Open thread on capitalism

Posted on July 30, 2010 by Jarrah

By popular demand IRL, this thread is for arguments about capitalism. It can mean many things to many people, so to provide a starting point, here is my definition:

capitalism – a socio-economic system based on private property rights, with economic outcomes arising from the aggregated decisions of individuals and firms competing for value in a market.

The components ‘property rights’, ‘decisions’, ‘firms’, ‘competing’ and ‘market’ can have a multitude of qualifiers attached to them, which add to or modify this definition, but I believe the above is what underlies the various kinds of capitalism. Feel free to agree or disagree in comments, and we’ll see where the discussion takes us. It would be nice if people read an earlier post on economic debates, but it’s not essential.

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Obligatory election prediction

Posted on July 22, 2010 by Jarrah

Barring any game-changing developments, Labor will win. They were going to win with Rudd as leader anyway, but they’ll probably do slightly better with Gillard. The deposing of Rudd will not be a big factor by the end of the campaign. The myth that Labor saved Australia from recession will be commonly accepted by a majority, nullifying one of the Liberals’ traditional strengths. Gillard will maintain a just-to-the-left-of-the-Coalition stance on “border protection” that is sufficiently populist to appeal to enough voters. She won’t risk pissing off the committed conservative religious types by doing the right thing on gay marriage. Even though a clear majority of Australians support it, they mostly don’t consider it a key issue (unlike the fundies, a minority who might change their vote according to how politicians move on it). The resources tax has had much of its sting removed, and the media has certainly dropped it from their list of hot topics, though Twiggy and some others are worried about the possibility of an increase in Green representation in the Senate thanks to the preferences deal with Labor, and could prove a thorn in Gillard’s side.

Which brings me to the Greens. They will have an increased representation in the Senate thanks to the preferences deal with Labor. :-) They will not win any lower house seats. Their HoR vote will increase or decrease marginally, with no big swings.

The Liberals will gain some seats, especially in urban fringes. Abbott will eventually prove a liability as Labor’s attack ads sink into the public consciousness and his gaffes mount up, with some marginal seats falling to Labor. After campaigning hard on “stopping the boats”, which will be a vote-winner, the lack of other popular policies will be their downfall. Being deprived of their title as better economic managers, however spuriously, and a lack of fear-inducing events to bolster their security policies, will combine with a shortage of frontbenchers with a high enough level of perceived competence to ensure they lose.

Disclaimer: I have a terrible track record when it comes to predictions. Do not rely on this if you’re betting on the outcome.

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Won’t SOMEBODY think of the ninjas?

Posted on July 15, 2010 by Jarrah

The day before Bastille Day, French symbol of justice and freedom, the French lower house overwhelmingly approved a law that is unjust and takes away freedom, banning face coverings in public places. And they have the gall to dress it up as a blow for women’s rights, despite saying “this practice, even if it is voluntary, cannot be tolerated in any public place”.

See that? Even if it is voluntary! We will make you free from freely making a choice.

OK, so some women are wearing burqas or niqabs against their will, or because of social pressure. On a raw utilitarian level, if we could determine with a reasonable degree of confidence that substantially more women are wearing face coverings unwillingly than otherwise, then an argument could be made to ban them. Imposing on the few would be outweighed by liberating the many. Is legislation an option, then? I don’t think so, since it’s impossible to tell who is in that category, and who is not.

What to do for those that (presumably) are being forced to wear clothes that, literally, efface their identity? Our options are limited, but the origin of the problem suggests a solution. Because face covering is a cultural practice*, the best method for ensuring it is only done willingly is to promote a cultural context that is open, non-prescriptive, and tolerant. Most importantly, however, a society where individual choice is respected. In that way we can induce change in minority cultures towards a more liberal perspective, by applying gentle social pressure of our own. A slow but steady approach, if you will. And who knows, perhaps the emphasis on modesty will percolate outwards and counteract some of the sexualisation of Western dress codes.

France’s burqa ban is the opposite of such a strategy, attempting direct social engineering as a quick fix for a symptom, rather than addressing the underlying problem. Even if you reject my proposed solution, the ban could be counter-productive on the French government’s own terms, by causing some women to be confined to home if they cannot leave it covered. It certainly won’t do much to help integrate Muslims into wider French society – passing laws against minorities only serves to make them feel more isolated, and more defensive, than before. I suspect the popular support in France for the ban isn’t in spite of such considerations, but because they are (sadly) trending away from that famous aphorism, vive la différence!

* Many make the mistake of thinking it is a religious practice. Islamic scholars have argued for centuries about what is halal and what is haram with regards to clothing. As with any religion based on a holy book, many interpretations are possible, and the book itself can be contradictory or unclear. This is why Muslims do not dress uniformly, and why the concept of hijab, in its many forms, is more correctly defined as a cultural practice. If you’re thinking, “But it’s still just a Muslim thing”, then I suggest you look up the use of veils in myriad faiths and cultures for the past several thousand years.

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You cannot be serious!*

Posted on July 14, 2010 by Jarrah

Defying the laws of probability, the NSW Labor Cabinet has added to their list of incompetent decisions with their refusal to consider integrated ticketing for light rail. You’d think eventually they’d do something right.

Thankfully, some politicians are still capable of recognising a good idea when they see one, as seen last month when a bunch of representatives started agitating for more light rail extensions.

* Apologies to Mr McEnroe

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What’s that about simplistic neoclassical models again?

Posted on July 13, 2010 by Jarrah

Almost any statistic coming out of China can boggle the mind. In such a huge place, undergoing such rapid change, the sheer numbers in any area of inquiry are almost incredible. Especially to someone from the tiny peripheral nation that is Australia. The numbers relating to its economic growth are among the most impressive – GDP expanding at double figures for decades, 20,000 new dwellings and 250km of new roads built every day, energy consumption up 70% in just 10 years… the list of enormous numbers itself reaches a big one.

Such growth scares some people. While I was handing out how-to-vote cards for the LDP in the 2007 election, I was engaged in friendly argument by a Greens supporter about free trade. He asserted, as a possible consequence, that eventually Australia would lose all manufacturing and most services to China, since they can outcompete Australian firms on price. He rejected my objections that he was assuming an economic impossibility, and I didn’t really have the time to walk him through the reasoning as I had potential voters to convince. I’m also fairly certain no theoretical arguments would have convinced him anyway. So I dropped it.

Over the last few years, and with greater frequency in the past 12 months, the “capitalist press” (as my Greens interlocutor would have put it) has been reporting that a new big number is appearing in China – wages growth. Earlier numbers didn’t scare them, in fact the opposite, but this one tends to be couched in terms of apprehension. “Ow, my profit margin!” sums it up. But they shouldn’t be concerned. Unlike in some parts of the world, this particular kind of growth isn’t driven by inflation of the money supply, or edicts from on high that a bigger number is politically desirable. No, in this case, it’s the almost balletic interplay of our constant companions Supply and Demand.

The vast exodus from China’s under-developed hinterland to the booming coastal cities, which kept wages among the lowest in the world, is finally starting to diminish. Increasing productivity and wealth are increasing domestic demand. The shifting of workers from collectives to the private sector are improving pay and conditions. As a consequence, China’s labour force finds itself with much better bargaining power than it used to, which is mirrored in more industrial disputes. Some official minimum wages (which, more rationally than Australia, are determined by region) just went up by 20%, which sounds big, but in fact is lagging wage rises in the rest of the economy. Since 1995, average wages have increased 300%, while inflation has been very low.

All this, remember, is despite the hindrances of China’s fake labour unions that are in fact extensions of the Communist Party apparatus whose job is to keep workers docile, and the export subsidy that is the constricted currency.

Perhaps I should have tried to convince that fellow. I could have said that supply and demand never stop working, and if Australian jobs went to China, that would increase development, which increases wages, eroding China’s comparative advantage. Which is exactly what is happening – countries like Vietnam and India are benefiting. I could have pointed out that this is the very definition of beneficial globalisation, where companies seek out the cheapest labour in the poorest countries, and in so doing drive up wages and living standards. People live longer, better lives and national disparities diminish – goals every left-winger aspires to, brought about by brutal capitalism. I should have asked him why he hates the poor :-)

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Perverse incentives

Posted on June 20, 2010 by Jarrah

While watching the World Cup, and pondering the phenomenon of ‘diving’, I came to the realisation that soccer, among other sports*, suffers from a problem of meta-construction. I’m sure there is a proper game-theoretic or rule-theoretic term that applies, but I am unfortunately ignorant of it, so I’m stuck with my approximation. Anyway, what I mean is, soccer has contradictory imperatives embedded in its rules.

Theoretically, soccer is a non-contact sport. However it involves a contest for possession of one object of small size. This invites contact, but that’s not the problem. The problem is that the rules punish contact unless it can be construed as a legal fiction of non-contact. Allow me to explain. You can go for the ball, not the player. If you happen to contact the player in the process of going for the ball, that’s OK. But the nature of the contest means such contact is the norm rather than the exception. So the natural actions involved in playing the game – competing for possession of the ball – are contraventions of the rules for playing the game. What it creates is an incentive for the opposing player to demonstrate that you went for him/her rather than the ball, otherwise known as diving. It’s widely acknowledged as the bane of the sport, but given the fundamental set-up, it appears unavoidable.

Contrast this with AFL, a highly artificial game (unlike soccer that has been more ‘organic’ in its development), the rules for which have been constructed with great care, and therefore do not suffer this particular contradiction. In AFL, there is no pretence that you can gain control of the ball without making contact with the opposition. Certain kinds of contact are forbidden, but they do not constitute the typical contact necessary for the playing of the game. Thus opportunities for diving are very few.

* Netball springs to mind, with its constant litany of penalties for “Contact!”

Posted in Uncategorized | Tagged | 10 Comments

My lovely pile 2

Posted on June 17, 2010 by Jarrah

First uni put a big dent in my reading-for-pleasure time, and currently the exam period is keeping me from posting much, so I thought I’d show you what I’ve been saving up for the break. A couple I’ve been meaning to read for years, while a few others looked like they would challenge my worldview in an intelligent way (unlike, for example, George Ann Potter, Sandra Bloodworth or Frank Stilwell).

Continue reading →

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Where the Australian Greens go wrong

Posted on June 4, 2010 by Jarrah

I have voted Green more often than I have voted Labor (I’ve never voted for the party I’m a member of, but that’s because there hasn’t been a candidate in my electorate yet). I do so for a number of reasons – environmental issues are not given sufficient consideration by the major parties; the Greens are generally liberal when it comes to social issues; and I want minor parties of all persuasions to have more say in our democracy, which suffers from the 2-party rule we have been afflicted with for so long. However, there is an area where I diverge strongly from Green orthodoxy – economics. Not many people have a solid knowledge of Green economic policies, relying on the watermelon stereotype and the generalised slurs repeatedly made by the mainstream media, so I thought a rundown of some egregious examples would be useful.

Continue reading →

Posted in economics, national | Tagged , , , , , , , , , , , | 43 Comments

Win-win turns into lose-lose

Posted on June 1, 2010 by Jarrah

Well, that certainly didn’t turn out how I predicted.

Israel boarded the flotilla, as expected, though (unusually and critically) did so in international waters. I suspect that detail is going to be important. Violence ensued, with conflicting stories about who did what and when, and not only are the flotilla spokespeople’s stories conflicting with that of the IDF, each side’s story is inconsistent with itself. It should be noted that none of the passengers on the ships have been able to give their side of the story yet – so far everyone is having to rely on statements and videos released by Israel. When they are released, we will have more to go on. Undoubtedly they will be kept in detention as long as possible to ensure the Israeli side of events is given the most time possible in the public eye.

In the meantime, some key points:

  • The ships were “thoroughly searched and certified before they left port”, according to the Free Gaza Movement organiser Renee Jaouadi, and the passengers vetted. This can be checked, but even if it did happen like that, questions about the thoroughness of those procedures would always remain.
  • The flotilla was given ample opportunity by Israel to send the supplies through them instead of trying to break the blockade. This supports Defense Minister Ehud Barak’s assertion that “the sail was a provocation”, and shows that the blockade runners did not have a purely humanitarian agenda, as they claimed.
  • The IDF says two pistols were stolen from their commandos, and used against them. This corroborates the “unarmed” story of Jaouadi, and contradicts Deputy Foreign Minister Danny Ayalon’s assertion that “we found weapons that were prepared in advance and used against our forces”. It also begs the question, how the heck were random passengers able to steal guns off special forces??
  • Israel’s repeated statements that its blockade is legal under international law, and breaches of it illegal, are dubious at best. Incredibly, they completely negated this argument anyway by attacking in international waters, outside the blockade area. While not ‘piracy’ as defined by the 1982 United Nations Convention on the Law of the Sea, it was still an illegal boarding. That suggests that any violent action taken by the passengers is classifiable as self-defence (as claimed by Jaouadi), and the killings have no justification whatsoever.
  • Demands for an investigation are coming from many quarters, but most are merely asking Israel to investigate itself. That would be an injustice, and I join those calling for an independent inquiry.

So what I thought would be a minor incident, with the flotilla organisers getting what they want (a confrontation to highlight the plight of Palestinians ) and Israel getting what it wants (prevention of any breach of their blockade), has turned into anything but. Some foolhardy decisions have made a potential win-win into a lose-lose, at least for those injured and killed. At a more abstract level, it can be viewed as a victory for the flotilla organisers, because their hoped-for confrontation went beyond anything they anticipated. If they did want to have a violent encounter, Israel played right into their hands.

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Levantine blood feud, part MMXXXIV

Posted on May 31, 2010 by Jarrah

As I type this, a motley group of  ships are sailing from Cyprus towards the Gaza Strip in an effort to deliver 10,000 tonnes of supplies, in direct opposition to Israel’s blockade of the territory. The blockade has been in place since June 2007, when Hamas won a violent conflict with Fatah after coming first in the Palestinian parliamentary election in 2006 (a victory unrecognised by the international community). The problem with fostering democracy is that sometimes the “wrong people” win. Fatah was ejected from the Gaza Strip, where Hamas is strongest, but retained control of the West Bank. Well, as much control as it is allowed by Israel, anyway.

Under the 1993 Oslo Accords, which established the Palestinian Authority and gave it limited administrative powers over the Palestinian territories, Israel maintained control over Gaza’s land borders, its airspace, and its territorial waters. To that end, Israel built a barrier around Gaza that was mostly torn down during the 2000 Intifada, then rebuilt. Gaza was completely sealed off in 2004, when a barrier was built along the Gaza-Egypt border. In 2005, Ariel Sharon managed to engineer a full withdrawal of Israeli “settlers” and IDF soldiers from the Gaza Strip, though Israel retained control over Gaza’s borders, airspace, coastline, power (which mostly comes from Israel), and of course its import and exports. The withdrawal has been criticised from all sides (as would any substantial action in such a polarised environment) and can be viewed as a real attempt to advance the peace process, or as a cynical move to try to get rid of the “Gaza problem”. However, Sharon’s chief of staff pointed to a third, more strategic, reason – to make the peace process more difficult, and delay the formation of a Palestinian state.

No-one has been able to get hold of a definitive list of allowed imports, but it can be said that only the bare necessities are sent in – basic foodstuffs, clothing, some medical and school supplies, some chemicals and fertilisers, things like that. The amount of food let in is much less than previously – according to UN Special Rapporteur Richard Falk “only barely enough food and fuel … to stave off mass famine and disease”. Falk has been criticised as blatantly biased against Israel, and there’s something to be said for that, but he’s not alone in condemning the consequences of the blockade. Oxfam, Amnesty International, other aid groups, the UN Secretary-General and the Pope have all called for its lifting or easing. The primary objection is that it constitutes “collective punishment” of innocent Gazans for the crimes of its Hamas leaders. From the Goldstone report:

Israeli acts that deprive Palestinians in the Gaza Strip of their means of subsistence, employment, housing and water, that deny their freedom of movement and their right to leave and enter their own country, that limit their rights to access a court of law and an effective remedy, could lead a competent court to find that the crime of persecution, a crime against humanity, has been committed.

The current situation is difficult to classify. This is important, because occupying powers have obligations under international law that mere neighbours do not. Israel claims that, since it has no-one inside Gaza, clearly it is no longer occupied. The fact that Israel has effective control of everything going in and out, barring the smugglers’ tunnels, is problematic for that argument. Most independent assessments have concluded that Israel is still occupying Gaza even if it has no troops on the ground, including the authoritative judgment of the International Court of Justice. This means that, under the Fourth Geneva Convention, Israel has responsibility for the wellbeing of the Gaza population.

Israel takes a different view. It says that since the withdrawal, it is in a state of armed conflict with an entity ruled by terrorists, and therefore a blockade is a perfectly legitimate tactic. It cites the many economic sanctions used elsewhere, and the validity of maritime blockades in times of armed conflict. If we take the claims at face value, they seem valid. However, no sanctions have ever reached the level of utter domination that Israel has over Gaza, which has been described as “the world’s largest open-air prison”. The economic effects are devastating, far beyond any previous examples of sanctions. Gaza is effectively undergoing undevelopment, if I may use such an ugly neologism. Also, it’s not simply a matter of Israel choosing what to do with its own borders – if it were, the maritime blockade would not exist. Interestingly, the blockade of the coast does not just consist of stopping foreign ships arriving with potentially dangerous goods, but also the extraordinary restriction of Palestinian fishing boats from going more than three nautical miles from shore, instead of the previously agreed 20 nautical miles. Such a restriction has all the hallmarks of punitive, rather than preventative, action.

Alternative courses of action for Israel – that would be in keeping with their assertions of self-defense – are difficult to imagine. They are attacked regularly by Hamas and the various Palestinian resistance groups. Their citizens are killed and terrorised. It’s easy to see why they would seek to limit the ability of their enemy to attack them. The idea that they face an existential threat from Palestinians is laughable, but neither can they sit idly by and hope the rockets miss. Of course, “sit idly” is not what the status quo involves – rather, it is an active and aggressive occupation.

Despite all that, perpetual blockade is unsustainable. Though whether the so-called Freedom Flotilla is the harbinger of change is debatable. Most likely, they will simply be boarded and deported, the supplies distributed by the Israelis to the Gaza Strip, and victory claimed by both sides. Israel can’t be forced to let go of the Palestinians, and the terror tactics of Hamas and the rest will never beget a free Palestine. It’s as close to an insoluble problem as has ever existed in international relations, with all sides locked into patterns of behaviour that prevent the very result they crave. I do not envy the task facing the leaders and their successors.

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