Scottish-born economist - Angus Deaton - recently published his new book - An Immigrant Economist…
I am in a quandary … as usual! I thought along the same lines when Australia was stricken with drought recently and there was a national urgency to provide both government assistance and support from the private sector (national appeals and such). At present the world’s media is focused on the events following the natural disaster in the Indian Ocean. Not without some justification given the extent of the calamity. Nation’s (some) are rushing to provide aid and our Prime Minister John Howard quickly committed $35 million in aid and has said more funds will be made available. He is quoted on ABC news today as saying “The amount will be added to significantly in the time ahead … We have a moral obligation on the basis of pure humanity to help and we will help.” Say that again John: “We have a moral obligation on the basis of pure humanity to help and we will help.” But try this logic out: the citizens who have been ravaged by the earthquake and subsequent tsunamis could have taken steps to avoid their exposure. Why didn’t they educate themselves enough to ensure they knew about the dangers and why didn’t they build better houses and why, why, why?
Similar logic can be applied to the drought case.
See this Op Ed I wrote on June 13, 2003 – A drought of jobs for more on this theme.
In summary, the media always hammers home distressing stories of the drought’s impact and we are very much aware of the stress the drought imposes on farming families and their regional and rural communities. We are aware of the damage to export income and of the fragile, fractured nature of rural life.
But why not construct the problem differently. There is evidence that sustainable agricultural practices can cultivate drought-resistant farms, even in areas where conventional farms have suffered badly.
Should we therefore focus on the deficiencies of individual farmers? Should we highlight their lack of skill or poor motivation or reluctance to plan for bad seasons?
Well the common point in both these tragedies is that it might have helped if the people were encouraged or supported to adopt better housing planning and certainly poor farming practices deepen the impact of the drought – but the the root cause of both problems is clear – they are both the response of ‘systemic causes’ – geological movements of subterranean plates and a lack of rain are both events that are beyond the control of the individuals impacted.
It is that fact that justifies such a rapid deployment of aid and support from communities and governments around the globe, although it seems in the current disaster, some very wealthy countries have not come to the party.
But we are not consistent in the way we construct events. Australia (and Australians) lose billions per annum in lost income by failing to ensure there is full employment of our willing labour resources.
On top of those losses are the enormous social costs that arise from unemployment in the form of increased family breakdown and crime, and poor physical and mental health. But when was the last time you read about the costs of unemployment or the plight of the unemployed?
Why doesn’t our prime minister express moral outrage at these losses and use the power of the budget to ensure there are enough job opportunies for all? Easy. We have deliberately allowed the neo-liberals to construct the problem of unemployment in an erroneous way.
We have been repeatedly told that unemployment is the fault of the unemployed. The solution then focuses on making the unemployed employable rather than on ensuring there are sufficient jobs. We arraign our most disadvantaged citizens with accusations that they are lazy and unskilled claiming that they could get work if they tried harder or changed their attitude.
Meanwhile, we blithely ignore the failure of macroeconomic policy to ensure there are enough jobs available despite the evidence for unemployment as a ‘system failure’ being as compelling as meteorological data showing a lack of rain and the seismologists recording the earthquake intensity.
Since 1975 there has been, on average, 11 unemployed for every job vacancy. At present time, the ratio of unemployed persons to job vacancies is around 7:1.
While governments of all persuasions have spent billions on labour market programs and training schemes, to encourage more assiduous and effective search behaviour by the unemployed, the employment outcomes from these programs have been poor. Simply put – you can’t search for jobs that aren’t there!
So when it comes to Government being moral and looking out for humanity they could start by fixing the problem of unemployment. In fact, this sort of system failure is entirely within our own discretion to reverse. The government has the fiscal power to generate full employment.
They should immediately announce a Job Guarantee and take Argentina’s lead. It would be better for government to provide the unemployed with opportunities to contribute to productive output, to contribute to their communities, and to acquire independence than to sign welfare cheques, police activity tests, and recycle those without work through a succession of programs and placements.
We don’t blame the poor seaside folk in the Indian Ocean devastated by the tsunamis. Nor should we blame the unemployed. Not enough jobs means not enough jobs. In both cases, blaming the individual is as unfair as it is unproductive.
And while on the topic of selectively mean-sprited Australia government policy, in the UK Guardian article (December 28, 2004) – The road to recovery – written by John Vidal, we trace the attempts by poverty stricken East Timor to rebuild after 25 years of repression and persecution and culpable abandonment by Australia.
Remember that the Whitlam government and subsequent federal regimes were complicit in the Indonesian invasion and suppression of these people.
We learn that the:
… harsh Indonesian rule … saw up to 200,000 people killed in 25 years, systematic torture, large-scale relocations of people and rampant human rights abuses. Between 1975 and 1999, many of its present population of roughly 900,000 were displaced, hid in the forests or fled the country. Hundreds of villages and schools were burned down, and tens of thousands of young women were forcibly sterilised under the guise of ‘family planning’. Full independence was gained only in 2002.
Desperately poor, UN data shows that “one in eight of the children he will grow up with will have moderate or severe physical stunting because of a poor diet, and half will have chronic malnutrition.”
The East Timorese are, however, enthusastically embracing the rebuilding program despite the lack of support from the international community. Vidal reports that “Since the Indonesian withdrawal, more than $3bn in aid has gone to East Timor … but hardly any of that has benefited the poor.”
Quoting a local official, Vidal says:
Billions have been spent but very little has gone to help people. The vast majority has gone on international peacekeeping forces and the UN police. Highly paid foreign consultants, wages for international staff, foreign contractors and supplies procured outside the country account for most of the rest. The local people and economy has hardly benefited.c
Aid is now drying up anyway, and the international organisations are trying to develop intensive farming which undermines the sustainability of small scale farming.
This is a familiar pattern that has been imposed on African nations by the permicious IMF/World Bank Structural Assistance Programs.
A local is reported as saying that “We may be exchanging one form of colonial dependency for another. We used to have only one enemy, the Indonesians. Now we have to take on big institutions and countries. Indonesia was able to compete with the big companies, but I fear that we cannot. We are open to be dominated by outsiders.”
Vidal says that the “only hope the country has of becoming genuinely independent, it is widely agreed, is to develop the vast oil and gas deposits known to exist in the Timor Gap, the sea area between East Timor and Australia. In May 2002 the governments of both countries signed a treaty that gives East Timor 90% of the reserves in one of the Gap’s largest petroleum development areas.
But “these reserves are only worth about $50m a year to East Timor.”
Vidal notes that:
… still in dispute is Greater Sunrise, one of the Timor Sea’s largest known gas reserves, estimated to be worth at least $36bn. Eighty per cent of this gas reserve comes under Australian jurisdiction, according to a historic agreement between Australia and Indonesia, but East Timor has a powerful legal claim on the field which, conservatively, is worth at least $12bn to the country over the next 20 years. Australia is already earning $1m a day from the field and has offered to buy Timor out for a one-off payment of $4bn. It has led to a furious row and to Australia being accused of bullying its minute neighbour.
East Timor’s Prime Minister says:
Australia is acting unfairly and unlawfully. They think they can do anything they like. Their arguments are legally baseless. We are very dependent on oil. They are very powerful and we are struggling for independence They come here to tell us that we should have a country with a rule of law, but there is no law for them.
So John: “We have a moral obligation on the basis of pure humanity to help … ”
Not just when we want to grandstand on the world stage but also to redress the damage we, in part, caused in East Timor and always to our own unemployed citizens.
That is enough for today!
(c) Copyright 2004 William Mitchell. All Rights Reserved.