21st April 2005
has become diplomatically active.
Least threatening is the trade deal that is being worked out
with Australia. China wants a recognized trade status that will
protect it from charges of "dumping". Australia is a mineral
resources nation, China is a labour resources nation. These two
are a natural fit to produce goods for the world.
Slightly more worrying is the internal talk of unfixing the US-Renminbi
exchange rate in apparent compliance with the US congress's concern
about the trade imbalance. The fixed rate benefits both the US
and China, as everybody but Congress and the unemployed are aware.
Most worrying is the attack on Japan. So far this has mostly been
attacks on Japanese property within China. There seem to be four
My own suspicion that the first three are a "moral smokescreen"
for applying pressure to obtain title to the suspected major
hydrocarbons deposit. The suspected
hydrocarbons deposit is closest to an uninhabited island group (Senkaku
Islands) in the East China Sea. According to
international law, the determination of ownership is by the median line
between national territory. The Chinese have adopted the
Australian approach (see Timor) and pointed out that the proposed
mining rights are on "their" continental shelf, and that there is an
oceanic trench separating the islands from the islands claimed by Japan.
- Japan's stance on Taiwan.
- Japan's History Textbooks.
- Japan's PM Junichiro Koizumi's visit to Yasakuni Shrine war
- Disputed East China Sea Hydrocarbons mineral mining rights.
South Korea, China and Taiwan also claim the Senkaku Islands.
There has been recent civic unrest in South Korea concerning the
issue. It is possible that China does not strongly contest
ownership of the Senkaku Islands because Taiwan
would, in that instance, probably be the reasonable custodian.
It is possible that Taiwan does not promote the issue because of recent
Japanese statement in support of the USA concerning Taiwan's
I believe that the Chinese are bluffing from a weak hand. The
magnitude of the kitty can be estimated from the fact that they have
staked as much as they have.
There are, according to mainstream economist thought, three
types of economy. These three are:
To these three I would add a fourth:
- Primary, e.g. resources, such as mineral, agricultural,
- Secondary, such as manufacturing (which is really just
another resource, called
"labour", or recently, automated technology.)
- Tertiary, also called services, which (supposedly) includes
everything else that
makes money. I would prefer to limit "services" to those
industries that facilitate the first two types of economy.
Australia, Canada, the countries of Asia and Europe that comprised
"the old Soviet Union", South America and Africa are primarily mineral
- Quaternary, or lifestyle exporters, whose
intangible things that people aspire to possess,
including political environment, moral attitudes, information,
fashion concepts, including preventative health care and all other
things that interest & motivate people once their basic needs are
China, India and most of South Asia are primarily labour resource
nations, although India has made a start as a services economy.
The US is nominally a services nation, although by my
definition it is t "lifestyle" economy. It still has fast fading
holdovers from when it was a unionized manufacturing nation, (such as
GM and FORD.) Liberal sites (basically Democrats or in Australia,
the Labour Party) are still attempting to restore that era by railing
against "cheap overseas labour" taking away "our" jobs. (e.g. Working Wages
Slide, While Business Lines Its Pockets
by Lee Sustar in Counterpunch). The USA will continue as the most
powerful country in the world precisely because it resists those
interest groups that attempt to hold onto outmoded protectionist social
policies that have been known since about the time of Ricardo to enrich
the wealthy at the expense of the worker.
Japan is a services resource nation, and is verging on becoming a
lifestyle resources nation.
Old Europe is a bastardized mix of "labour" and "services" and
"lifestyle". Overgovernment provides a "protected"
environment that allows overpriced labour to increase the social cost
of luxury technology (cars, computers). This results in stifling
of the services sector, and severely inhibits the "lifestyle" sector.
In the recent months Indonesian authorities have made two
"drug busts" involving Australians. The first was Ms Corby, who
was found to have over 4Kg of marijuana in her bags when she arrived at
Bali. If she is found guilty her penalty can be as severe as the
firing squad. The other bust was a total of nine couriers and
support persons of varying ethnicity allegedly carrying a few Kg of
Heroin from Bali to Australia. The penalty for possession of
those quantities of Heroin is the firing squad.
Of course the penalties for drugs in some south Asian
countries are somewhat extreme by Australian or European or even US
standards. Australia and (most of?) Europe do not have the death
penalty on the books for any crime whatsoever. In California
marijuana has reportedly been legalized for chronic pain. In
Australia's capital Canberra small quantities of marijuana can be grown
for home use. In Amsterdam marijuana and hashish are legally
purchasable from various coffee shops, the price in 2004 was Euros
In raising children, I have always been uncertain as to what tone
to adopt as I meet the various moral dilemmas with which every parent
is confronted. For instance the catholics teach that
contraception is wrong, even when it's purpose is prophylactic.
My own view differs, but not with such certainty that I would teach it
as a moral law to my children. Other things about which I have no
certainty are abortion and drugs. In consequence, in raising
children, my approach was to exercise as little authority as was
possible commensurate with mutual survival. For instance I
insisted that they not to step onto a road without an adult.
However I did not insist on fixed bed-times, and controlled their diet
mainly by not providing many sugar based foods. I believe that
people should be encouraged from as early an age as possible to make
their own decisions, and learn the consequences.
Illegal drugs are something that I would rather were not illegal.
Sure, the misuse of opiates is dangerous, but so too is alcohol,
smoking, starvation, obesity, too little exercise, too much aspirin,
the list seems endless. I just do not think that our legislators
should have interfered. In fact I believe that our legislators
interfere far too much in our lives.
However whether the law is justified does not excuse those who break
laws regarding the supply of opiates. Having made those drugs
illegal, a considerable amount of further evil is generated by the high
cost of supply.
For instance the opium derivative codeine (in tablet form, combined
with Aspirin or Phenacetin) is available without prescription from just
about any pharmacy in Australia at a cost of around
AU$15.00/gr. Therefore Heroin and other opium based drugs
could be commercially produced at similar cost. From newspapers
it appears that the street value of 100% pure Heroin in Australia would
AU$1,000/gr. (i.e. $300/gr for 70% cut)
Those who have become addicted to Heroin presumably pay the rapidly
escalating cost of use from their wages. As the cost rises, they
will eventually need to commit
felonies to pay for further supplies. On the other hand, if drugs
were not illegal,
then an addicted user could continue to obtain sufficient drugs from
the local pharmacy without committing
felonies, and would presumably eventually either kill themselves (which
is a low
probability when the quality of supply is assured) or cure themselves,
or just continue and manage it's use.
However, as things stand, those who venture to supply those goods must
accept the penalties. It would be desirable if Indonesia reduced
I find it curious, when the Indonesian penalties are so high, that
Heroin should be available so cheaply. Apparently Heroin is also
cheap in Singapore and Malaysia and Thailand. I understand that
the death penalty applies to possession of large quantities of drugs in
Such high penalties are an open invitation to police corruption.
I understand that the "godfather" of the nine Australians offered a
bribe of AU$1,000,000, which was refused. One cannot help but
wonder whether the bribe might not have been accepted had the
Australian police not been involved.
Ziggy Switskowski is due to finish at Telstra soon. He
is apparently proud of the fact that Telstra has about 8,000,000 mobile
phone customers. During his tenure he has lost no opportunity to
compete strongly with any operator who entered telephony, and also
attempted (apparently without adequate
research) to enter into partnership with shady characters. During
all this time he followed standard "good" business practice (as
recommended by MBA courses he attended, no doubt) of not cutting his
own throat by upgrading or expanding the cheaper and more efficient
copper (PSTN) network. In the meantime he has been milking
the PSTN by increasing margins and cutting maintenance. The
impact of VOIP in the next few years will be much more severe because
of his lax approach to copper.
My suggestion in these pages of some years past was to give
the copper to local government, and let councils manage the PSTN on
behalf of ratepayers. (After all, the owners of telephones have
a pretty steep "installation charge" so they should, in theory, own the
shouldn't they?) The councils could then ask for "PSTN
operation bids", somewhat like garbage collection. Hopefully the
rest of Telstra could be given to the existing 49% of public
shareholders. Of course Johnny Howard would miss out on the
several (20? 30?) billion dollars he had anticipated, but then it
wasn't his anyhow, and besides, it is becoming increasingly evident
that he will be able to sell the other half of Telstra anyhow, (except
for less than T1 & T2) the way the market is moving. (and
that would be EXTREMELY bad PR for the mums & dads.) The
Country Party (sorry, the "National Party") will get the blame if
Telstra doesn't get sold.