians aka Poland, Hungary etc., and what is a ‘European’, it’s neither a race nor an ethnic group?

      There is a democratic deficit growing due to youth and working age (mobile in EU and often precluded from voting) being screwed by older generations of committed voters whose horizons merely scope their pensions and health care and ‘immigrants’, sound familiar?…… and no one knows how the oldies will be supported in future without crashing their state finances…. some nations’ politicians get a lot of short term mileage from dog whistling, works as political or campaign tactic, but does nothing for the nation in the long term.

      It make some think that most xenophobes and nationalists are really raving narcissists…… as head of US Skeptics said after doing ‘beer and pizza’ with holocaust deniers (non violent conspiracy types), antisemitism was secondary, talking about themselves was primary……

      • Rusty PennyMEMBER

        I’m pretty sure if you asked most Europeans what consituted a European, and what constituted a non-European, they’d have a pretty good idea.

        I reckon if you asked the same question to East Asian’s and South Americans they could answer it too, with an answer pretty close to above.

        Hello, I reckon if you asked Robert Mugabe, he’d also give a definitive answer n line with the above.

        The only one who hand ring about this, by intentionally delving into semantics, the real ‘hilarious’ notion here, always seem to originate from the safe, advanced and prosperous environs that Europeans seem to be found.

        White guilt is really getting old.

  4. GunnamattaMEMBER

    Good piece, though I dont think you push the writing far enough when it comes to the corruption that permeates every layer of decisionmaking when our economic landscape has devolved to the level of uncompetitiveness it has.

    Like Most Australians would consider their homeland a good step up from the sort of stuff which unfolds in the Russian speaking world, but here, just last night we have this from Fairfax…..

    Mafia adviser’s meetings with Malcolm Turnbull, MPs
    http://www.theage.com.au/national/mafia-advisers-meetings-with-malcolm-turnbull-mps-20160522-gp0slh.html

    No, I dont think the ALP is any better – it was just that the LNP headline was in my mind when I read this piece.

    The sad thing is that a lot of Australians think that the little bit of corruption they think they have works in their favor – so they kind of like it. Of course I speak mostly of the politico housing complex which has gamed, and so far remained unpinned when it comes to taking a social good and making it a speculative asset class preeminent, and the ability of that politico-housing complex to remain (even now, even with the ALP running anti – Negative Gearing in an election campaign) on the very edges of public awareness and accountability. The market isnt a market – it is a game of plausible deniability, where the onus of proof moves from needing to prove something is competitive (in a market) to needing to prove something is corrupt or anti competitive (in a legal or social sense).

    Other nations recognise the system as something they know well…….

    Chinese interests play increasing role in Australian political donations
    http://www.theage.com.au/federal-politics/political-news/chinese-interests-play-an-increasing-role-in-australian-and-political-donations-20160517-goxl8b.html

    This is how democracy and politics works in China (or Russia, or indeed just about anywhere else). The rich buy the outcome they want and ignore the interests of the rest. This is what Australia is descending into.

    Those owning assets know (even if they dont know how) that the corruption (or lack of transparency/accountability) is what is keeping their assets as valuable as they are, and they are aware that their assets and their aspirations for a comfortable life are the ‘human shield’ of the vested interests now controlling the economy. By and large they will vote with the vested interests, while hoping the corruption doesnt tinge them.

    So far all we have seen is decent journalists (and your comments on the media are spot on and have been self evident for at least 4 years) are laid off and seek work elsewhere. From here on it will be those who still seek to do some form of journalism (as opposed to a churnalist) who will be found with their hands bound and a control shot to the head as the vested interests identify more closely who is a risk to them and their model.

    At the moment there is still a sense of plausible OKness for many who have jobs and have assets. Yes they are mainly older (though there are plenty older who are doing it tough). I guarantee (because I have seen it up close) that the real stress point of a corrupt society is when there isnt enough wealth to share around between the corrupt interests and they start fighting with each other for patches of turf (from which to extract their rents). Australia is walking onstage into that environment right now, with the curtain going up in as little as 6 weeks.

    Voters should ask themselves if their election is about bedding down the model you describe or doing something about it regardless of who they vote for.

    • The media being corrupt is the easiest message for the electorate to absorb, and should be the mantra of any aspiring non party candidate.

      Australians know there’s a horrible stench right across the parliament, but have yet to put it all together.

      Attack the media.

    • Exactly! The issue more about the corruption of governments, government officials, and society in Oz. It is endemic.

    • But Russia does not have mass immigration.

      How come they have not corrupted Putin enough to allow mass immigration.

      Maybe Putin does not want to make it harder for Russians to get a job – unlike corrupt MPs in AUS.

    • Well said Gunna, I was just thinking today how corrupt this country has become and it seems to bear no resemblance to what it was like growing up here in the 80s and early 90s. Or maybe it’s just that I’m older and more aware of it now?

      I keep thinking I should leave for a new destination because it’s not the country I thought it was.. But hard to convince my partner to go yet. Perhaps if we are squeezed further it might encourage her. But I fear like a frog in boiling water we may not notice our plight till it’s too late.

      We really need this correction or I suspect things will just get worse… From great pain can come positive change.

  5. there is profound difference between workers trying to protect penalty rates and REA trying to preserve NG, between farmers screaming against supermarkets and super industry spruiking their profits, …

    there is profound class gap in australia that is becoming wider at accelerated speed and putting both sides of the gap in the same basket just helps to destroy the country

    • ErmingtonPlumbingMEMBER

      Any Jurno talking seriously about class would soon find him/herself ostracized and if to persistent, out of a job,…at least out of a job that’d pay enough to live in a Capital city.

      • Thanassis Veggos

        Doctor X I know, when I tell my neighbours that “house prices are absurd for a working class suburb”, they look at me like a shat in their imaginary swimming pool (that they don’t have).

      • Pretty much, there are a lot of people who have mistaken “bogan bait rates” for actual wealth

      • billygoatMEMBER

        @thannasis Veggos. Too true. I shat in a colleagues imaginary wealth. In casual discussion I questioned the wisdom of holding the winning bid at auction with NO other bids from any parties then raising your own bid by 60k to then WIN the auction! I was then schooled in how auctions works & it was mansplained (wow doesn’t even auto correct to anything – does that mean it’s a legitimate term??) to me that ‘you have no idea how auctions work & vendor bid’ Passionate words on both sides but best I could come up with was that I found it absurd that a bidder would bid against themself. My colleague declared that in no circumstances would they accept less that 1.3 mill for their outer inner west abode & anyone who offered less could essentially ‘get f@&ked’ because that is not how the market works. Insanity prevails!

  6. HnH Good article:
    The reason there is no chorus of locusts as the economy and budget sink is as follows.
    a) most people dont know about the state of our economy
    b) most dont know about our economic role / status in world affairs
    c) most do not know about the advancing role of machine intelligence
    d) most do not know how the wealth has been moved to one side of the economic table
    e) most have an inkling that lifestyles are changing, but credit fixes that .
    f) most people do not care!

    There has been so much crying wolf in the past, which has been papered over by anti social interests, read cartels run by the Elite, that many think the Wolf is miles away.
    When Mr.Canis Lupis appears at the front door there will be panic.
    (this is when the sidelined money on the economic table will move back into play)

  7. When Mr.Canis Lupis appears at the front door there will be panic.

    As long as it’s not Canis LupUs we’ll be okay. 🙄

  8. The flourishing of the Chicago School and subsequent deregulation of the financial sector through the 80s and 90s has only served to create private global monopolies, concentrate wealth in fewer hands, and has been a disaster for social democracy. Our economy is entirely captured by the banking and finance sector. They are writing their own rules.

    When jobs are – as a matter of policy, as a matter of creating shareholder value – exported to developing countries, then there is nothing else left to do but financialise every other sector of your economy, increase the role of debt to enable consumption, import consumers when your own are tapped out.

    Everything will be sacrificed to this overarching goal – a free press, public education, public health, cultural identity, everything, all gone – to keep asset prices high, to maintain consumption, to cover over the gaping chasm left by the outsourcing of jobs, the privatisation of public goods, the primacy of shareholders, the capture of public policy by the banks and neoliberal economic ideologues (sociopaths), for whom truth and fairness are mere variables, money the only constant.

    • ErmingtonPlumbingMEMBER

      Luckily the right are protecting us from refo terrorists and from wollies and coles (grocery code of conduct)

      And the politically correct left are sticking up for GLBT rights (whats the b stand for?) and the 0.5% of the polulation that wants to get gay married.

      So chill dude,…she’ll be right mate.

      • The Right (Liberal Party in this country) are entirely bereft. Menzies would not even recognise his own party, would squirm at the kind of hateful tosh that is so casually offered up as conservative policy debate by the likes of Cormann, Robb, Brandis, Morrison, Pyne, Cash, Turnbull et al. They are hollow ideologues, entirely sold and bought by vested interests.

        At least the ALP, for all its faults, for all of its own policy capture, is making an effort to reform. Now, of course, they have been forced to focus on policy and cultural values by the demagoguery of the right and the popular appeal of the great phony liberal Turnbull. But I will take that over the shallow, malevolent vision of the modern Liberal Party.

      • Yes Green The so-called reforms of the 80’s were just more and bigger distortions trying to paper over the distortions of the past. I get damned sick and tired of all the denial. Those so-called reforms accelerated the pace of the arrival at our, now, inevitable destination.

      • B = Bisexual EP.

        As much as gay marriage and similar issues are just and worthwhile causes, they are far from the only causes, nor should they be front and centre of a comprehensive progressive agenda. I think it’s an area where the left has really dropped the ball in recent decades, possibly as a result of the leading figures on that side of politics having become well educated and financially comfortable, thus focussing their energies on issues of more interest to them.

  9. H&H, your key theme is correct, so this comment is at the edges only.
    My repetitive, boring defence is of farmers. Their contribution to overall GDP is pretty low nowadays, but (a) they have a great multiplier effect, (b) they are the world’s most efficient broad-acre farmers, (c) they have lower subsidies than just about every country except NZ, and (d) they generally produce food you can safely eat.
    As you well recognise, our cartel-like supermarkets exert extraordinary buyer power. I would guess that their behaviours were the primary driver in the emergence of the Effects Test in competition law. Our farmers fight every day – whether it be against drought, poor suppliers of rural services, incompetent infrastructure operators, or government bureaucracy. They rarely scream, because they know that no-one listens – there are not enough of them to make their vote matter. All they want is a decent set of Queensberry rules.

    • Yes, I agree. Not sure why one would add farmers to the list of the most pernicious rent seekers. Compared to the grocery sector in this country, which would have no qualms in quashing competition to ensure a monopoly of supply – all in the name of ‘consumers’ (laughable) – farmers are relatively saintly.

      • Re he schmozzle in Victoria. I see one comment that ‘ we’ve got money to give them psychological advice to try to stop them killing themselves but we don’t have money to give them a decent price for their milk.’

    • Tassie TomMEMBER

      I agree to in general, with the exception being the water license/ irrigation game.

      In Tassie there’s some small irrigation schemes going in – their cost to build is around $20,000 per permanent megalitre, and the farmers are paying around $1000/ML for the right + $100/ML/yr.

      This massively increases the value of their farms, far more than their investment. Sure there’s some knock-on benefits – more upstream and downstream jobs related to their increased productivity, but it is still a massive value boost created out of thin air and paid for by the rest of us.

  10. My vote is for 7, the endless boom
    We have become a lazy, complacent nation
    We’ve chosen to make our way in the world not by competing in human capital but by digging stuff out of the ground
    We’ve chosen to make our personal fortunes not by risk taking and innovating but by investing in property
    We’ve chosen to drive growth not with economic reform but with monetary policy and cheap debt
    We keep making the lazy choices because they keep paying off. But we need to question the choices we have made and that will only happen once we have a recession

  11. Stephen Morris

    You haven’t even begun to comprehend the holocaust that is bearing down on us.

    This is not just an Australian problem. It is a problem facing the entire human race. And it is far, far, far, far worse than you imagine.

    For God’s sake, step back for a moment and consider the bigger picture while there is still time to do something about it.

    Stripped of its ephemera, human history from the Agricultural Revolution to the Industrial Revolution was a story of psychopaths competing (sometimes collaborating) to attain positions of power, then using that power to dominate and brutalise their fellow human beings. We know from the historical record that such brutal individuals felt no remorse whatever in wasting the lives of thousand – millions even – of “their” Subjects.

    The ideals which many people in the 20th century regard as “self-evident” were incomprehensible to such psychopaths. As Charles I famously remarked, “A Subject and a Sovereign are clean different things.” Or consider Alexander Hamilton speaking to the Constitutional Convention: “All communities divide themselves into the few and the many. The first are the rich and the well-born; the other the mass of the people … turbulent and changing, they seldom judge or determine right. Give therefore to the first class a distinct, permanent share in the Government … Nothing but a permanent body can check the imprudence of democracy.”

    Those were the truths self-evident to Rulers in the pre-industrial era.

    If that behaviour seemed to moderate in the Modern Era, it was not because homo sapiens psychology had evolved. The psychopaths are still there!! It is just that the demands of the industrial economy made it expedient – for a time – for the Rulers to make certain concessions to their Subjects.

    The industrial state required the training of large numbers of Subjects to operate the complex – but not fully automated – machinery of industrial production. Having had so much invested in them, Subjects had value and their bargaining power relative to their Rulers improved. In the extreme, they could withdraw their labour and quickly impose greater costs on the owners of capital than they themselves suffered. Under such conditions, the optimal strategy for Rulers (only after they had tried violent suppression and found it ineffective!) was to make certain limited concession to their Subjects.

    A similar phenomenon occurred in Europe following the Black Death when labour became temporarily scarce, and the Subjects were – for a brief time – able to exact better conditions from their Rulers.

    The conditions of the industrial era lasted longer than those following the Black Death, and the concessions were more entrenched. Thus we had the quintessential ideals of the 20th century:

    a) egalitarianism, the ideal that all people are entitled to the same basic opportunities irrespective of their ancestry;

    b) democratisation, the ideal that Subjects are entitled to have some say in how they are governed; and

    c) self-determination, the ideal that self-identifying communities are allowed to choose for themselves for they will govern themselves.

    But these concessions didn’t mean that the psychopaths had gone away. The snakes have been there all the time, wearing their suits and uttering hypocritical cant for those foolish enough to swallow it.

    And there was nothing to say that the conditions of industrial production must last forever. And they haven’t!!

    What we are witnessing today – not just in Australia but worldwide – is the Elite’s response to the post-industrial world, the world of AI and robotics. No longer are large numbers of Subjects required to run complex – but not fully automated – machinery. Now it is small numbers of very highly trained trained technicians required to manage the robotic workforce. Small in number, they can easily be bought off.

    As for the rest of humanity?? Well, they are now redundant. Their Rulers no longer need them. The concessions made previously are now “inoperative”.

    And the Elite are responding precisely as you would imagine self-serving psychopaths to respond. They are relentlessly winding back any concessions hitherto made.

    Inequality is quickly returning to historical norm, as Piketty has documented. We are returning to a feudal state in which property is owned by the magnates and everyone else is a defenceless serf.

    Monied interests and well-organised pressure groups have found it a trivial exercise to subvert elective government (it was never Democracy). And to entrench their gains, they are taking ever more decisions out of the hands of elective government: the privatisation of strategic monopolies means that elected politicians are forced negotiate with private magnates, on terms dictated by the private magnates.

    And self-determination has been eroded by the growth of opaque and unaccountable supranational organisations (like the EU) and so-called “trade” agreements (which actually have little to do with trade and everything to do with taking decisions out of the hands of national governments).

    This is only going to get worse. At some point, the Elite will decide that the continued existence of masses of redundant human beings is a threat to their own safety.

    Already, we have seen the recent unveiling of weaponised robotic “security guards”. This technology isn’t going to go away.

    And you don’t need to be Einstein to see how it must end.

    There is – perhaps – still a window of opportunity to forestall this holocaust, but it is closing rapidly. As the Elite re-consolidate their power it will become ever more difficult for the Subjects to do anything about it.

    The only hope for most of the human race is to fight for Democracy. Fight for the institutional changes which will make politicians truly accountable to the People.

    For God’s sake, while there is still time.

    • So: You want us to fight for Hamilton’s democracy? Isn’t that THE problem? Isn’t that what Sanders is fighting to circumvent? Who knows, but it looks like a lost task. Otherwise your post is spot on!

      • Stephen Morris

        Hamilton was an anti-democrat. The US Constitution was design to forestall emerging democratic tendencies in the colonies by creating a central government which the Elite could control.

        The modern use of “democratic” to refer to “elective” government arose only in the 1790s, paradoxically as a perjorative applied by Hamilton’s Federalist Party to Jefferson’s and Madison’s “Republican Party” (what became the Democratic Republican Party, not to be confused with the modern Republican Party):

        The Republicans contended that the Federalists harboured aristocratic attitudes and that their policies placed too much power in the central government and tended to benefit the affluent at the expense of the common man. Although the Federalists soon branded Jefferson’s followers “Democratic-Republicans,” attempting to link them with the excesses of the French Revolution, the Republicans officially adopted the derisive label in 1798. (http://www.britannica.com/topic/Democratic-Republican-Party)

        Ten years after ratification of a deliberately non-democratic constitution (in the historical sense), a political party can be seen appropriating the title “Democratic” safe in the knowledge that there was no real threat of actual democracy (in the historical sense).

        This strategy has been used ever since. The “German Democratic Republic” (the former East Germany) was in fact a police state. Likewise, to this day the brutal North Korean dictatorship chooses to style itself “The Democratic People’s Republic of Korea”.

        And the Elite in almost all other countries refer to their regimes as “democratic” when they are in fact merely “elective”. Those who do not know their constitutional history swallow this rhetoric without question.

      • Hear hear… Stephen Morris…

        That some don’t realize neoliberalism is just a return to a variant of Noblity in a two tiered social template… is concerning…

      • But Stephen Morris, weaponised robots are just as easily manufactured by some of the non elite as by the elite. With fewer numbers, the elite could easily find themselves more vulnerable than they might otherwise think…ie: push too hard and revolution results. Ways will always be found to bypass the elite’s safety barriers once push comes to shove.
        But you are right….the human costs would be enormous.

      • Stephen Morris

        Perhaps. Perhaps.

        But realistically we may expect to see the Elite working hard to keep this technology under its own control . . . . for the “public good” of course.

        Unlicenced manufacturers of weaponised robots will be savagely punished.

        Indeed, even under present legislation, any attempt to make such a device would probably fall within the definition of “terrorist activities” and render one liable to life imprisonment.

        I suggest that Nhibbo would be wise to avoid suggesting such a course of action, even as a hypothetical possibility.

        Any resistance to the oncoming holocaust must be perfectly legal.

        Futile perhaps. But legal!

      • drsmithyMEMBER

        But Stephen Morris, weaponised robots are just as easily manufactured by some of the non elite as by the elite.

        Please show your working.

      • Please show your working.

        Drsmithy, it is there for all to see. The most potent, mechanised military machine the world has ever seen has failed to subdue the Afghani/Pakistani “terrorists” despite 14 years of trying, just as in Vietnam a generation before.

      • drsmithyMEMBER

        Drsmithy, it is there for all to see. The most potent, mechanised military machine the world has ever seen has failed to subdue the Afghani/Pakistani “terrorists” despite 14 years of trying, just as in Vietnam a generation before.

        That is a very, very different statement to “weaponised robots are just as easily manufactured by some of the non elite as by the elite”.

        The yanks are constrained by faux civility and the rules of engagement. If they really wanted everyone there dead – WW2 total war style – they’d be dead. There wouldn’t be any boots on the ground, there’d just be endless drops of bombs.

    • Belligerent Blue Jay

      ‘This is not just an Australian problem. It is a problem facing the entire human race’
      I agree it’s an ape thing not a footy team colour thing. It’s also amusing when people who claim to be against the system and inequality, propagate divide and conqueror memes about ‘race’ and ‘gender’.

    • ErmingtonPlumbingMEMBER

      A Well written lament Steve.

      I agree entirely with what you have stated above, but would like to comment, that i think you over emphasize the role of individual (ruler) phsycosis.

      When i was 22-23 (early 90s) a friend introduced Noam Chomsky to me, through a Video tape called “Manafacturing Concent, Noam chomsky and the media” The film, as well as discussing his book of the same name, is a bio on Chomsky and delves into his thoughts and analysis on modern society and the forces of indoctrination required to circumvent basic principals of justice and fairness (traits Chomsky considers inate to the human condition, like he posits language is also) through what he calls the instutional process. It is the lack of serious analysis of this process by our Mass Media that makes the Democracies of the west so Disfunctional. He also believes, that at the point our species is at now, True Democracy may be a nessary element of our very survival.

      I agree with this and think that of all the issues people here on this site embrace,…R2Ms advocacy of Climate change mitigation, Skippys laments on the curruption and evils of Neoliberalism and WWs fears of robot over lords, or Boomer intergenerational theft,… one must also embrace, as a primary cause to fight for, an Independent Press, free of Comercial constraints and considerations.

      Without a victory for THIS cause, all other causes are doomed to fail.

      http://youtu.be/YHa6NflkW3Y

      • Stephen Morris

        The ease with which Elites may manufacture consent is a consequence of the interaction of elective government and an aspect of Game Theory known as the “Schelling Focal Point” (https://en.wikipedia.org/wiki/Focal_point_%28game_theory%29).

        In order for their reporting to be considered “newsworthy”, reporters with limited time and resources must focus on those events which they expect others to regard as “newsworthy”. In the political arena, established political parties are a natural focal point for what may be expected to be considered newsworthy, making it difficult for others to gain attention. This allows established parties to “control the narrative”.

        This goes some way to explaining why new parties are often prepared to be outrageous in their behaviour and statements: it is the only way to gain any media coverage. But there is an invidious trade-off between the benefit of being outrageous and the cost of such behaviour in undermining voter confidence in the party’s ability to govern under a system which awards a monopoly on power to the winner.

        The effect is magnified by the tactic of holding elections for all constituencies on a single day. (Note how this is in contrast to corporate practice where directors retire in rotation each year and stand for re-election.) The simultaneous election of all political agents on a single day ensures maximum congestion of media channels and increases the incentive of reporters to move to the Schelling Focal Point.

        True Democracy breaks the Elite parties’ stranglehold on the narrative. Once a matter comes up for referendum, it becomes newsworthy whether or not the Elite parties want it to be.

  12. casewithscience

    I feel sick – I try in my own business to push innovation and competition hard, but I am undermined by dominant firms who are protected by industry and government policy. I don’t understand our government protects existing business, when it should be looking to help up and coming businesses which will promote the future economy. As it is, I am seriously considering selling into one of the big firms – where they will just work me senseless to pull cash, but ignore all my innovation work. Short term gains and long term failure.

    • interested party

      “I don’t understand our government protects existing business” umm……brown paper bags mean anything?…. also lobby groups and connections…….not what you know but who.
      Start with the end in mind, I was taught. Have an exit strategy as nothing lasts forever. Cash out before new/better technology kills you off or the better funded get hold of your ideas and undercut you.

      In other words…. don’t make a business your life… know that it is finite and the clock is ticking.

  13. Torchwood1979

    This outlandish scab grab is universally aimed not at winning business, nor competing successfully but at policy protections to secure or preserve economic rents.

    And we are being governed by an economically illiterate Coalition Government with “Malcolm” as Prime Minister.

    So is it 1982 or 2016?

  14. “What about the story of ingenious entrepreneurs creating value for the community? Such examples do exist – think of Boost Juice founder Janine Allis, Red Balloon founder Naomi Simson, Atlassian founders Mike Cannon-Brookes and Scott Farquhar and Bing Lee founder… Bing Lee.”
    – Andrew Leigh

    Notice anything about that list? Aside from Altassian, which is neither one nor the other, the ‘innovations’ are all aimed at more consumption rather than production. That is the way the economy has been slanted for the last 60 years so it is not surprising that might be where big innovations occur because it pays.
    Alternately it might reflect Leigh’s thinking bias given he is part of the Canberra Sydney Melbourne axis where only consumption matters.

      • Blimey IP – Even you and I aren’t old enough to take us back to a time before that wasn’t happening. Sometimes I get really sad for us and for our planet.

      • interested party

        Well…… economics is very much city centric. I would go so far as to say that the bush is the last bastion of society and community. Cities are full of me me me me me…….and the scab grab IS the soul of the city.
        That is why I find cities to be completely toxic and recognise they are the very antithesis of sustainability. And that is why they will take us over the edge.

  15. In my (humble) opinion.
    The Four Horsemen of the Western Economic/Cultural Apocalypse.

    1) Neo-Liberalism.
    2) The Frankfurt School Cultural Marxism, Political Correctness and Dumbing down role of the Mainstream Media.
    3) The Cultural Marxism Role of Feminism to produce a Feminized Society where the “Feminine Imperative” has infiltrated nearly all strata of culture and society. (See the Rational Male blog for an explanation).
    4) Too big to Fail style Capitalism = Cryptofascist Kleptocracy.

    • drsmithyMEMBER

      LOL. Yeah, civility and treating the other half of the human race with respect will be the downfall of western society.

    • Stephen Morris

      If only it were a joke.

      Drivers will now be tossed onto the heap of redundant human beings.

      How long will the Elite – the increasingly concentrated owners of capital and their political stooges – be prepared to go supporting this growing pile of “useless” humanity?

      See Brad Delong’s article on “Peak Horse” (http://equitablegrowth.org/technological-progress-anxiety-thinking-about-peak-horse-and-the-possibility-of-peak-human/).

      We are now witnessing Peak Human.

      Perhaps they will be sent to glue factory.

      • Rusty PennyMEMBER

        Is your view that the psychopaths will seek to offer sustenance level UBI’s for the masses? Or they’ll engage in tacit extermination, such as continued funding for regressive movements like feminism?

      • azxylonMEMBER

        The joke is primarily on those private car owners who allowed themselves to be used as tools by Uber. So that Uber could change the mindset of governments in such a way as to undermine the conventional taxi industry. And in turn, their success in bringing this about may now allow Uber to discard those private car owners in favour of the driverless taxi. Maybe.

        In any case, in a wider sense the joke is, yet again, on us.

      • Stephen Morris

        If history is any guide (and why should it not be if human psychology has not evolved?) then an Elite which feels threatened will not hesitate to eliminate the threat . . . by whatever means.

        And to add insult to injury, they will construct some rationale – some “ethical” system – by which their actions will be justified as being necessary and virtuous.

        As John Locke famously remarked (Essays on the Law of Nature):

        “There is almost no vice, no infringement of natural law, no moral wrong, which anyone who consults the history of the world and observes the affairs of men will not readily perceive to have been not only privately committed somewhere on earth, but also approved by public authority and custom. Nor has there been anything so shameful in its nature that it has not been either sanctified somewhere by religion, or put in the place of virtue and abundantly rewarded with praise.”

        Rationalising a little mass extermination should prove no difficulty to the “theologians” of the future, any more than it has to those of the past.

      • interested party

        Stephen, peak human was at least 60 years ago…. since then it has been chronic overshoot.

        Rusty, tacit extermination won’t be needed. Culling will be taken care of by the changing world climate. Starvation and storms will dent the population somewhat.

        No matter how you cut it, there is trouble ahead…. I submit to you that the climate is the only danger here… and not out at year 2100 either….. try this decade and the next one. We are so close to agricultural collapse that all your worst fears won’t have time to crystallise.

        Syrian refugees are just the start…. the main event hasn’t even started yet.