7th &27th June 2005.


My friend David from Paris has been reading some of my diary entries on the death of Capitalism, and wrote:

I’m willing still to debate your assertion of the demise of Capitalism because I can see it is still the very large generating force of world production and is not running out of steam.  .... the economic system under which individuals employ capital (raw materials and tools used in the production of consumer goods) and employees to produce wealth. Corporate America it has become a monstrous mechanism, in China it has become a juggernaut in the form of a dragon. It is a non sequitur to say “economy of scale produced capitalism” and now that “economy of scale is vanishing” it is the death of capitalism.

David's letter is a warning to me that I must define my terms.  Capitalism is the employment of CAPITAL in the production of goods.  His declaration that "it is a non sequitur to say "economy of scale produced capitalism" is the crux of what I think is his misapprehension of my argument.  The fact is, only those entrepreneurs who could afford the enormous expense (i.e. had the capital) to set up a production line (think cars, liberty ships, canned tuna, cotton clothing) could produce goods at a competitive price in the nineteenth and twentieth century.  I believe that David has fallen into the error of thinking that "lassaiz faire economy" means the same as "capitalism economy"

Quite simply, the investment of large amounts of capital was, until recently, a requirement to obtain "economy of scale".

Now the economy of scale is disappearing.  The requirement for capital as an ingredient of a lassaiz faire economy is diminishing rapidly.  From that the results predicted in "death of capitalism" follow.

- EURO -

In the last few weeks the French people (followed by the Dutch) have given a sharp lesson to their President (who is pretending that they weren't actually revolting against him, but against European union.)  My two cents advice to the French people is, your solution in the 18th Century was the correct response.  Politicians are about as bad as the nobility,except they base their elitism on political manipulation rather than birth.

Perhaps (on second thoughts) the guillotine is a bit drastic.  Maybe the French can take control of the political process (much like the Swiss & the Californians and the Venezuelans already have) by enacting a constitutional amendment that permits the people to dismiss the government.  Not in three or four years when an election is due, but NOW, in the next few weeks.

Come to think of it, something like that is what Australia's opposition (Kim Beazley's Labour Party) should offer as a constitutional amendment to set the cat among the electoral pigeons.


Lebanon, Iraq and Palestine are in the throes of establishing liberal government.  True, there are hiccups.  In Iraq the different parties refused to form a government until their preconditions are satisfied.  In Israel the incipient Palestinian police force is being weaned from committing terrorist acts, and taught instead that it must arrest terrorists.  In Lebanon the Syrians are learning that their overlordship was resented.

The opponents (loosely grouped as Al Qaida or Jemah Islamia) are reduced to complaining that somebody in Gautanamo is peeing on the Qran, while Islamic fundamentalists meanwhile (lets get things in perspective here!) bomb historic Islamic shrines and murder women and babies.  Are those guys for real?

On the other hand, Australian Engineer Douglas Wood had the great good fortune to be sprung after being kidnapped in Iraq.  The problem of his kidnapping is part of the mosaic which includes the difficulty that the USA is having in recruiting for the military.  Basically, anybody who has a skill and is prepared to work in Iraq can command a high income.  This includes professional military people.  So any US soldiers see civilians getting several times their money for less risk, how would you feel?

Not that I ever felt much sympathy for Douglas Wood.  My thinking was, He was in Iraq to make lots of money, and the reason that there was lots of money to be made was because the terrorist risks were high.  So he lost the gamble. So what?  That is the risk he took for the money he made.


The Chinese have problems.  Their interference in their own birthrate has produced a population profile more extreme than that suffered by Europe and Japan, and to a lesser extent Australia.  Consequently they will have problems dealing with their aged "baby boom" population.  They are also having some difficulty coming to terms with their new superpower status.  Most of the world wingers about the USA, which is not to say that it would like to see the USA supplanted by the Chinese.


The Australian government has over the past few years sold nearly half of it's privately owned telephone corporation (Telstra) to the Australian people.  The trouble is, they are probably not going to be able to sell the remaining 51% at anything near the price that the last investors paid.  That seems to me to be politically unacceptable.  So what other options exist?

The reason for the catastrophic drop is thought to be the management skills (lack) of the last manager, Ziggy Switskowski, MBA.  Consequently, the government has purchased a new broom, called Trujillo.  Trujillo apparently specializes in "rationalization".  I still believe that the final solution will be to split Telstra, giving the last mile (local loop) of copper to local government.  (The federal government do not actually want to give the local loop away, but unfortunately, the federal government does not have the constitutional power to enforce purchase by local government).

Another option would be to suddenly discover that it was in the public interest for the local loop to be treated as "infrastructure" and bundle it all up and sell it to Macquarie bank like Sydney airport.


The Senate changes over at the end of June, and with it go the best and the worst of Australia's politicians.  Senator Harradine refused to support the GST, Meg Lees did support it even though she had promised not to.  If there is a private hell for politicians, let us hope that is where Lees is sent.


Some time ago, Queensland's chief magistrate Di Fingleton was found guilty of blackmailing and bullying magistrates under her control, and was jailed for six months.  Australia's high court has reversed that sentence, on the grounds that administrative decisions were not subject to review.

Well I don't know what the High Court is on about.  She was jailed for writing a threatening letter to one of her subordinate magistrates because he gave evidence that she did not like.  I would want to see such a magistrate jailed.  I think that she was behaving most reprehensibly.