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Important News, Belangrijke nieuws, Nouvelles importantes, Wichtige News, Fontos hírek, Importanti novitŕ, Pomembne novice, Importante Notícias, Viktiga nyheter



Ing. Salih CAVKIC


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VRTNieuws

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Deutsche Welle
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The man of the year

Guy Verhofstadt
Mr. Guy Verhofstadt

The man of the year
L'homme de l'an
De man van het jaar
2009


A proven Democrat, protector and fighter for justice and human rights in the World.

Een bewezen Democraat, beschermer en strijder voor rechtvaardigheid en mensenrechten in de Wereld.

Un prouvé démocrate, protecteur et combattant pour la justice et des droits de l'homme dans le Mond.

Eine bewährte Demokrat, Beschützer und Kämpfer für Gerechtigkeit und Menschenrechte in der Welt.

Dokazani demokrat,
 zaštitnik i borac za pravdu i ljudska prava u Svijetu.




The man of the year

Guarantee
Peace in the World


Mr. Barak Hossein Obama

The man of the year
L'homme de l'an
De man van het jaar
2012


Guarantee
peace in the world

Garantie
vrede in de wereld

Garantie
la paix dans le monde

Garantie des Friedens in der Welt

Zabezpečenie
mieru vo svete

Garancija
mira u svijetu





Murray Hunter
University Malaysia Perlis



Perpetual Self conflict: Self awareness as a key to our ethical drive, personal mastery, and perception of entrepreneurial opportunities.
Murray Hunter




The Continuum of Psychotic Organisational Typologies
Murray Hunter




There is no such person as an entrepreneur, just a person who acts entrepreneurially
Murray Hunter




Groupthink may still be a hazard to your organization - Murray Hunter



Generational Attitudes and Behaviour - Murray Hunter



The environment as a multi-dimensional system: Taking off your rose coloured glasses - Murray Hunter



Imagination may be more important than knowledge: The eight types of imagination we use - Murray Hunter



Do we have a creative intelligence? - Murray Hunter



Not all opportunities are the same: A look at the four types of entrepreneurial opportunity - Murray Hunter



   The Evolution of Business Strategy - Murray Hunter



How motivation really works - Murray Hunter



Evaluating Entrepreneurial Opportunities: What’s wrong with SWOT? - Murray Hunter



 The five types of thinking we use - Murray Hunter



Where do entrepreneurial opportunities come from? - Murray Hunter



  How we create new ideas - Murray Hunter



How emotions influence, how we see the world? - Murray Hunter



People tend to start businesses for the wrong reasons - Murray Hunter



One Man, Multiple Inventions: The lessons and legacies of Thomas Edison - Murray Hunte


   
Does Intrapreneurship exist in Asia? - Murray Hunter



 What’s with all the hype – a look at aspirational marketing - Murray Hunter



   Integrating the philosophy of Tawhid – an Islamic approach to organization - Murray Hunter



Samsara and the Organization - Murray Hunter



Do Confucian Principled Businesses Exist in Asia? - Murray Hunter



 Knowledge, Understanding and the God Paradigm - Murray Hunter



On Some of the Misconceptions about Entrepreneurship - Murray Hunter




How feudalism hinders community transformation and economic evolution: Isn’t equal opportunity a basic human right? - Murray Hunter



The Dominance of “Western” Management Theories in South-East Asian Business Schools: The occidental colonization of the mind. - Murray Hunter



Ethics, Sustainability and the New Realities - Murray Hunter



The Arrival of Petroleum, Rockefeller, and the Lessons He taught Us - Murray Hunter - University Malaysia Perlis



 Elite educators idolize the “ high flying entrepreneurs” while deluded about the realities of entrepreneurship for the masses: - Murray Hunter



Lessons from the Invention of the airplane and the Beginning of the Aviation Era - Murray Hunter



Missed Opportunities for ASEAN if the ASEAN Economic Community (AEC) fails to start up in 2015 - Murray Hunter



From Europe, to the US, Japan, and onto China: The evolution of the automobile - Murray Hunter



ASEAN Nations need indigenous innovation to transform their economies but are doing little about it. - Murray Hunter



Do Asian Management Paradigms Exist? A look at four theoretical frames - Murray Hunter



Surprise, surprise: An Islam economy can be innovative - Murray Hunter



Australia in the "Asian Century" or is it Lost in Asia? - Murray Hunter



Australia "Do as I say, not as I do" - The ongoing RBA bribery scandal - Murray Hunter


 
Entrepreneurship and economic growth? South-East Asian governments are developing policy on the misconception that entrepreneurship creates economic growth. - Murray Hunter



Hillary to Julia "You take India and I'll take Pakistan", while an ex-Aussie PM says "Enough is enough with the US" - Murray Hunter










 

Are "B" Schools in Developing Countries infatuated with 'Western' Management ideas?

Murray Hunter

In the rapidly urbanizing developing regions of the world today upward career mobility requires a diploma, degree, and some form of post graduate qualifications to get promotions, particularly within the desirable publicly listed companies in the region. Upon closer scrutiny of what is taught at these "B" schools, a colonial hangover and psychological dependence on 'Western' ideas appears to still linger on. This is somewhat ironic in a region where most African, South Asian, and South-east Asian governments espouse their own national values and "ways of doing things".

Developng countries may stand independent politically, gone a long way in achieving economic independence, but today still trapped within the syndrome of intellectual colonization. As business schools steadfastly stick to occidental business curriculum, former “western colonial masters” still dominate their ex-colonies, this time intellectually.

Business, entrepreneurship, and management courses are the fastest growing areas in education. Along with ICT, these are the most popular areas within both the private and public higher education sectors. The relatively low overhead and operational cost per cohort is a financial windfall for colleges and universities. Business education has become the cash-cow of colleges and universities within the region.

What makes these courses financially lucrative is the relatively low cost of teaching resources for basic courses compared to other disciplines. Very little infrastructure aside from classrooms and lecture theatres are required. A great number of business schools develop curriculum around an array of “international” edition US sourced textbooks on offer by the major educational publishers, strongly competing for business.

Consequently the intelligentsia of many business schools has looked inwardly, focusing their concerns upon quantity and numbers. They are bureaucratic diploma factories based upon single textbook unit courses, orientated around exams that at best measure memory and retention rather than creativity and the potential of the student to be innovative. To cap it all off, these schools are burdened down with quality assurance processes at administrative and teaching levels. With the high time commitment needed to adhere to these processes, mediocrity is ensured through the rigidity these systems create.

The leaders and teaching staff of most business schools have a preference for the imported hype of management gurus who are popular in the media, even if these positivist instruments are not directly suited to the different contexts and varied business situations within the local environment. Perhaps it would not be exaggerated in saying that local academics educated in the “western” paradigm locally or abroad are mesmerized by international management gurus.

The great paradox of South-East Asian business and entrepreneurship education is that local higher education institutions espouse values within their respective cultural frameworks, but what is actually taught is distinctly “western”.

There has been little debate about the fit between “western” management thinking and the make-up and behavior of local corporations, entrepreneurs, and the general environment. As a consequence, the relevance of many theories has been accepted without question.

For example in the theory area, Maslow’s Hierarchy of Needs is accepted into management curriculum where there may be many other more suitable theories and meta-theories that could be advanced. In the contextual area, the legal system, supply chain, where the emphasis on particular marketing tools should lie, interrelationships between people, which all could be described ‘as the way of doing things’, makes applying ‘western management theory’ challenging to say the least.

The preference for the ‘latest popular’ management knowledge often leads to misinterpretations, as very few management and entrepreneur instructors actually have much first hand business experience. Thus rigid interpretations of management still influence entrepreneurship courses. Many entrepreneurship courses advocate market research through focus groups, which are not suited to new to the world products in developing markets. Business plans are almost always at the central core of any curriculum where there is little evidence that planning leads to success in entrepreneurship.

Further business schools base much of the curriculum upon general misconceptions that both the media and imported textbooks that have evolved over the last 15 to 20 years have created. Entrepreneurship has been glorified by media stories, biographies of successful entrepreneurs, and events like ‘entrepreneurship week’, ‘business plan competitions’, and ‘entrepreneurship awards’. Course curriculum is shaped in the mold of the media made myths of hi-tech and high-growth entrepreneurs.

Business literature in the developing world is primarily US based which reflects the needs of a post industrial society rather than a developing economy. This is partly responsible for one of the biggest tragedies of entrepreneurship education in the region. Very little if any focus is given to various technologies that a potential entrepreneur will require in a new business. The acquisition of technology is one of the greatest difficulties SMEs in developing countries face and little is done within the education sphere to solve this problem. A graduating student may have acquired some general business skills but has little or no knowledge or access to the means to acquire the knowledge to develop a farm, a small engineering shop, a food manufacturing operation, or a cosmetic manufacturing operation. One can see that it is often the non-business schools that show innovation with their outreach programs while business schools fall into the trap of cashing in on their BBA, MBA, and now DBA programs.

Evolving business and entrepreneurship curriculum has followed the post industrial models with a number of errors and mistakes. Due to the developing nature of most developing economies, there should be an emphasis on agriculture and manufacturing. However ‘cut and paste’ curriculum from business schools in post industrial societies have largely dropped manufacturing from their curriculum due to the cohort interest in the services sector, where opportunities exist. This leads to a mismatch of what business schools offer and what business and entrepreneurship students need. As a result business and entrepreneurship graduates flood out into the market place without any technology skills, crowding the services sector which is not creating extra employment or real economic growth. Business and entrepreneurship graduate employability is a major issue facing developing economies today, with thousands of unemployed business graduates all across the developing world.

These two issues, technology and pedagogy require some deep thinking on the part of the intelligentsia of business schools. Content and delivery needs to be closely examined, experimented with, and utilized with close adaptation to the needs of cohorts. This is the challenge that requires a large investment in time and staff resources to create the curriculum and delivery methods necessary to meet the needs of the students and nation.

To compound the problem further, governments and local corporations have a preference for foreign advisors and consultants, shunning their own. There is a negative disposition toward ‘locals’. Foreign advisors and consultants are most often sort in the misconception that their advice will be superior to local advisors and consultants, even though foreigners may have little real understanding of local context. This doesn’t occur because of any vacuum in knowledge and wisdom of local academics. In fact many African, South and South-East Asian academics are very successful in other universities around the world. Some have written very sound academic dissertations and hypothesis but fail to get them published through the publishers that can bring them to mass popularity. Rather they sell a few hundred copies and can be found gathering dust on library shelves.

Part of this preference for foreign expertise is based on the belief that something imported is better, an old colonial hangover. However the cost of this hangover is holding back indigenous intellectual development and preserving the state of neo-colonialism at a time when the US and Europe are far from possessing a monopoly of new ideas.

For example, in the Asian region the irony is that ideas have more influence on ‘Western’ management thought than in Asian management thinking. The only probable exception is Confucianism which could cautiously be associated with the structure, process, and strategies of family owned Chinese businesses in Southeast Asia. Although Sun Tzu’s ‘The Art of War’ and Buddhist Dharma originated in the Asian region, it has primarily been ‘Western’ management thinkers who have applied the respective philosophies to management, at least in these contemporary times. Although the IslamicTawhid’ is 1500 years old, it is probably only now that it is being considered seriously as a management philosophy.

Business school deans tend to play the role of a patriarch rather than a chairman of the board, which often degrades into crude authoritarianism. Consequently major positions within the hierarchy tend to go to those are liked and favored, rather than those who have worked meritoriously, successfully, and are qualified for the job.

Consequently many business schools see personal power as the prize and Machiavellian behavior as the norm. Motivation among staff at the school will most probably be very low.

There is a drastic shortage of business and entrepreneurship lecturers within the region. Stringent criteria in the employment of lecturers eliminate the potential to employ mature, experienced practitioners or practademics. For example under the regulations of one aspiring university in Malaysia that portrays itself as the “Harvard of the East”, it would not be possible to employ people like Bill Gates, Mark Zuckerberg, and the late Steve Jobs, even as adjunct, due to issues of qualifications. Thus those that gain employment within the region’s colleges and universities have formal qualifications, usually without much, if any experience.

Inexperienced indigenous business and entrepreneurship academics consequently tend to lack the depth of knowledge about what they teach and rely on textbooks and popular management books as the basis of their teaching. This lack of depth of knowledge in many fields leads to a lack of confidence to develop curriculum outside the familiar textbooks they have available to them, thus inhibiting the ability to provide an education according to local needs. With this comes a reinforcement of an unconscious bias towards ‘western’ literature as local literature is still rare and far between and in many cases just a translation of existing foreign textbooks. Any original local material usually lacks peer acceptance due to the lack of ability of many to critically appraise it.

Many business schools have developed into a rut of pursuing quantity for the windfall incomes they can accumulate through popular products like the MBA. Foreign universities through setting up branches or strategic alliances are also cashing in on the rapid growth of business education in South-East Asia, further perpetuating the myth that foreign business theories are the first class product. They have adopted the classic post colonial market strategy of importing their product into a local market with minimum modification and exploiting the market to the maximum.

This rut manifests deep into the structure and processes of local colleges and universities. ISO quality accreditations and their logos are prominently displayed as symbols of quality, even though they have little or no relevance to the actual standard of the courses provided. ISO standards make no claims about product quality or relevance whatsoever and only mislead the public. The resources needed to implement these useless ISO standards are taken from potential academic development resources. This leaves a single textbook approach to courses, predominately delivered through formal lectures, rigid assessment and examination criteria and reliance on outdated curriculum development tools like Bloom’s taxonomy, when there have been many advances in pedagogy over the last few years; all in an unquestioning manner. The result of this is a sanitized teaching paradigm which doesn’t reflect the real business environment, leaving students ill-prepared for the outside world.

This ‘cut and paste’ culture without questioning and adaptation is holding back the development of business education in the region.

Of late, universities have realized the need for research to build esteem and gain a ranking. However this has been turned into a meaningless chase of KPI figures. Many new academic journals are cashing in on this unhealthy focus on SCOPUS indexing and now offer ‘pay for publishing’ arrangements, rather than the traditional ‘double blind peer review’ system. To date, most local research has tended to emulate other research, applying theory to local contexts, rather than developing indigenous hypotheses. This lack of originality is preventing the rise in international stature of local business academics and is the loss of a great opportunity to develop Asian based management knowledge.

Local academics have not asked whether “there is a distinctively Asian type of management based upon traditional philosophy?” Management theory has been something secular in Asia in contrast with the ‘west’ where it has been tainted with spiritualism. Asian academics have preferred to keep both issues in separate boxes. May be it is just from lack of confidence to think outside their trained discipline and merge new ideas into their existing knowledge.

The education gap between Africa, South, and South-East Asia, and Europe, Australia, and the US is going to be felt for a long time. Part of the problem is the inept ability and resistance to change. Part of the problem is the lack of skilled, experienced and knowledgeable people. However the rigidity of educational institutions is something that can be solved, through some visionary thinking.

There is also another problem. It is apparent that creativity is an important aspect of education, which is deeply lacking in Asian curriculum throughout the whole school system within most of the ASEAN region. In business and entrepreneurship creativity is vital in the areas of opportunity recognition and construction, strategy development and execution, marketing, new product development, and solving general problems related to entrepreneurship. Creativity, rather than intelligence appears to be a more critical factor in achieving success.

It could be argued that developing countries failure to develop their own contextually relevant theories and the corresponding positivist practices, where instead culturally unsuited practices are utilized, is a missed opportunity to develop new forms of new dynamic capabilities and competitive advantage within the region. This is the challenge to management academics and practitioners in the developing wortld. It is the task of looking through the rich history, culture, society, stories, and philosophies of the region for the inspiration to develop and construct homegrown management ideas, rather than importing ideas developed in other parts of the world, which are suitable for those parts of the world.

Today there is an intense vacuum of original management thinkers in the developing world.

29.01.2013


The Stages of Economic Development from an Opportunity Perspective: Rostow Extended

Murray Hunter

Introduction

All economies evolve and develop over time and there have been many theories developed over the years that have attempted to give both descriptive and predictive explanations. One of the more widely accepted theories was Rostow’s linear stages of growth model, modified from Marx’s stages theory of development, focusing upon the accumulation of capital through the utilization of both domestic savings and foreign investment as a means of creating economic growth and development.1 The Rostow model postulates that an economy goes through five stages of development – the traditional society, the pre-conditions of take-off, the take-off, the drive to maturity, and the age of mass consumption.2

However other economists pointed out that that capital accumulation is not a sufficient condition one its own for development and other cultural, political, social, institutional and geographical factors are also important in creating the right conditions for development.

Michael E. Porter postulated a linear stage model emphasizing a nation’s type of development drivers as a source of competitive advantage.3 Porter postulated that a factor driven economy gains its competitive advantage from natural resources, favorable conditions for growing crops, and low cost labor sources, an investment driven economy from the willingness of firms and individuals to invest in modern plant, equipment, and technologies, an innovation driven economy based on firms creating novel processes, products, and business models, and a wealth driven economy (also one in decline) where investment is based on accumulated capital in low risk ventures and activities like shopping centers.

From the point of view of opportunity, the accumulation of capital, social, cultural, political, regulatory, technological, and attitudes towards risk and investment are all important factors in the creation of the opportunity landscape which is related to the stage of national development – demographically, economically, socially, regulatory, and technologically. The following paragraphs attempt to describe the stages of a nation’s evolution in reference to the types of opportunities available within each stage of growth.

 

Traditional Economy

Traditional economies can be found in two forms, a subsistence society where its inhabitants live off the land on a daily basis using handed down generational knowledge with minimal outside interference, and an agrarian society where some crops are cultivated and livestock reared, producing some surpluses that can be sold or bartered to acquire outside items that the people feel they need or want. Within an agrarian society today, two types exist, one that relies on outside inputs and the other where people utilize their own inputs, reflecting their degree of both economic and social isolation. Traditional societies can usually be recognized by the high proportion of people involved in land based activities such as agriculture.

The type of activities a subsistence or agrarian society undertakes is shaped by the general topography and climate of the region they inhabit. For example, within an arid ecosystem some horticultural and pastoral activities can be undertaken, within a coastal ecosystem some livestock, fisheries, and horticulture can be undertaken, within a hilly ecosystem horticulture and livestock activities can be undertaken, and with a rain-fed ecosystem arable farming, forestry and livestock can be undertaken.4 The general geography and resources available are important to development.

These include the physical landscape, genetic endowments, the institutions and rules people follow, and the dynamics of interactions between inhabitants and outsiders. The role of development greatly depends upon the types of institutions, culture and education of the population.

Today traditional societies are mostly socially remote from the education system and urban societies evolving around them. Most often the absence and/or high cost of transport acts as a strong disincentive to development, so there is generally very little trade. For example the cost of transporting goods from the New Guinea capital Port Moresby to the other major urban centers in the country cost more than shipping goods from other countries to those centers. The high cost of transporting goods is also a problem in many of the islands of Indonesia and the Philippines. In addition, these types of societies usually carry values and norms which allow very little room for modernization or expansion to a larger scale. The whole pre-Newtonian world once existed in this way prior to the acceptance of science for advancement.

Figure 1 The stages of national development5

The first step of evolution comes from subsistence farmers and hunter-gatherers moving to agriculture with the domestication of animals and plants into fixed location farming. Different locations have different advantages and disadvantages in making this step depending upon what animals and plants locally exist (without the introduction of external species). For example in our early history the Eurasian region had an abundant number of animals and plants to domesticate compared to the Americas and sub-Saharan Africa. In addition the Americas and Africa were fragmented by geo-climatic features that increased the difficulty of domesticating crops and animals over wide areas, i.e., with the difference of growing conditions each side of the Rocky Mountains in North America and the vast differences in climates and physical separation by deserts and jungles running along Africa. In contrast Europe benefited in its East-West orientation in the very first millennium BC, where the Mediterranean areas of Europe through Roman conquest were able to adopt economically useful animals and plants from the Middle East. Increased agricultural productivity allowed some of the population to move off the land into small towns and specialize in craft and other professions. Society could begin to develop through these new specializations. Once populations began to grow, great divisions of wealth occurred where some groups amassed political power and formed small nation states within the European area using natural boundaries such as rivers and mountains for defenses against external threats. Many societies within old Europe, the Middle East, Central and South Asia have emerged this way.

Today there are very few whole countries that are based on traditional economies, except perhaps for Bhutan. Some traditional societies certainly exist within parts of countries within Africa, Asia and South America. Some hill tribes are still living traditional lifestyles in Northern Thailand, inland tribes exist within inland pockets of Sarawak and Sabah within the island of Borneo, within tropical Africa and the Amazon basin within South America, etc. Most of these societies remain the same until they become encroached by timber logging, infrastructure development like dams, tourism, or the settlement of immigrants from other areas.6

Opportunity is very limited in traditional economies due to remoteness, lack of capital, lack of travel and outside experience by the local population, lack of education, knowledge and skills, and lack of motivation to do anything different. The more backward a country the less likely to be any shift to industrialization and special institutions will most likely be required to facilitate capital to assist any potential nascent industries start up.7 Agriculture will not be sufficiently large enough or productive to supply raw material to any potential industry. The lack of any infrastructure is also a barrier to developing any new industry or enterprises due to the extra costs that would be involved in overcoming this lack of infrastructure. The main types of opportunities that would exist will be in the newly developing urban areas (when they begin to occur) supplying staple foods, hardware and construction materials to any development that is slowly occurring within the region. The speed and scale of these opportunities develop depend upon the rate of urban growth. It is only when education, saving through a monetary economy, and when people begin traveling outside their region that ideas and the will to pursue them develops. A general increase in agricultural production allows any urban growth to continue on a gradual basis. The general difference between the development of Asia and Africa from their traditional economic bases is that Asian agricultural productivity was able to increase dramatically where Africa didn’t. Small countries with large populations have generally been able to progress out of traditional livelihoods better than small countries with small populations due to the larger potential size of their domestic markets.8

The very nature of subsistence agriculture is very risky and susceptible to disaster and uncertainty which breeds conservatism.9 People tend to want to be safe rather than put themselves at risk and may prefer inferior outcomes to the prospect of higher than average returns with a greater degree of risk.10 The most important aspect of transition from a traditional economy is the willingness of the people to change their customs and traditions into accepting to produce goods for consumption through the monetary economy. As well as the willingness there must also be the ability to raise capital through savings or loan to purchase inputs to do this.

 

Under-Developed Economies

An under-developed economy is one that has broken out of the traditional mode and is beginning to experience some development spurred on by government investment in transport, social capital, and other infrastructure. Government supported roads, railways, airports, communications services, and schools enhance the ability of society to develop and transform itself from a rural based society. At this point of time the economy may enter what Rostow called the transition stage, driving the nation into rapid development (the next stage). However with poor economic management, nepotism, misallocation of resources and corruption, the economy may plunge into a backward state of poverty.

Early development within this stage will be based upon the country’s basic resource endowments which include its natural resources like timber, minerals, petroleum, gas, coal, precious metals or stones, arable land and favorable growing conditions for certain crops, fishery resources, and inexpensive labor supplies, etc. Early America relied very heavily on tobacco for the establishment of its original colonies, timber for development, and cotton that helped to develop the South. Malaysia developed on rubber, palm oil and later petroleum. Botswana had been able to gain rapid economic development through its endowment in diamonds. Resource poor countries like Japan, Taiwan, and Korea initially utilized their low cost labor resources to produce cheap products that could be exported to the rest of the world.

The types of factor endowments a country processes severely limit the types of industries and development trajectories that can be taken. The country’s resource base may be developed enough to enable the creation of other industries that spur further development,11 however a resource driven economy may be a poor foundation for sustained growth as it is subject to changing world economic conditions, exchange rate fluctuations and other countries becoming more competitive with their own resource endowments. Quite often, many industries will be temporary ones that die out as more lucrative opportunities occur and factor costs rise through higher demand for labor.

At this point there are few SME start-ups except for those that sell basic products such as food, motorcycles, cars, vans, light trucks, etc. There are opportunities for new businesses that supply need based products to consumers. As the market grows there is more room for new competitors who may apply some minor forms of innovation to their businesses.12 A social elite may grow with some aspirations and be willing to take risks with their savings to invest in new businesses.

Many new local industries will tend at these early stages not to compete on price as there is little direct competition. Their monopoly positions enable them to avoid acting in any competitive sense focusing on profit rather than volume sales. Manufacturing companies tend to purchase technology through turnkey plants imported from other countries to enable some limited import substitution manufacturing on high volume and bulky items like detergents and paint. These companies usually imitate other companies operating in other countries as far as the products and services offered. They will grow as the economy grows but in most part remain domestic producers as they will not develop any economies of scale, superior product quality, branding or other type of international competitiveness that will enable any exports. Those companies that set up an export based business will have few direct links to customers and usually be limited to producing OEM products in the early years of operation.

Where people are attracted to the urban environment do not for some reason obtain formal employment, they most often enter the informal sector. Although the informal sector is often thought of as being made up of petty traders and other under-employed groups, it is actually an efficient and profitable small scale form of business that is limited by capital, technology, and lacks links with other sectors of the economy.13 These businesses may look poor but actually contribute enormous income to the economy and provide a living for a large population of many underdeveloped countries.

As mentioned, the informal sector is large in many under-developed countries (which sometimes continue into the developing, developed and even post industrial stages of some economies), consisting of three main types. First are legal but may be not ethical such as people in Indonesia collecting cigarette butts off the streets to produce them into recycled cigarettes for resale. Other types of legal informal businesses may be collecting used cooking oil for recycling into cooking oil for resale in Malaysia, producing biodiesel from used cooking oil, or doing odd jobs and home repair work on a cash basis in developed and post industrial economies. Secondly illegal, but victimless businesses may include unlicensed or unregistered taxies, selling numbers in an illegal sweepstakes (very popular in S.E. Asia), or prostitution. Finally illegal businesses include selling counterfeit DVDs, bags and fashion accessories, drug dealing, cultivating marijuana, human trafficking, organ harvesting and selling, and illegal casinos. Some of these often occur because there is a weak law enforcement system and a belief that the person can get away with it.

The informal sector is characterized by the ease of entry, reliance on indigenous resources, adaptive technology, family ownership, small scale of operation, labor intensiveness, skills acquired from outside of the school system, and operate primarily in unregulated and competitive markets. The illegal activities are generally actively discouraged by authorities. People in the informal sector generally operate outside the taxation system and have no access to formal credit institutions, although various microcredit schemes may accommodate them in some regions. Many informal traders operate in parallel with the formal sector producing foodstuffs and other consumer goods.

The informal sector is also a training ground for some to emerge into the formal economy at a later stage. For example, back in the 1950s Ayu Masagung without any schooling carried and sold newspapers around the Semarang area on foot, later became the founder of the Gunung Agung group which is one of the largest book selling and consumer goods distribution operations within the Republic of Indonesia. In this way the informal sector can be a source of future dynamism and change for an economy, being an internal source of entrepreneurship generation within the country. The informal sector is a source of future growth, developing talent, practical skills, and entrepreneurial approaches to business.

Whether an under-developed economy can make the transition to the developing stage will depend upon a number of positive factors and even chance in some cases.14 Some positive factors that may contribute to the conditions of development include;

· Output from various resource endowments, i.e., land, labor, capital, and technology, are especially favorable to the country and provide it with a large advantage over other nations, e.g., coal from Australia, palm oil from Malaysia, rubber from Thailand and Indonesia, etc.

· Growth of the domestic market coupled with an increase in savings and loan capital,

· A sufficient level of infrastructure exists, e.g., telecommunications, ports, roads, railways, and airports, to enable efficient and competitive logistical chains to develop,

· Improvements in the quality of labor occur through training and education, for example the workers in some countries are known to be more productive than others and therefore attract investment to take advantage of this factor,

· There is a change in the value of a resource, e.g. increasing demand for bio-fuel makes sugar cane production more valuable, the price of oil goes up making oil reserves that are more costly to extract viable,

· New innovations are applied to agriculture enabling large productivity gains,

· The ability to exploit unused resources through either capital inflows or new knowledge,

· Access to new markets, e.g., through improved infrastructure, foreign investment, and/or free trade agreements,

· Immigration (responsible for the development of America and Australia), and

· Positive government policy, economic and social management, and implementation (this includes lack of barriers, restrictions and regulations that distort growth).

The last point on positive government policy, economic and social management is extremely important and if not in place can prevent a country evolving into the development stage. Tim Harford in a very colorfully written chapter in his book The Undercover Economist described what life is like within a failed state that does not develop any further economically.15 Harford lists the characteristics as follows;

· Endemic corruption through all levels of bureaucracy to the point that it ceases to function effectively,

· The informal economic sector is larger than the formal economic sector,

· Poor and inconsistent enforcement of the law,

· Poor, insufficient, poorly maintained, and decaying infrastructure,

· Feudalistic society with a privileged elite that provides them advantages in business,

· Extremely high fees and procedures for starting up a new business,

· Poor legal enforcement of commercial and intellectual property laws,

· Lack of encouragement for business and entrepreneurship leading to a low tax base,

· Dysfunctional and poorly motivated agencies and institutions within the country that supervise projects that are for prestige or self interest rather than the public interest and have large spending leakages,

· Failure to localize and adopt imported technologies and ideas to suit the local culture leading to poor performance or failure, and a

· Poor and inadequate education system.

Table 1 below shows some of the bottom level countries in the Transparency International Corrupt Perceptions Index16 with some additional economic statistics17 showing broad common characteristics of poor development and high perceived corruption.

Table 1 Some of the bottom level countries in the Transparency International Corrupt Perceptions Index

Country

Population

GDP18

GDP Per-capita19

Rank20

2008 CPI Score21

Confidence Range22

Literacy23

Labor force

Belarus

9,612,632

$120.7 B

$12,500

91

2.0

1.6-2.5

99.6%

Service 51.3%

Central African Republic

4,844,927

$3.295 B

$700

223

2.0

1.9-2.2

48.6%

-

Côte d’Ivoire

21,058,798

$35.94 B

$1,700

195

2.0

1.7-2.5

47.8%

Agric. 68%

Ecuador

14,790,608

$110.4 B

$7,600

128

2.0

1.8-2.2

91%

Service 70.4%

Laos

6,368,162

$14.2 B

$2,300

181

2.0

1.6-2.3

73%

Agric. 80%

Papua New Guinea

6,064,515

$13.85 B

$2,300

183

2.0

1.6-2.3

57.3%

Agric. 85%

Tajikistan

7,487,489

$13.65 B

$1,900

191

2.0

1.7-2.3

99.5%

Agric. 49.8%

Angola

13,068,161

$106.2 B

$8,300

120

1.9

1.5-2.2

67.4%

Agric. 85%

Azerbaijan

8,303,512

$85.65 B

$10,400

105

1.9

1.7-2.1

98.8%

Service 49.6%

Burundi

9,863,117

$3,241 B

$300

228

1.9

1.5-2.3

59.3%

Agric. 93.6%

Congo, Republic

4,125,916

$15.56 B

$3,900

159

1.9

1.8-2.4

83.8%

-

Gambia

1,824,158

$3.196 B

$1,800

192

1.9

1.5-2.4

40.1%

Agric. 75%

Guinea-Bissau

1,565.126

$1.712 B

$1,100

211

1.9

1.8-2.0

42.4%

Agric. 82%

Sierra Leonie

5,245,695

$4.507 B

$900

220

1.9

1.8-2.0

35.1%

-

Venezuela

27,223,228

$384.8 B

$13,000

86

1.9

1.8-2.0

93%

Services 64%

Cambodia

14,453,680

$27.88 B

$2,000

188

1.8

1.7-1.9

73.6%

Agric. 67.9%

Kyrgyzstan24

5,508,626

$12.09 B

2,200

185

1.8

1.7-1.9

98.7%

Agric. 48%

Turkmenistan25

4,940,916

$32.52 B

$6,700

131

1.8

1.5-2.2

98.9%

Agric. 48.2%

Uzbekistan

27,865,738

$78.37 B

$2,800

170

1.8

1.5-2.1

99.3%

Agric. 44%

Zimbabwe

11,651,858

$4.161 B

<$100

>229

1.8

1.5-2.1

90.7%

Agric. 66%

Congo, Democratic

Republic

70,916,439

$21.75 B

$300

229

1.7

1.6-1.9

67.2%

-

Equatorial Guinea26

650,702

$23.82 B

$37,600

28

1.7

1.5-1.8

87%

-

Chad

10,543,464

$17.93

$1,700

194

1.6

1.5-1.7

25.7%

Agric. 80%

Guinea

10,324,025

$10.51 B

$1,000

213

1.6

1.3-1.9

29.5%

Agric. 76%

Sudan

43,939,598

$92.52 B

$2,200

186

1.6

1.5-1.6

61.1%

Agric. 80%

Afghanistan

29,121,286

$26.98 B

$900

217

1.5

1.1-1.6

28.1%

Agric. 78.6%

Haiti

9,648,924

$11.97 B

$1,200

206

1.4

1.1-1.7

52.9%

Agric. 66%

Iraq

29,671,605

$109.9 B

$3,800

160

1.3

1.0-1.5

74.1%

Service 59.8%

Myanmar

53,414,364

$57.41 B

$1,100

210

1.3

1.0-1.5

89.9%

Agric. 70%

Somalia

10,112,453

$5.665 B

$600

225

1.0

0.5-1.4

37.8%

Agric. 71%


Developing Economies

The impetus of a developing economy is industrialization. This may occur in a number of ways. Established primary industries whether resource or agricultural based may support the establishment of complementary industries which utilize a by-product of that industry. For example the pine plantations in Scandinavia and America enabled the production of turpentine oil which can be used as a feedstock to produce a wide range of other chemicals. Citrus plantations in both Italy and Brazil enabled the production of citrus oils from the skins of fruit, a by-product of pulped juice. Early industrialization in a developing economy may also involve the production of industrial goods that service demand from existing primary industries thus forming some of the early secondary industries within the country. This may encourage the development of engineering shops that produce specialized equipment or small factories that produce products relevant to established industries like maintenance chemicals. Alternatively there may be some special advantages in the country’s resource endowment that other countries resources don’t possess. The Swedish steel making industry emerged because of the low phosphorus iron ore reserves which provided an advantage over steel industries in other countries with higher phosphorus ores. Other local factors may include topographies and climates that may be particularly attractive for tourism or be especially suitable for the cultivation of specific industrial crops. Simple physical conditions, climate and activities may create demand for heaters or air conditioners, tray trucks, and fertilizers, etc. Finally pure chance may play a role where an entrepreneur may have an idea through serendipity, unconnected to existing resource endowments or related industries.

Some of these early industries may grow out of factor advantages such as low cost labor, as did the Japanese consumer product manufacturing during the 1950s and 1960s. However to maintain any industry in the long term, a new basis of competitive advantage should be developed on the production and/or market sides, i.e., new technologies, design superiority, the development of enhanced logistical chains, or the targeting of special market segments like the Japanese did with small automobiles, etc. Within the area that these new industries have been created, suppliers, workers, and managers will develop specific experience, expertise, skills and competencies related to that particular industry, which can be considered a country specific source of competitive advantage.

A predominant policy of the 1950s and 1960s in many countries had been the development of protection to encourage the production of consumer goods as substitutes for imports. Governments would construct a high tariff regime around a potential industry and allow the importation of raw materials, but insist on final assembly inside the country. Governments through this top-down policy hoped to attract new technologies and foster new import replacing industries by encouraging local and foreign manufacturers to set up local manufacturing to escape import controls and tariffs. Governments believed that this support would incubate new industries and expand new employment opportunities outside of agriculture. Import substitution would have little effect on attracting supply-orientated industries but play a significant role in attracting local market orientated industries where the domestic market potential is large. However this policy’s long term success depends upon the ability of the new industry to create new technologies and sources of competitive advantage to survive competitively once tariffs have been retracted. However from the micro, individual or firm perspective, protection offers an opportunity to invest and operate in the marketplace without competition from imported products. In general however most import substitution era based industries failed to survive trade liberalization in the 1980s and 1990s and declined or even disappeared. But in the days of early development these industries did play a role in creating wealth through employment and developing urbanization.

National development during this stage is dependent upon the willingness and ability of individuals and firms to invest. The general investment climate will be influenced by the general and specific segment growth within the national market, available, access to technology, the stability of government regulation, and general national stability. The market evolves from one based on goods of need to one based on goods of value, which greatly widens the scope of market opportunities. However for firms to be able to exploit these emerging opportunities they must be able to acquire the best technology available through licensing or developing a joint venture with foreign companies. It was usually individuals that were able to communicate with foreign firms that could create business relationships with the foreign firms. Therefore those who had the opportunity to study in developed countries and understand the language and business culture had an advantage over those that didn’t, such as was the case of many South-East Asian Chinese studying overseas between 1950s-1990s.

Figure 2 The shifting values that urban society brings to a developing economy

At this stage urban society begins to grow rapidly. This is triggered by the much higher wages offered for factory employment than can be obtained in agricultural activities. Initially this migration is selective with the younger educated seeking urban employment but as demand for workers grows and stories about higher wages filter back to the rural areas, larger numbers of people migrate to the cities. Urban populations become consumers and increase demand for all types of food, accommodation, consumer and durable goods. They also partake in savings either voluntary or through nationally induced savings schemes developed by government through an emerging banking system. The education system is enhanced from basic systems distilling discipline to those that place more emphasis on critical and creative thinking. Growing urban development attracts new entrepreneurs who values are shifting from traditional attitudes to those more in line with an urban environment of a newly developing country (see figure 2.). Those with natural abilities are quick to emerge and the socio-economic structure of society begins changing away from its feudal base. They pick up new skills and competencies from education and employment and learn as they go along in their new businesses.

A developing economy experiences rapidly changing demographics leaving a deeply divided agrarian society and newly educated urban society. This can still be seen today in most South-East Asian countries which have become part of the source of political problems in countries like Thailand.27 Developing society has some influence on agrarian society through urban residents remitting funds back to parents and families in their villages and returning to build new houses and buy consumer goods. This starts to break down traditional values and bring envy into village societies.

Although economic growth is destroying traditional culture and values, a whole range of new opportunities begin to emerge with rural based urban centres developing. These new towns commercially serve their respective hinterlands with goods, basic education and health services provided by government. Newly developed infrastructure, roads, railways, communications, schools, and health centres help provide the ability of rural society to transform itself. This brings a whole new range of opportunities to those that can see the opportunity, have the resources, networks and skills to develop them. The economy is now developed into partitioned agricultural, manufacturing and service industries with many new opportunities continually developing (Table 2).

Table 2 Emerging opportunities within a developing economy

Construction

Processed food manufacture

Car mechanics and other service industries

Hardware goods manufacturing, window sills, doors, door frames, tiles, roof tiles, insulation, flooring, paints, cement, pipes, etc.

Fast food, restaurants, cafes, coffee shops, etc.

Engineering shops

Hardware retailing

Basic urban entertainment

Child minding nurseries

Furniture manufacturing

General healthcare

Printers

Household product manufacture

General retail

Real estate development

Market gardens and poultry farming

Logistics and transport

Banking

The United States, Europe, and Australia experienced increased birth rates from the 1950s. The high proportion of people of working age with low dependency rates dramatically increased the size of the workforce, savings, investment, and consumption, contributing to economic growth substantially in what was called the demographic dividend.28 This demographic bulge the baby boom was also seen in Ireland, East Asia and Latin America between the 1960s-90s, however Latin America did not benefit much from this because the quality of government institutions, labor legislation, macroeconomic management, education, and openness to trade was poor.29 The processes of rural-urban migration, population growth in urban centers, and increasing education, increased consumption and saving. Rising entrepreneurship occurred through increased opportunities, fueling increased investment and rapid economic growth. These phenomena are shown in the schematic in figure 3. below.

Figure 3 The path to rapid economic growth in a developing economy

Rising populations create momentum, which create opportunities and begin to feed off each other creating a chain in the economy and expand as other opportunities become exploited. Real estate developments, need building contractors, which need hardware suppliers, which need hardware goods manufacturers, who need workers who are paid and spend money on food, accommodation, and consumer goods. Sales operations are needed to sell the real estate and credit facilities are needed to enable people to buy the homes and properties. The development of a textile industry needs suppliers, tool manufacturers and dye manufacturers, and the development of the automobile industry needs parts manufacturers, paint manufacturers, steel suppliers, logistic transport providers, and automobile dealers. All these interactions creates and environment with a set of opportunities. This pattern of development, growth, and creation of opportunities, as well as decline, are in a perpetual motion. The inner city and suburban areas of cities develop certain socio-economic characteristics in terms of the sets of needs and wants consumers have leading to its own set of interrelationships which determines what can happen and what cannot happen. Adjacent suburbs may have a completely different set of dynamics. The development of cities like Detroit was dominated by an industry, in this case the automobile industry. London, Melbourne, Singapore, or Bangkok will have their own trajectories, dynamics, and patterns of growth and interrelationships which create the window for certain opportunities in different places at different times. Looking at this on a global scale where growth is varied and staggered, opportunities are thus forever changing over space and time.30,31

Rapid urbanization and developing rural regions begins to break down traditional society structure. There are pressures to adopt new more egalitarian business structures which sometimes challenge long existing orders. During the under-developed and early developing phases of economic development in many countries, businesses have been controlled by families of government officials and the military protected by restrictive regulation and practices that allow monopolies and oligopoly competition. Such situations would be similar to those under the Suharto regime in Indonesia and the Marcos regime in the Philippines, but also exists throughout Africa, the Middle East and Latin America. In some of the old Soviet Block countries, state capitalism was replaced by a small group of politically supported entrepreneurs in what could be called ‘oligarch capitalism’. To a lesser in some countries like Malaysia certain parts of industries are controlled by Government Linked Companies (GLCs) under another version of state capitalism. The effect of these business structures is to restrict opportunity and growth to small groups of people.

In most cases it takes some form of shock event like a political upheaval or even revolution to change the situation where a more egalitarian business society is created where more liberal business environments exist.32 These reforms usually come under pressure by the people who have become educated, having the confidence to recognize opportunities and had the opportunity to travel and see other countries where the business environment is much more open. Once this change in society occurs the economy can move onto the next stage of becoming a developed economy. Figure 4 shows the transformation from a feudal to a more egalitarian business society.

In the transition from a developing to a developed economy competition becomes based on much wider parameters than price. Markets also become segmented as there are large and distinct groups of consumers with different demographics, needs, and wants. The economy is beginning to rely on household consumption to drive growth rather than resource endowments or investment. The continued rise in per-capita incomes and the associated savings and investment guarantees growth for years to come. The process of industrialization, urbanization, and suburbanization develops a self-driving momentum of its own. Business replication as a source of opportunity is becoming replaced with new innovations, and spin-offs often leading to new industries creating further growth for the economy. For example the rapid development of Bollywood in India has brought many spin-offs, support and service industries including special effects, costume design, set design, set building, pyrotechnics, protection, catering, transport, and insurance services. Further examples of industries and spin-off industries that have emerged over the last few decades are listed in table 3 below.

Figure 4 The shift from a feudal to an egalitarian business society

 

Table 3 Industries and their spin-off industries

Industry

Spin-off Industry

Country

Industrial chemicals

Fine chemicals and Printing inks

Germany

Lighting

Furniture

Italy

Dairy products and beer brewing

Industry enzymes

Denmark

VCRs

Videotape

Korea

Port facilities

Ship repairs

Singapore

Electronic testing equipment

Medical diagnostic equipment

United States

Aircraft

Spacecraft

United States

Automobiles

Trucks and buses

Sweden

Communication equipment

Mobile phones

United states

Personal Computers

Mobile phones

United States

The leading industry sectors will differ by country due to different situational factors, however primary industries will encourage secondary industries to develop and eventually tertiary service industries to service the former. Some firms would have developed their own channels of distribution within foreign markets and begin to market their own brands in addition to the OEM brands they have been manufacturing. Research efforts begin to be supported through some basic university research which is now capable of developing new applications from existing technologies.

One of the most dramatic aspects of the advanced stage of a developing economy is the tendency for credit to become more liberal through a deregulated banking sector. This is an important key to entrepreneurs being able to exploit opportunities at an SME level. As many cities are relatively new, business networking is much easier which is important in urban opportunities.33 Business formation is greatly enhanced by relaxed procedures and lower costs for forming business organizations. The World Bank has been collecting detailed data on the costs and time required to form a business throughout the world and been reporting the results in their Doing Business Report.34 Virtually all of the countries where it is easy to start a business are developed countries, but where it is difficult and costly to start a new business are still developing or very poor countries.

Many large companies either foreign or nationally owned may take the lead in the prominent sectors of the economy. These firms develop a ‘management logic’ and organize themselves through hierarchical systems. This is particularly efficient where there are focused investments and manufacturing operations.35 Many large resource based companies require equity based capital from equity markets due to their capital intensity and use of specialist assets. Family based businesses tend to fill opportunities that are too small and niche orientated for larger companies to exploit. They develop upon their own equity and extensive networks, enabling them to take quick action upon emerging opportunities.

Small businesses still tends to be more replicative than innovative at this stage but the number of people employed in SMEs may now be higher than those employed in large manufacturing firms. Business replication must give way to innovation to maintain growth in the future. The transition into becoming a developed economy depends upon industry and firm diversity and synergy within the economy that provides strength, laying ground for further opportunities that firms can begin to exploit utilizing new sources of innovation.

 

Developed Economies

A number of economies may reach the stage of being developed where the general population will be enjoying a reasonably high standard of living in primarily urban environments, benefiting from the decades of vertical deepening of the industrial base. The nation’s markets have become large, complex, and segmented, deep international trade links have developed along with a rich service industry base. The economy is largely private sector driven where industry linkages are complex. Generally the world’s coastal areas and land locked countries with good transport logistics linking the country to the outside world are the countries developing to this stage.

At the developed economy stage there has been an almost complete factor change from resources to innovation based development. Corporate advances cannot be undertaken by investment alone as innovation is usually required to gain new angles of competitive advantage within the marketplace at this time. Most markets are now highly competitive where competition helps to insure against any company single gaining higher than average profits through forms of monopolistic competition.36 Inefficient manufacturers that can’t satisfy consumer wants will be driven out of business. This represents a big change from the days firms competed primarily on price.

Firms during the developing stages tended to sell high volume products in a similar fashion as to how one would sell commodities focusing on sales rather than branding. Luxury goods were pushed through heavy advertising. There was really very little product differentiation of substance. This pattern changes dramatically in a developed economy where consumers are much more varied about what they want, forming various need/want segments. Firms have to learn how to make this transition from a production and sales orientation to competition based on product quality, brand, image, and after sales service, i.e., a full marketing orientation.

Firms have become much more sophisticated in running their operations and no longer seek to maximize sales volumes and market-share. Gross profit orientations have become much more important. Products that are cheaper versions of well known branded products have less influence over customer decisions to purchase, except in the commodity type product segments. Retailers will develop category management and store shelf space planning systems that maximize gross profit from the shelf sales and complex pricing and rebate schemes with manufacturers. Manufacturers will focus upon building brands that have customer loyalty, developing as much influence over the distribution channels that they can seeking to differentiate their product from other companies to minimize the effects of competition.

Consequently logistical supply chains have become very integrated lowering distribution costs and providing retailers with much more control over the market. The growth of retailer concentration is an important characteristic of a developed economy, which has wide influence over how business is undertaken. Retailer concentration drastically decreases the viability of family owned independent supermarket and corner stores that cannot afford to purchase in the same quantities as major chain stores, stay open long hours, and sell items on low margins to attract customers during promotions. Growing specialization of chain retailers within supermarkets and discount stores has greatly affected the viability of small specialty enterprises like bakeries, delicatessens, milk bars, sundry shops, liquor shops, pharmacies, and poultry shops, etc. At the same time the development of centralized suburban shopping malls puts pressure on long established stores in strip shopping centers along primary roads. Consumers once in the car tend to drive to these shopping malls for the comfort of shopping in heated and air conditioned environment.

Small consumer product manufacturers begin to struggle to operate in the growing concentrated environment. The effect of category management is to rationalize shelf space so that smaller companies miss out on their products being carried in the major chain supermarkets. This forces them to service the smaller independent stores which have a much lower presence and national retail market share, often not enough for the small firm to remain viable. Some of the small companies with brands that are seen to have potential are bought out by multinational companies that specialize in selected areas. This further adds to manufacturer-retailer concentration and rationalization of consumer brands within markets.37 Opportunities for smaller entrepreneurial firms in the consumer product manufacturing and retail industry are substantially diminished during the developed stage.

The prime form of firm competitive advantage is now innovation. However it becomes very difficult for one firm to develop advantages other the other. Firms that grow quickly tend to be those based upon some form of new technology, an important improvement upon what is already being done within the market, serving identified incongruities, and utilizing new business models that bring more value and/or convenience to consumers. In a developed economy firms now create new technologies through their own research and development where large efforts are put in to convert ideas into products that consumers highly value. Breakthrough or new to the world products where feasibility cannot be easily determined through market research are often launched on the hunches and faith of the organization (or founder) developing them. Such examples would be the Sony Walkman and Apple’s Macintosh (now iPhone and iPad as well) where enormous efforts were put in to develop these products by the development teams concerned. Likewise non-technical innovation in developing new business models like fast-food and hotel chains that provide for the needs and wants of large groups of consumers have been extremely important in bringing further evolution and growth to markets.

A developed country may still have resource based industries but modern technology and consumer accepted practices may be applied to them to improve product acceptance, quality, and production efficiency to maintain the industry’s desirability and competitiveness. As relative factor costs between countries change, many industries in developed countries start becoming uncompetitive, especially labor intensive ones. Companies within these industries will be forced to relocate, source their product offshore or fail. Changing factor costs often cause firms in developed countries to completely change their operational orientation from being a manufacturing based company to being a marketing based company. This leads to a great reduction of general factory or blue-collar workers in the economy towards white-collar workers in the growing services sector.

One of the most pronounced changes in the economy during this stage is the rapid rise of the services sector. There has always been traditional services and services linked to the resource, agricultural, and manufacturing sectors, but during the developed stage a dramatic rise in leisure, lifestyle, and high mass consumption services with a high income elasticity of demand occurs.38 The growth progression of the service sector size and per-capita incomes of some selected countries is shown in Table 4 below.

Businesses in developed countries have many more needs for specialized services than firms in developing countries. Over the last three decades there has also been a tendency for firms to outsource many services due to its apparent cost effectiveness. Firms require specialized marketing services, ICT, advertising, HR and headhunting, management training and motivation, and taxation and finance services. Also the growing increase in business regulation and compliance in occupational health and safety, food and chemical regulations, adoption of international (ISO) standards, and environmental compliance is creating new specialized and lucrative opportunities for those with specialist education and experience.

Table 4 The growth progression of the service sector and GDP per-capita income for some selected countries39

Country

1960

1980

2000

2009

 

Service % GDP

Per-capita Income

Service % GDP

Per-capita Income

Service % GDP

Per-capita Income

Service % GDP

Per-capita Income

Ireland

52%

$684

57%

$5,230

56%

$20,300

49%

$37,600

Spain

-

$396

57%

$5,640

63.2%

$17,300

71.6%

$29,500

Italy

46%

$804

53%

$6,960

65.8%

$21,400

73.3%

$30,700

New Zealand

-

$2,368

58%

$7,700

69%

$17,400

74%

$28,000

Netherlands

45%

$1,115

63%

$11,700

69.7%

$23,100

72.4%

$40,500

United Kingdom

54%

$1,379

65%

$9,110

73%

$21,800

80.4%

$35,100

Japan

42%

$470

53%

$10,400

63%

$23,400

75.7%

$34,200

Austria

43%

$935

57%

$10,210

66.3%

$23,400

69.1%

$40,300

Finland

49%

$1,172

57%

$10,680

63%

$21,000

68.2%

$35,300

Australia

48%

-

-

$11,080

71%

$22,200

71.2%

$41,300

Canada

61%

$2,262

64%

$11,400

66%

$23,300

71.3%

$38,700

Belgium

52%

$1,278

62%

$11,920

71.6%

$23,900

77.2%

$37,900

France

51%

$1,386

61%

$12,190

70.6%

$23,300

79%

$33,000

United States

58%

$2,881

63%

$12,820

80%

$33,900

76.7%

$47,400

Germany

41%

-

49%

$13,450

68.4%

$22,700

71.3%

$34,700

Denmark

58%

$1,383

64%

$13,120

69%

$23,800

76.1%

$36,400

Norway

58%

$1,444

54%

$14,060

71.5%

$25,100

57.8%

$59,100

Sweden

53%

$1,963

66%

$14,870

67.3%

$20,700

72,2%

$39,000

Switzerland

-

$1,731

-

$17,430

66.1%

$27,100

71.2%

$42,900

Singapore

78%

$394

58%

$5,230

72%

$27,800

72.8%

$62,200

Korea

43%

$155

44%

$1,700

50%

$13,300

57.6%

$30,200

Many of the Gulf States are attempting to invest their way into the developed stage through the belief that building modern cities with the best infrastructure will spark new innovation based industries which will drive future growth. This can be seen in the tourism industry which has used investment and innovation but it is yet to be seen whether this will attract and create complementary and other innovation based industries to the Gulf.

A developed economy fosters maturity and national confidence but other dynamics like changing demographics, particularly aging populations, can drastically change economic trajectories where the nation flows into a post industrial state.

 

Post Industrial Economies

A fully developed economy will eventually drift into becoming a post industrial economy when the major source of employment and income for the nation is the service sector. The agricultural and industrial sectors over decades have slowly lost competitiveness where the manufacturing base has narrowed and importance to national GDP declined drastically (see table 5.). The primary type of industries that remain within a post industrial economy are those that;

1. Have been able to maintain a strong competitiveness through accumulated investment over the years, continue to generate advantaged technology for the industry, higher education and research institutions compliment the industry, a wide range of relevant skilled workforce exists, and companies are domiciled within the country i.e., defense or highly scientific based industries like microchip processors, biotechnology, and some specialist engineering industries like jet engine production,

2. Industries where early mover advantages still exist like the aircraft or scientific instrument industries that have strong branding and buyer loyalty,

3. Industries that still hold factor advantages because of exclusive access to particular resources, and

4. Industries that serve the wealth and consumer sophistication of the nation like real estate, financial services, health service, convenience and packaged good products, and the entertainment industries.

Table 5 The decline of the agricultural and industry sectors in selected countries over a 50 year period40

 

1960

1980

2000

2009

Country

Agri % GDP

Ind % GDP

Service % GDP

Agri % GDP

Ind % GDP

Service % GDP

Agri % GDP

Ind % GDP

Service % GDP

Agri % GDP

Ind % GDP

Service % GDP

Ireland

22%

26%

52%

-

-

57%

5%

39%

56%

5%

46%

49%

Spain

-

-

-

7%

36%

57%

3.2%

33.6%

63.2%

2.9%

25.5%

71.6%

Italy

13%

41%

46%

6%

42%

53%

2.5%

31.6%

65.8%

1.8%

24.9%

73.3%

New Zealand

-

-

-

11%

31%

58%

8%

23%

69%

4.6%

24%

74%

Netherlands

9%

46%

45%

4%

33%

63%

3.5%

26.8%

69.7%

2.6%

24.9%

72.4%

United Kingdom

3%

43%

54%

2%

33%

65%

1.7%

25.3%

73%

0.9%

22.1%

80.4%

Japan

13%

45%

42%

4%

43%

53%

2%

35%

63%

1.5%

22.8%

75.7%

Austria

11%

46%

43%

4%

39%

57%

1.3%

32.4%

66.3%

1.5%

29.4%

69.1%

Finland

17%

34%

49%

7%

36%

57%

5%

32%

63%

2.6%

29.1%

68.2%

Australia

12%

40%

48%

5%

-

-

3%

26%

71%

4%

24.8%

71.2%

Canada

5%

34%

61%

4%

32%

64%

3%

31%

66%

2.3%

26.4%

71.3%

Belgium

7%

41%

52%

2%

37%

62%

1.4%

27%

71.6%

0.7%

22.1%

77.2%

France

10%

39%

51%

4%

35%

61%

3.3%

26.1%

70.6%

1.8%

19.2%

79%

United States

4%

38%

58%

3%

34%

63%

2%

18%

80%

1.2%

22.2%

76.7%

Germany

6%

53%

41%

2%

46%

49%

1.2%

30.4%

68.4%

2.4%

29.7%

71.3%

Denmark

11%

31%

58%

4%

32%

64%

4%

27%

69%

1.1%

22.8%

76.1%

Norway

9%

33%

58%

5%

42%

54%

2.2%

26.3%

71.5%

2.1%

40.1%

57.8%

Sweden

7%

40%

53%

3%

315

66%

2.2%

30.5%

67.3%

1.7%

26.1%

72,2%

Switzerland

-

-

-

-

-

-

2.8%

31.1%

66.1%

1.3%

27.5%

71.2%

Singapore

4%

18%

78%

1%

41%

58%

>1.0%

28%

72%

0%

27.2%

72.8%

Korea

37%

20%

43%

17%

39%

44%

5%

45%

50%

3%

39.4%

57.6%

The extent to which a nation’s economy is service orientated depends upon the extent products that are imported from other countries have a cost advantage over local products. Due to lower production costs offshore and low tariff regimes, it is much cheaper to source products from lower cost producing countries. Durable consumer goods are now much cheaper than they were during the past stages of economic development.

However becoming a post industrial economy may not altogether be a negative process, and does not always involve de-industrialization. The economy may be going through a restructuring where lower productivity industries are being replaced by higher productivity industries in other sectors. The services sector may be growing at a much faster rate than the manufacturing sector which statistically shows a decline of the agricultural and industry sector relative to the services sector.

While some industries have declined and disappeared, other industry structures have radically changed, and/or merged together with other industries. Many industries have become extremely competitive where segmentation has become intense. Some companies practice custom mass production, i.e., Toyota Scion targeted at Gen Y customers and Dell computer allowing customers to order computers according to their own specifications. The personal computer, mobile phone, and even books are becoming one industry with the arrival of products like the Apple iPhone and iPad. The airline industry, once used by a privileged few has radically changed through the low cost segment growing rapidly, redefining how the industry and customers behave. Banking was just a necessary institution within an economy at one time to provide a means for savings, loans, and financial transactions. In post industrial society banks transform to become much more integrated with consumers’ lives where services are almost unconsciously utilized through paying for groceries at the supermarket with debit cards and paying bills through ATMs and on the internet, where cash from transactions is disappearing. The processed and fast food industry has become corporatized focusing on presentation, convenience through replication, and sophisticated logistical systems to place product within very easy reach of consumers.

Over the last decades of economic development firms have moved from a production to a marketing orientation. In the post industrial economy firms start making a transition into developing integrated values within the whole company, reflected in strategies, and products. Consumers at the same time have become very paradoxical. Consumers live within a corporatized society and accept luxury and branding, shopping in the comfort of shopping malls and hypermarkets, yet at the same time yearn to return to the street markets and the specialty and boutique corner stores. They also have concern for local issues, the environment, and the future, and seek out farmers’ markets, buy local products, seek to live with low carbon footprints, prefer organic, and Fairtrade products in increasing numbers. Today it is not unusual for people to travel on a low budget airline to an exotic holiday location and stay at a five star resort. At the same time we are becoming skeptical about government, frustratingly looking for alternatives that may not yet exist.41 There are no existing or new political movements in sight that appear to have the answers, just an apparent vacuum or void. The corporate world is also looking for the answers about where they stand in society through corporate social responsibility (CSR). What is mostly apparent is the variety of different approaches taken. Is it civic responsibility – making a difference to society? Is it about empowerment – whose? Is it about aid to the less fortunate – some special projects? Is it about ethics, environmental responsibility, and sustainability? Is it about community development – local, national, or global citizenship? Is it about philanthropy? What are the specialized values the corporate world should adopt? Post industrial society is a somewhat more paradoxical society than those of the previous phases.

All of the above is occurring at a time where corporations are devoid of shareholder influence.42 The motivations of managers are moving in directions that undermine sustained investment and innovation. Investment becomes focused on financial assets rather than acquiring real assets. Mergers and acquisitions stifle innovation. Foreign investments are now purely financial rather than aimed invest in building capacity and productivity that they once were. General investment in the previous stages had been undertaken within an almost continuous growth rate which maintained a positive momentum of return that could be supported by borrowing. However capital gains are not assured within a post capitalist economy due to the many structural changes taking place and end of the high growth period that the early stages of economic development experienced. Asset values start declining with the structural changes leaving investments that are not covered by the equity within the assets.

The concept of what constitutes an investment and what is an expense is under threat. No longer can a house be looked upon as an asset that acquires value continually, as this ignores the fundamental issue that a house depreciates through wear, and upkeep costs are expensive and rarely factored into value, leaving only value in the land. Land value is only relative to demand and suburban areas that were once in demand two decades ago in American cities are the urban prairies of today. Post industrial economies will continue to experience readjustments that will change the nature of opportunities and what constitutes good investment.

Business investment tends to be more wealth based rather than innovation based, utilizing past wealth. During this stage the lower productive segments of industry drop away. Many national size firms are acquired by larger multinationals and/or shift off-shore to become based in other countries, leaving only a small subsidiary operation within the original country. Other established industries close down their manufacturing operations and source their products offshore from lower cost producers. Many established firms begin to consolidate their market positions rather than enhance it, have a declining inclination to invest, become headed by stewards rather than entrepreneurs, lose their aspirations, become complacent risk takers, and develop organizations that have a culture resistant to change. This is reflected in the high turnover of companies on the S&P, Forbes, and Fortune lists, where vibrant new entrepreneurial companies are taking the place of the complacent companies with outdated products for their market and older technologies.

A post industrial economy is one that is no longer balanced and requires new activities to rebalance it. Post industrial societies face the trauma of losing export orientated industries, increasing imports, higher public debt, and growing unemployment. This raises possibilities that the urban areas of many societies will become poorer and fall into relative poverty. There are even risks that a whole new generation of people may not have jobs. How this evolving scenario is countered depends upon how many new entrepreneurs can create new industries that will create new domestic and regional demand and increase employment. However this is hindered by rising taxes on wealth and income created by governments trying offset their dwindling tax bases.

Changing age structures in many post industrial economies are beginning to have a significant effect on economic performance. Populations are shifting from a high proportion of working people to non-working people to an aging population where assets must be put into aged and health care, which inhibit economic growth. This is the ‘pay up’ period for the ‘demographic dividend’ the country enjoyed two decades ago. Age expectancy has also increased due to better knowledge, nutrition, and healthcare resulting in declining death rates which further stress government welfare systems. The population of people aged 80 or above is projected to rise around 3.5% per annum until 2050 and will force Governments in East Asia, Europe, the United States and Australia to develop surpluses in future budgets. Meanwhile declining fertility rates in Europe will lead to massive labor shortages that must be supplemented through increased immigration.

Standards of education are declining due to less domestic demand because of demographic shifts. Many higher learning institutions seek overseas students to supplement declining enrolments and maintain revenues. Education is a growth business for students from developing countries and becomes a major growth industry in post industrial economies with a stock of high reputation universities and other colleges. Education is now Australia’s third largest export earner behind coal and iron ore.43 However Finland has shown through investment in education other industries can be developed which in her case include the forestry industry.

Post industrial societies have also neglected the rural areas which have fallen into crisis. With tightening credit, many rural families are forced off the land. Chronic shortages of labor affect harvests and production. Declining services and infrastructure lowers the quality of life for rural families. Educational pathways between urban and rural societies widen,44 which could inhibit the ability of rural people to scan for opportunities and exploit them in the next generation.45 There is a genuine social inequality between urban and rural populations. Rural population will have fewer opportunities from limited economic activity, where disadvantages include the remoteness from urban markets, the high cost and deterioration of transport services, poor access to services, and lack of private and government investment. This lack of rural investment leads to higher unemployment where a large percentage of rural youth population leaves for potential work in the cities.

Post industrial societies become high compliance cultures. Value added taxation systems (VAT or GST), environmental compliances, occupational health and safety compliances, require large amounts of documentation in business. Civil society is also regulated very heavily with service fees and infringement penalties are important sources of revenue for government. This substantially increases the licenses, costs and knowledge required to start a business just like high start up costs that discourage entrepreneurial start-ups in under-developed economies. Opening a simple business like a café or restaurant now most likely requires a loan from a bank to enable the individual to comply with health, building, and food storage and preparation regulations. This puts the opportunity of starting many types of businesses out of the reach of many people without the ability to save or raise finance.

However, even given all the above it is likely that the environment for potential opportunities will increase in the post industrial environment due to large urban diversity, high incomes, and sophisticated market segmentation that has evolved over decades. For example, high market segmentation presents new opportunities that established channels of distribution do not cater for and new distribution channels can be created to exploit these opportunities. New alternative channels appealing to particular segment groups like buy local, organic, Halal, Kosher, Fairtrade create many new product and retail opportunities. Internet retailing is on a massive growth path and the discount shop46 phenomenon throughout Europe, Japan, the United States and Australia is now a very significant worldwide industry. In a post industrial economy it will take more investigation to see potential opportunities as small niches are harder to see than the general environment. Figure 5 shows conceptually the level of potential opportunities in relation to the stage of economic development.

Figure 5 The level of potential opportunities in relation to the stage of economic development

 

Conclusion:

National Economic Development is Not a Linear Process

However, countries do not necessarily develop directly along the path outlined above. Resources are unevenly distributed within a country and in addition, geography, population and infrastructure will be distributed in such a way that development may occur unevenly. This consequently means that opportunities available may follow patterns related to all stages of economic development, and that economies are more complex than the singular typologies outlined above.

The first development within a country will most likely be related to existing natural resources and the new industry would locate itself within proximity to the resource location. How quickly and large this industry may develop will depend upon the agents involved in the industry, access to markets, production or extraction costs, transport costs, and the ability of the industry to grow and sustain itself. How quickly and substantially complementary and support industries accumulate in the region depend upon the substance of the industry and potential growth. The suitability of local topography to support transport infrastructure, i.e., potential to house a natural port, build roads and railways to the region, support a large population, and availability of labor either currently present or willing to relocate to the new area will support further regional growth. Some areas within a country are better endowed than others promoting uneven growth within almost every economy. This can be seen in the rapid growth along the coast of China and stagnation within some parts of the interior of the country.

Figure 6 shows where both Thailand and Malaysia’s current development levels would be placed over the five stages of development. Both Thailand and Malaysia are predominantly developing countries relying on investment to drive their respective manufacturing sectors. However at the same time there are many aspects of both countries industries and markets that have the characteristics of a developed economy. Both Malaysia and Thailand’s services sectors are rapidly growing. Malaysia could also be said to display some characteristics of a post industrial society where some of the large government linked companies (GLCs) make substantially wealth based investments in real estate and construction projects rather than investments in innovation. Outside the major cities both Thailand and Malaysia are characteristic of under developed economies still using traditional techniques in local farming and fishery enterprises, still lacking basic infrastructure in some places. Paradoxically Thailand still has hill tribes around Chiang Rai that still maintain traditional lifestyles and Malaysia still has the Iban, Dayak, and Dusun tribes in Borneo.

Figure 6 Where Thailand and Malaysia’s development would be placed over the five stages of development


Notes and References

[1]. Meier, G. M. (1984), Leading Issues in Economic Development, Fourth Edition. New York: Oxford University Press, 91.

2. Rostow, W. W. (1960), The Stages of Economic Growth: A Non-communist Manifesto. Cambridge: Cambridge University Press.

3. Porter, M. E. (1990), The Competitive Advantage of Nations. New York: Free Press, Ch. 10.

4. Hunter, M. (2009), Essential Oils, Art, Science, Agriculture, Industry, & Entrepreneurship: A focus on the Asia-Pacific Region. New York: Nova Scientific Publishers, 330.

5. Adapted from: Hunter, M. (1993), “The Challenge of South East Asia for the Australian Cosmetic Manufacturer,” Cosmetics, Aerosols & Toiletries in Australia 8(1).

6. For example the residents of the Laotian town of Luang Prabang maintained a traditional lifestyle until very recently when tourism numbers rose to the extent of radically disturbing the culture of the place.

7. Meier, G. M. (1984), Leading Issues in Economic Development, 101.

8. Bienhocker, E. D. (2007), The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economies. London: Random House, 80.

9. Galbraith, J. K. (1980), The Nature of Mass Poverty. Cambridge, MA: Harvard University Press.

10. Thirlwall, A. P. (1983), Growth & Development: With Special Reference to Developing Economies, 3rd Edn. London: MacMillan, 96.

11. These may initially be direct support industries that are complementary to the resource industry but overtime may become diversified into industries that supply goods to the employees of these industries and eventually become adjunct or allied industries that may use the resource based products as raw materials, etc.

12. In this context this may simply mean a new retailer offering a wider range of clothes, new car models, or restaurants with novel cuisines to the region.

13. Meier, G. M. (1984), Leading Issues in Economic Development, 183.

14. For example the lemongrass oil industry could only develop within Haiti during the Second World War because stocks could not be shipped to the United States from countries like India at the time.

15. Harford, T. (2006), The Undercover Economist. London: Abacus.

16. See http://www.transparency.org/publications/gcr/gcr_2009#dnld

17. Compiled from CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/ (accessed 11th January 2011).

18. GDP in US dollars at purchasing power parity.

19. At purchasing power parity.

20. Country comparison to the rest of the world.

21. The ‘2008 CPI Score’ related to the degree of corruption perception as seen by businesspeople and country analysts.

22. The ‘Confidence Range’ provides a range of possible values to the CPI Score as it varies according to survey taken.

23. People age 15 and over who can read and write.

24. A progress government is reforming the economy, tackling issues like poverty and attracting foreign investment.

25. A largely desert economy with intensive agriculture in irrigated areas where production has declined in recent years. The major income is now oil and gas but the country is slow to privatize, has inadequate export routes, widespread poverty (30%), endemic corruption, poor educational system, government misuse of oil and gas revenues, and reluctance to introduce economic reforms.

26. The discovery of large oil reserves have contributed to dramatic economic growth. However there is a 30% unemployment rate and most businesses are owned by government officials and their families.

27. See: Profile: Thailand’s reds and yellows, BBC News, 20th April 2010, http://news.bbc.co.uk/2/hi/asia-pacific/8004306.stm, accessed 20th April, 2010).

28. Bloom, D. A., and Canning, D. (2004), “Global Demographic Change: Dimensions and Economic Significance,” paper presented to the Federal Reserve Bank of Kansas City Symposium on Global Demographic Change: Impacts and Policy Challenges, Jackson Hole, Wyoming, August 26‒28.

29. Bloom, D. A., and Canning, D. (2001), “Cumulative Causality, Economic Growth, and the Demographic Transition,” in Birdsall, N., Kelley, A., and Sinding, S. (eds.), Population Matters: Demography, Growth, and Poverty in the Developing World. Oxford: Oxford University Press, 165‒197.

30. Harvey, D. (2010), The Enigma of Capital: and Crises of Capitalism. London: Profile Books, 147‒150.

31. For examples many cities in the old East Germany are declining in favor of cities on the western side of Germany, The Pearl River Delta has seen unprecedented industrial and urban growth over the last thirty years while at the same time many industrial cities in the United States are declining. What were very recently empty desert space in the Gulf States are now the sites of modern new mega cities, Bangalore in India has become an international IT industry centre, Shanty towns still exist in South Africa while there is still conflict in areas of Central Africa.

32. However even in some cases this does not change even after a revolution, i.e., the fall of the Soviet Union just replaced state capitalism with ‘oligarch capitalism’, the peoples revolution against Marcos did not dispose of ‘crony capitalism’, and the revolutions in Latin America during the 1960s and 1970s did not change the situation much.

33. This is very important to small enterprises where they have access to potential landlords, contractors, suppliers, credit providers, and customers.

34. See: http://www.doingbusiness.org/reports/doing-business/doing-business-2011

35. Williamson, O. E. (1991), “Comparative Economic Organization: The Analysis of Discrete Structural Alternatives,” Administrative Science Quarterly 36: 269‒296.

36. This doesn’t mean that firms have ceased trying to distort pricing through methods like collusion and bullying. There have been over the years many high profile corporate cases about this issue with many companies being found guilty and being forced to pay large fines.

37. These factors have increased global branding by manufacturers. Multinational manufacturers in efforts to seek better economies of scale will also make regional or worldwide supply agreements with their suppliers, thus also eliminating the ability of small domestic suppliers to deal with multinational companies.

38. They can be considered to have a high income elasticity of demand because they open up choice to consumers and compete for their limited incomes.

39. Shown as service sector percentage of GDP and GDP per-capita (PPP) US$ extracted from the World Bank Development Report and other data.

40. Agriculture, industry, and service sector percentage of GDP and GDP per-capita (PPP) US$ extracted from the World Bank Development Report and other data.

41. People around the world appear to be looking for new political hopes in different ways. In 2008 the people in the US elected Barack Obama with such great hopes, yet the Republican tea party movement is gaining some momentum in public opinion. The recent UK and Australian elections returned major parties without any preference for either one, requiring minor parties and independents to make or break the government. Although the greens vote rose slightly, there is really no political party or movement that appears to be inspiring voters. The Edelman Trust Barometer 2011 shows that the majority (over 50%) of people distrust their governments in France, Italy, India, United Kingdom, United States, Russia, and Germany. See http://www.edelman.com/trust/2011/ (Accessed 27th January 2011).

42. Drucker, P. F. (1993), Post-Capitalist Society. New York: Harper Business.

43. See Export Income to Australia from Education, Research Snapshot, No. 34, March 2008, http://www.isana.org.au/files/AEI%20March%20sshot%20expt%20income.pdf, (accessed 17th January 2011)

44. Golding, B. (2001), “Great Divides in Learning: Youth Learning Pathways in Rural and Remote Australian Towns,” Proceedings of the ACER Research Conference 2001, Understanding Youth Pathways, Hilton on the Park, Melbourne, 15‒16th October, 13‒18, http://acer.edu.au/documents/RC2001_Proceedings.pdf (accessed 29th November 2011).

45. Hunter, M. (2009), Essential Oils, 22.

46. Also known as dollar, $2, or One Euro or Pound Shops.

19.01.2013



Who Really Rules Australia?:
A tragic tale of the Australian People

Murray Hunter

An inconvenient question

The question of "who rules Australia?" is always answered with pet ideas and different theories. We can see symbols of power all around us, but the exercise of real power and influence is rarely a public event. Defining and identifying who really rules Australia is like trying to pinpoint where consciousness exists within our brain. It is complex and illusive. We may have some idea about different entities who potentially exercise power, but can't put any single entity under any precise scrutiny. Besides the formal means of power through authority, ownership and control over regulation, etc., much power is the result of inducement, compromise, promises, flattery, coercion, threats, favors, and even goodwill. Making the situation more complex is that different groups exercise power and influence over different aspects of society. Finally is rule in Australia in the hands of an "oligarchy" that dictates, or is it more likely that the group(s) that rule Australia are more like a football umpire who can influence the flow of the game, with the power to influence formulation of new rules end of season for the next season?

Surprisingly formal academic papers about "who rules Australia" are almost non-existent. A multitude of internet articles, review articles, opinion, and even lectures and documentaries exist online about who rules the world. However in Australia it doesn't seem a question that academics have bothered to write too much about, except for the prominent Australian public intellectual and writer Donald Horne in the mid 1980s, who asked the question in an obscure essay "Who Rules Australia?"

Horne meticulously examined rule from the perspective of our history, significance of the crown, formation of our political system, parliament, political parties, federalism, the role of the media, unions, and banking; proposing that Australians live under a myth about who actually rules them. Although the situation today is very different from the time Horne reflected on these issues, much of his description concerning "who rules Australia" is still valid today. What may be even more starkly relevant is Horne's conclusion, which Australians at the time and even now have taken little notice of.

My intention is to take up from Donald Horne's commentary, update it, and postulate this inconvenient question again in Australia today. Many people know the parts of the puzzle, but by putting them altogether the author hopes it may lead to a more thorough understanding about the intricacies of who really rules Australia.

This paper will do so in the format of looking at each section of potential influence upon Australian society, starting with an encapsulated summary of Australia's sovereign history.


From the Crown to the Commonwealth -Will Australia ever have an independence day?

The formal European claim for sovereignty was made in the name of King George III[1], where upon, a colony New South Wales was established. All legitimate power was exercised under the name of the Crown. Further colonies were proclaimed and established across the continent, ruled by Governors under the authority of the Crown but with advice of the Secretary of State for Colonies. In effect however due to distance and time for messages to reach London and return, Governors were in effectively autocratic control, within the constraints of British law. Eventually Legislative Councils were set up in the colonies to advise governors, who made proclamations. Initially these councils were comprised of appointees of the respective governors, but were later expanded to include elected members until voting franchises were dramatically widened in the 1850s (in New South Wales). Later, completely elected lower houses were established in Australia's colonies which took over most responsibilities of government from the governors.

A British parliamentary act, the Commonwealth of Australia Constitution Act, given Royal Assent by Queen Victoria brought the six colonies together under a Federation in 1901. However all state and federal governors remained appointees of the British Monarch upon the advice of the British Cabinet[2], where Australia was recognized as a Dominion of the British Empire[3]. In addition the Colonial Laws Validity Act 1865 was still in force where any Australian or state laws deemed repugnant to Britain would be deemed invalid[4]. All bills passed by parliaments must be given Royal Assent by the representative governors to become law.

This division of power between London and Australia at the turn of the century set the tone of history where those in influence have not necessarily acted in the best interests of Australia, a theme that returns a number of times in Australian history as we will see.

One such example in the early 20th Century was upon the British Liberal-Imperialist Ronald Munro-Ferguson's appointment as Governor General in 1914. Munro-Ferguson sort a return to the traditional London-Colony relationship, where Australian politicians were beginning to have their own regional security concerns. Britain prior to the First World War began pulling its ships back to Britain leaving Australia vulnerable. Nevertheless when war broke out on the European Continent, the Australian Government loyally sent troops who were unnecessarily put in harm's way by British Generals, Gallipoli being a good example.

Munro-Ferguson saw himself first as a British agent to promote the War effort rather than just a representative of the Crown. He personally assisted Australian Prime Minister Billy Hughes at the time in his attempt to introduce conscription. When the referendum failed and Hughes was expelled from the Labor party, Munro-Ferguson saw this as a disaster for the British war effort and allowed Hughes to stay on as a minority supported prime minister and form a new party on a "win the war" platform[5].

Some of Britain's Dominions sort a change in their status after the sacrifices made during the first World War[6] and a series of Imperial conferences were held in London where the Balfour Declaration of 1926 was agreed to. The declaration agreed that the United kingdom and the Dominions were to be considered autonomous communities within the British Empire with equal status. They would not in any way be subordinate to one another in domestic or external affairs, however they would be united in their continued allegiance to the Crown. It was only after the Royal and Parliamentary Titles Act, 1927 was passed by the British Parliament that the Australian cabinet could directly advise the Sovereign on the choice of Governor General, thus ensuring his independence in office from British interests[7].

However political events in Queensland in 1975 showed that the British Government still exercised influence over state matters in Australia. Sir Colin Hannah, the Governor of Queensland at the time was critical of the Whitlam Federal Government. The British Government had considered dismissing him from office, but due to the dismissal of the Whitlam Government by Sir John Kerr this seemed simply not practical to do[8]. The then Queensland Premier Sir Joh Bjelke-Petersen sought another term of Governor for Sir Colin. However the British Government advised the Queen that his should not be granted another term. This situation made all state Premiers in Australia realize that they were not advising the Queen through the British Government as they believed, and that it was the British Government that was actually advising the Queen.

The constitutional crisis helped build up determination by the New South Wales Premier Neville Wran to take unilateral action by legislating to stop the ability of parties to appeal to the Privy Council. Wran also wanted the Queen to be required to act on the advice of State Ministers in appointing a State Governor[9], but the British Foreign Secretary at the time at the behest of the Palace indicated that he would advise the Queen to withhold Royal Assent to such Bills.

The Palace resisted the notion that states could advise the Queen directly due to the concern that this could place the Queen in the invidious position of receiving conflicting advice from state and Commonwealth ministers[10]. Many different concepts were proposed, but rejected by either the States, Commonwealth, British Government, or the Palace. The matter had also grown into a "states rights" issue, where states did not want to concede more power to the Commonwealth.

It was only when the New South Wales Solicitor General Mary Gaudron was in London for a Privy Council appeal that the issue was resolved with the British Foreign Office. Gaudron convinced the British to open up direct channels of communication to the States[11]. These arguments finally received the recognition that Australia was an independent country. Such a precedent was established in Nigeria some years earlier, until Nigeria was proclaimed a republic, and the proposal was put up to the Palace.

Finally, Sir Geoffrey Howe, the British Foreign Secretary at the time agreed to the right of Australian State Premiers to advise the Queen directly as "a consequence of Australia having been established as a federation with a fragmentation of sovereign powers"[12].

Buckingham Palace however continued to object to the proposal where the Queen's private secretary took up negotiation directly with the Commonwealth Government in Australia in the capacity as private secretary of the Queen of Australia. Senator Gareth Evans, Australia's Foreign Minister at the time told the British High Commissioner in Australia that patience was wearing thin and suggested for the first time that the Queen might be formally advised to act despite her own personal objections. Finally the Secretary of Prime Minister and Cabinet of Australia Sir Geoffrey Yeend travelled to London and suggested that in the light of the idea of a republic, the Queen might want to entrench her position in the Australian States[13].

The Queen finally agreed to the Australia Acts with a "convention" to protect the Queen's position where she would be free to read what speech she wanted at any state function[14]. The Australia Acts finally ended the responsibility of British Ministers to advise the Queen over Australian State matters[15]. This established the concept that the Queen being a separate Crown with respect to each State.

As a consequence the sovereign is regarded as the legal personality of the Australian state. State land is called Crown land, but actually held by the state. The Crown is thus symbolic, still seen on the emblems of some state law courts, police forces, and Australian Military insignia. The Queen's portrait is still on all Australian coins, the five dollar note, and the symbol of the Crown can still be seen on the One hundred Dollar note.

Although there has been a gradual moving away from the traditional links to the Monarchy, Horne postulated that although the Crown is the symbol of legitimacy of function, symbolically the centre of power is offshore, which has contributed to Australia's sense of "dependence"[16].

However the Crown does signify that there is a power above and beyond elected government. The concept of the Crown creates a spirit of government that has a sense of permanence, where elected Government is only transient. This is where the "mysticism" of a state within a state is created, where anecdotes of this can be seen in government life within Australia today[17].

Where the Monarchy in Australia goes from here, is a matter of conjecture. There have been numerous attempts to kindle debate on an Australian republic, with even a referendum in 1999[18]. However, one of the problems that exist is not so much about Australia becoming a republic, but what form should an Australian republic take. Any progress in Australia heading down the republican road is halted on this point. However opinion polling over the last few years show weak support by Australians for a republic[19]. There is conjecture that the republican debate may emerge strongly once again when the death of the current Monarch[20][21].


The next Issue is what are the real powers of the Australian Governor General?

The Governor General of Australia - Still with undefined powers and more than just the Queen's representative

As we have seen, the Governor general of Australia is the representative of the Monarch of Australia, thus the symbolism of the Crown resides in the office. The functions and roles of the Governor General are specified in the Australian Constitution and include the appointment of the Prime Minister, ministers, ambassadors, judges, giving Royal Assent to bills passed by the Parliament, dissolving Parliament, and issuing writs for elections. The Governor General is also the President of the Federal Executive Council, where the above appointments excepting Prime Ministers and Ministers are made, and Commander in Chief of Australia's defense forces. The Governor General, according to conventions usually acts solely on the advice of the Australian Prime Minister, and usually selects the person who has the confidence of the House of Representatives as the Prime Minister. According to the Constitution the Governor general is appointed by the Queen acting on the advice of the Australian Prime Minister. The Governor General's usual role is a ceremonial one, both domestically and overseas.

However the Governor General has reserve powers that are explicitly stated in the Constitution but subject to convention. These reserve powers include the power to dissolve Parliament, to withhold assent to Bills, and to appoint or dismiss Ministers. Under convention the Governor General would take the advice of the Prime Minister, but the Governor General has the power to act independently[22].

The extent of the Governor General's reserve powers are not absolutely known. Only constitutional situations that arise and corresponding actions taken can define the extent of these powers. In addition, A former Private Secretary to the Governor General Sir John Kerr, Sir David Smith stated in 1988 that "the Governor General is in no sense a delegate of the Queen. The independence of the office is highlighted by changes which have been made in recent years to Royal instruments relating to it.......under section 2 of the Constitution the Governor general is the Queen's representative and exercises certain royal prerogative powers and functions; under section 61 of the Constitution the Governor General is the holder of quite a separate and independent office created, not by the Crown, but by the Constitution, and empowered to exercise, in his own right as governor general and not as a representative or delegate of the Queen, all the powers and functions of Australia's head of state"[23].

This appears to be confirmed by a reply from the Queen's private Secretary Sir Martin Charteris, dated 17th November 1975 in reply to a letter written to the Queen by the then Speaker of the House of Representatives on the matter of the Prime Minister's dismissal by Sir John Kerr, Governor General of Australia on 11th November 1975; "As we understand here, the Australian Constitution firmly places the prerogative powers of the crown in the hands of the Governor general as the representative of the Queen of Australia. The only person competent to commission an Australian Prime Minister is the Governor General, and the Queen has no part in the decisions which the Governor general must take in accordance with the Constitution. Her Majesty, as Queen of Australia, is watching events in Canberra with close interest and attention, but it would not be proper for her to intervene in person in matters which are so clearly placed within the jurisdiction of the Governor General by the Constitution Act"[24].

The Governor General Sir John Kerr used his reserve powers to resolve the Constitutional crisis of 1975. This has caused much controversy because it was also a political crisis, and there has been much conjecture since about Sir john Kerr's influences and motivations. Without re-opening the debate which has been going on since the dismissal, although there is conjecture about foreign intervention[25], evidence based on accounts by those participating in those events tend to suggest that Kerr toke the action he did out of a sense of destiny[26]. He was a lawyer by training, a judge by career, and had a deep sense of the law. There is no other convincing evidence to conclude otherwise, although all Labor Governments since that dismissal have worked hard on developing a very strong relationship with the US, and all Labor Prime Ministers have enjoyed their personal relationships with US Presidents. In addition no Government has ever attempted to borrow funds outside traditional means of raising funds for a government.


Power and Australian Politics - Living in a temporary world

Australia appears to have a vibrant representative democracy. The Australian political system is centered upon parliaments around the country and which party commands the majority of seats in each legislature and forms a government. If the government doesn't perform to the satisfaction of the public, electors in the next election have the opportunity to vote out the government and install another one in its place. Over the last few decades this has been the pattern where both major parties have each spent time in government and opposition. Democracy seems to be well in Australia.

The Australian House of Representative is primarily an electoral college to determine who has the right to govern. Even in the life of the current Parliament where the Gillard labor Government is in a minority, the primary aim of the house is to facilitate the executive[27]. Debates within the Australian Parliament tend to be adversary in nature, usually short of new ideas or constructivism, unless it is in support of a Bill. Most policy discussion, agreements, pledges of support, and collaborations are discussed and decided outside of the Parliament. The committee system in Australia doesn't have the clout and power of those within the US Congress. Political power in Australia appears to be vested in the executive, led by the Prime Minister.

However, entering executive government in Australia appears to be restricted to those that make politics their career[28]. This has been the case with only a few exceptions. A person joins one of the two major political parties and rises through the ranks within the party by making alliances, joining factions, collaborating with others to gain support and influence, eventually winning pre-selection as an electoral candidate in a constituency and makes it to parliament. Inside the parliamentary party, these career politicians continue to build alliances and a few become leaders which entitles them to become either prime minister or opposition leader. Consequently a person can become the Prime Minister of Australia on the votes of around just 100 parliamentary colleagues. The Prime Minister then selects (or in the case of the ALP ministerial posts are also voted upon where the Prime Minister allocates portfolios) to form a ministry and cabinet. What is important to understand here is that the Prime Minister of Australia and Ministers come from a very select group of mostly career people.

What is most interesting here is that most leaders of parliamentary parties who are either Prime Minister or leader of the Opposition have been elected based upon an agenda they present rather than the strict party platform. If Prime Minister, he or she rules on agenda rather than party policy. Prime Ministers and Governments run on agenda rather than policy of late in Australia (see Table 1).

Table 1: Pursued Agenda of Recent Australian Governments:


Government

Years

Agenda

Fraser Government (Liberal-National Coalition)

1975-1983

Strong fiscal management
● Some aboriginal rights
● Multiculturalism - relaxed immigration
● Anti-apartheid stance towards South Africa and Rhodesia
● Pro-state's rights
● Pro-US alliance
Hawke Government (Australian Labor Party) - The Hawke Government came under great party criticism for departing for party policy and willingness to cooperate with big business[29]. 1983-1991 Deregulation of the financial system, dismantling of the tariff system, and floating of the Australian dollar
● Privatization of Commonwealth Bank of Australia
● Implementation of fringe benefits and capital gains tax
● Creation of an accord with the union movement that increased the social wage
● Dramatically boosting lower income levels and poverty eradication
● Restoration of Medicare system dismantled by Fraser
● Expanded funding for education
● Some focus upon environmental issues
Keating Government (Australian Labor Party) 1991-1996 Introduction of national superannuation scheme
● Introduced native title of land
● Creating an Australian republic
Howard Government (Liberal-National Coalition) 1996-2007 Conservative social policies
● Debt reduction
● Pro-Commonwealth and Monarchy
● Pro-US alliance
● Deregulation of industrial relations
● Continued improvement of social security measures
● Focus on Asia and improving bilateral relations, as well as taking an active role in the establishment of APEC
Rudd Government (Australian labor Party) 2007-2010 Focus on building infrastructure
● Continued strong ties with US
● Strong focus on the environment - signing Kyoto Protocol
● Attempted to increase Australia's international influence
● Phased out workplace agreements introduced by Howard Government for new award structures
● Apology to indigenous peoples for the "stolen generations"
● Proposed large increase of Australia's population
● Proposed resources super profits tax
Gillard Government (Australian Labor Party) 2010-present Aim to develop a national consensus on a carbon trading scheme
● Proposal for internet controls
● Introduction of plain cigarette packaging
● Introduction of My School website
● Reintroduced off shore processing of asylum seekers
● Continued strong support for US alliance taking US troops onto Australian soil
● New "Asian Century" White Paper


There is little point for NGOs, lobbyists, and interest groups to talk to political party machinery. Most lobbying is undertaken directly to Government in Australia. The party is effectively only a campaign and selector of who will become a member of the parliamentary party. There is a fear that while Australian politics has the trappings of a democracy, it masks an oligarchy where political power rests with only a few rich and powerful citizens and corporations[30].

The reality is that political power in Australia is something very temporary. Individuals through a network of supporters who are able to negotiate, garner support, reach compromises and collaborations within a party with the majority of members (or supporters) in the lower house of parliament can become the Prime minister and run an agenda that he or she has agreed upon in deals and bargaining both with party stalwarts and parliamentary members of the party. This alliance build upon all these contingencies will only last a couple of parliamentary terms maximum, or until another group within the parliamentary party musters up enough support to dislodge the sitting leader.

Consequently power is limited to agenda and both outside and inside groups of influence allow a prime minister to hold office for the time the agenda suits them[31]. If a prime minister falls out of favor with any of these groups, new alliances, agreements, collaborations, and contingencies arise that will eventually change over the reins of power to someone else[32]. Thus political and executive power is only something temporary, where a change also changes all the powerbrokers with them. Power possession is something of a cyclic nature, and it's very rare that any agenda is passed on from one prime minister to another. With any change, there seems to be also a change in agenda. In this way issues (and agendas) are organized into politics while others are organized out[33]. So understanding who is in control is about understanding what the politics is about and who has a say.


Is the Public Service still the real tai-pan of government?

Almost all contact between the people and government and the dissemination of services are directed, managed, and delivered by the Australian or respective state public services. This includes health care, education, policing, public transport, immigration and customs officers, and the armed forces. Behind these frontlines are public servants who administrate and conceptualize, develop, and implement government policies and programs. Traditionally the public service is the principal agent of agenda setting for government and what it should be concerned with[34].

The Australian Government employees over 300,000 people, of which over half are employed within the Australian Public Service. The rest are employed in the Australian Defense Forces, within agencies like Australia Post and Medibank Private, etc. Since 1990, there has been a gradual shift towards a more ‘top-heavy’ public service, with an increasing proportion of employees in the Executive or Senior Executive Service (SES). Correspondingly, a decreasing proportion of employees are now in lower level positions.

Almost all positions (94%) in the senior public service are still dominated by people of white Anglo-Saxon or other European origin[35]. In the words of Donald Horne which are still applicable today, these bureaucrats "share personal characteristics, the power elite are uncommonly bright, intellectually dexterous, verbally adroit, hugely persistent, agile, passionate and tough as nails. Very few of them possess a below-average ego. Many of them possess an above-average libido"[36]. Over the decades there has been an over proportionate number of public servants who were freemasons compared to the number of freemasons in the general Australian population[37]. It is also believed that Freemasonry was particularly strong in sections of the business and trade union communities, as well as in the police and fire services, defence forces and the legal profession[38].

Even though demographics are rapidly changing in Australia, the characteristics of the public service are not following these changes. The APS workforce is less diverse than the Australian community in general, with fewer people with disabilities, fewer Aboriginal or Torres Strait Islander employees, and a continued under-representation of women in the senior levels[39]. Evidence also exists that the Australian public service has historically exemplified the practice of "social closure" where staff selection has been biased towards those that display of economist characteristics as an 'ideology of recruitment and promotion' serving the interests of groups within the public service[40]. In addition there have been accusations of bullying within the public service to ensure conformity to agenda[41], and the misuse of mental health assessments to neutralize complainants[42].


The public service up to the 1970s was almost the sole advisor to the government on policy, agenda, and implementation[43], and not used to having their work open to scrutiny[44]. A minister after his or her duty in the electorate, political responsibilities, parliamentary duties has very little time to scrutinize a complex ministry and was almost at the mercy of department heads when it came to advice and policy. However the newly elected Whitlam Government very quickly found frustration with a public service that was not used to being questioned and directed, so governments began using their own appointed advisors on policy matters.

This trend has continued from the 1970s to today where the Rudd Government spent almost $800 million on 6,534 consultancy contracts during its first 18 months in office[45]. Public servants have also been seconded to Ministerial offices and become involved in work that is often compromising to their apolitical stance. For example, during critical moments of public policy development and implementation such as the Tampa and ‘children overboard’ refugee crises, public servants have been seen as politically compromised and far from independent, and even become collateral damage in political events[46].

The Gillard Government is planning further cuts to the Australian Public Service, and cap the senior executive level[47]. Now ministers are taking the policy lead in their respective portfolios, armed with advice from their own consultants and staffers. However with the environment of 24 hour media cycles and opinion polls, there is risk that policy formulation within ministerial offices is short term orientated[48].


The Administrative Law Monster

The Australian Public Service, state public services, and local government are responsible for enacting, implementing, and enforcing administrative law. There has been an exponential increase in the volume of legislation in the last 50 or so years. In 1955 the Commonwealth Parliament passed a single volume of legislation of 580 pages; in 2005, it passed seven volumes of legislation in excess of 4000 pages. Tax law, migration law, income support law and the Corporations Law are clear examples[49]. However within each new law there is provision for the Minister to make regulations under the Act. Over the last few years there has been an introduction of more than 20,000 new or amended regulations with only 104 repealed, drowning small business in a sea of red tape and burdensome regulation. These administrative laws are set by unelected officials in obscure offices around the country on a daily basis.

The common theme in the different mechanisms of administrative law around the country is an emphasis on the control of over the area of each Act. Officials framing regulations should remain within the scope of that authority. However this is not easy to determine and through the Administrative Appeals Tribunal expensive to challenge. Technology, especially interconnected ICT is becoming a major tool of power and compliance for agencies without exhibiting very much transparency or accountability. Thus administrate law has become a means of entrapment where departments like the Australian Taxation Office have issued formal targets of ensuring taxpayer objections to audit decisions are upheld in less than 20% of cases[50], striking a severe blow to the doctrine of transparency, fairness, and objectivity in public service administration[51].

Certainly at the local government level in Australia there are numerous corruption cases involving local government officials involved with administrative law[52]. The sheer volume of regulations, lack of resources to scrutinize by authorities, and lack of time and resources of citizens to understand them has created opportunity for individuals and business to benefit. In addition a current review of Freedom of Information Legislation by Dr. Allan Hawke may restrict it on the basis of cost justifications further reducing transparency[53].

Consequently, administrative law and technology has gone a long way of creating a "compliance society" in Australia, exercised across all jurisdictions of government and law enforcement agencies. Thus this framework gives government through the enforcement agencies great powers over citizens in most aspects of daily life. Authority comes from regulation produced by unelected people where great difficulty on the part of any citizen to challenge.

One of the "spin offs" of the "compliance society" is an increased cost of living. In addition the start-up and operational costs of businesses rise making the cost of products and services more expensive. The question here is who is this "compliance regime" benefitting?

The Reserve Bank of Australia is looking after whose interests?

The Reserve Bank of Australia was formed in 1960 to take over the role of banknote issuing authority from the Commonwealth Bank. The Reserve Bank also supervised the banks, and governs monetary policy in Australia. Then from 1 July 1998, the banking supervision function was transferred from the RBA to the newly created Australian Prudential Regulation Authority. The Reserve Bank Act was amended also to create a new Payments System Board, with a mandate to promote the safety and efficiency of the Australian payments system. New legislation, the Payment Systems (Regulation) Act 1998 and the Payment Systems and Netting Act 1998 were introduced, giving the Bank relevant powers in this area.

The Reserve Bank Board's obligations with respect to the formulation and implementation of monetary policy are laid out in the Reserve Bank Act. Section 10(2) of the Act states:

'It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

(a) the stability of the currency of Australia;

(b) the maintenance of full employment in Australia; and

(c) the economic prosperity and welfare of the people of Australia’[54].


In 1993, the Reserve Bank focused on the objective of price stability where inflation was to be held to an average of 2-3 per cent over a period of years.

In December 2007, following the change of Government, a new Statement on the Conduct of Monetary Policy was jointly issued by the new Treasurer Wayne Swan, and the Governor of the Reserve Bank, Glenn Stevens. This Statement incorporated substantive amendments enhancing the independence of the Reserve Bank and covered practices regarding transparency and communication. A revised Statement on the Conduct of Monetary Policy was issued following the 2010 election, which explicitly covered the Reserve Bank's mandate for financial stability[55]. Effectively the Reserve bank of Australia became fully autonomous.

The Reserve Bank Board is made up of nine members which include the three ex officio members of the Board, consisting of the Governor of the Reserve Bank, who is Chairman of the Board, the Deputy Governor of the Reserve Bank, who is the Deputy Chairman of the Board, and the Secretary to the Treasury. In addition, there are six external members who are appointed by the Treasurer for a period of five years. The board normally meets eleven times each year, of which one of the responsibilities is to set official interest rates (the overnight bank cash rate).

The RBA is intended to be independent of government to enable impartial economic decisions. It effectively controls the country's monetary policy. Public pronouncements by the bank governor can stir stock and currency markets. Those decisions are made by an independent board who get their advice from both formal and informal sources that are undisclosed. This lack of any transparency in decision making can run potential conflict. Former Prime Minister John Howard blamed the Reserve Bank for his election loss in 2007, accusing the bank of meddling in domestic politics by announcing a rate rise[56].

If one undertakes a very quick internet search on the current RBA board members, one will find that the directors have links to multinationals, media, right wing think tanks, and other foreign interests. The Reserve Bank Governor Glenn Stevens, portrayed by the Australian Financial Review as the most powerful man in Australia is an avid New American Standard Bible reader[57]. Who is importantly not represented on the RBA board are small business and Australian wage earners.

The RBA has allowed the Australian Dollar to rise to record highs against the US Dollar and other currencies. Although this reflects some weakness in the US Dollar, the Australian Dollar is high in its own right and is attracting inflows from investors wishing to benefit from relatively high interest rates in Australia. The high Australian Dollar although making imports cheaper, which is keeping a check on domestic inflation, is putting exports from Australia in a precarious position, where industries are being devastated, which is costing many thousands of jobs. Rural industries in Australia are also finding it very tough competing against cheap primary produce imports, which over a long period of time could shut down many rural industries all together. The higher Australian Dollar is also making Australian Universities more expensive for foreign students, where drops in enrollments are occurring[58], and a there is also a decline in foreign tourists visiting Australia[59].

There is very little concern from the parliament of executive government on the loss of industry and employment. Again the question can be asked, whose interests are the RBA Board acting for?


The Commercial Banks - Too big to fail, too few to be competitive

The ANZ was started in London as The bank of Australasia in 1835. British based shippers, commodity traders, merchants, pastoralists, miners, merchant bankers, and joint-stock bankers, were joined by a group of eminent British businessmen where cross directorships were commonplace, developing a strong relationship with the City dynasty[60]. The first bank established in Australia in 1851 was the Bank of New South Wales, where it quickly expanded around the colonies. The early standing of the Anglo-Australian banks in the City of London greatly depended upon who the directors were. The National Bank of Australasia was formed in Melbourne in 1858, and very quickly expanded across the colonies, also opening a branch in London, important for financing wool, gold, and other commodity exports and imports back to Australia. The Commonwealth Bank was formed through the amalgamation of a number of smaller banks under the Commonwealth bank Act 1911 as a savings and general trading bank in a similar fashion to banks that the Australian states had been founded.

Until 1961 the Commonwealth Bank acted as the central bank for the Australian Government. All states owned a savings bank, along with a number of private banks operating under very stringent regulation, where the government used tightly controlled monetary policy to regulate the economy. Bank interest rates and liquidity ratios were tightly controlled thus limiting the profitability of Australian banks[61]. Two types of banks were allowed. Savings banks took deposits and paid low interest rates and lent money out for mortgages, while trading banks operated more like merchant banks dealing only with commercial customers. The increase of migration after the Second World War increased savings and opportunities for lending on mortgages, made lending risks very low[62]. The booming economy of the 1960s enabled other forms of financial institutions to develop like building societies, credit unions, life assurance, and later finance companies that could charge and pay higher interest rates and also subject to less stringent regulations. The diversity of these institutions greatly restricted growth of the banks in the Australian economy.

The Hawke Government in the 1980s began deregulating the banking sector. There was no longer any distinction between savings and trading banks and banks were allowed to operate in money markets. A partial float of the Australian Dollar and allowing foreign banks to come in and directly compete in retail markets, along with the turbulent economic conditions of that decade led to many mergers and acquisitions by the banks. The Commonwealth bank was privatized during the 1990s in a public offering.

Foreign banks found it very difficult to take up a new license and compete alongside the local banks initially. However with general liberalization of the Australian economy, foreign banks stated investing in the existing Australian banks from the late 1990s. This was encouraged by the Australian Government adopting the "four pillars" policy that disallowed any mergers between the four Australian banks, ANZ, Westpac, National, and Commonwealth, weakening the influence of the Trade Practices Act, but at the same time allowed foreign banks to takeover any bank[63].

The global crisis of 2008 wiped out Australia's banking diversity and highly competitive banking system. The four major banks aggressively took on the smaller banks like George, BankWest, Bendigo Bank, Aussie, Adelaide Bank, RAMS, Wizard, and Challenge bank, eventually buying most of them up and consolidating the sector into a situation where they control 80-90% of all financial transactions executed across the country. In addition, the introduction of government guarantees for the first time during the 2008 crisis provided the big four banks with a unique competitive advantage.

The above has effectively provided the four major banks with extremely high credit ratings because they are guaranteed "extraordinary government support" in any future financial crisis. This effectively provides the banks with the ability to borrow money at lower rates than other banks, thus putting smaller Australian banks at a great disadvantage.

In addition to the big four banks being able to borrow funds cheaper than their competitors, policy makers have favored their exclusion from the extra capital buffer that the IMF is insisting upon. Extra capital holdings would greatly lessen taxpayer risk with the Government's obligations as a guarantor. An extra capital buffer would also help keep any designs by banks to follow high risk growth strategies in check.

With the four big banks having higher credit ratings, they are able to borrow from the RBA, where smaller banks cannot achieve the ratings required. The big banks are able to issue bonds that are secured with assets where the smaller banks cannot. Over the last few months the major banks have been able to raise more than $20 Billion of new funding through their AAA-rated covered bonds to government and other investors all around the world in the lucrative environment of a high Australian Dollar and higher interest rates[64].

Government action of guaranteeing private banks according to Mark Bouris has created a "moral hazard" where the banks are insured as too big to fail, which history has shown as a recipe to irresponsible behavior. Government policy has also created a scenario in Australia where the tradeoff between risk and return has been eliminated. In Australia, the lower risk banks with the highest credit ratings are able to provide higher returns than the smaller banks with the lowest credit ratings , a complete reversal of the inverse relationship between risk and return, that the Australian taxpayer has guaranteed[65].

1997 gave the opportunity for foreign equity to flow freely into the banking sector and today the ownership landscape of Australian banks is very different from the traditional idea that Australian banks were owned by the "average Australian" through superannuation and investment funds. Although major shareholders are in fact mutual and investment funds, they are now managed by foreign interests as table 2 shows.

Table 2. Major Shareholders in Australia's "Big Four" banks
 

  Company Combined HSBC (Nominees)[66] JP Morgan Nominees Combined Citicorp
1 Commonwealth Bank[67] 14.10% 11.13% 4.18%
2 National Australia Bank[68] 16.94% 14.47% 3.33%
3 Westpac Bank[69] 15.10% 12.27% 4.60%
4 ANZ Bank[70] 18.88% 15.65% 5.41%


Apart from the top four shareholders shown above, an inspection of the data in the respective annual reports shows that most of the other top 20 shareholders are companies with a stake in more than one big bank. Moreover, ownership figures for the second tier banks, Bendigo and Adelaide Bank Limited, Suncorp-Metway Limited and Bank of Queensland Limited, show they are also owned by the same organisations that own the big four.

When one looks closely at who owns the big four banks it becomes clear that there is a lot of common ownership, suggesting that those banks may not in fact be independent, competing entities.

Due to the complex nature of the legal structures of shareholders and ways that the various shareholders work together, it is virtually impossible to determine who really controls the banks. Many of the other minor shareholders in the banks also have HSBC, JP Morgan and Citibank, along with many other European and US banks as their major shareholder. This argument is often countered by arguing that HSBS, J.P. Morgan and Citibank are only investing on behalf of small investors. What is of issue here is control and it is the prerogative of the funds to appoint a director to the board of their choice, not the investors. These figures are also consistent with a worldwide study showing that most of the world's company equity is controlled by no more than 25 companies, of which have many of these companies have equity in the Australian banks[71].

One of the most interesting aspects that complement the cross-ownership in the big four Australian banks is the number of cross directorships in other foreign banks and financial institutions that exist in a wide manner. Studies have shown how even small cross-shareholding structures, at a national level, can affect market competition in sectors such as airline, automobile and steel, as well as the financial one[72].

Debt is the financial sector’s key tool to extract wealth from governments, companies and families. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a potential lever to pry away land and assets. Currently a massive redistribution of assets is taking place [73]. Debt is an extremely powerful method of ruling and controlling what happens in society.

Consumers are losing out in this cross ownership. Interest rates and bank charges are already some of the highest in the world, with the government not seeming to be too concerned. Even financial planning companies are owned by the banks which provide advice on products of which parent companies own, taking away all prudency to customers[74]. When banks are found to be wrong, there is very rarely any acknowledgement or apology[75]. Many actions such as the four banks all raising interest rates without the RBA raising rates appear to be collusion[76]. Banking is now an area where consumers need to be vigilant about their rights to protection, as it appears the Government of today has left the Australian people to the big four's mercy. The four big banks are becoming larger and larger in the Australian economy, to the extent that 2.3 cents in every dollar spent in Australia becomes their pre-tax profit, compared with 0.7 cents in 1986[77].

Big Business and Mining - Welcome to Australia, the land of oligarchy

When the ownership of public companies in Australia is examined, one will find that it is very similar to the banks. Both commercial and mining companies ownership are dominated by HSBC Nominees, JP Morgan Nominees, and Citibank Nominees as the top three shareholders of most companies (see table 3). If one examines company directorships there is a tight cross-linking across commerce, banking and mining in Australia today. Commerce, banking and mining are now part of an oligopoly.

Table 3. Major shareholder of Australia's largest public companies:
 

  Company Combined HSBC (Nominees) JP Morgan Nominees Combined Citicorp
1 AMP[78] 19.23% 13.88% 4.6%
2 BHP Billiton[79] 17.36% 13.29 10.75
3 Brambles[80] 25,85% 21.73% 8,77%
4 CSL[81] 24.39% 17.43% 6.1%
5 Fosters Group[82] 23.29% 21.23% 6.31%
6 Macquarie bank[83] 19.06% 19.96% 6.08%
7 Newcrest Mining[84] 37.83% 16.57% 4.94%
8 Origin Energy[85] 15.83% 14.10% 5.17%
9 Rio Tinto[86] 19.59% 16.68% 4.89%
10 Sun Corp[87] 20.23% 17.09% 7.1%
11 Telstra[88] 18.49% 12.5% 1.36%
12 Westfield[89] 31.44% 25.0% 7.03%
12 Westfarmers[90] 16.31% 13.77% 6.43%
13 Woolworths[91] 16.50% 11.34% 4.025
14 Woodside[92] 16.19% 11.97% 2.25%


The reality is that much of Australian are owned by faceless people hiding behind big nominee companies that are virtually impossible to research. Not to mention global investment banks, insurance companies and the Commonwealth public servant superannuation scheme. Many companies have directors that are involved in media, banking, and politics, with many ex-politicians coming onto boards when they leave the parliament. We have seen the close relationships between business and politicians over many governments. And Labor has been able to stay long in government with this accommodation with business interests, ever since Bob Hawke achieved an understanding with a significant group within the dominant corporations of Australia[93]. Big business probably has greater influence at state level where government can directly facilitate access to prime land and assets that each state contains.

Big business now is able to practice what could be called "bully capitalism" where they dictate terms unfairly to smaller businesses. For example rents charged to tenants in large shopping malls are calculated as a percentage of turnover, with systems that allow landlords to audit tenant sales, where profit is virtually regulated. Supermarkets in Australia now that a duopoly exists with control over 90% of retail sales have been able to increase profit margins from 20% in the 1970s to over 50% today[94].

With so much ownership concentration of Australian business and industry through skillful fund control and use of company law and cross directorships, a very few people can exercise great influence over the Australian economy. Many company boards and directors can operate without much accountability[95]. As the recent Jonathon Moylan case has shown, any statement about a company can easily manipulate share prices and make profits or losses of hundreds of Millions of dollars instantly. The potential to easily manipulate share prices is there on a huge scale[96]. HSBC Nominees, JP Morgan, and Citicorp Nominees are the 1st, 2nd and 4th largest shareholders in the Australian Stock Exchange as well[97].This has potential consequences for local innovation, consequences for sustainable exploitation of resources, consequences for which industries survive and which industries are lost, and consequences for the cost of living for Australians, not to mention fairness and transparency in the marketplace.


The unions have been big losers

Unions have played a major part in Australian work life for the last century. Up until the early 1990s approximately 50% of the workforce were members of a union. Today union membership is just a fraction of what it was. This decline has been due to the shrinking of the country's manufacturing base, and federal and state legislation prohibiting compulsory unionism and moving towards individual contracts under the Howard Government in 1996. The final factor is structural labour market change. Across the developed world, unions have traditionally had their strongholds in the manufacturing sector, public sector, among full-time workers, and in large firms greatly weakened through industry decimation. The rise of the service sector, downsizing of government, casualisation of the workforce and rise of smaller firms are all changes that have decreased union strength.

Under the Rudd and later Gillard Governments, the Fair Work Act which aimed to bring back collective bargaining, modern awards, minimum wage fixation, dispute resolution, approval of enterprise agreements, and handling claims for unfair dismissal with a body called the Fair Work Commission to Replace the Australian Industrial Relations Commission. However this change in the industrial relations structure had little effect in raising union membership[98].

What is interesting in the labour sphere is the Gillard Government's plan to bring in foreign workers for the mining industry, under Enterprise Migration Agreements (EMA). This is a very contentious issue with both the unions and some Australians, who see this move as costing Australians jobs, thus politically dangerous[99].


The media - A "closed shop"

The media may have taken over from religion as the prime creator of social reality[100]. What becomes important in Australian society very heavily depends upon what the media reports and focuses upon. Reality is what television stations put on the screens each night, newspapers report, and online news sites and social media focus upon. And as a consequence the media proclaims what is important in politics, the significance of parliamentary debates and how they are projected to the public, and what issues are important in elections[101].

A research project conducted into the Australian media conducted by the Australian Centre for Independent Journalism (ACIJ) scanned through 2,203 different media stories to determine whether there was any bias in stories. The results found that 555 of stories where public relations driven[102]. The author has found scanning through news sites that most media organizations prefer their own group of contributors and the Australian online media is basically a "closed shop" for outside opinions, so little diversity of opinion exists. Thus the consequences of this are that although Australia may have a free media, this does not equate to the right of freedom of expression. There are indeed a narrow range of views put through the Australian media, surprisingly less than other "Western countries". Influential political blogger with US website The Nation, John Nicholls, said in Australia in 2010 that, despite the new “players”, “content” and “platforms”, people have never received less information and less of it from alternative sources[103].

Just like the banks and corporations, the Australian media too appears to be an oligopoly with four major media corporations. Australia is ranked 41st in the world for media diversity[104]. Currently two newspaper groups, News Limited and John Fairfax Holdings account for over 90 per cent of the circu­lation of daily newspapers, and Australia has only three commercial television networks. Even with strict cross ownership laws in Australia with the emergence of the internet media diversification has not increased very much and formats have become very blurred, where a single story from a journalist can now be reported across a number of formats, i.e., radio, television, print, and internet.

In October 2006, the Australian Government introduced new media laws. These amendments reformed the Broadcasting Services Act 1992 which regulates ownership and control rules for commercial television and radio broadcasting, subscrip­tion television broadcasting, international broadcasting, data casting transmitters and newspapers. The purpose of the original Act was to encourage diversity and quality of media services, controlling access to the market and the services that are offered. The new ‘two out of three’ rule that allows companies to own up to two media outlets, i.e., television, radio and newspaper in a single area. However, since these amendments foreign and cross ownership has increased, mergers are allowed if the proposed acquisition passes a media diversity test that ensures there are five remaining independent media groups in metropolitan markets and four in regional mar­kets. Under the amended laws, media mergers are subject to the approval of the Australian Competition and Con­sumer Commission (ACCC)[105].

There have been many critiques about the political power of media companies like the Murdoch group running their own agenda which favors a particular side of politics, or smears another with very powerful results[106]. An example of the extent that the media is intermingled with politics can be seen with the News Corporation scandal of 2011 where allegations of phone hacking and close relations with politicians were aired. Investigations found that News Corporation went as far as obtain private bank information, medical records, and legal files of individuals. The findings of the Leveson Inquiry in the UK indicate just how closely related politicians and the media have been over the last few decades[107]. There has been little scrutiny of these issues in Australia.


The national narrative is the source of power

What society discusses and the way society speaks about these issues constitutes what could be called the national narrative. The national narrative encapsulates societies shared assumptions, beliefs, and values about people, issues, events, and situations. Consequently there are a number of national narratives that continually run; such as ideas and realities about the society we live in. The national narrative creates a mental map of our reality. It tells us what is, what should be, what things are like, and what we should value and talk about. The national narrative encapsulates our existence, what is possible and not possible. Narrative tells us how to interpret things and bonds people together in society. Narrative sets our beliefs and values and is a powerful influence upon our actions.

Politics is a set of theatrical narratives. A theatre of people posing a reality that becomes plausible[108]. Well crafted drama signifies that the outside world and all within is well[109]. For example, the narrative of General Westmoreland about body-counts during the Vietnam War gave the impression of the US winning the war and suppressed the human side of the war. Society has a narrative of freedom, free enterprise, social justice, environmental sustainability, not drinking and driving, smoking is harmful, and the list goes on. Shaping the national narrative is the tool used to install political agenda into society's narratives by those that rule the country.

To see power one must pay attention to the narratives in society. They come through the media, through political statements, advertising campaigns, films and sitcoms, events, stories, artifacts like community and commercial slogans, thought leaders, and education. Power and who rules can be seen through what conflicts exist in society and who are the perpetrators of these conflicts. Who are for and who are against? Are there coalitions?

The strength of the power of who rules can be seen in their reaction to outcry. For example, governments were not influenced by the mass demonstrations against the Vietnam War during the 1960s, and there is little, if no reform of the financial system in response to the occupy movement. This indicates entrenched power whereas the Franklin Dam protests during the 1980s in Tasmania, especially before the 1983 election had positive responses from those campaigning to be rulers (the eventual Hawke Government), as he was facing election. Narratives show what current politics are about and who is involved. Thus the whole political process and who are in position of influence can be seen through the narratives that flow into the public arena and narratives that flow out. Who is setting the national narrative is the same as the one setting the political agenda.

The national narrative rules Australia. So the next question should be "how does the national narrative develop?" Obviously the Government and media have great influence upon the setting of this narrative. So is it manipulated? Of course. Prime Minister Howard utilized the national narrative to increase gun control after the 1996 Port Arthur massacre, look at the Sandy Hook debate about gun control in the US today. Again Howard used the Tampa affair to rush Border protection legislation through the parliament in 2001[110], and won an election by claiming that asylum seekers had thrown children overboard in an attempt to secure entry into Australia[111].

One could argue that Australia is a conservative society and not as progressive as many other post industrial societies. There were no pioneering attitudes towards same sex marriages, women in the armed forces, migrants, or drugs. The Australian progressive agenda has always tended to follow rather than lead. Some of the values that can be picked up through observation of Australian society might include;

1. A belief in the status quo has served the nation well and shouldn't be tampered with, i.e., attitudes towards a republic

2. An optimistic belief about the future, i.e., Australians high consumers of debt,

3. A fear of something different imposing change upon society, i.e., support for the "war of terror",

4. A belief in the role of big business as the driver of economic growth and Government as fiscal controller, i.e., peoples tolerance to high bank charges,

5. A belief in economic growth and development, i.e., peoples low scrutiny of mining policies and little public outrage when the "mining super tax" wasn't introduced,

6. A belief in the US alliance, Australian general support for US bases, US troops on Australian soil and Australia's participation in the Iraq and Afghanistan wars, and

7. A belief in acquiring debt to achieve the Australian dream and live through capitalism, i.e., Australian's high propensity towards debt consumption.

These narratives and the beliefs and values that go along with them often hide the truth from the average Australian. For example, with the belief in capitalism, Australians may believe that to mean the laissez-faire flourishing of small business and entrepreneurial opportunity, hiding the reality that the Australian economy is actually oligoplistic and government protected[112]. But the myth created through the narrative covers the realities of what goes on and eliminates scrutiny. A belief in development and economic growth suppresses questioning about resource depletion of mining and the fact that these resources are not renewable. If this was questioned, public support for the "super tax" on mining may have been too strong for the government to ignore. The national narrative can also inhibit Australia excelling in new undertakings like the "pivot towards Asia" outlined in Prime Minister Julia Gillard's "Australia in the Asian Century" white paper. Deep set Australia attitudes may hinder the country's engagement with the region due to what the author called and ideology of "Austro-centrism"[113]. The national narrative can be a barrier to a change in attitude.

The national narrative controls what is "politically correct" and the tolerance levels for alternative views in Australian society. It is very difficult to question the US alliance in Australia and any suggestion of Australia adopting a Swedish style of neutrality would be scorned[114]. Even the suggestion of scrapping Australia's compulsory voting requirement in elections met with strong attacks and accusations that the freedom to vote or not would "encourage extremists"[115].The rulers of Australia control through creating, maintaining, manipulating, spinning, and changing the national narrative.


Advance Australia Where?

When Labor was in opposition before 1972 it acted as an umbrella for the synthesis of many different points of view through very powerful policy committees. However many of these policies were not conducive to a conservative Australian electorate and ignored by parliamentary leaders who adopted conservative and "popularist" approach. In 1992 Labor's narratives disconnected with its traditional constituency (loss of Hawke's old seat in Wills, centered around Coburg, Melbourne by the ALP to an independent after he left Parliament), while the ALP moved into the middle ground of conservative Australian politics with an economic rationalist agenda and strong realignment with the US alliance. This was in stark contrast to former Prime Minister David Lange in New Zealand banning US warships to NZ ports in 1985. Labor had learned from the Whitlam experiment of the 1970s that it will only be able to govern from the centre in line with the national narrative.

Even the Eureka movement in Ballarat during the 1850s was not the radical movement that today's mythology depicts[116]. The radicalism was a complete myth. When the leaders of the rebellion became members of the Victorian Legislative Assembly, where their voting records show a very conservative stance[117]. One of the leaders Peter Lalor claimed he was never a democrat in the sense of Communism or Republicanism, but just fighting the cause of a tyrannical government[118].

Australians are not liberal innovators in political philosophy. Action, including the Gallipoli landing shows Australians to be accepting of the establishment and conservative, rather than the innovators we have been portrayed to be. This conservatism has been very costly to the real interests of Australia.

Inherited cultural values have disadvantaged Australian's and prevented adaptation to the hostile environment of Australia when they first settled[119]. Australians allowed themselves to be subjected to the rivalries of Europe in 1914, the common market in the 70s[120], and global geopolitics with the ANZUS alliance.

Australian introduced sheep rather than develop kangaroo as a staple food, introduced European species into the natural environment with catastrophic consequences, and adopted the "level playing field" as an economic philosophy, without really thinking what benefit it had for Australia. Imported ideas over history have only caused problems like the rabbit proof fence[121]. Tax deductions for clearing land and phosphate bounty only assisting in degrading Australia's natural environment[122]. All these have been great tragedies for Australia.

The rhetoric of the rulers doesn't meet the reality. The great myth is that Australia is a competitive economy. Most of Australia's largest companies have either monopolies or exercise some form of oligopoly. For example;

BHP Billiton, Rio Tinto, Woodside Petroleum, Newcrest Minerals, Fortescue Mining and Origin Energy all have monopoly control over the resources they exploit,
● The four major banks exercise almost 90% control over all transactions in the economy and the smaller banks have the same shareholding as the 'big four" as well,
● News Corporation controls over 80% of all metropolitan newspapers in Australia,
● Westfarmers operate Coles, Bunnings, Target, Kmart, Officeworks in duopoly markets,
● Telstra has a near monopoly,
● Woolworths operates in a duopoly with Coles.
● Westfield group operates a unique group of shopping centres without competition, and
● CSL has an almost complete monopoly on all blood products.

The top businesses in Australia do not exist within competitive environments and are able to earn above average profits. The reality of Australia itself has become a lie and cover-up. No such environment could have been created without collusion, corruption, and cover-up, unless it was stupidity.

British ownership in Australia has always been high and considered friendly. Australians have tended to assume that the banks and big business were primarily owned by superannuation funds investing on behalf of average Australians. This belief gave credibility to the banks where there huge profits are palatable to the Australian public. But this is a myth. Shareholding records show equity funds in positions of great influence in banking, business, mining, and media. Equity funds are designed where they are managed by HSBC or JP Morgan Nominees, where through cross equities, mergers, and acquisitions these firms are part of the "25" who own a great proportion of the world's banking and finance business. The procedures and rules for selecting directors with an array of cooperation and collaboration could give strong influence, if not control to these firms in almost every aspect of Australian's life. We have seen the large extent of cross directorships that are people selected from a very narrow group of professional people with career connections to the big names in the financial world. A large matrix of cross ownership also occurs and we have seen only a little of the extent they are used to circumvent national rules and taxes in the media. However we cannot know for sure the true situation as determining who truly owns these corporations is virtually impossible.

likewise in foreign policy, Australia has become almost totally subservient to US interests, even at the cost of our own interests in the Asian region. China is our major trading partner and not a military threat as US policy action is making out. Australia viewing its largest trading partner as a potential threat, is beyond commonsense. The Australian Government has shown great immaturity in this area that has in many ways compromised our neighbors views of Australia as an independent country with its own will
[123].

Conservative Australians don't subscribe very well to conspiracy theories. Whitlam found that out in 1975 when Australians didn't maintain their rage about his government's dismissal being more concerned about economic management. Australians like to see and believe, which assisted Howard win the 2001 election over the story of boat people throwing their children overboard. Australians were equally accepting of the need to invade Vietnam, to stop the red peril, Afghanistan to flush out Osama Bin Laden, and Iraq to stop Saddam Hussein using WMD on the free world. Even today there is little public questioning of these matters unlike the UK where there is an inquiry into Britain's role in Iraq. Just like Governor General Ronald Munro-Ferguson using his position to send Australians to the other side of the world for Britain in WWII, Australians needlessly died in Vietnam, Afghanistan and Iraq over another country's agenda.

As Donald Horne stated in his essay "Who Rules Australia", "it seems there is little dispute that business interests prevail in Australia"[124]. Business is setting the agenda, not government. Worse still government has become dependent upon business to keep the economy running. The state only helps to manage the economy so that businesses can make profits and continue to administer society so that even more profits can be made. It is also apparent that businesses now are the group that make decisions about taxes and labor conditions. Business controls the national narrative and the fate of the environment is primarily left up to business, the government can only react, or bring up concepts like "carbon trading schemes" that make government look concerned. Labor unions have been controlled and industrial democracy in Australia isn't even a dream, although these concepts are advanced in many other post industrial societies. Politicians are transitory characters upon a stage that pursue an agenda they are allowed. Both the tai-pans of the public service and the leaders of the business sectors see prime ministers come and go.

Probably the biggest "conspiracy" over the people is administrative law at all levels of government with little scrutiny over whether all regulation is constitutionally compliant. Agencies under temporary ministers are taking on an authoritarian demeanor of their own acting outside the real scrutiny of an under resourced parliament .

Australia will very soon see UAVs or drones flying over Melbourne and Sydney suburbs looking for pensioners who have taken a Coles or Woolworths shopping cart home with the groceries to prosecute[125]. All Australian Governments have legalized casinos and allowed massive expansions even at the great social costs to the community in terms of problem gambling, bankruptcies, dumping children, and suicides[126]. Local Governments spend lots of time and money financing entrapment operations against illegal brothels (a victimless crime) on the behest of the large legal operations[127].

Both Government and opposition are often bilateral in many more areas than one thinks. Most of the differences are rhetorical. This has led to cover ups at the highest level of the government machinery, namely the Reserve Bank of Australia by both sides of Australian politics[128]. The media is also complacent in scrutinizing these issues.

Australia is not being ruled for the benefit of Australia, but rather the sectional groups that yield influence over the country running their own agendas. Secretive nominee companies and an anonymous front for overseas investors who are prepared to destroy the environmental and cultural heritage of Broome and the Dampier Peninsula for profit. Multinationals don't have to own, they control, and utilize the funds from small investors for gaining control. In this way the small investor is captive to the agendas of the fund managers.

The two party adversarial political system is an advantage for other parties of influence in Australia. When the ruling Government or prime minister doesn't support a particular agenda, then parties can support and encourage the other party or internal factions within the prime minister's own party to move and change the policy. The potential of this was seen in the removal of both Prime Minister Rudd and the Liberal Opposition leader Malcolm Turnbull over the Carbon Pollution Reduction Scheme[129].

Urbanization, overgrazing, depletion of resources, salinity[130], water shortages, bush fires, and droughts lack the attention they need. The issues of poor productive soil and depleting minerals are about future of Australia. Australia lost the eucalypts as an indigenous product and the fisheries are now unproductive. Australia is much more like Haiti than a first world political and economic institution with well educated people. Just as early settlers stripped the trees in Australia thinking land was fertile once again the land is being stripped without a replacement. The consequences were invisible then and again seem to be now.

The media has failed to provide a platform to promote any visionary thought. The media's takes a narrow interpretation of what should constitute the national discussion.

What we have seen with the recent HSBC case in the US is that ethics are no longer a consideration for any business it undertakes. So trusting these firms to act in the national interest would be like trusting the goat to look after the cabbage patch.

It is almost impossible to regulate multinationals and there is indeed no show of political will to do so in Australia. The idiom "to big to fail" is now the catch cry when any scandal occurs. Australia is not exempt and public debate to date has not tackled the real issues that survival of the country depends upon. Boat people and asylum seekers seem to be a convenient issue to waste national emotional energy upon while Australian assets are being stripped before the country's eyes. So why the parliament and government in all this ill-informed and complacent, a willing collaborator? These are the questions that nobody is asking.

A lack of vision for Australia by the people and encapsulated by governments is the complacency that allows other interests to come and impose their visions on the country. This is what Donald Horne eluded to with his words "Australia is a lucky country, run by second rate people who share its luck"
[131] . Australians are too complacent about the country and have allowed entities with agendas contrary to Australian interests to prevail.

To a great extent our own national mythology has blinded us to the realities of how the country really operates. We like to believe in the myth which prevents us from seeing the reality and worse still inhibits a vision for Australian society. All our narratives are within a narrow arc of what is prescribed for us to believe. Anybody prescribing anything else differently will attract anyone of the colorful Australian labels to describe a person who doesn't subscribe to the mediocrity of the Australian dream.

This story above that has unfolded over the years, is not the one of democracy and an egalitarian society that many believe Australia is, but rather as the country that never gained its real independence. Perhaps ANZAC Day on 25th April commemorating the slaughter of Australians at Gallipoli Peninsula under British command in Turkey, symbolic of 'Australia's coming of age' in the national narrative, is also symbolic of Australia not being able to achieve independence and being at the mercy of foreign interests, contrary to those of Australia. As a concluding remark, what Donald Horne wrote almost 30 years ago seem very apt: "there are ruling interests that seem to prevail at some time of conflict. But these prevailing interests are not in Australia"
[132]. Who are the real umpires in Australia?

11.01.2013


References:

[1] See History and present government, The Official Website of the British Monarchy, http://www.royal.gov.uk/MonarchAndCommonwealth/Australia/Historyandpresentgovernment.aspx

[2]. Hudson, W., J., & Sharp, M., P., (1998), Australian Independence: Colony to Reluctant Kingdom, Carleton, Melbourne University Press.

[3] Andrews, E., M., (1993), The ANZAC Illusion: Anglo-Australian relations during World War I, Cambridge, The Cambridge University Press, P. 21.

[4] Craig, J., (1993), Australian Politics: A source book, 2nd Edition, Marrickville, NSW, Harcourt Brace, P. 43

[5] The Times, 31 March 1934; The Sydney Morning Herald, 2 April 1934; The Argus, Melbourne, 31 March 1934

[6] Blackshield, T., & Williams, G., (1998), Australian Constitutional Law and Theory, 2nd Edition, Annandale, NSW, Federation Press, P. 143.

[7] However the Curtin Labor Government appointed Prince Henry, the Duke of Gloucester as Governor General during the Second World War in the hope that the appointment may influence the British Government to send men and equipment to assist in the pacific War.

[8] Twomey, A., (2006), The Chameleon Crown: The Queen and Her Australian Governors, Sydney, Federation Press, Chapters 5 & 13.

[9] Twomey, A., (2006), "The Chameleon Crown", Chapter 14.

[10] Twomey, A., (2007). The Queen of Australia, 19th Conference of the Samuel Griffith Society, Melbourne, http://www.samuelgriffith.org.au/papers/html/volume19/v19chap9.html

[11] Twomey, A., (2007). "The Queen of Australia", P. 83.

[12] Twomey, A., (2007). "The Queen of Australia", P. 85.

[13] Twomey, A., (2007). "The Queen of Australia", P. 85.

[14] Twomey, A., (2006), "The Chameleon Crown", Chapter 20.

[15] Australia Acts 1986, s.10.

[16] Horne, D., (1985), Who Rules Australia?, Daedalus, Vol. 114, No. 1, P. 175.

[17] One can see that the public service in Australia sees itself as autonomous where many ministers have difficulties in dealing with their own departments. Perhaps one example is illustrative where in Adelaide in 1978 during a royal Commission into the dismissal of the Police Commissioner who had been accused of misleading the Premier, justified his actions by claiming he had a deeper loyalty to the Crown which is beyond the elected Government. Through this Monarchic language, a belief that the police and other security agencies may exist that they are the ones who are the true interpreters of what are the best interests of the state. See: Hall, B., (1978), The Secret State, Sydney, Cassell, P. 123.

[18] According to the press, the Queen was amazed that we voted “No” in 1999, Prince Philip said we were “bloody mad” when told the result and Prince Charles has said that Australia should become a republic. See: Keating, M., (2012), Why Australia is waiting for the Queen to die?, The Punch, 4th October, http://www.thepunch.com.au/articles/why-is-australia-waiting-for-the-queen-to-die/#comments

[19] Steketee, M., (2012), Republic? Young want to keep it in the (royal) family, The age..om.au, 20th October, http://www.theage.com.au/national/republic-young-want-to-keep-it-in-the-royal-family-20121019-27wxe.html

[20] Warhurst, J., (2012), Waiting for Queen's death soft option for republic, The Punch, 8th June, http://www.thepunch.com.au/articles/waiting-for-queens-death-soft-option-for-republic/

[21] This view is supported by ex Labor Prime Minister Gough Whitlam who believes that the affection and respect the Australian people feel for Queen Elizabeth, “Prince Charles does not have”. See: ‘Once the Queen is dead, long live the Republic’, Tony Stephens, SMH, Oct. 31, 2008.

[22] This power is usually used in situations where an election results where no party has a majority and the Governor general may select a Prime Minister, if the Prime Minister losses support of the majority of members in Parliament, then the Governor general may appoint a new Prime Minister, or refuse to dissolve the parliament should he or she be advised to do so by the Prime Minister (however not the power to dissolve the Parliament without advice). This is not an exhausted list and new situations that arise will define the extent of the Governor general's reserve powers.

[23] Smith, D., (2007), A Mate for a head of State, Address to The Sydney Institute, Dixon room, State Library of New South Wales, Sydney, 24th January, http://www.norepublic.com.au/index.php?option=com_content&task=view&id=1217&Itemid=25

[24] Kerr, J., (1978), Matters for Judgment, Sydney, Macmillan, pp. 374-375.

[25] It was alleged that Sir John Kerr was acting on behalf of the United States Government in dismissing Whitlam from office (See: Blum, W., (2004), Killing Hope: US Military and CIA Actions Since World War II, London, Zed Books). It was claimed that the CIA wanted to remove Whitlam from office because he threatened to close US military bases at Pine Gap and NW cape (report from Ray Martin 60 Minutes, A Spy's Story in 1982 see: http://williambowles.info/spysrus/cia_australia.html).it was also reported by Whitlam that the US Deputy Secretary of State Warren Christopher made a special trip to Sydney on behalf of President Jimmy Carter to express US willingness to work with which ever government Australians elected and that the US would never again interfere with Australia's democratic processes (See Whitlam, G., (1997), Abiding Interests, Brisbane, University of Queensland Press, pp. 49-50).

[26] Kelly, P., (1983), The Dismissal, Melbourne, Angus & Robertson.

[27] Members of Parliament act according to their party allegiances, independents usually declare their allegiances, and pairing conventions allow government members to be absent from the house in voting, so it will maintain a majority on a lower house vote.

[28] Some make assertions that at least one party, the Liberal Party of Australia are biased against Asian representatives. See: Watanabe, A., (2012), Analysis: Are Australians anti-Asian? Or is it just politics?, asian correspondent.com, http://asiancorrespondent.com/80826/are-australians-anti-asian-or-is-it-just-our-pollies/

[29] The Hawke Government came under immense criticism from within his own party for the agenda he ran while Prime Minister. Some of the issues he was criticized for included his public closeness with major business leaders, and siding with the airlines in the 1989 pilots strike. See: Kelly, P., (1992), The End of Certainty: The story of the 1980s, Sydney, Allen & Unwin, P. 544.

[30] Tham, J-C, (2010), Money and Politics: The Democracy We Can't Afford, Sydney, University New South Wales Press.

[31] However in the current Australian Federal Parliament, high office only gets you so far, as the predicament of the current prime minister confirms. Technically, she holds the most powerful position in the country, yet in reality she is one lower house vote away from oblivion, she must genuflect to the independents and Greens, she has to be nice to her predecessor, she commands little respect in the electorate, she is despised by the business community and she carries minimal personal gravitas. Hardly the ingredients of a powerful political leader. And now we're living with the consequences. A nervous, frightened unconvincing government and a cynical, negative opposition that will oppose anything to win votes. Opinion of Jason Morrison on Radio Station 2UE on 18th February 2011, "Who Really Runs Australia?" http://www.2ue.com.au/blogs/2ue-blog/who-really-is-running-australia/20110218-1ayy5.html

[32] This can probably be best illustrated with the fall of Labor Prime Minister Kevin Rudd for Julia Gillard in June 2010 over the agenda of the Emissions Trading Scheme (ETS). See: Van Onselen, P., (2010), The rise and fall of Kevin Rudd, The Australian, 24th June, http://www.theaustralian.com.au/news/the-rise-an-fall-of-kevin-rudd/story-e6frg6n6-1225883564857

[33] Schattschneider, E., E., (1960), The Semisovereign People, New York, Holt, Rinehart & Winston, P. 71.

[34] Thompson, E., (1983), Democracy, Bureaucracy and Mythology, In: Kouzmin, A., (Ed.), Public Sector Administration: New Perspectives, Melbourne, Longmans Cheshire.

[35] Whelan, J., (2011), The State of the Australian Public Service: An alternative Report, Canberra, Centre for Policy Development, Occasional paper No. 12, P 19, http://cpd.org.au/wp-content/uploads/2011/08/CPD_OP12_2011_State_of_APS_Whelan.pdf

[36] Horne, D., (1985), "Who Rules Australia", P. 189.

[37] Franklin, J., (1999), Catholics Verses masons, Journal of the Australian Catholic Historical Society, Vol. 20, pp. 1-15.

[38] Henderson, G., (2002), The secret we should all be let in on, Theage.com.au, 3rd September, http://www.theage.com.au/articles/2002/09/02/1030953434455.html

[39] Whelan, J., (2011), "The State of the Australian Public Service".

[40] Matheson, D., (2001), Staff selection in the Australian Public Service: A history of social closure, Australian Journal of Public Administration, Vol. 60, No. 1, pp. 43-58.

[41] Davies, S., (2012), Australian Public Service Bullying - Holding up the mirror, OZLOOP, 6th December, http://apsozloop.ning.com/profiles/blogs/australian-public-service-bullying-holding-up-the-mirror?xg_source=activity

[42] Davies, S., (2012), Australian Public Service denial, OZLOOP, 10th December, http://apsozloop.ning.com/profiles/blogs/australian-public-service-denial

[43] Verspaandonk, R., Holland, I. & Horne, N., 2010, Chronology of changes in the Australian Public Service 1975 – 2010, Parliamentary Library of Australia, Canberra, P. 2.

[44] D Volker, (2001), Just do it - How the Public Service Made it Work, Australian Journal of Administrative Law Vol. 8, P. 204.

[45] Lewis, S., (2009), $800m the high price of Rudd advice’, The Australian. 9th July, http://www.dailytelegraph.com.au/news/m-the-high-price-of-rudd-advice/storye6freuy9-1225747573306

[46] Reforms not over says DPMC Chief, http://www. psnews.com.au/Page_psn264f1.html

[47] Mannheim, M., (2012), Austerity drive to exe 12,000 public service jobs, 8th may, http://www.canberratimes.com.au/business/federal-budget/austerity-drive-to-axe-12000-public-service-jobs-20120508-1yb34.html

[48] Tieman, A., (2012), We won't save the public service by looking backwards, The Conversation, 22nd October, http://theconversation.edu.au/we-wont-save-the-public-service-by-looking-backwards-10194, see also: Gray, G., (2012), Public service and a false nostalgia, smh.com.au, 28th September, http://www.smh.com.au/opinion/politics/public-service-and-a-false-nostalgia-20120927-26nvv.html

[49] C Hull , (2007), Judiciary struggles under volume of laws with moot benefits', The Canberra Times, 31 March, http://business.highbeam.com/437587/article-1G1-161315221/judiciary-struggles-under-volume-laws-moot-benefits

[50] See: http://media.crikey.com.au/wp-content/uploads/2012/11/ATO-Benchmark-Expectations-20-or-less.pdf

[51] Tedffaha, S., (2012), Chris Seage reports on Federal Court Action against D'Ascenzo, Diment, Rushton and Lombardi, OZLOOP, 26th November, http://apsozloop.ning.com/profiles/blogs/chris-seage-reports-on-federal-court-action-against-d-ascenzo

[52] Bajkowski, J., (2012), New corruption scandal hits 14 NSW councils, 29th October, http://www.governmentnews.com.au/2012/10/29/article/New-corruption-scandal-hits-14-NSW-councils/NLXXJEMMGB

[53] FOI cause off on a dummy run, Civil Liberties Australia, 24th November 2012, http://www.cla.asn.au/0805/index.php/foi/articles/foi-cause-off-on-a

[54] Reserve Bank of Australia, A Brief History, http://www.rba.gov.au/about-rba/history/index.html

[55] Reserve Bank of Australia, "A Brief History".

[56] Howard, J., (2010), Lazarus Rising, Sydney, Harper.

[57] Haigh, G., (2012), Why Glenn Stevens is the man who really runs Australia, Financial Review, 4th August, http://www.afr.com/p/national/why_glenn_stevens_is_the_man_who_TKPAEolaFy71cPYmEMVtGL

[58] As at year-to-date (YTD) January 2012, there were 256,087 enrolments by full-fee international students in Australia on a student visa. This represents a 10.7% decline on the same period in 2011, See:
 



http://www.aei.gov.au/research/International-Student Data/Pages/default.aspx
 


[59]See:http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/2012/Business%20tax%20reform/Submissions/PDF/National_Tourism_Alliance_submission.ashx

[60]
Broeze, F., & Brooks, R., (1988), In: Appleyard, R.T., & Schedvin, C., B., (Eds), Australian Financiers, Melbourne, Macmillan.

[61] Merret, D.T., (2012), Paradise Lost? British banks in Australia, In: Jones, G., (Ed.), Banks as Multinationals, London, Routledge, P. 74.

[62] Myers, M., G., (1961). The Control of Consumer Credit in Australia,. Journal of Finance, Vol. 16, No. 3., pp. 409–422

[63] See: RELEASE OF THE REPORT OF THE FINANCIAL SYSTEM INQUIRY AND INITIAL GOVERNMENT RESPONSE ON MERGERS POLICY, 9th April 1997, http://fsi.treasury.gov.au/content/PublicInformation/Pressreleases/PR090497.asp

[64] Uren, D., (2012), Global holdings of the Aussie dollar on the rise, The Australian, 24th September, http://www.theaustralian.com.au/business/opinion/global-holdings-of-the-aussie-dollar-on-the-rise/story-e6frg9qo-1226479846337

[65] Bouris, M., (2012), Our banks: too big to fail, too few to be competitive, The Drum, 7th February, http://www.abc.net.au/unleashed/3815636.html

[66] These figures are significant, as they are near the limit for any individual shareholding in a financial institution (unless permission is given by the Treasurer) under the terms of the Financial Sector (Shareholdings) Act 1998.

[67] Commonwealth Bank Annual Report 2012, P. 221, http://www.commbank.com.au/about-us/shareholders/pdfs/annual-reports/2012_Commonwealth_Bank_Annual_Report.pdf

[68] National Australia bank Annual Report 2012, P. 165, http://www.nab.com.au/wps/wcm/connect/9d3263804d77c16a9876f8ae098b30d1/annual-financial-report-2012.pdf?MOD=AJPERES&CACHEID=9d3263804d77c16a9876f8ae098b30d1

[69] Westpac Bank Annual Report 2011, P. 292, http://vpr.hkma.gov.hk/pdf/100167/ar_11/ar_11.pdf

[70] ANZ Annual Report 2012, P. 207, http://media.corporate-ir.net/media_files/IROL/96/96910/AGM12/2012_Annual_Report.pdf

[71] Vitali, S., Glattfelder, J., B., & Battiston, S., (2011), The network of global corporate control, PLos ONE, Vol. 6, No. 10, http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0025995

[72] O’Brien D, Salop S (1999) Competitive Effects of Partial Ownership: Financial Interest and

Corporate Control. Antitrust Law J, Vol. 67, P. 559, Gilo D, Moshe Y, & Spiegel Y (2006) Partial cross ownership and tacit collusion, RAND J Econ, Vol. 37, pp 81–99.

[73] Hudson, M., (2012), Finance Capitalism and its discontents, Islet.

[74] Pokrajac, M., (2012), Cross-Ownership a barrier to good financial advice: ASIC, Money Management, http://www.moneymanagement.com.au/news/financial-planning/2012/cross-ownership-a-barrier-to-good-financial-advice

[75] Schwab, A., (2012), Banks Penalized for fees, but don't expect an apology, Crikey, 10th September, http://www.crikey.com.au/2012/09/10/banks-penalised-for-fees-but-dont-expect-an-apology/

[76] Seccombe, M., (2012), What if a bank puts its customers ahead of its shareholders? The Global Mail, 22nd February, http://www.theglobalmail.org/feature/what-if-a-bank-put-its-customers-ahead-of-its-shareholders/78/

[77] Richardson, D., (2012), The rise and rise of the big banks: Concentration of ownership, Technical brief No. 15, December, The Australia Institute, P. 3.

[78] AMP Annual Report 2011, P. 128, http://media.corporate-ir.net/media_files/IROL/14/142072/news/AMP_08_2012_Annual_Report_2011.pdf

[79] BHP Billiton Annual Report 2012, http://www.bhpbilliton.com/home/investors/reports/Documents/2012/BHPBillitonSummaryReview2012.pdf

[80] Brambles Annual Report 2012, P. 68, http://www.brambles.com/PDF/Annual_Reports/Brambles%20Annual%20Report%202012-2-3.pdf

[81] CSL Annual Report 2011-2012, P. 28, http://www.csl.com.au/docs/494/678/csl_ar_2012,0.pdf

[82] Fosters Group Annual Report 2011, P. 124, http://www.fostersgroup.com/common/files/1023060.pdf

[83] Macquarie bank Annual Report 2012, P. 214, http://www.macquarie.com.au/dafiles/Internet/mgl/au/about-macquarie-group/investor-relations/events-and-presentations/documents/2012/full-year-result/fy12-mgl-annual-financial-report.pdf

[84] Newcrest Mining Annual Report 2012, P. 122, http://www.newcrest.com.au/media/annual_reports/FINAL_newcrest_annual_report_2012_72dpi.pdf

[85] Origin Energy Annual Report 2011, P. 132, http://reports.originenergy.com.au/2011/images/uploads/Origin_Annual_Report_2011_web.pdf

[86] Rio Tinto Annual Report 2011, P. 123, http://www.riotinto.com/documents/Investors/Rio_Tinto_2011_Annual_report.pdf

[87] Suncorp Annual Report 2011, P. 167, http://www.suncorpgroup.com.au/announcements-pdf/209216

[88] Telstra Annual Report 2012, P. 39, http://www.telstra.com.au/abouttelstra/download/document/Telstra-Annual-Report-2012.pdf

[89] Westfield Annual Report 2011, P. 139, http://www.westfield.com/corporate/news-announcements/annual-reports/2011/2011_Annual_Report.pdf

[90] Westfarmers Annual Report 2011, P. 176,
www.wesfarmers.com.au/.../doc.../1301-2012-annual-report.html?...

[91] Woolworths Annual Report 2012, P. 179, http://www.woolworthslimited.com.au/annualreport/2012/pdf/WW_AR12_Full.pdf

[92] Woodside Annual Report 2011, P. 141, http://www.woodside.com.au/lists/annualreports/22.02.2012%20annual%20report%202011.pdf

[93] Anderson, T., (2007), Labor and the Australian oligarchy, Green Left, 9th March, http://www.greenleft.org.au/node/37176

[94] See: Ethical Consumer Guide, http://www.ethical.org.au/issues/?issue=16

[95] Crook, A., (2012), Who's the most powerful person in the Australian boardrooms?, Crikey - The Power Index, 26th November, http://www.crikey.com.au/2012/11/26/whos-the-most-powerful-person-in-australian-boardrooms/

[96] Jacob, P., (2012), Hoaxer Jonathan Moylan cost Nathan Tinkler $180 million after Whitehaven share plunge, 7th January, http://www.perthnow.com.au/news/national/hoaxer-jonathan-moylan-cost-nathan-tinkler-180-million-after-whitehaven-share-plunge/story-fndo4gtr-1226549159715

[97] Australian Stock Exchange Annual report 2012, P. 98, http://www.asxgroup.com.au/media/PDFs/ASX_Full-Year_Annual_Report(1).pdf

[98] Davis, M., (2010), Unions face fight on a new front, smh.com.au, 22nd September, http://www.smh.com.au/opinion/politics/unions-face-fight-on-a-new-front-20100922-15mex.html, Slaon, J., (2012), Membership fall crisis for unions, The Australian, 1st May, http://www.theaustralian.com.au/opinion/columnists/membership-fall-crisis-for-unions/story-fnbkvnk7-1226343081983

[99] Cowan, S., & Philipatros, A., (2012), Unions could make a difference for workers if they canned the sloganism, On Line Opinion, 25th June, http://www.onlineopinion.com.au/view.asp?article=13780

[100] Berger, P., L., & Luckman, T., (1966), The social construction of reality, New York, Doubleday.

[101] Edgar, P., (1979), The Politics of the Press, Melbourne, Sun Books.

[102] See: http://cimethics.blogspot.com/2012/03/who-really-controls-media_15.html

[103] Donovan, D., (2011), Concentrated media Ownership: A crisis for Democracy, Independentaustralia.net, 14th March, http://www.independentaustralia.net/2011/philosophy/democracy/concentrated-media-ownership-a-crisis-for-democracy/

[104] Democracy in Australia - Media concentration and media Laws, January 2012, http://www.australiancollaboration.com.au/pdf/Democracy/Media-laws.pdf

[105] Media reform - key concepts relating to media ownership in 2006 amendments to the Broadcasting Services Act 1992, January 2010, Australian Communications and Media Authority, http://www.acma.gov.au/webwr/_assets/main/lib101061/acma_fact_sheet_key_concepts_media_reform.pdf

[106] Terton, B., F., (2004), The Man Who Rules the World, The Moderate Independent, Vol. 2, No. 4, http://www.moderateindependent.com/v2i4world.htm

[107] An inquiry into the culture, practices and ethics of the press: report (Leveson), 29th November 2012, http://www.official-documents.gov.uk/document/hc1213/hc07/0780/0780.asp

[108] Mangham, I.L.,& Overington, M., A., (1987), Organizations as theater: a social psychology of dramatic appearances, New York, Wiley, P. 49.

[109] Bolman, L., G., & Deal, T., E., (1997), Reframing Organizations: artistry, Choice, and leadership, 2nd Edition, San Francisco, Jossey-Bass, P. 237.

[110] David Marr and Diane Wilkinson show Howard's shameless tactics, the complete lack of independence in the Australian Public Service, and the contemptible weakness of military officers who refused to speak up with 'frank and fearless' advice even when they knew the government was lying. The book also demonstrates is the terrifying gap between daily media reports and the reality of what goes on. Marr, D., & Wilkinson, M., (2003), Dark Victory, Crows Nest, Allen & Unwin.

[111] Marr, D., (2006), Truth overboard - the story that won't go away, smh.com.au, http://www.smh.com.au/news/national/truth-overboard--the-story-that-wont-go-away/2006/02/27/1141020023654.html?page=fullpage#contentSwap1

[112] Simms, M., (1982), A Liberal Nation, Sydney, Hales & Ironmonger.

[113] Hunter, M., (2012), Australia in "Asian Century" or is It Lost in Asia? China & Us: Australian Dilemma, The 4th Media, 4th November, http://www.4thmedia.org/2012/11/04/australia-in-the-asian-century-or-is-it-lost-in-asia-australia-maintains-a-delusion-of-reality-china-and-the-us-the-australian-dilemma/

[114] Horne, D., (1985), "Who Rules Australia", P. 186.

[115] Rout, M., (2013), Scrapping compulsory voting would be a boost for extremists, say Joyce, Turnbull, The Australian, 4th January, http://www.theaustralian.com.au/national-affairs/state-politics/scrapping-compulsory-voting-would-be-a-boost-for-extremists-says-barnaby-joyce/story-e6frgczx-1226547512089?sv=66f20bcb9d95e42b43123e4bf72078af

[116] Beggs Sunter, A., (2010), The Eureka Stockade and the Australian republic, independentaustralia.net, 24th November, http://www.independentaustralia.net/2010/australian-identity/republic/the-eureka-stockade-and-the-australian-republic/

[117] Bate, W., (1978), Lucky City: The First generation of Ballarat 1851-1901, Melbourne, Melbourne University Press.

[118] JSH, (1938), Ballarat Revisited: Some Golden Jubilee Recollections, The Worker, Tuesday 10th march, P. 14. {National Library of Australia}

[119] Diamond, J., (2005), Collapse: How societies choose to fail or survive, London, Penguin, P. 390.

[120] Diamond, J., (2005), "Collapse", P. 394.

[121] Diamond, J., (2005), "Collapse", P. 392.

[122] Diamond, J., (2005), "Collapse", P. 393.

[123] Hunter, M., (2012), Hillary to Julia "You take India and I'II take Pakistan", while an ex-Aussie PM says "Enough is enough" with the US", In2eastafrica, 14th November, http://in2eastafrica.net/hillary-to-julia-you-take-india-and-ill-take-pakistan-while-an-ex-aussie-pm-says-enough-is-enough-with-the-us/

[124] Horne, D., (1985), "Who Rules Australia", P. 192.

[125] Stewart, C., (2012), Drones, lives and liberties, The Australian, 4th March, http://www.theaustralian.com.au/news/features/drones-lives-and-liberties/story-e6frg6z6-1226285527326

[126] Mickelburough, P., & Buttler, M., (2009), How Steve Bracks saved a suicide jumper on West Gate bridge, Herald Sun, 7th March, http://www.heraldsun.com.au/news/bracks-a-west-gate-hero/story-e6frf7jo-1111119058694, Barry, P., (2010), The Biggest Loser: Harry Kakavas and Problem gamblers, The Monthly, February, http://www.themonthly.com.au/monthly-essays-paul-barry-biggest-loser-harry-kakavas-and-problem-gamblers-2249.

[127] Murphy, P., (2002), licensed brothels call for blitz on illegal sex shops, theage.com.au, 3rd June, http://www.theage.com.au/articles/2002/06/02/1022982650259.html

[128] Hunter, M., (2012), Australia "do as I say, Not as I do" - The Ongoing Reserve bank of Australia Bribery Scandal, The 4th media, 7th November, http://www.4thmedia.org/2012/11/07/australia-do-as-i-say-not-as-i-do-the-ongoing-rba-bribery-scandal/

[129] Rodgers, E., (2009), Senior Liberal desert Turnbull, ABCNEWS, 26th November, http://www.abc.net.au/news/2009-11-26/senior-liberals-desert-turnbull/1158164

[130] Diamond, J., (2005), "Collapse", P. 383.

[131] Horne, D., (1964), The Lucky Country, Melbourne, Penguin Books.

[132] Horne, D., (1985), "Who rules Australia?", P. 195.


11.01.2013


 


ESI newsletter 1/2013
January 8, 2013

 

Winter in Kyiv

Winter in Kyiv

The ESI team would like to wish all our readers the very best for 2013

Dear friends of ESI,

2013 will be a big year for those that stand for visa free travel in Europe. Decisions will be made which will affect millions of Europeans directly.

The first of these is between the government of Turkey and the EU, taking place (hopefully) within the next few days: scheduling the official hand-over of a visa liberalisation roadmap by the European Commission to Turkey, along with the signing of an EU - Turkey readmission agreement (see below).

There will be continued debates about visa liberalisation for both Kosovo and the EU's Eastern Partners. While Kosovo's prospects look grim – among senior policy makers in Brussels, ESI does not find anybody who expects any breakthrough soon due to fears of asylum seekers and concern about the situation of Roma in Kosovo – those of Moldova are brighter.


ESI's first report of 2013, published on 1 January this year, addresses "How to save visa liberalisation" in the Balkans (see below). The Economist has featured our report in its current edition. Click here to read it.

 

The Balkans: Saving visa free travel

2012 has been the year with the highest number of asylum applications by Western Balkan citizens in the EU since the Schengen visa requirement was lifted for their countries. In Germany, Serbian citizens were the largest group of asylum seekers in 2012, before Afghans and Syrians.

Calls to re-impose the visa requirement have become both louder and more frequent. Yet this would be unfair towards hundreds of thousands of Western Balkan citizens who use visa-free travel simply to travel. It would also undermine EU credibility in the Balkans.

In a new ESI report – "Saving visa-free travel. Visa, Asylum and the EU roadmap policy" – which is part of our ongoing work on South Eastern Europe supported by ERSTE Stiftung, we propose an alternative solution. More than 80 percent of all Western Balkan asylum claims are submitted in just four EU member states: Germany, Sweden, Belgium and Luxembourg. Claims were made in these states and not in others because their respective procedures lasted between 3 and 8 months during which asylum seekers are provided with benefits. At the same time, hardly any of these Western Balkan claimants qualify for asylum.

Austria, which has short procedures (1-3 weeks) for Balkan asylum seekers, saw a decrease in numbers of applications since visa liberalization was introduced in 2009. Switzerland recently introduced a 48-hour procedure for asylum seekers from the Western Balkans. It saw a reduction in monthly applications from 780 in August to 95 in November 2012. The reform has streamlined the application process without jeopardizing its ability to identify legitimate asylum seekers.

Instead of going back on visa liberalization, we propose that all EU members have short procedures for dealing with applicants from European countries that meet a series of human rights conditions and are therefore "safe countries of origin". At the same time, the EU should also officially declare them safe countries and stipulate time limits and procedural safeguards for dealing with claims of their citizens.

This would preserve a very successful EU foreign policy tool. It would give reason to Moldova, Kosovo, Turkey, Ukraine and others to carry out further reforms. It would also make explicit the link between future visa-free travel and improving the human rights situation in each of these countries.

 

Turkey: The Roadmap and beyond

The dream of easy travel
The dream of easy travel
 

Serbia was given a visa liberalisation roadmap in May 2008. It received visa-free travel in December 2009. It implemented major reforms during the visa liberalisation process, improving the security of its passports, strengthening border controls and scaling up efforts to fight illegal migration. These reforms continue to contribute to the EU's security.

The question is now: will the same happen in the case of Turkey?

In December, the European Commission showed the final version of the Turkey roadmap to Ankara. The very fact that it is called a "roadmap" is significant – the Western Balkan states all had "roadmaps" and have already received visa-free travel. The same criteria to assess progress should be applied to Turkey, which can expect to see the visa requirement lifted once it meets all the conditions.

The Western Balkan countries needed two to three years. If Turkey implements the required reforms, it need not take longer.

Getting the roadmap will be a real success for Turkish diplomacy. The moment it is officially presented there is no need for any voting in the Council until the European Commission presents a legislative proposal to abolish the visa requirements for Turks. Even then, no single EU member state will have a veto. This proposal will need 229 out of 309 votes in the Council in order to pass.

ESI will continue to follow this process with the support of Stiftung Mercator. For EU-Turkey relations this should become one of the most dynamic areas for real progress in 2013. Last November, we met with Giuliano Amato (the former Italian Prime Minister), Otto Schily (the former German Interior Minister), Anna Maria Cancellieri (the Italian Interior Minister), and former Home Affairs Commissioner Franco Frattini in Rome. We discussed confidence-building steps that both EU member states and Turkey can take to overcome the lack of trust that has built up during a difficult accession process.

 

ESI Croatia and Moldova documentary films online - watch for free

Belgrade film screening Berlin film screening

Belgrade film screening – Berlin film screening

In the last months of 2012 there have been a lot of screenings of the latest ESI documentary films, part of the award-winning Return to Europe film series supported by ERSTE Stiftung in Vienna: in London, Berlin, Vienna, Belgrade, Istanbul, Graz, and Pristina.

Now you can also watch both films (in German or English) online for free:

Twilight of heroes – Croatia, Europe and the International Tribunal

Moldova – Lost in transition?

ESI in January: London – Budapest – Kyiv

The Future of election monitoring ESI capacity building for Crimea

The Future of election monitoring – ESI capacity building for Crimea
 

In 2012 ESI immersed itself in a lot of work on Azerbaijan. This continues to be covered throughout the international press.

This week ESI will present its new research on Azerbaijan and the Council of Europe in London at Chatham House.

The following week, ESI is organizing a closed policy seminar with the Central European University in Budapest on the future of election monitoring in light of recent difficulties and tensions in countries. More information is available here.

On 24 January ESI analysts are in Kyiv for a capacity building seminar for analysts and think tanks in Ukraine, with the goal of helping to establish a new think tank working on Crimea.

Best regards,

Gerald Knaus

Gerald Knaus

Gerald Knaus

Further reading

Feedback

As always, we are looking forward to your feedback. However, please do not reply directly to this message but send your comments to feedback@esiweb.org.

Contact

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© European Stability Initiative (ESI)




PUBLICATIONS:


      Are "B" Schools in Developing Countries infatuated with 'Western' Management ideas? - Murray Hunter

      Europe: Something Old, Something New, Something Borrowed, and Something Blue - Murray Hunter

      The Stages of Economic Development from an Opportunity Perspective: Rostow Extended - Murray Hunter

     
Who Really Rules Australia?: A tragic tale of the Australian People - Murray Hunter

      Europe: Something Old, Something New, Something Borrowed, and Something Blue - Murray Hunter

      Back to the future: Australia's "Pacific Solution" reprise - Murray Hunter

      Hillary to Julia "You take India and I'll take Pakistan", while an ex-Aussie PM says "Enough is enough with the US" - Murray Hunter

     
Entrepreneurship and economic growth? South-East Asian governments are developing policy on the misconception that entrepreneurship creates economic growth. - Murray Hunter

      FOCUSING ON MENACING MIDDLE EAST GEOPOLITICAL ENVIRONMENTS, ENDANGERING SECURITY AND STABILITY OF WESTERN BALKAN* - Brig Gen (Rtd) Dr. Muhammad Aslam Khan, Pakistan

     
Australia "Do as I say, not as I do" - The ongoing RBA bribery scandal - Murray Hunter

      Australia in the "Asian Century" or is it Lost in Asia? - Murray Hunter

      Surprise, surprise: An Islam economy can be innovative - Murray Hunter

      Do Asian Management Paradigms Exist? A look at four theoretical frames - Murray Hunter

      What China wants in Asia: 1975 or 1908 ? – addendum - prof. dr. Anis Bajraktarević

      ASEAN Nations need indigenous innovation to transform their economies but are doing little about it. - Murray Hunter

      From Europe, to the US, Japan, and onto China: The evolution of the automobile - Murray Hunter

      Missed Opportunities for ASEAN if the ASEAN Economic Community (AEC) fails to start up in 2015 - Murray Hunter

      Lessons from the Invention of the airplane and the Beginning of the Aviation Era - Murray Hunter

      Elite educators idolize the “ high flying entrepreneurs” while deluded about the realities of entrepreneurship for the masses: - Murray Hunter

      The Arrival of Petroleum, Rockefeller, and the Lessons He taught Us - Murray Hunter - University Malaysia Perlis

      Ethics, Sustainability and the New Realities - Murray Hunter

      The Dominance of “Western” Management Theories in South-East Asian Business Schools: The occidental colonization of the mind. - Murray Hunter

      How feudalism hinders community transformation and economic evolution: Isn’t equal opportunity a basic human right? - Murray Hunter

      On Some of the Misconceptions about Entrepreneurship - Murray Hunter

      Knowledge, Understanding and the God Paradigm - Murray Hunter

      Do Confucian Principled Businesses Exist in Asia? - Murray Hunter

      Samsara and the Organization - Murray Hunter

      Integrating the philosophy of Tawhid – an Islamic approach to organization. - Murray Hunter

      What’s with all the hype – a look at aspirational marketing - Murray Hunter

      Does Intrapreneurship exist in Asia? - Murray Hunter

      One Man, Multiple Inventions: The lessons and legacies of Thomas Edison - Murray Hunter

     People tend to start businesses for the wrong reasons - Murray Hunter

    
How emotions influence, how we see the world? - Murray Hunter

     How we create new ideas - Murray Hunter

     Where do entrepreneurial opportunities come from? - Murray Hunter

     The five types of thinking we use - Murray Hunter

     Evaluating Entrepreneurial Opportunities: What’s wrong with SWOT? - Murray Hunter

     How motivation really works - Murray Hunter

     The Evolution of Business Strategy - Murray Hunter

     Not all opportunities are the same: A look at the four types of entrepreneurial opportunity - Murray Hunter

     Do we have a creative intelligence? - Murray Hunter

     Imagination may be more important than knowledge: The eight types of imagination we use - Murray Hunter

    
The environment as a multi-dimensional system: Taking off your rose coloured glasses - Murray Hunter

     Generational Attitudes and Behaviour - Murray Hunter

     Groupthink may still be a hazard to your organization - Murray Hunter

  
  Perpetual Self conflict: Self awareness as a key to our ethical drive, personal mastery, and perception of entrepreneurial opportunities - Murray Hunter

     The Continuum of Psychotic Organisational Typologies - Murray Hunter

    
There is no such person as an entrepreneur, just a person who acts entrepreneurially - Murray Hunter

     Go Home, Occupy Movement!!-(The McFB– Was Ist Das?) - prof. dr. Anis Bajrektarevic

     Diplomatie préventive - Aucun siècle Asiatique sans l’institution pan-Asiatique - prof. dr. Anis Bajrektarevic

    
Democide Mass-Murder and the New World Order - Paul Adams


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Maasmechelen Village




Maasmechelen Village



     FOCUSING ON MENACING MIDDLE EAST GEOPOLITICAL ENVIRONMENTS, ENDANGERING SECURITY AND STABILITY OF WESTERN BALKAN* - Brig Gen (Rtd) Dr. Muhammad Aslam Khan, Pakistan









The ESI team would like to wish all our readers the very best for 2013