Tuesday, March 13, 2012

478 Chomsky addresses the Occupy movement; praises the 1950s, a time of Protection

Chomsky addresses the Occupy movement; praises the 1950s, a time of

South Koreans protest that a Free Trade deal with US endangers their
country's agriculture (item 7); but that's what's happening to our

(1) Chomsky addresses the Occupy movement; praises the 1950s, a time of
(2) Chomsky's address to the Occupy movement
(3) Manufacturing not an economic maybe
(4) Without Manufacturing, America is rotting at its core
(5) Does America Need Manufacturing?
(6) Jeffrey Sachs turns against "corporatocracy", yet endorses Offshoring
(7) S Koreans protest against trade deal with US; say it endangers their
country's agriculture
(8) Qantas trying to shift jobs offshore, despite being one of the
world's most profitable airlines
(9) Murdoch's secret ABC attack

(1) Chomsky addresses the Occupy movement; praises the 1950s, a time of

Peter Myers, November 11, 2011

Th re-valuation of the 1950s is notable, because the Trotskyist Left has
long supported the abolition of tariffs. I myself heard
"anti-Globalization" protest leaders say "we support Globalization, but
not the inequality that goes with it". In other words, they supported
Globalization, to destroy the nation-state; then, once a single world
economy was in place, they would lead the poor against the rich. This is
what Occupy is all about; and now, it has resonance, because - and the
elite still does not realize this - decades of class war from above have
De-legitimated the state. It's no longer "our" state, but "theirs".

In 1979 the Socialist Workers Party (SWP), through Pathfinder Press in
Sydney, published a book entitled Socialism or Nationalism?: Which Road
for the Australian Labor Movement?, by Jon West, Dave Holmes and Gordon
Adler, which argued for Free Trade, for the abandonment of tariffs, and
against the 1950s economic model. The book condemned all the other
Communist parties as Stalinist and Nationalist.

"Perhaps the worst aspect of the adoption of protectionism as a policy
for fighting unemployment is that it is seen as a substitute for a
class-struggle approach" (p. 29).

In other words, a Protected economy looks after all the social classes,
so there is less class antagonism between them, so the Trotskyists are
out of business.

More at http://mailstar.net/xTrots.html

Karl Marx similarly advocated Free Trade (Capitalism) to exacerbate
Class War and thus create revolutionmary conditions.

His major statement about Free Trade was an address delivered to the
Democratic association of Brussels, Belgium, on January 9, 1848, around
the same time as he wrote the Communist Manifesto:

{quote} But, generally speaking, the Protective system in these days is
  conservative, while the Free Trade system works destructively. It
breaks up old nationalities and carries antagonism of proletariat and
bourgeoisie to the uttermost point. In a word, the Free Trade system
hastens the Social Revolution. In this revolutionary sense alone,
gentlemen, I am in  favor of Free Trade.

{endquote} http://mailstar.net/classwar.html

(2) Chomsky's address to the Occupy movement


Noam Chomsky: ‘The Occupy movement is unprecedented’

Saturday, October 29, 2011

 From GLW issue 901

It’s pretty hard to give a talk for the Howard Zinn memorial lecture at
an Occupy meeting. There are mixed feelings that necessarily go along
with it.

First of all regret that Howard is not here to take part in, and
invigorate in his inimitable way, something that would have been the
dream of his life.

Secondly, excitement that the dream is actually being fulfilled. It’s a
dream for which he laid a lot of the groundwork. It would have been a
fulfillment of a dream for him to have been here with you.

It is an extremely exciting development. In fact, its kind of
spectacular and unprecedented — there’s never been anything like it that
I can think of.

If the bonds and associations that are being established in these
remarkable events can be sustained through a long, hard period ahead
(because victories don’t come quickly) it could turn out to be a really
historic and significant moment in American history.

The fact that the Occupy movement is unprecedented is quite appropriate:
it’s an unprecedented era, not just at this moment but since the 1970s.

In the 1970s, there began a major turning point in American history.
Since the country began, it had been a developing society: not in very
pretty ways, but it was a developing society with ups and downs but with
general progress towards wealth, industrialisation and development.

I’m just old enough to remember the Great Depression. After the first
few years, but the mid-30s, although the situation was objectively much
harsher than it is today nevertheless the spirit was quite different.
There was a sense that we were going to get out of it, even among
unemployed people.

There was a militant labour movement organising, the Congress of
Industrial Organizations, which was getting to the point of sit-down
strikes, which really were very frightening to the business world.
Because a sit-down strike is just a step before taking over the factory
and running it yourself: something which, incidently, is very much on
the agenda today.

It’s quite different now. Now there is a pervasive sense of hopelessness
and, at times, despair. And I think it’s quite new in American history
and it has an objective basis.

In the 1930s, unemployed working people could anticipate realistically
that the jobs were going to come back. If you are a working in
manufacturing today, and the level of unemployment in manufacturing is
approximately like the Depression, if current tendencies persist then
those jobs aren’t going to come back.

The change took place in the ’70s. There are a lot of reasons for it.
One of the underlying reasons discussed by economic historian Robert
Brenner is the falling rate of profit. There are other factors that led
to major changes in the economy.

[There has been] a reversal of the several hundred years of progress
towards industrialisation and development and a turn to a process of
de-industrialisation and de-development.

Of course, manufacturing production continued, but overseas. That’s very
profitable but no good for the workforce.

Along with that came a significant shift in the economy from productive
enterprise — producing things that we need and we could use — to
financial manipulation. The financialisation of the economy really took
off at that time.

Before the ’70s, banks were banks. They did what banks are supposed to
do in a state capitalist economy: they collected unused funds like, say,
your bank account and transferred them towards some potentially useful

Then, there were no financial crises. It was a period of enormous
growth, the highest growth in American history, in the ’50s and ’60s.
And it was egalitarian. So the lowest quintile did about as well as the
highest quintile.

A lot of people moved into reasonable lifestyles: what’s called here
“middle class” but is called “working class” in other countries. But it
was real and the activism in the ’60s, after a pretty dismal decade,
really civilised the country in lots of ways that are permanent. They’re
not changing, they’re staying on.

The ’70s came along. There was a sharp change: de-industrialisation,
offshoring of production, and shifting to financial institutions (which
grew enormously).

I should say that in the ’50s and ’60s, there was also the development
of what several decades later became the high-tech economy: computers,
internet [and] the IT revolution were mostly developed in the ’50s and
’60s, substantially in the state sector. It took a couple of decades
until it took off, but it was developed there.

The developments that took place in the 1970s set off a kind of vicious
cycle. It led to the concentration of wealth, increasingly in the hands
of the financial sector, which doesn’t benefit the economy — it probably
harms it and harms society.

The concentration of wealth yields the concentration of political power,
which in turn gives rise to legislation that accelerates the cycle — the
fiscal policies, the tax changes, the rules of corporate governance,

Alongside this began the very sharp rise in the costs of elections,
which drives the political parties — even deeper than before — into the
pockets of the corporate sector.

[There’s been] a tremendous concentration of wealth, mainly in the top
one-tenth of one percent of the population. Meanwhile, for the general
population there opened a period of stagnation or even decline [in
wealth] for the majority.

People got by, but by pretty artificial means. A lot of borrowing, and
so a lot of debt. A longer working day, which was pretty soon much
higher than in other industrial countries.

There has always been a gap between policy and the public will, but it
just grew astronomically.

For the general population — the 99% in the imagery of the Occupy
movement — it’s been pretty harsh and it could get worse. This could be
a period of irreversible decline.

For the 1%, and more so the one-tenth of the 1%, it’s just fine. They
are richer than ever. They are more powerful than ever. They are
controlling the political system. They are disregarding the public.

Take Citigroup. A couple of years ago they came out with a brochure for
investors. They urged investors to put their money into what they called
the “plutonomy index”. They said the world is dividing into a plutonomy
[an economy controlled by the very rich] and that’s where the action is.

They said their plutonomy index was way outperforming the stockmarket,
so put your money into it.

And as for the rest, we set them adrift. We don’t care about them. We
don’t need them. They have to be around to provide a powerful state to
protect us and bail us out when we get into trouble, but other than that
they essentially have no function.

They are sometimes called these days the “precariat” — people who live a
precarious existence on the periphery of society. But it’s not a
periphery any more, it’s becoming a substantial part of the economy in
the United States and elsewhere.

And this is considered a good thing. For example, [former US Federal
Reserve chairperson] Alan Greenspan , when he was still hailed by the
economic profession as one of the greatest economists of all time,
before the crash for which he was substantially responsible, he was
testifying to Congress in the Clinton years explaining the wonders of
the great economy that he was supervising.

And he said a lot of the success of this economy was based on what he
called “growing worker insecurity”. If working people are insecure, if
they are part of what we now call the “precariat” and live precarious
existences, then they are not going to make demands, they are not going
to try to get higher wages, they won’t get benefits, we can kick them
out if we don’t like them, and he said that’s good for the health of the

And [Greenspan] was very highly praised for this.

And now the world is indeed splitting into a plutonomy and precariat —
in the imagery of the Occupy movement, it’s the 1% and the 99%. That’s
not literal numbers, but it’s the right picture.

It could continue like this. And if it does continue [then] this
historic reversal that began in the 1970s could become irreversible.
That’s where we’re heading.

And the Occupy movements are the first, real, major popular reaction
that could avert this. But as I said, it’s going to be necessary to face
the fact that it’s a long, hard struggle. You don’t win victories tomorrow.

You have to go on. You have to form structures that can be sustained,
that will go on through hard times, and can win major victories.

In many ways the most exciting aspect of the Occupy movement is just the
construction of these associations, bonds, linkages and others that are
taking place all over. And out of that, if it can be sustained, it can
come to be expanded to a large part of the population.

(3) Manufacturing not an economic maybe

Ian Porter

Sydney Morning Herald, August 31, 2011


MANUFACTURING is not a take it or leave it option for Australia.

It has to be a central part of the economy in coming decades if the
Australian population is not to get dragged into a race to the bottom in
terms of living standards.

The exact split between primary, secondary and tertiary industries in a
healthy economy cannot be defined by any formula, but the potential for
a sharp shrinking of the Australian manufacturing sector threatens to
seriously unbalance the economy and lead to social disruption in coming

The minerals boom and the resultant very high value of the Australian
dollar pose a threat to manufacturing of a scale never seen before.

Sixty years ago, when the wool boom sent the currency soaring, the local
manufacturing sector - just getting started under an umbrella of federal
government industrialisation policies - was protected by tariffs and a
relative lack of goods to import from Europe and Asia.

Fast-forward to the present and those elements that "saved"
manufacturing back then are absent. There are no tariffs any more and
there are many sources of cheap imports.

It has been suggested that the minerals boom could last 20 years - or as
long as it takes China to lift 1.4 billion people out of poverty. If the
Australian dollar stays where it is now for that long, the consequences
for manufacturing, and the people dependent on it, would be dire.

As BlueScope and the carmakers have found, it is impossible to export
when the Australian dollar is above parity with the US dollar. And that
sort of valuation also makes imports abnormally cheap.

It is not just manufacturing workers and their families who will suffer.
Even if they do find other work - and there are not one million jobs out
there in the market waiting to be filled - it is unlikely to pay as
well, leading to an adverse impact on their own standard of living, but
also on that of almost every other Australian.

The drop in living standards caused by a decline in manufacturing will
flow into the economy. There will be reduced demand for goods. Even if
those goods are imported, the retailers - who comprise one of the
largest employment sectors in the economy - will sell fewer of them.

Rushing into tertiary industry - services - will not help. With fewer
people employed, there will be less demand for everything, whether it's
haircuts or legal services, IT services or shoe-shining. Australia has
been lucky and lazy in the past. Instead of processing many of its own
primary products like wool, foodstuffs and minerals, it has simply
shipped them offshore and let someone else earn the manufacturer's margin.

The wealth foregone is almost unimaginable. It's the manufacturing
margin where the wealth is created. A $50 strip of steel can be
converted into a $700 refrigerator, 10¢ worth of wool into a $2 pair of

Australia has a chronic trade deficit problem and it's no wonder. We
sell iron ore at $180 a tonne and import it back in the form of cars at
a rate of $20,000 a tonne.

If Australian manufacturing is to survive in the long term, we need to
pull back a lot of this processing onshore and create the wealth here.
And we should start with the sector that is visiting the mayhem on
manufacturing - minerals.

This is what the federal government had in mind when it first granted
export licences to BHP and Rio Tinto (then CRA) when they proposed giant
ore mines in Western Australia. One condition was that they beneficiate
(process) a proportion of the ore into a value-added product.

Forty years on and there is still nothing concrete to show. BHP lost
billions when its hot briquetted iron plant blew up - although its
pellet plants in Brazil work fine - and RTZ is still fiddling with a
smelting system that is supposed to produce pig iron more efficiently.

Does the parlous state of manufacturing mean that all the protection and
assistance over the past six decades and more has been wasted? Far from it.

The industry assistance plans have helped manufacturing overcome a
crucial shortcoming in Australia, a small domestic market. Purists would
say a country with a small domestic market should not aspire to make
cars, refrigerators or even steel if the market can't support them with
no assistance.

But that ignores the stimulus manufacturing provides in many areas,
whether it's education and the trades or management or innovation, quite
apart from employment and general economic activity.

Manufacturing itself is a multiplier of value, turning basic materials -
steel, aluminium, plastic, glass, rubber - and components like
electronics into products worth much more than the core ingredients.

Yes, other countries may be able to do it cheaper, especially when the
Australian dollar is ridiculously overvalued, but importing products
creates few jobs in Australia, and low-paid ones at that.

(4) Without Manufacturing, America is rotting at its core


America is rotting at its core

Hugh White

National Times (Australia), August 16, 2011

As China rapidly ascends in influence, its superpower rival seems unable
to face up to its failings.

For years we have been told not to worry about China's growing strength,
because America is even stronger. No matter how far China rises, our
leaders have said, America will be the world's omnipotent power. ''You
can do anything,'' the Prime Minister told the US Congress just six
months ago.

This has always been naive. As long as China keeps growing fast - and
our entire economic policy assumes it will - the laws of arithmetic
guarantee that it will soon overtake the US to become the world's
richest country. And wealth is strength, as America itself has shown for
over a century.

But until now it has been easy to assume that America itself is not in
decline: that the global power shift is driven by China's growing
strength, not by American weakness. China might grow stronger, but
America would remain a uniquely vibrant, resilient and innovative
country, and a beacon to the world.

Advertisement: Story continues below Now one has to wonder. It is
possible that we are witnessing not one but two remarkable national
transformations, as America stumbles while China ascends. If so, that
will make the shifting power balance between them much faster, more
destabilising and more risky than we thought.

We should not exaggerate the importance of Congress's debt fiasco and
the S&P credit downgrade. But nor should we overlook their significance
as evidence of deeper, long-term shifts in America's economic and
political foundations. We have assumed that America will bounce back
from its present troubles because it has always bounced back before.
This time might be different.

Look at the economy first. The US economy has changed a lot over the
past few decades. The first and most important of those changes has been
the decline of manufacturing as a share of the economy and a source of
well-paid jobs. Manufacturing has always been the bedrock of American
economic might. Thirty years ago 20 million Americans worked in the
sector. Today only 12 million do, and that number is falling by 50,000 a
month. The biggest cause is competition from China.

As manufacturing has declined, its place has been taken by new
''knowledge'' industries such as finance and IT. But these industries do
not create the vast numbers of well-paid jobs that once provided the
bedrock of American society. Instead they provide very high paying jobs
for relatively few people. This produces the second big long-term change
in America's economy - the stagnation in average incomes.

While the relatively few people who work at the top end of America's
growth industries have done very well, average incomes have hardly risen
for the past 30 years. That's a very sharp contrast to what's happened
in Australia, for example, where average incomes have been rising steadily.

So one problem with America's new knowledge economy is that it doesn't
produce many well-paid jobs. The other problem is that it's not clear
what it does produce. Value is an elusive concept, but to put it mildly
it is hard to see how much value the bankers of Wall Street have added
to the US economy over the past decade or two, compared with the
contribution of Detroit in its heyday.

And while it is easy to see how Windows and Word make real differences
to productivity throughout the economy, that's less clear for later
generations of software. Facebook, for example.

This raises some rather unsettling questions. Can America's
post-industrial knowledge economy support its global power? Can it
create millions of well-paid jobs to replace those lost in
manufacturing? Indeed, how can the US maintain a high-wage economy
without rebuilding manufacturing?

And how could America rebuild manufacturing in the face of China's
competition? America's genius for innovation will help, but only if it
can stop China adopting the same innovations itself. Essentially, as
long as markets for goods and ideas remain relatively open, the only way
for America to rebuild manufacturing would be to drive American wages
down to the point that they meet Chinese wages as they rise.

In fact, this may be what we are already seeing. But they'll have a lot
further to fall before China stops taking American jobs. That's bad news
for American workers, but it is also bad news for America's long-term
economic and social trajectory.

Which brings us to politics. Clearly America's political system has
always been untidy, but it has mostly produced good government.
Governing America has, however, become harder over the past few decades.
Politics everywhere is first and foremost about choosing how to
distribute wealth. Until recently the choices have always been
relatively easy in America, because there has been a lot of wealth to go
around. Now there is, relatively speaking, less to go round, the choices
become harder, and the struggles over them intensify.

Several things then happen. First, the debt grows, as both government
and people try to avoid choices by borrowing money. Second, politics
becomes polarised, as voters scrabble harder for the choices that suit
them best. Third, people become susceptible to any politician who can
convince them that somehow the hard choices do not have to be made.

Americans believed George W. Bush when he said they could invade Iraq
and cut taxes. And they believed Barack Obama's beguiling mantra. ''Yes,
we can'' was a promise to Americans that they did not have to make hard
choices - a promise he could never keep. Now many Americans seem to
believe the Tea Party that cutting taxes will fix everything. As if.

America is a remarkable and wonderful place, with immense resources of
all kinds. It will remain the world's second-strongest power for decades
to come, with a big capacity to shape world affairs and provide a great
life for its people. But it faces choices today about how to grow its
economy and use its power that are in many ways harder then any it has
faced since the Civil War. Its political system today seems incapable of
making those choices. We should be worried, because we need a strong and
well-governed America.

Hugh White is professor of strategic studies at ANU and a visiting
fellow at the Lowy Institute.

(5) Does America Need Manufacturing?


Gabriele Stabile/Cesuralab for The New York Times.


Published: August 24, 2011

Hockfield recently assembled a commission at M.I.T. to investigate the
state of American manufacturing and to offer a plan for its future. “It
has been estimated that we need to create 17 to 20 million jobs in the
coming decade to recover from the current downturn and meet upcoming job
needs,” she said at a conference this past March. “It’s very hard to
imagine where those jobs are going to come from unless we seriously get
busy reinventing manufacturing.” This logic has been endorsed by Jeffrey
Immelt, General Electric’s C.E.O.; Andy Grove, the former chairman of
Intel; and Andrew Liveris, Dow Chemical’s C.E.O. A widely circulated
2009 Harvard Business Review article — “Restoring American
Competitiveness,” by two Harvard professors, Gary Pisano and Willy Shih
— has become one of the touchstones of the manufacturing debate. In the
article, Pisano and Shih maintain that U.S. corporations, by offshoring
so much manufacturing work over the past few decades, have eroded our
ability to raise living standards and curtailed the development of new
high-technology industries.

When I spoke with Pisano, he noted that industries like semiconductor
chips — the heart of computers and consumer electronics — require the
establishment of “an industrial commons,” the skills shared by a large,
interlocking group of workers at universities and corporations and in
government. The commons loses its vitality if crucial parts of it, like
factories or materials suppliers, move abroad, as they mostly have in
the case of semiconductors. At first the factories leave; the
researchers and development engineers soon follow.

The most punishing effect, however, may be the one that can’t be
measured — the technologies and jobs that aren’t created because the
industrial ecosystem is degraded. The semiconductor industry, for
example, led to the LED-lighting and solar-panel industries, both of
which are mostly based in Asia now. “The battery is another fascinating
example,” Pisano told me. “The center of gravity is Asia. But why?” If
you go back to the 1960s, he says, the American consumer-electronics
companies decided they were better off in Japan, and then Korea, where
costs were lower. “And then you have to ask: Who had the incentives to
make batteries smaller or more powerful or last longer? Not the car
industry. The consumer-electronics industry did.” This explains why the
U.S. is now playing catch-up with lithium-ion batteries. It also
underscores the vulnerability of an economy with a shrinking
manufacturing sector. “When one industry moves,” Pisano says, “there can
be other industries in the future that follow it that you couldn’t even

Even in the battery industry, there are skeptics. Menahem Anderman, a
California-based consultant, says that transforming 10 percent of the
world’s automobiles into either plug-in hybrids or electric vehicles by
2020 is a pipe dream. His projection is for less than 2 percent.
U.S.-based factories, he says, are at a disadvantage. The U.S. industry,
he told me, “was not ready to take in $2 billion from the government and
spend it wisely. And so now we will build a lot of plants, and we will
create overcapacity, and a lot of the companies will fail.” He has no
ideological objection to federal support, he adds, “but the status of
the technology and the market were incompatible with the desire of the
government to create manufacturing jobs.” For pure electric vehicles in
particular, which will likely need an expensive battery replacement
within 10 years, Anderman still sees the dilemma Patil faced at Ford in
the ’90s, when he questioned whether consumers would pay $10,000 more
for an inferior car. As Anderman puts it: “Has there ever been, in the
modern history of capitalist countries, a new product for which the
mainstream customer paid more for less?”

By his math, gas prices have to reach about $7 a gallon to make plug-in
electric-hybrid vehicles attractive to consumers. To create demand for
fully electric vehicles, gas prices would have to rise even higher.
Which means generous government subsidies for purchases of these
vehicles. Currently, Chevy Volt owners receive a tax break that brings
the cost of the car down to about $33,500, from $41,000. In Washington,
several people told me that unless there is consistent and increasing
demand, taxpayers will have helped build an industry to nowhere. This
fear is what turned so many politicians and policy makers against
industrial policy in the first place. When government-backed ventures
fail, taxpayers are left on the hook.

For now, battery makers think they can bring down costs quickly enough
to be competitive. Improvements in the manufacturing process — spreading
a better chemical coating on the sensitive elements inside the
batteries, for instance, or raising the plant’s conveyor belt speed ever
so slightly — will increase quality and efficiency. I also heard talk of
start-ups in California working on new cost-effective chemistries. “We
see prices over the next five years coming down 50 percent,” A123’s
Forcier told me. “And it’s easy to say that, because we’re quoting 2014
business, and we know what the prices are.”

Whether this adds up to American jobs is less clear. The hope is that
lithium-ion plants will seed a network of new chemical and equipment
providers. To some extent, this has already happened. Some Japanese and
Korean companies have set up shop in the United States, and local
colleges are offering training courses for aspiring lithium-ion-battery
factory workers. But it’s a fragile ecology. Job numbers are small
relative to the huge plants of Detroit’s past. As the former labor
secretary Robert Reich pointed out, high-tech manufacturing is
increasingly automated. At capacity, the lithium-ion factories in
Michigan will each employ between 300 and 400 people. Even the most
optimistic forecasts — enough hybrid- and electric-car demand to
necessitate several dozen factories — suggest the battery industry can’t
significantly offset declines in American manufacturing.

Which doesn’t mean that it’s a bad investment. If nothing else, the
Obama administration’s efforts in Michigan reawaken the conversation
about industrial policy. To a large extent, this is an old war among
Washington politicians. In the 1970s, it was fought over the federal
bailouts of Lockheed and Chrysler — and a few years later during debates
over whether the country needed to assist domestic companies in their
efforts to gain ground on the Japanese in the semiconductor industry. By
the time George H. W. Bush ascended to the presidency, the move away
from industrial policy was clear.

“All you had to do in the 1980s was say, ‘That’s industrial policy,’ and
it killed anything it was hurled at,” says Senator Levin, who along with
Senator Sherrod Brown of Ohio is now among the most vocal advocates of
such a policy. “It was the kiss of death. And it set us back 10 to 20
years in terms of manufacturing in America.” What is different now,
Levin argues, is that “our companies are not competing with those
companies in Korea and Japan. They’re competing with those governments
that are supporting them. It’s na├»ve to believe that we just have to let
the markets work and we’ll have a strong manufacturing base in America.”
In his view, the lithium-ion investments are tantamount to repairing a
kind of market failure.

The battery executives I spoke to viewed the stimulus money as a
once-in-a-lifetime opportunity. None seemed to think a federal windfall
would come their way again. None saw their business endeavors as
inherently political or ideological. And none seemed to believe they
could survive if they didn’t drive battery costs down and demonstrate
that they could compete with the best lithium-ion factories abroad. “My
own feeling is this will happen just as the government incentives wear
off,” Patil told me. “By then it has to become a self-sustaining
business, and we actually see a line of sight to get there.”

If the battery stimulus ultimately succeeds, does it demonstrate that
expanding the United States’ economy only through knowledge and services
is no longer a viable strategy? “All of the great new American companies
of the past few decades,” says Suzanne Berger, a chairwoman of M.I.T.’s
panel on the future of American manufacturing, “have focused on research
and development and product definition — Apple, Qualcomm, Cisco.” These
were technology companies that could take full advantage of what she
calls the “modularity” of the global economy. Their genius resided in
the design of their gadgets and information systems; offshoring the
industrial work did not leave them at a disadvantage. It did the
opposite, greatly reducing costs and raising profits. “Now I think we’re
at a really different moment,” Berger says. “We’re seeing a wave of new
technologies, in energy, biotechnology, batteries, where there has to be
a closer integration between research, development, design, product
definition and production.”

One challenge to moving in this direction may be that our banks, hedge
funds and venture capitalists are geared toward investing in financial
instruments and software companies. In such endeavors, even modest
investments can yield extraordinarily quick and large returns. Financing
brick-and-mortar factories, by contrast, is expensive and painstaking
and offers far less potential for speedy returns. Berger maintains that
for the economy to get “full value” from our laboratories’ ideas in
energy or biotech — not just new company headquarters but industrial
jobs too — we must aspire to a different business model than the one we
have come to admire.

Which is to say, companies that have a passing resemblance to A123
Systems in Livonia, Mich. Or to use a more familiar example, a business
that looks less like Google and more like Ford.

(6) Jeffrey Sachs turns against "corporatocracy", yet endorses Offshoring


The Price of Civilization

by Jeffrey Sachs

{reviewed by} Robert Skidelsky

The Guardian | Thursday, October 06, 2011

This is the latest in a spate of books provoked by the world economic
crisis and one of the best. Jeffrey Sachs calls himself a "clinical
economist". In The End of Poverty he applied his clinician's skills to
the distempers of Africa; in this book he turns them to the hubristic
and wasteful habits of America. ...

Sachs's list of American diseases is familiar: no jobs or bad jobs for
those with poor education; decaying infrastructure; collapse of saving;
lagging educational standards; increasing inequality; soaring healthcare
costs; rampant corporate dishonesty. The diagnostician traces the source
of these evils to the "free market fallacy" leading to "Washington's
retreat from public purpose"; to the "new globalisation" which cost
jobs, lowered wages, and skewed rewards to the very rich; to social and
ethnic fragmentation; and to the domination of politics by "corporate
lobbies" and "spin masters of the media", who have distracted the
American people with the "relentless drumbeat of consumerism". ...

Having diagnosed the diseases, our clinical economist writes out his
prescriptions. These aim to replace the "distracted" society with the
"mindful" society. "Mindfulness", we learn, comes in eight dimensions,
and is conveyed along three paths: cognitive, meditative, and practical.
These paths lead to eight economic goals for the next 10 years – to
"raise employment and quality of work life", "improve the quality of and
access to education", "reduce poverty", "avoid environmental
catastrophe", "balance the federal budget", "improve governance",
"national security", and "raise America's happiness and life
satisfaction". The social reform goals can be reconciled with the
balanced budget requirement only through a heavy increase in taxes on
the rich. Sachs calls for an end to the Bush tax cuts for those with
incomes over $250,000, and an increase in the top rate of income tax to
40%, a wealth tax, closing of tax loopholes, tightening tax compliance,
and increased taxes on oil and fossil fuels, as well as substantial cuts
in defence spending. ...

Extrication of American politics from the clutches of the
"corporatocracy" will require the provision of public money for campaign
financing, free media time, a ban on campaign contributions from
lobbying firms, and a stop to the "revolving door" between lobbying
firms and federal employment. However, Sachs doubts whether effective
government can be achieved without the rise of a "credible third party"
to break the corrupted Republican-Democratic duopoly. He cites John
Anderson in 1980, Ross Perot in 1992 and 1996, and Ralph Nader in 2000
and 2004 as precedents, but prudently omits George Wallace, the racist
governor of Alabama, who, in 1968, was the last independent presidential
candidate to achieve any votes in the electoral college. Theodore
Roosevelt in 1912 would have served his purpose better.

There are at least two omissions from the doctor's diagnosis. The first
is that he ignores the role of inadequate demand in causing the current
high level of unemployment and unwanted part-time employment, treating
it purely as a supply-side problem. Thus, while aiming to reduce
unemployment from 9.4% to 5% by 2015, he rejects "macroeconomic measures
to boost aggregate demand, including more fiscal stimulus and
quantitative easing by the Fed". Instead he offers various supply-side
reforms, such as putting "millions of young people currently unemployed"
back in school or college, increased job sharing, and job retraining
schemes. But current unemployment is both a supply-side and a
demand-side problem. Sachs's dislike of Bush-era budget deficits, which
combined huge increases in military spending with tax cuts for the rich,
is understandable, but to suppose that supply-side measures alone will
halve unemployment in four years' time is pie in the sky.

Second, Sachs's diagnosis of America's ills understates the deleterious
effect of globalisation. He doesn't question the economics or morality
of offshoring American production abroad, regardless of its consequences
for American jobs or real wages, simply saying that the winners should
compensate the losers. Not only has this not happened, but it is
increasingly unlikely to happen, because globalisation has greatly
increased the political clout of the winners. Since the 1980s owners of
capital have enjoyed not just a big rise in pre-tax earnings, but a
substantial cut in tax rates, taking inequality back to levels last seen
before the First World War. This has made the task of social democrats
like himself that much more difficult. The United States of the 1950s
and 60s, which Sachs looks back to as a golden age, did not transfer
production abroad, protected itself against imports, and had stringent
immigration controls. The wealthy were less rich and less powerful, and
there was strong "countervailing" power in the trade unions. All this
was swept away by globalisation. But Sachs fails to draw the pretty
obvious lesson that globalisation actually destroyed the basis of the
plural American society he admires, leaving the "American people"
impotent to affect political outcomes. ...

(7) S Koreans protest against trade deal with US; say it endangers their
country's agriculture

{but that's what's happening to our manufacturing}


S Koreans protest against trade deal with US

Authorities detain at least 15 people after police clash with
demonstrators in the capital Seoul.

Last Modified: 03 Nov 2011 11:56

South Korean authorities have detained at least 15 people after police
clashed with protesters demonstrating against the country’s free-trade
agreement with the US.

Riot police used water cannons on Thursday to disperse an estimated
2,000 protesters who gathered in front of the National Assembly in the
capital Seoul, before a parliamentary vote to ratify the pact.

The South Korea-US Free Trade Agreement (FTA) has been approved by the
government but still requires approval from Korea's legislature.

The protesters claimed the pact would endanger their country's
agriculture industry by flooding the market with cheaper imported goods.

"This agreement is totally shameful and it betrays our country," Kim
Won-yeol, a protester, said.

"This agreement also seriously damages our citizens' goods, so many
people have gathered here to stop the FTA from being ratified at the
National Assembly."

The demonstrators said they wanted Lee Myung-bak, the country’s
president, and his ruling Grand National Party to renegotiate the deal
with the US.

Korea's parliament was scheduled to vote to ratify the FTA at its
general meeting on Thursday afternoon.

The pact is America's biggest free-trade agreement since the 1994 North
American Free Trade Agreement (NAFTA) with Canada and Mexico.

South Korea is the world's 12th largest economy and US-South Korea trade
amounted to $90.2bn last year.

(8) Qantas trying to shift jobs offshore, despite being one of the
world's most profitable airlines


OCTOBER 31, 2011, 4:34 A.M. ET

Qantas Crisis Jeopardizes Ratings, Brand Value


SYDNEY—Qantas Airways Ltd. may have succeeded in restoring flights and
gaining the support of the Australian government to resolve a damaging
dispute with unions, but the Australian flag carrier faces a tougher
challenge restoring investor confidence in its brand.

Moody's Investors Service placed the airline on review for a downgrade
Monday, just as its first flights took off from Sydney International
Airport and the carrier started to clear its backlog of 70,000
passengers stranded over the weekend. Standard & Poor's followed,
downgrading the outlook on the airline's coveted investment grade debt
rating to negative from stable. As of June 30 Qantas had net-debt
including off balance-sheet liabilities of 6.97 billion Australian
dollars (US$7.46 billion).

Qantas unexpectedly shut down its domestic and international flights
Saturday in response to an escalating series of worker strikes over pay
and conditions.

"The outlook revision reflects our view of the uncertainty concerning
the severity of the negative impact on Qantas following the protracted
industrial relations dispute, which has included the grounding of its
entire fleet," Danielle Kremzer, credit analyst at Standard & Poor's
said. Moody's said the grounding of services over the weekend was
"likely to place pressure on the airline's forward bookings,
profitability and longer term brand equity."

Workplace arbitrator Fair Work Australia's decision early Monday to end
the dispute between Qantas and unions representing engineers, baggage
handlers and pilots over wages and the company's plan to establish new
Asia-based airlines to lower its costs means both sides now have 21 days
to agree a permanent settlement. If they fail to agree during that
period the tribunal will enforce its own decision.

Longer-term, Qantas faces a challenge in restoring its brand after a
tough year for the airline that included the blowout of an engine on one
of its flagship A380 superjumbos. Brand Finance, a consultant that
assesses brand worth, estimates that the value of the Qantas's brand has
declined by about US$100 million, or 9% since January.

"All stakeholders should be acutely aware that the dispute is eroding a
cornerstone of the business," said Tim Heberden, managing director of
Brand Finance Australia.

To be sure, Qantas remains one of the world's most profitable airlines,
doubling its net income in the year ended June 30 to A$250 million.
Australia's resources boom has spurred demand for business travel,
partly shielding the carrier from higher fuel costs and renewed global
economic jitters. Qantas's international unit, however, is posting steep
losses as fuel costs and state-backed Middle East rivals compete
aggressively for market share.

"I think the Qantas brand is an amazingly resilient brand and we've gone
through very significant industrial disputes before," Alan Joyce, Qantas
group Chief Executive said Monday.

The airline's immediate priority will be to fully restore services,
which it hopes to complete by Wednesday, and then focus on reaching an
acceptable deal with unions. The head of Australia's baggage handlers'
union gave an indication on Monday of how fraught talks could be in the
weeks ahead, suggesting civil disobedience is an option if an acceptable
settlement can't be reached.

"If laws are unjust and the big end of town is against you, acts of
civil disobedience are the only [action] you can take against the
powerful and rich," Transport Workers Union national secretary Tony
Sheldon said on the sidelines of a news conference in Sydney. Mr.
Sheldon said his union's members could resort to sit-ins or road
blockages to pressure the government to change industrial relations laws
that allow the tribunal to enforce a negotiated settlement not in the
union's favor.

The industrial dispute may be the worst flash point between Australian
unions and a major corporation since the bitter waterfront strikes of
the late 1990s. In 1998, Patrick Stevedores' chief Chris Corrigan sacked
his entire work force of 1,400 employees and replaced them with nonunion
labor to break the Maritime Union of Australia. Qantas's latest problem
isn't the first time that strikes have caused upheaval for the nation's
aviation industry. In 1989, a pilots union dispute with now-defunct
Australian airline Ansett saw domestic services crippled and a separate
engineers strike against Qantas in 2008 cost the airline more than A$130

Shares in Qantas rallied to close up 4.1% Monday as investors welcomed
the restoration of grounded services that threatened to cost it A$20
million a day in lost revenue. The stock is down 43% over the last year
amid concerns that a strong Australian dollar was undermining demand for
tourism and high fuel prices were adding to costs.

Cynthia Koons contributed to this article.

Write to Ross Kelly at ross.kelly@dowjones.com and Andrew Critchlow at

(9) Murdoch's secret ABC attack


Posted: 31 October 2011

In hours, Murdoch could secure his stranglehold on the Australian media
by acquiring our public international TV news network -- and rob a
struggling ABC of $223 million in funding. Communications Minister
Stephen Conroy is under pressure to give control over the network to
Murdoch instead of the ABC -- but together we can stop the deal.

Just last week, we called on you to help save the media inquiry from
Murdoch's meddling -- and thousands of you responded. Now, we
desperately need to come together again. Murdoch’s mouthpiece The
Australian has been leaking details of insider support for Murdoch in a
blatant attempt to force Labor into backing his bid. Conroy knows that
giving the network to Murdoch would greatly increase the media mogul’s
corrupting influence and hurt the ABC, and is looking for a way out.

Together, we can give Conroy the public mandate he needs to reject
Murdoch’s power grab and award the contract to the ABC. Send a message
to Conroy telling him that Australians don't want this dodgy deal --
sign now and then forward to everyone!

{visit the above link, to see how to do it. Or email yourself to Senator
Stephen Conroy <minister@dbcde.gov.au>}

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