Dog Washing, Hair Dressing and the Future of the Australian Economy (In response to a question. Isn't it nice how interactive and multi directional communications media are these days?!

The following comment was posted in response to this post. My response is altogether too verbose to be posted as another comment, so here is is.  

Ann said...

Do you think Australia is becoming a third world country and that the balance of power and wealth will shift worldwide? We export our resources (human and physical) to India and China and dispense with our manufacturing industries. It seems to me that an economy and society based on tourism, dog washing and haircutting is not sustainable. The mining boom is a good example of short-term greed at the cost of sustainability.

4 November 2011 12:10 

Pinky's Reply: 

I'm not sure that the definitions by which economists judge which countries are third world and which aren't are all that satisfactory and it often becomes a derogatory term used by nationalistic types to brand everyone else. 

However, in general, the countries considered 3rd world have very different problems to those facing Australia, or areas thereof. In Australia, hardship is caused by the increase in prices brought about by the extremely high performance of some sectors. The overall GDP per capita figures are still good.  

As for whether 'we' should outsource manufacturing, the answer is that 'we' don't. Governments and representatives of the people do not encourage companies to move their operations off shore. The difference is that we no longer actively create barriers to them doing so in the form of tariffs. Because imports are not taxed or restricted as much as they used to be, it becomes cheaper to import goods from low cost parts of the world than to manufacture locally. Because groups of commercial entities that operate internationally have pressured governments around the world to reduce trade barriers, arguing that it will increase efficiency and reduce costs through competition, there is very little possibility of the process being reversed. 

As for whether Australia needs manufacturing to function economically, the argument usually put forward is for a 'knowledge economy' in which skilled and educated people here manage operations that generate huge profits by outsourcing menial tasks to the cheapest bidder so they can concentrate on the really important stuff like thinking and designing and being innovative. This is very appealing, since nobody would want to work in a factory anyway, would they? People like to be told they are too clever for that. It's probably true for some. 

Of course the fundamental weakness of this model is that there are of course people in China and India who can think and be innovative too. We might hope that there are getting pretty good at it by now, since one of our biggest exports is education and they are its consumers. If people like me are doing our jobs right, we are helping those who do not settle here to go back to China and India and other countries with as much cleverness and initiative and business knowledge as as anyone in the Australian work force. Indeed, because they appreciate and value our teaching, they learn more from us than many of us learn from each other.

Should we be worried then? Should we greedily keep our knowledge and ideas to ourselves? Of course not! That would firstly destroy our second biggest export industry and secondly be bad for the world as a whole, including the first world, or should I should write hole because that's a more apt description of any world without scholarship. Whenever we teach and educate people we are contributing to humanity and as a part of it we benefit. Sorry to upset those who believe in individualism, but ultimately we're all in the same boat, by which I mean planet. You'd have to be off the planet to not get that. (sorry, I know that't terrible, but it really is true.)

So there you have it: what is going on will encounter issues. Things will have to change. The changes that have led to this can't be undone. The answers? I'm still looking too. 

For further reading in relation to outsourcing, please consider the following. Buy via my links and you will support my blog too^^. Only $2.99 for the first one, in electronic form. Others are hard copies. 

CEOs and Incentives

CEOs often have little or no incentive to improve. Even in cases of very poor performance by the companies they lead, they continue to receive extremely high pay, often award themselves bonuses and, once they leave, are able to easily find similar work in other companies, no matter how bad they are at it. This is a sad state of affairs.

Qantas CEO Alan Joyce is a prime example of this. Increases in his pay are completely disproportionate both to the company's performance under his leadership and to the working conditions of the majority of Qantas employees. 

When share holders vote on pay increases it is rare for the recommendations of the board to be opposed. Those who cast proxy votes but don't specify any instruction by default allow decisions to be passed. Even if there were a high level of voter engagement it would be hard for small share holders to have much influence, since major share holders in companies tend to belong to the same social elites as the company leaders and share similar ideas. 

This is a serious issue of corporate governance. Companies themselves are unlikely to decide to make changes, as they lack any financial incentive. The interests of companies as a whole, as organisations of people working together to earn a living and achieve something, would be better served by restrictions on pay, share schemes, bonuses and benefits given to company leaders. Bonuses must be conditional if they are to be an effective incentive for improvement and for them to be meaningful, salaries and other benefits must be kept at levels where their recipients, though well off, will still feel a need for more income. 

The only way that restrictions can ever be put in place is through legislation. The chances of it happening are very slim. The most likely outcome is that we will be interminably stuck with poorly performing companies that serve largely as a means of funnelling funds into their CEOs' bank accounts.

What is to Become of Qantas

With flights grounded over industrial disputes and share prices in steady decline for the past year. According to their media release on the 28th of October, which is, for some reason, not listed on their website as of the time this article is published, protests, organised by unions, had by that date cost Qantas 68 million dollars. The costs have no doubt increased further over the past few days. Note that Qantas CEO Alan Joyce compared the costs to those incurred during the grounding of flights during the recent volcanic ash cloud, which were significantly less costly. Perhaps the comparison was for dramatic effect. Joyce certainly seemed at pains to emphasise the costly nature of the protests.

  Using rather more measured language, fund managers from AIF released a brief ASX announcement this morning to the effect that they did not expect revenue from airports to be significantly effected. However, by contrast, The Age, in the coverage linked above, interviewed various airport food service proprietors who complained that their daily takings had reduced by 30 to 80 percent.

  The extent to which the impacts are either downplayed or emphasised appears to depend largely on the party's respective interests. Of course small businesses, with tighter budgets, will suffer indirect consequences of the flight groundings, which were a Qantas decision and not a natural consequence of the protests.

  Joyce's constant reference to the cost of the protests is a very obvious and cliched attempt to shift responsibility for Qantas mismanagement to the unions. Traditionally, such attempts have worked, since companies occupy a higher echelon in western social hierarchy than unions. All he has to do is describe the unions as violence inciting mobs of working class ruffians and the corporate community will pat him on the back and give him another CEO job once he's finished, no matter how badly Qantas does.

(Google images)

  For Qantas share holders, however, the future could be very bleak. In fact Joyce's communication strategy should be making him extremely unpopular with share holders right now. In recent years, Qantas has been a failure. In reaction to the success of budget airlines, it has sacrificed its status as a premium service for futile attempts at compromise. Cutting costs by outsourcing maintenance operations is probably the silliest decision a board ever made. The biggest selling point Qantas ever had was it's reputation for safety. In the past, Qantas pioneered innovations in maintenance and testing and was a world leader. That's gone now and it would take many years and cost a great deal of money to bring it back.

  Qantas's other selling point as a premium service was it's reputation as a good employer with professional pilots and staff. That too is being sacrificed. The unions "unreasonable demands" (Joyce, 2011) are for the kind of decent employment and management practices that have in the past made the company a success.

  Qantas will never be as cheap as Jetstar or Virgin. If it was, it would lack a raison d'être. Shaving a few dollars off the price of an air ticket in panic at falling passenger numbers was never going to help if it came at the expense of quality. The food was never in my experience much good and they didn't have the kind of sexist hiring practices that let other airlines lure passengers with the beauty of their air hostesses. The sad fact of the matter is, Qantas are now a bad airline with little hope of recovery and the most likely outcome is that they will be bought out by another company, probably from somewhere in Asia, at a heavily discounted price. It's a waste. 


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Are Australian Living Standards Declining? A Cursory Look.

The OWS protests have brought a lot of new knowledge to light about inequality, greed and corruption in the USA. Not least of these little insights has been the fact that average incomes (those of 'the 99%') peaked relative to the cost of living in the 1970s and Americans have in effect been worse off ever since.

What about my little country then: Australia? Well, a cursory glance at the graph (below) of real household disposable income, would suggest we're doing pretty well. Have a look, then I'll continue. 

Well that one doesn't go back to the 70s, so here's one that does, but doesn't quite cover the little dip in the last few years: 

There. Now there seems to be a reasonably steady trend upwards. That one is in '99/2000 prices. 

However, commentators have argued that women's workplace participation has been a contributing factor to increasing income. Here is a graph showing the increase in workplace participation by gender. The bottom line is dotted (hard to see) and, as may be expected, represents women. 

That's from here. The explanation notes that male participation has declined, but female participation has increased enough to make the overall participation rate increase, which has been extremely beneficial to the economy. 

So, disposable income has about doubled in about the same time that womens' participation in the workforce has not quite doubled. Very well. Each of us must be better off. Right? 

Well, here's another graph from the same document: 

Married women's participation in the workforce is growing much faster than that of non married women. This means there has been a significantly greater increase in the proportion of people living together, married on dual incomes than data manipulators like The Australia Institute would claim. There isn't equivalent data available to show de facto arrangemnts, I'm afraid, or at least I can't find it right now. Young single people often live in share houses to lower costs. There isn't data on this, since the arrangements are often illegal (the landlords don't know) and share houses aren't regarded like families by gatherers of data like the ABS. 

Either way, based on this cursory glance, it looks like we're not much better off than the 1970s. Right wing extremists like the 'Australia Institute' bewilderingly state, in rather sexist and patronising terms, that without women's participation in the workforce, average household disposable income would be higher. This is obviously misleading. There is a need here for more detailed analysis and also for concern. It quite clear that far more of us are working in order to achieve similar living standards to what we had in the 1970s. Whether those standards are in fact slightly higher or slightly lower though, that's something that needs to be investigated further. I'll look into it soon. 

Bigots' FB Page.

I can't believe people would express senseless views like this publicly. However, I still come across them from time to time. The mainstream media promote racism on a regular basis and contribute a lot to these kinds of views being held by people who don't know any better.

I encourage anyone who uses FB to report this page. It's quite blatant discrimination based on lies.

For what it's worth, the I'd just like to point out that unemployment cannot, by any stretch of the imagination, be linked to immigration, as this page tries to imply. In fact our economy and the jobs we have rely heavily on it.

Political correctness is just derogatory word that racists have begun to use as a defense whenever they are told not to say offensive, idiotic or defamatory things about others in public. This is worrying. Words have consequences. Words can hurt people. If you hurt people physically, of course there are laws to stop you. The same applies if you hurt people with offensive words, for example, by creating stereotypes or misinformation about them.

When these people talk about 'Aussy Pride' what they really mean is that they have the arrogance to say they are better than other people in other parts of the world, no matter how little intelligence they exhibit, simply on the basis that they live in Australia and look something like their ideal image of what it is to be Australian. It's because of this that we need words like racism and bigotry.

Worst of all, the page uses the word 'islamification,' which presumably refers to some kind of conspiracy or agenda on the part of our friends and colleagues who believe in Islam. There is no evidence for any such agenda. All religions aim to encourage people to believe. The white majority from whom the page's creators undoubtedly derive are themselves descended from Christians and their religion has been spread world wide, often (though not always) through coercive means. For them to blame any social problems on those who practice Islam, a religion that values purity and peace, is both hypocritical and disrespectful.

So, dear readers, please take action and report the page to FB admin. The more complaints they receive, the sooner it will be removed. Also, please share this article to send a clear message to bigots everywhere about how wrong these kinds of views are.

The Highest Tower

Long ago, churches, mosques and temples used to tower over the surrounding towns. At other times it was the castles and palaces of monarchs. 

In Paris, France, the Eiffel tower stood, tall and magnificent, as a symbol of industrialisation. 

Today, we have towers of steel, concrete and glass that make all of those past structures look small and insignificant through their vast height and size. 

The size and height of buildings may reflect the priorities of a society, or at least to the distribution of power and wealth within it. The poor and powerless have traditionally lived at the bottom, in single story structures, overlooked by the wealthy and powerful in their towers. Or perhaps, society places its priority and invests its greatest effort in the areas that really matter? Like the building of pyramids by the ancients or the erection of cathedrals and domes by the pious? Where then is the priority placed in our society today?

What about these then?

Housing commission flats are tall and they are structures dedicated to welfare, to looking after the lives, theoretically at least, of those with the least power and wealth. Do they represent a high priority then? Well, they are designed, quite intentionally, to look cheap and ugly and there aren't many built these days anyway. Those that do exist are not always occupied by genuinely poor people anyway. There are ways around that system apparently. Anyway, really wealthy people want to have their own gardens and tennis courts. It is not at home, but at work that they ascend their towers and their positions of power. 

The tallest buildings in our city, and in many cities, are not for people but for commerce. The tallest are occupied by companies dedicated to the accumulation and moving about of money, closely followed by companies that mine and exploit fossil fuels. 

What's the point of all this though? Surely, for the existence of humanity to have any meaning at all, there should be two priorities held above all else: compassion and study. 

Our housing commission flats are a poor and half hearted effort to elevate (both figuratively and literally) those in poverty above the streets. They don't tackle the problem where it is at its worst, which is in developing nations, war zones and our own country's Northern Territory, though recently, poverty is a growing problem in the USA as well. 

What of study then? Well, we are hardly among the tallest buildings in the city, but the view from this university does look pretty enticing. 

Yes, there is hope here yet that study and it's goals of wisdom, knowledge and understanding, haven't completely been forgotten. We need to do a lot more, of course. Scholars are not respected or taken seriously by many powerful parts of our society. A little help from government wouldn't go astray here, but then, parliament house is so low it's half under ground. 

中华民国一百年 *English

Today, many Taiwanese and non Taiwanese and somewhere in between people around the world are celebrating the centenary of the founding of 中华民国 (the republic of China), which is now the official title of Taiwan. There are complexities about this which continue to be debated. Arguably Taiwan was separate from China since about 1680. However, what is clear is that the events of 100 years ago were highly significant in the forming of the amazing and unique country that we know as Taiwan today. 

Being from Australia, it's hard to see why there is so much controversy. Australia is just as new and few Australians look to their British ancestors (many of us don't even have British ancestors) in assessing our identity. We find it extremely hard to relate, I think, even to images and voices of the Australia of the 1950s. People change quickly. Language and culture change, perhaps even more quickly. Clinging to past associations, can bring only suffering.

Somehow I have to reconcile two contradictory urges. On the one hand, I hate nationalism and all it stands for. There is no satisfactory distinction between racism and nationalism, because no universally applicable definition of race exists that can stand independently of either culture or nationality and the phrases 'we are better' and 'they are inferior' ultimately convey exactly the same meaning. 

  On the other hand, I do love Taiwan. When I'm there I feel nothing by joy most of the time and when I meet Taiwanese people, wherever I am in the world, I feel drawn to them as if to my own family. 

  I wish nations didn't exist, I really do. They can't last forever and of course there will be a new world order in the future and probably sooner than we think. Will it be any better? It would be hard to do much worse and the programs of regional cooperation such as the EU are a good start, despite the complexities they involve. However, right now, in the context of how the world is, Taiwan is a bastion of inspiration, creativity, culture, friendship and education in a world where all these things are lacking. 

If new nations like Australia and East Timor can be internationally recognized, then surely Taiwan must also. Most nations are cowardly and two faced, treating Taiwan as a nation state, placing embassies and recognizing its passports while calling it part of China whenever the all powerful PRC happen to be watching. Citizens of the world need to make it clear to their governments that this kind of dishonesty and cowardice is unacceptable. Therefore, I hope that people will make a point by displaying Taiwan's national flag (you can copy and paste the one below) and making this an issue for public debate. 

Ricer!

The term Ricer is a term used by Australian bogan types to refer to some brands of car in what appears to be a derogatory way. The etymology of the word is probably something to do with the noun 'rice' being made into a verb, then back into a noun, but this time to describe machines that do whatever the verb means. What is it they are doing then? Well, as best I can deduce, they are being associated with countries in North East Asia, usually Japan, where rice is considered a dietary staple.

The term, however, does not appear to be applied universally to all vehicles originating from Japan. For example, I recently overheard a conversation in which a young man was advocating that his friend buy a Subaru, but then, when his friend said he was considering a Nissan, he denounced Nissans as 'Ricer cars.' On another occasion, I heard the same thing, but with Toyota and Mitsubishi substituted respectively.

One possible explanation for this apparent inconsistency is that the bogans wish to emphasise the foreign nature of vehicles which they deem to be in some way inferior. Subaru and Toyota offer exceptional engineering, it's true. However, both Nissan and Mitsubishi have high end models which should be sufficient to dispel any possible perception of inferiority: the Nissan Skyline GTR has an engine manufactured in a laboratory and the Mitsubishi Lancer Evolution has driving aids that would make an L player look good round a race track. Anyway, if inferiority was the key, then surely Korean cars and Peugeots would be called Ricers almost universally, which does not appear to be the case.

Another possibility that should not be discounted is that the term is chosen not based so much on the origins of the vehicles, but on the perception that more people from rice staple cultures are likely to own and drive them. This would imply a great deal of racism on the part of the bogans using the term and, as there doesn't seem to be any readily available data linking vehicle manufacturer preference to dietary staple or culture of origin, it would not be fare to level such an accusation without further research.

For now, let us simply consider that the term Ricer is a quirky linguistic anomaly and that, though I have to say it makes me cringe, I have very little idea what it means.

Why Guns are Cool

In Australia, funnily enough, we don't seem to have guns.

That's not to say they don't exist at all. Some farmers and people who live out in the country have them. So do the police and the army. Perhaps the security people who protect politicians have them but they must keep them hidden. Also, very occasionally, you do hear of gun crimes. There are underworld gangsters and some motorcycle gang members who somehow come up with an illegal, unregistered firearm. You usually hear about them when they've just been arrested for shooting each other.

Still though, guns in Australia are somewhat of a rarity. If you have them, your not exactly considered normal. If you have one for private use then it's almost certainly of a variety designed for shooting at things that aren't likely to retaliate.

Things weren't always like this here in Australia, of course. I do have dim memories of a time when gun ownership was, though not an everyday pastime, common enough that it probably wouldn't have raised an eyebrow if you heard that someone had a semi automatic or a self loading shotgun. That was before the new gun laws that were introduced after the Port Arthur massacre. You can watch some rather unclear footage of parts of it here, but I must warn you, it's shocking. After that happened, the federal government, with the support of about 85% of the public, bought back guns considered particularly dangerous, such as self loading, semi automatic and pump action weapons, and toughened licensing for all other types of guns. There was an amnesty period during which the guns were to be turned in by their owners to police stations and I remember the newspapers showing photos of the guns laid out on sheets like museum exhibits. Of course some unregistered guns must have escaped the buyback scheme and are still out there somewhere, which is why they sill turn up from time to time.

That was back in 1996/7. It all seems a long time ago now. As I said, guns really are a rarity here. There existence usually seems like a distant phenomenon, like something you see in news stories about other countries but can't imagine ever facing yourself.

I understand that gun ownership is still a very significant and controversial issue in the USA. There seems to be a huge amount of rhetoric on the internet from people, particularly in the southern states, about their 'right to bear arms.' Of course this is hard for me or anyone here in Australia to understand, since I don't think we've ever had such a right and if we did, it was taken away a long time ago. In the cities, we don't even have the right to carry a pocket knife if the blade is more than a few centimeters (I think it's about 3 inches, but don't quote me on that) or if it's the kind of blade that you can flick out quickly.

I do, however, have a Nerf gun. Actually, I have to admit, I have several. Nerf guns are a kind of children's toy that shoots foam darts. They usually don't hurt very much, even when they inevitably get you in the eye. One of mine has laser sight too. I have no idea why, but even as an adult I find these toys absolutely thrilling to play with. When I'm at home alone, I practice sneaking about and surprising imaginary enemies with them or practicing my aim by shooting my reflection in the mirror (the suction cap darts are the best for this).

Why is shooting a Nerf gun so much fun? It doesn't even do anything to whatever it hits. It certainly isn't useful for anything. Somehow though, it get's the heart racing and ignites some sort of warrior instinct in me. It's the same feeling I get when I drive dangerously fast around corners in a car or when I'm sailing a boat on a windy day. It's exhilarating!

There's more, too. I was reading about the traditions of pheasant shooting the other day. An old man who was interviewed proudly showed off his ancient fowling piece. It had shiny polished bits and beautiful timber and looked like something that was made to be held. It had a history. It had been with him all his life since he inherited it from his father. That reminded me of sailing too. The wooden bits were like the tiller of a lovingly crafted timber boat. I love boats. Boats have a tradition and a beautiful, thrilling feeling that goes with them. Boats are part of my 'culture.'

So I get it, I really do. When all those people in America are having their outcries against the lefties (hay, I'm a lefty!) taking their guns away and interfering with their rights, I get it. I have sympathy. I can see how they (or you, if your a gun owner) could love their guns.

I can imagine myself, if i were born in and lived in a culture like that, lovingly cleaning and maintaining my gun, taking it apart and reassembling it with pride, indulging in the satisfying metallic click as each component moved into place. Not many things we come across are well built and strong and mechanical like that. I can see myself going to a range and shooting it and feeling the power and the glory of holding the key to sudden death in my hands. Blasting things to smithereens must be an amazing feeling, too. All very harmless, I'm sure, since I would be a responsible gun owner and never point my weapon at anybody and never leave it loaded or in reach of children. Yes, I could be a gun owner and a very happy one at that. Guns are cool.

I'm not there though. I'm here in Australia. I've never lived with guns or experienced any of those amazing feelings, though once, as a small child, I did hold a rifle that belonged to a friend's father. The point is though, here in Australia, all the guns I see are on TV. Generally they are in the hands of soldiers and are being used to kill people. Then, if I change the channel, there may be a movie of the guns in America. They're usually being used to play cops and robbers: yes, more killing. Of course I know the phrase that's appropriate here: "guns don't kill people, people kill people." Well that may well be true. Yes, people are the ones doing the killing. The thing is though, here in Australia, in my own country that I see every day, is people not killing each other. Just to make sure I'm not living with a false sense of security, I did check: the USA has a murder rate of 5, compared to Australia's 1.3. How do we keep it so low? Well we don't have the death penalty and innocent people don't have any weapon with which to defend ourselves. Perhaps we're good at communicating with each other. Based on this observation, I humbly suggest you modify your saying: guns don't kill people: people with guns kill people. I get where the Americans are coming from, but I'd still much rather live here than there.