politics | Paul Wallbank - Communications Professional

Revolution and disconnected leaders

Revolutions are unexpected, but the causes are often obvious to all. The West shouldn’t be too smug about the economies of other nations.

China expert Patrick Chovanec has a provocative blog post on What Causes Revolutions, building upon the Financial Times’ description of how the Chinese Communist Party is struggling with corruption.

In his article Chovanec quotes Richard Pipes’ Three “Whys” of the Russian Revolution which looked at how the fall of the Tsarist government was largely unexpected.

This is true with the fall of all great regimes, in the late 1980s the idea that the Soviet Union would cease to exist within a decade was unthinkable.

Chavonec quotes a key part of Pipes’ book;

In 1982 [Pipes writes], when I worked in the National Security Council, I was asked to contribute ideas to a major speech that President Reagan was scheduled to deliver in London. My contribution consisted of a reference to Marx’s dictum that, when there develops a significant disparity between the political form and the socio-economic context, the prospect is revolution.

“A significant disparity between the political form and social-economic context” could be just as applicable to Western democracies.

The Economist article makes a point about the French revolution “the widely accepted theory now is that the French Revolution was one of rising expectations that eventually could not be met.”

As Stratfor’s George Freedman pointed out last week, a generation of Americans have expectations that are not going to be met. The same is true in Europe.

While there’s no doubt the China’s political structures – like those in all totalitarian nations – are more brittle than those in established democracies, it might not be a good idea for those of us in the West to be smug and complacent about our own systems.

Zapata image is courtesy of Ferferfer through SXC.

Did online democracy ever exist?

The idea of democracy in an online world dominated by private interests is a misnomer.

“Democracy is dead” proclaim online pundits as Facebook closes down their corporate governance feedback pages.

The question though is whether democracy really exists online; the internet is largely a privately run operation which makes the hysteria about the International Telecommunication Union’s attempts to impose standards on the web all the so more fascinating.

As a consequence of almost every internet service being run by private organisations, rights and concepts like “democracy” are pretty well irrelevant and have been since the first connection to ARPANET.

When we use services like Facebook, or even our internet provider’s email account, we are only being allowed to do so within the companies’ interpretation of their terms and conditions.

Often those interpretations are wrong or bizarre as we see with Facebook’s War on Nipples and often the results of misinterpretation are costly for businesses.

But we have little recourse as these sites are private property and the owners can do pretty well what they like within the law.

Just a like a shopping mall, if the managements of Amazon, Google or Facebook want you to leave their service then you have no choice but to do so.

We can squeal about rights online, but in reality we have few.

That’s something we should keep in mind when investing our time or business capital into any particular platform.

Life in the mob

At a time of easily generated moral hysteria, it’s best to keep your head rather than joining the mob.

The reaction to last week’s tragic passing of a nurse over a hoax phone call shows how hysteria and cynicism in new and old media fuel each other.

Having created villains, in this case the two hapless Sydney radio hosts, the mainstream media creates a moral outrage to stir up the mob which in turn generates more headlines.

As with the Hillsborough tragedy, this allows those in positions of responsibility the opportunity to avoid scrutiny and accountability.

In this case we see the hospital management demanding action being taken against the Sydney duo while conveniently ducking questions about why poorly paid nurses are expected to act as switchboard operators on top of their already considerable responsibilities.

Now we’re seeing calls to make practical jokes illegal – no doubt there’ll be a wave of teenage boys being prosecuted for making prank phone calls when panicked politicians pass poorly drafted laws to deal with the ‘problem’.

Our taxes at work.

Your mission in life is to use your brain and not to be one of the torch bearing mob.

If it’s you the mob are looking for, then it’s best to lie low until another headline or something shiny distracts them.

Stumbing into recession

An obsession with surpluses and satisfying the ratings agencies is going to have harsh consequences for Australians

The Committee for Economic Development Australia (CEDA) today released its 2012 Big Issues survey looking at the responses of 7000 business people on the issues confronting Australian industry in 2012.

One of the notable results is that business people don’t care about government surpluses. A third are neutral on the question “do you believe maintaining a government surplus is important” while 35% disagree that it is a high priority.

Yet despite the electorate and business saying the deficit is not a priority, the politicians still obsess about maintaining their surplus.

Now Australia’s mining boom has come to an end – along with the blue sky economic assumptions that underlie both sides of politics’ spending plans – governments are desperately trying to fudge the books and continue the pretense that their budgets are in the black.

Driving this obsession with avoiding deficits is the religious belief among Australia’s political classes that Triple – A credit ratings from the discredited Wall Street ratings agencies is more important than educating the nation’s children, caring for the country’s sick or building the infrastructure to compete in the 21st Century.

The real danger with this deficit obsession is that there is a very high possibility that state and Federal governments are going to tip Australia into a recession driven by European style austerity. Already we see this developing as various states start slipping backwards according to the ABS’ latest accounts.

Another interesting result from the CEDA report is how business’ view the Australia in the Asian Century report with nearly 80% of respondents saying the issue is important or critical.

It is questionable whether Australian business is prepared to face the realities of an Asian Century as David Llewellyn-Smith writes at the Macro Business Blog, Australia’s businesses are looking more at getting help from the government to cut domestic costs rather than sell into Asia. That inward focus of Australian business since the mid-1990s is the topic for another blog post.

The sad thing is that the government aspects of Asian Century report is stillborn as surplus obsessed politicians carve into skills training and innovation programs in a vain attempt to balance the books while failing to reform the tax system or address the middle class welfare that’s squandered most of the returns from the last decade of prosperity.

Australia’s politicians are very soon going to have to decide who they govern on behalf of, the corrupt and incomptent ratings agencies or the people who vote for them and pay the taxes which support them and their political parties. For some, this might be a tough choice.

Newly normal in the English Midlands

The new normal will be different to the old normal – is the English Midlands a vision of the future?

On their metal, a story from BBC Radio’s In Business program looked at how the English Midlands is dealing with the toughest economic conditions the beleaguered region has suffered for decades.

Once the centre of the industrial revolution, The Midlands have had a tough time of the last fifty years as the region caught the brunt of Britain’s de-industrialisation and the loss of thousands of engineering jobs.

Today, the surviving engineering companies are struggling to find new markets as orders from Europe dry up and many Midlands workers find they are confronting the ‘New Normal’.

The ‘New Normal’ for British industry is described by Mark Smith, Regional Chairman, Price Waterhouse Coopers Birmingham who points out that UK industries have to sell to the fast growing economies.

Interestingly this is similar, but very different in practice, to the Australian belief – where the Asian Century report sees Australia continuing being a price-taking quarry for Asia rather than selling much of real value – the Brits see some virtue in adding value to what they sell to Asia’s growing economies.

The British experience though shows the realities of the ‘New Normal’ for Western economies – the cafe owner featured in story now offers no dish over £3 and the idea of overpriced five quid tapas are long gone. The customers can’t afford it.

Part of this is because of the casualisation of the workforce as people find salaried jobs are no longer available and become freelancers or self-employed. One could argue this is the prime reason why unemployment hasn’t soared in the UK and US since the global financial crisis.

That ‘new normal’ features the precariat – the modern army of informal white and blue collar workers who have more in common with their grandparents who worked for day wages at the docks and factories in the 1930s than their parents who had safe, stable jobs through the 1950s and 60s.

For the precariat, the idea of sick leave, paid holidays or a stable career started to vanish after the 1970s oil shock and accelerated in the 1990s. The new normal is the old normal for them, there just happens to be more of them after the 2008 crash.

With a workforce increasingly working for casual wages without security of income, the 1980s consumerist business model built around ever increasing consumption starts to look damaged.

The same too applies to the banking industry which grew fat on providing the credit that unpinned the late 20th Century consumer binge.

When the 2008 financial crisis signalled the end of the 20th Century credit binge, the banks were caught out. Which is why governments had to step in to help the financial system rebuild its reserves.

The effects of that reserve building also affected businesses as bank credit dried up. Early in the BBC program Stuart Fell, the Chairman of Birmingham’s Metal Assemblies Ltd described how his bank decided to cut his line of credit from £800,000 to £300,000 which forced the management to find half a million pounds in a hurry.

That experience has been repeated across the world as banks have used their government support and easy money policies to recapitalise their damaged accounts rather than lend money to entrepreneurial customers to build businesses.

Businesses are now looking at other sources to find capital from organisations like the Black Country Reinvestment Society which is profiled in the story that raises money from local investors to provide small businesses with working capital.

Communities helping themselves and each other is the real ‘New Normal’ – waiting for the banks to lend money or hoping that surplus obsessed governments will save businesses or provide adequate safety will only end in disappointment as the real austerity of our era starts to be felt.

The New Normal is declining income for most people in the Western world and we need to think of how we can help our neighbours as most of us can be sure we’re going to need their help.

Just as the English Midlands lead the world into the industrial revolution, it may be that the region is giving us a view of what much of the Western world will be like for the next fifty years.

Here’s where the fees go

Goldman Sachs is taking on new partners, showing how lucrative their fees are.

Becoming a partner of Goldman Sachs is a path to riches and is admission into the highest elites of the Western World’s corporatist society.

The Guardian looks at the process of becoming a Goldman Sachs partner from joining the company as an ‘analyst’ or ‘associate’ through to achieving the highest partner level.

What’s notable about the story are the layers of management and their grandiose titles; the position of “vice-president” being a case in point where it is the next step up for associates and analysts rather than the seat of power such a title suggests.

The sheer number of these vice-presidents and Managing Directors, estimated in the hundreds by the Guardian, is another notable point. The fact there are nearly 500 partner positions in the firm indicates just how fat the fees must be to pay these people.

If Goldman Sachs and their clients were private companies their fees and remuneration would be their own business. Since the Global Financial Crisis, Goldman Sachs and its too-big-to-fail competitors now are explicitly underwritten by the world’s taxpayers.

That should make us all concerned at just how much our grandchildren are going to have to pay for the generous lifestyles of today’s banking elites.

Australia in the Asian Century – Chapter 8: Building sustainable security in the region

What are the security issues for the Asia in the 21st Century

This post is one of the series of articles on the Australia in the Asian Century report.

The eighth chapter of Australia in the Asian Century looks at the security picture of the region, this is one of the bigger chapters and like some of the others it’s as notable for what it leaves out as for what it says.

National objective 20. Australian policies will contribute to Asia’s development as a region of sustainable security in which habits of cooperation are the norm.

That’s nice, worthy and has been undoubtedly true for most previous Australian governments. Except of course when Australian Prime Ministers join the prevailing colonial power in wars like Iraq, Afghanistan, Malaya, Korea, Vietnam or kicking around the German territories in World War I.

Chapter Eight partly dives into territory already covered in Chapter Three, this time though the analysis does discuss the United States’ role in more detail and makes the observation that US military spending dwarfs that of any other Asian nation – interestingly this is one of the few times Russia gets a mention in the entire report.

Encouragingly, the paper doesn’t confine the concept of ‘security’ just to military matters and takes a broader view of issues such as guaranteeing access to resources, food and water. There is some discussion of climate change and on regional responses to natural disasters such as tsunamis and earthquakes.

One notable omission is that of refugees. Given that most of the asylum seekers arriving by boat are Asian – currently coming from Afghanistan and Sri Lanka – and almost all pass through other Asian countries, it would be expected this issue would get some exploration. Sadly it doesn’t and once again skirting over an important issue detracts from the paper’s substance.

As befits Australia’s most important relationships in Asia, there is a lot of discussion of the three way relationship between China, the United States and Australia with a detailed breakout box in section 8.4.

The discussion on Australia’s relations between China and the US makes an interesting statement;

In managing the intersections of Australia’s ties with the United States and China, we will need a clear sense of our national interests, a strong voice in both relationships and effective diplomacy.

Undoubtedly this statement is true, however successive Australian governments have conflated the interests of the United States with being the same as Australia’s. In recent times Australian leaders have followed the US lead even when it has been clear American policy conflicts with Australia’s Chinese relations.

Moving away from a reflex support of the United States is going to be one of the biggest challenges for Australian governments in the Asian Century and one hopes the process is as gradual and incident free as the white paper hopes.

National objective 21.The region will be more sustainable and human security will be strengthened with the development of resilient markets for basic needs such as energy, food and water.

National objective 21 is an interesting statement in itself – “resilient markets for basic needs such as energy, food and water” smacks of the 1980s privatisation and corporatism that has left Australia with duopoly industries and an excessive financialisation of those markets for basic needs.

It may well turn out to be the case that Asian countries choose not to follow that path, particularly those like the Philippines and Indonesia who have experienced the effects of crony capitalism in recent history.

Chapter 8 of Australia in the Asian Century finishes with a detailed look at the regional efforts aimed at building trust and co-operation on trans-national issues. Much is made of various international groups such as the G20 and the UN.

An interesting case study is that of the Nuclear Non Proliferation Treaty with an examination of Japan’s and Australia’s work in that field. Sadly this is another area that’s let down by the actions of current and previous Australian governments in selling uranium to India.

The nuclear weapons stand off between India, Pakistan and China is another ‘elephant in the room’ issue that doesn’t really get the coverage it should in such a report.

Chapter 8 of Australia in the Asian Century is a very optimistic section of the report however it does hint at the path Australia could follow to being a credible, medium sized economy and influencer in the region. However one has to consider the actions of Australian leaders when asking if the nation is really interested in taking that path.

Double guessing the boss

What do the BBC, the Chinese government and Australian banks have in common?

Two interesting articles, one from English media writer Nick Cohen and the other from American journalist Eveline Chao, show how effective fear is for driving self censorship.

Eveline’s story, Me and My Censor, tells of her relationship with the Chinese Government censor appointed to monitor the publication she worked for in Beijing.

As well as having to avoid the 3Ts – Taiwan, Tibet, and Tiananmen – there were also a range of other delicate issues an active writer could find themselves being censored for as she relates in this conversation with her censor Snow;

We couldn’t use the cover image I had picked out for a feature on the rise of chain restaurants, because it was of an empty bowl, and, Snow told me, it would make people think of being hungry and remind them of the Great Famine (a period from 1958 to 1961 when tens of millions of Chinese starved to death, discussion of which is still suppressed). Even our Chinese designers began to roll their eyes when I related this change to them, and set them to work looking for images of bowls overflowing with meat.

Snow had learned the hard way about the power of imagery to upset the party functionaries. Snow explained why when she urged Eveline didn’t illustrate a story with a graphic showing stars;

I once published, in a newspaper, a picture of a book put out by the German embassy, introducing China and Germany’s investment cooperation. The book’s cover had a big stream on it, half of it the colors of the German flag, half of it red with yellow stars. I decided since it wasn’t a flag it was okay, and sent it to print. Our newspaper office was slapped with a fine of 180,000 yuan [today, around $28,000] and I had to write a self-criticism and take a big salary cut.

Self criticism and big salary cut – the things that middle managers fears regardless of whether they work in the Chinese Communist Party, the BBC or a bank.

The same fear of upsetting those in power is discussed in Nick Cohen’s article on the BBC’s disastrous and scandalous decision to pull a documentary exposing Jimmy Savile as a child abuser. Cohen quotes an interview where George Entwhistle, the executive responsible for pulling the program, was interviewed on the matter.

When Entwistle implied that the editor of Newsnight had no need to worry about his bosses circling over him like glassy-eyed crows, Evan Davis did what any sensible person would have done and burst out laughing.

Nick Cohen’s point was emphasised to me during the week when a former bank worker mentioned an executive had been disciplined for letting slip the bank was running several instances of a cloud computing service. Apparently the press and regulators could have been in the room where he discussed this.

Another example is a big organisation I’ve been regularly writing on where staff members regularly say “this is not a place where you question management.” An acquaintance that recently started there had to agree that they wouldn’t mention anything about the organisation, ever.

The problem with this self-censorship is that it quickly becomes destructive. In the United Airlines dead dog case, staff subject to arbitrary whims and discipline of management avoid taking decisions which often escalates situations where common sense would quickly find a simple solution.

It also means people jump to conclusions. Eviline relates the story of the tourist story;

One month, we ran a short news brief with figures on the number of mainland Chinese tourists that had visited the United States in 2007, and Snow flagged the number for deletion. We wondered what dirt we had unwittingly stumbled upon. Which government bureau oversaw tourism figures? What were they hiding? Finally, I called Snow, and learned that the numbers we had cited were for the number of Chinese tourists worldwide, not just in the United States.

So much for the would-be plot. Chagrined, I had to announce to my colleagues that we’d made a mistake.

A culture of secrecy also creates an atmosphere of distrust with every decision being analysed by staff, customers and outsiders for what nefarious motives lie behind even the most innocuous management decision.

Eventually those organisations become insular and inward looking with only those perceived as being ‘safe’ allowed to move into responsible positions which further entrenches the culture of secrecy and blame.

This is not healthy, but it’s where many of our government departments, political parties, sporting organisations and business are today including the BBC, Chinese media organisations and Australian banks.

For the disrupters, this is another competitive advantage.

Being careful what you wish for

Sometimes its best our wishes don’t come true

Economist Yanis Varoufakis posted the conclusion of his speech to British Euroceptics this week with the warning “the cruellest God is the one who grants us our wishes”.

In a time of austerity this is something we all should carefully consider. Some of these people need to be careful about their wishes;

Those renters hoping for property prices to drop 40% may get their wish, but such a crash will leave the economy in ruins and the renters themselves without a job to service their mortgage.
Landlords who fantasise about rents tripling, not realising that ripping disposable income out of their tenants’ wallets will also push the economy into recession and hurt their property values.
Politicians obsessing about AAA credit ratings without understanding that this locks a government into the narrow, failed ideologies of the ratings agencies – the world’s most incompetent and corrupt organisations.
Business leaders demanding that workers be thankful for getting $1 a hour, forgetting that Henry Ford started paying his workers so they could buy his cars and pay executive bonuses.
Retired folk reducing their assets to get pensions because “they’ve paid their taxes” who then find life on the aged pension isn’t so great after all.
Middle classes urging the government to subsidise their private school fees and medical insurance because “they pay their taxes” and end up paying even more taxes.

Yanis himself is an interesting guy, having amongst other things taught economics in Sydney for 12 years before returning to Greece;

In 2000 a combination of nostalgia and abhorrence of the conservative turn of the land down under (under the government of that awful little man, John Howard) led me to return to Greece.

John Howard himself wished for Australia to return to the “white picket fence” conservative, insular nation of the 1950s. He got his wish and Australians decided they liked the past so much they decided to take the economy back to an 1850s structure of living off the ~~sheep’s~~ iron ore train’s back.

Today Australia’s inward looking and insular with an economy increasingly based upon mineral exports and property speculation. With both the export markets and property prices now wobbling we might be about to find the cost of our wishes being granted.

Australia in the Asian Century – Chapter Two: The future of Asia

Chapter two of Australia in the Asian Century attempts to predict the development of the region’s economies over the next decade

This post is one of the series of articles on the Australia in the Asian Century report. An initial overview of the report is at Australian Hubris in the Asian Century.

“Asia’s economic resurgence is set to continue” is the bold statement at the beginning of Chapter Two of the Australia in the Asian Century report and with that the chapter immediately falls back to warm motherhood statements;

Average living standards are set to improve dramatically and transform the way people live and work. Asia’s economies are projected to expand at a strong rate. The region’s expansion and development will change the contours of Asia and the globe—opening up exciting new opportunities, while also posing some challenges.

All of this is true, however the report struggles to identify exactly what those challenges and opportunities are as Asia develops and where Australians fit into the region’s evolving economy.

Demographics will matter, but they are not destiny

The constant mantra through the report is “demographics will matter, but they are not destiny.” Yet, despite the headline, Chapter Two illustrates that so far it has been destiny.

Graph 2.6 of the report shows how Japan’s, and now South Korea’s, productivity has tailed off as the population has aged. This is to be expected when economic expansion has been based on labour intensive manufacturing, as China’s is today.

Frustratingly, the report acknowledges this with the following paragraph;

But the fruits of adopting new technology and adapting it will become harder to harvest. A point will come, though it’s still some way off, where the growth of labour productivity in developing Asian economies will slow—opportunities for gains from importing foreign technology and for shifting workers from agriculture to industry will diminish.

“Some point in the future” doesn’t wash when the rest of the chapter shows off various ‘firm’ numbers estimating ‘base’, ‘low’ and ‘high’ growth rates. If you can quantify those growth assumptions, then it should be fairly trivial to estimate the turning point where aging populations start to affect China.

Luckily others have done this work, the Australian Macrobusiness site suggests that turning point could be as early as 2015. In which case, unlike Japan and South Korea, China will have got old before it got rich.

If this true, then IMF’s projected growth rates will miss their targets – particularly the ‘low growth’ scenario which is almost identical to their ‘base scenario’.

Rise of the middle class

Much of the emphasis in this view of Asia’s development is on the rise of the middle class and the report features a case study of Hitesh, a middle class stockbroker in Ahmedabad.

While there’s no doubt Hitesh and his family’s income and standard of living are rising, the idea that several hundred million Indian and Chinese will jump to European or North American income levels before 2025 is improbable.

Most stockbrokers in New York, London or Sydney earn between 30 and 300 times Hitesh’s $5,000 a year and in 2010, average Chinese income was a tenth of the US.

Even if the Indian and Chinese middle classes did manage a tenfold growth in income over the next decade, the assumption they would adopt the debt driven high consumption patterns of the US or Australia isn’t a given as we see in how the Japanese middle classes haven’t aped the spending behaviour of their profligate Western friends.

The credit and banking points in this chapter illustrate the hubris mentioned in my original overview of Australia in the Asian Century.

And with financial systems in advanced economies unwinding the high debt levels built up before the Global Financial Crisis, financial institutions in stronger economic positions, such as those in Australia and elsewhere in the Asian region, will have opportunities to expand into new markets.

Given the dire records of Australian banks in expanding overseas along with the “stronger economic position” being due more to government guarantees during the GFC and the desperate political desire to prop up Australia’s property market at all costs, it’s difficult to see exactly what Australian institutions have to offer Asian savers except to further underwrite the never ending down under housing bubble.

Chapter two of the Australia in the Asian Century report finishes with an overview of the current geopolitical situation which is notable more for what has been left out. This is again probably due to Canberra public service politics and the report suffers for it.

One major region left out is Central Asia and Russia – outstanding given the report’s view that a resource poor Asia (that Japanese assumption again) will need Australia to fuel its energy and resources needs – which ignores the construction of pipelines and railways to China and India.

Also missed are the projects to upgrade China’s railway and road links to Europe and Central Asia. These in themselves may trigger major geopolitical changes over the next few years, as we’re seeing today in Tibet and Xinjiang after railways were built to Kashgar to Lhasa. Yet none of this is considered.

Not the ‘Stans should feel aggrieved, like the rest of the report the emphasis is on China and India with scant mention of other Asian countries.

For Australia, much of the hope in the report seems to be in providing raw materials for Asia’s industrialising and urbanising societies along with being a holiday destination and education provider. This is all lazy 1980s thinking which projects Australia’s Japanese experience of thirty years ago onto China and India today.

The predictions of Asia’s future in the Australia in the Asian Century report are largely are a continuation of the status quo. If this report had been written in 1960, it may have picked the rise of Japan over the following twenty years but the main focus would have been on Burma as Asia’s richest independent country.

Exacerbating the report’s weakness are the assumptions that development paths will follow the same course as Japan, Taiwan or South Korea in the late 20th Century.

Development wasn’t a smooth path in all three of those countries and each had their own unique political and economic upheavals in that time, the failure to recognise that similar disruptions will happen in Asia’s emerging economies as they develop is probably the greatest weakness in the entire report.

It’s very easy to draw straight lines on graphs based on ‘best case’ IMF projections but history is rarely linear. This is probably the greatest intellectual failing of the white paper.

Australian Hubris in the Asian Century

Australia in the Asian century is the story of opportunities missed.

This post is one of the series of articles on the Australia in the Asian Century report.

The release of the Australia in the Asian Century discussion paper today raises the question of where the country sees itself and where it is going. It lets us down on many levels.

While there’s a lot more to discuss in the paper, which I’ll do over the next few days, there’s a few issues that come to mind on first reading.

The reliance on mining

A constant in the discussion about Australia’s future is the continued mining boom. This was the underlying theme of Monday’s Mid-Year Economic Outlook and is also the case in the Asian Century paper. Here’s chart 4.4.2 from the document which shows the forecast makeup of Australia’s exports.

Today mining exports are shown as being just over 50% of Australia’s trade with Asia and have mineral income growing to well over 60% of trade by 2025.

What is frightening about this is the belief across Australia’s political and business leaders that the mining boom is here to stay and will continue to keep growing.

Little risk analysis

Also notable about the report is how little acknowledgement of risk there is in the document. Most of the risks are dismissed in six paragraphs in Chapter 4.4

Geopolitical risk does get its own chapter, but even there most of the challenges are glossed over. Eventually most of the risks are dismissed with this line.

None of these developments of themselves make major power conflict likely—in some important ways they will probably act as a constraint. All the major powers recognise how interdependent their economic interests are.

This is reminiscent of the line used in the late 1980s – “no two countries with a McDonalds have ever gone to war against each other.” A glib nonsense which ceased to be true when NATO attacked Serbia in an effort to stop the massacres of the Yugoslavian disintegration.

Trivialising the big risks

Had anyone predicted in 1986 that within five years, there would be a bloody civil war in Yugoslavia, the Eastern Bloc collapse and the Russian Empire’s eagle replace the hammer and sickle on the Kremlin they would have been dismissed as fools.

Yet that is exactly what happened.

The risk of instability within the People’s Republic of China isn’t mentioned or even the effects of what a collapse of North Korea would mean to South Korea – another key Australian mineral market – both of which would have massive effects on Australia’s export markets over the next decade.

While I’m certainly not forecasting the collapse of either the DPRK or the Communist Party of China in the near future, these are massive risks to any plan which purports to look at the next decade. Ignoring them or trivialising them does not help the paper’s credibility.

Australian hubris

Most notable in the white paper is the tone of Australian Exceptionalism through the commentary. In the Prime Minister’s speech she said “we are the nation that stared down the economic crisis.”

Calling massive stimulus packages, reinflating the property market and guaranteeing bank liabilities is hardly ‘staring down’. Australia’s avoiding going to into recession after the 2008 crisis was due to the “go early, go hard” philosophy of pumping money into the economy which was learned by Australia’s bureaucrats in the 1990s recession.

That policy worked to stave off recessions during the Asian currency crisis of 1998, the Long Term Credit Bank collapse and the post September 11 uncertainty. It worked on massive scale during the post-Lehmann Brothers collapse.

Crediting Australia with some sort of miracle economy is hubris on a grand scale and hardly the basis for developing a sensible plan to guide us through the next decade.

What is Australia’s competitive advantage?

Essential to understanding where the nation can prosper from the rise of Asian economies is where our current strengths lie. Apart from empty phrases on “skilled workforces” and “new opportunities will emerge in manufacturing” there’s no explanation of exactly where Australia can profit from these.

In fact most of the case studies refer to Australian companies outsourcing or Asian trading patterns that really don’t need any skilled or valued added contribution at all, a case in point is the story of ‘Hitesh’, one of India’s rising middle class.

Hitesh, 31, is a stockbroker in a firm that he opened with his friend several years ago. He brings in an annual income of US$5,280, placing his family squarely in the middle of Ahmedabad’s middle class.

Nowhere does the case study explain exactly what Australia can offer him – the air conditioners and cars certainly won’t be made or designed in Australia and his daughters’ educations in 2025 might well come through the internet from MIT or the London School of Economics instead of them flying to Melbourne to drive taxis and do barista courses in the hope of getting Australian permanent residency.

In fact if anything, it’s difficult to see why an Asian company would choose to do business with an Australian stockbroker when they earn thirty to a hundred times more than Hitesh.

1980s thinking

Much of what is in the white paper is what we’ve heard before in the 1980s – back then it was Yuske in Nagoya who was going to buy our wine and come to the Gold Coast for holidays.

There’s nothing in the projections we haven’t heard before, except today we’ve squandered two decades of opportunity by ramping up our property markets and building an unsustainable middle class welfare state.

Sometime in the 1990s – possibly around the time of John Howard’s election – Australia turned inwards and insular. We had the opportunity to position Australia as a credible mid-level power in the region but we chose instead to renovate our kitchens.

That opportunity has been lost and repeating the mantras of the 1980s with the words ‘China’ and ‘Chinese’ substituted for ‘Japan’ and ‘Japanese’ won’t cut it.

Australia in the Asian Century was an opportunity to show some vision and stake a claim on sharing some of the 21st Century’s riches. Instead the writers chose to give us platitudes underpinned by the certainties of a never ending economic boom.

What are businesses thinking about?

The City of Sydney Business Awards recognised the best of the city’s commercial communities, but what’s going through the minds of the finalists?

Last night the Sydney Business Awards honoured the city’s best enterprises at a gala dinner where a whole group of great businesses were acknowledged for their great work.

The awards were the result of a three month process where the public voted on several hundred businesses to determine ten finalists in each category. The finalists were then evaluated by judges for each category. I judged the Online Business group.

The Events Agency who organized the awards today sent me a word cloud taken from the winners’ entry forms. This illustrates what the entrants were talking about in their submissions.

A wordcloud of the Sydney Business Awards winners entries — The word cloud of the Sydney Business Awards winners’ entries.

Staff is the biggest issue for businesses, followed by the two instances of ‘increase’ caused by one having a capital and the other not. If we combined the two instances ‘increase’ would probably be the biggest word.

Given training is one of the other big words we can see the real challenge is training up staff. Marketing and funding also figure prominently.

While basic and from a very narrow survey base, that word cloud gives us some ideas of what worries business owners and a base to start answering those challenges.

The word cloud also explains why education, training and industrial relations are such important issues to the business community which is something both politicians and the media should consider.

Overall the quality of the businesses entered into this year’s awards was terrific. In the online section I really struggled to separate the great finalists and there was very little between Appliances Online who won the category and the two runners up.

What’s also interesting is how many of the finalists in other categories had strong online presences, illustrating how the web is important for all businesses.

Congratulations to all the entrants and particularly Climate Friendly who not only won the main Business Award but also the Sustainability and Environmental awards. Glebe Medical Centre was the winner of the Small Business Award and the Healthcare and Fitness category.

For those who didn’t win this year, it’s worth entering next year as good businesses only get better with time. Hopefully we’ll see your business or vote next year.