Monthly Archives: October 2011

The visible hands.

Of late there has been a sustained attack on protestors, such as the Occupy Wall Street and Occupy (insert your nearest city’s name here) by the politics of the centre and the right.  Some of the criticisms are valid.  For example, the protests in Australia have been flimsy, with no real conviction (What do we want?  Something!  When do we want it?  Sometime reasonably soon if that’s at all possible, please!)  Or that the circumstances in Australia are not within cooee those in debt laden Europe and United States.

 

That’s fair enough.  What bothers me is the lack of understanding of what these protests are about.  Commentators of the political right are very happy to point to the loony fringe of these protests and dismiss why they are being sustained, longer than it took Egyptians to bring down Mubarak.

 

The right eagerly picks out sympathising celebrities who have shares in or own capitalist ventures, pointing them out as hypocrites.  The issue isn’t about capitalism (although hard left socialists and communists may argue it is), it’s about who owns the capital and how much.  This is why these protestors have locked onto the “we are the 99%” — they are not the 1% of Americans who own almost half of the capital.  It’s not enough to blame the Global Financial Crisis, or events such as the sub-prime real estate market that lead up to it for this inequity.  The problem is much more rooted and, without concentrated effort, impossible to solve.

 

The problem is the underlaying assumptions about how markets work.  The favored “less intervention = better” amongst economists and politicians is worrying.  Friedmanism is a theory, not an immutable law.  Beneath this there are underlying problems which most conservatives don’t wish to deal with.

 

An example.  In exchange for his vote of confidence in the Gillard Government, Andrew Wilkie MP wants macro-reform of the poker machine industry in Australia, in all states.  Opposing this is Clubs Australia, an industry group that wants to protect its investment.  I don’t blame them.  Clubs Australia is very good at reinforcing the view that any regulation inhibits individual freedom, that there is no such thing as problem gambling that can’t be addressed differently, and that we are all free to chose for ourselves whether to gamble our savings, and beyond, away.

 

The first fallacy is the fallacy of equal powers in market negotiations over time.  The idea that any swing to favour one negotiator over another somehow balances out is demonstrably false.  Ask anyone renting a home how inequitable the relationship is between landlord and tenant.  Or where monopolies exist, such as in the utility sector.  Don’t like how your power bill is going up?  Not much you can do about that, and even by going off grid all that happens is the company is forced to increase prices to make up for the shortfall.  That’s hardly an equal relationship between parties.

 

The core of this anger against corporate banking America and Europe is employment and social security.  Ironic that some of the harshest critics of the protests shout the never amusing “get a job” line at the protestors.  A bit like how those with means making the decisions to reduce their workforce and demand tax cuts from governments, citing a fabled “trickle down effect.”  If the money trickled down, there wouldn’t be unemployed people sleeping in Wall Street as a protest.  There wouldn’t be signs with “We are the 99%” written on them.

 

But the hypocrisy from the extreme right beggars belief.  For example, it has been revealed in Senate Estimates that the CEO of Australia Post – a government owned enterprise – was paid $2.89 million last year.  “Outrageous!” screams the right.  That’s more what the Prime Minister is paid.  That’s more than what the Governor of the Reserve Bank is paid.  That’s more than any chief of any government department.  Hang on a second: Australia Post is a profitable machine, and the citizens and residents of Australia are its beneficiaries.  The profit is returned to the government as a dividend. Also as a GOE, Australia Post is forced to have more services available in more places than would otherwise be commercially viable – it’s a social dividend.  For a business that turns over some $5 billion, is a $3 million pay packet that much?  “Yes, but…” the notion is false and unfair that somehow because a business is a GOE, its board doesn’t deserve to be paid in the same manner as that of a privately owned business.

 

The general complaint that the CEO is paid too much echoes the sentiment that any CEO is paid too much, in any sector, but particularly the financial sector in which governments around the world have invested enormous sums to prevent collapse.  While too many greedy individuals are rorting the system at the big end of town, ordinary citizens suffer the consequences.  The free market doesn’t appear to work here: CEOs are paid bonuses when the business is doing well or not.  Some are paid bonuses for sacking workers.  CEOs have access to government ministers directly while citizens don’t.  There is no level playing field here.

 

The disparity of negotiating sides goes beyond that of the protest in the street.  When New Ltd columnist Andrew Bolt was found to have breached the Racial Discrimination Act, the volume of outrage from commentators crying “It’s the death of free speech” was overwhelming, especially from Bolt himself.  Temperatures rose, passions inflamed.  As one commentator, Richard Flanagan, put it: “If you stood on the moon, two things are visible: the Great Wall of China and the self-pity of Andrew Bolt.”  A “victim” silenced by the death of free speech has never been so loud and so continual.  The issue for me isn’t this mythical free speech (speech has never been free — ask any defamation lawyer), but who controls the means of communicating opinions.  The Bolts and Bill O’Reillys of this world have been, and still are, in control.  They opine, in print, on TV or online, and followers disseminate the message as if such thoughts are fact.

 

When I read on Twitter that some people think that the Occupy (insert city) protesters should be locked up, I wonder how those people reconcile with their thoughts, that somehow Bolt has suffered an injustice.  It’s an extraordinary feat of mental gymnastics.  On one side, a single protester is unlikely to change the world. Their leverage is practically nil.  On the other side, Bolt, with backing of News Ltd, has been able to peddle the most offensive clap trap without fear of using facts.  How is the free market able to reconcile this imbalance?  Sure, if you don’t like Bolt, you don’t have to listen, read or watch, but his opinions are scattered about like dog turds on a skinny footpath: difficult to avoid completely and never far enough away from the stench.  In the cutthroat business of online press, a click on Bolt’s blog from someone who can’t stand him is just a precious as a click from his most ardent fan (other than himself).

 

The market isn’t free.  It’s not on a level playing-field.  If we continue on like this, we will end up mired in revolution as every bit as ugly and horrific as the French, American and Russian revolutions.  Surely there is a better way.