Autarchy v. Free Trade

 Blog. No. 67.

au·tar·ky or au·tar·chy (ô′tär′kē)

“A policy of national self-sufficiency and non-reliance on imports or economic aid.”

self-sufficiency

Anyone who hasn’t read my previous blogs on the subjects dealt with below, might form the view that I am making multiple unjustifiable assertions. However, my blogs are part of an on-going continuum of personal discovery. The references to the other sources contained in previous blogs should suffice to largely justify claims made in this.

With the ratification of the TPPA, a treaty designed and bought by multi-national corporates to regulate international trade in the best interests of multi-national corporates, New Zealand will have taken one more step in abandoning control over its own destiny.

The foisting of this unwelcome treaty onto the New Zealand public is entirely in conformity with the neo-liberal dogma espoused by the country’s National government. This would have it that all trades are good trades: that government’s role is to lay out the red-carpet and avoid getting in the way of profit-making – no matter, who it is that is making the profit, at whose expense, how it is being made, or where the profits end up.

One has only to look at the social and environmental consequences of runaway corporatism and its successful establishment of neo-liberal economic theory in governments around the globe, to realise that human society is facing a crisis of enormous proportions.

Allegedly, the globe’s leading two thousand corporations, account for in excess of 50% of global GDP – and less than 2% of global employment. These corporations, as they manoeuvre themselves from under the jurisdiction of any single democratically elected government, are increasingly able to extract their profits, while remaining independent of any sense of social responsibility for the communities they feed off.

Hillary Clinton has now raised $3 billion+ for her election campaign. The vast majority of this sum will have been ‘invested’ by corporations. If she makes it to President, Hillary will be the world’s most powerful political leader and yet another political puppet on corporate strings. The scale of this problem, as to how multi-national corporations should conduct themselves and be made answerable to the communities they feed off, dwarfs and subsumes most other issues facing humanity.

hillary-clinton-2016-president-election

The enormous lobby power of these titans, which obliges politicians to act contrary to the true interests of their communities, allows the wastes generated by their activities to run largely unchecked, as they destroy the climate and the environment. For thirty or more years now, polluting corporates, despite being aware of the consequences, have worked effectively to hold off any meaningful governmental actions designed to actually limit the greenhouse gases they are permitted to emit. Rapid climate change, unsustainable resource extraction, environmental destruction, reckless experimentation and interference in the food chain, amount to but one direction in which this unbridled power to pursue corporate self-interest is placing humanity in hazard.

The Paris conference represented only a tentative step in the right direction. In itself, with no binding commitments placed on nations, it does nothing on a scale sufficient to solve the problem. Superficially, it was a diplomatic victory, in that it could be interpreted as setting some sort of positive precedent for harmonising international decision making. It was at the same time, a major political defeat for humanity. The true victors were the corporations and the politicians in their thrall. Backed by the full support of the media corporates, politicians can now lull their populations into a false and euphoric sense of relief, by pretending they are intent on doing something about the crisis, while in effect they have ensured sufficient wriggle-room to do nothing of any efficacy. No effective restraints were placed on the on-going corporate pillaging of the planet and the inheritance of our grandchildren. Only grass-roots pressure on politicians, greater than that exercised by corporate money, will ever reverse their triumph.

Climate change and its accompanying problems are not the only corporate-induced situation that threatens massive extinctions of species including our own. The diversion of ever greater proportions of societies’ wealth to the development of weapon systems (and to political ploys to ensure that market demand for them is maintained or increased) can be largely traced to the ‘defence’ industry corporates and their growing ability to buy collaboration with the military elites within political systems. As this power continues its seemingly unstoppable growth, the potential for nuclear war, accidental or otherwise, grows in lockstep.

Compared to the other factors mentioned above, the next item might seem almost trivial – but it is the one most likely to be the first to seriously impact New Zealanders. The debt-based financial structures of the corporate world provide bonds that tie national politicians to neo-liberal dogmas. They thereby, ensure that, within nation states and internationally, the enormous divide between rich and poor continues to grow. The system, with its in-build, continuous expansion of printed money and indebtedness, becomes ever less-stable. Hugely economically destructive and conflict-inducing crises are increasing in frequency. This trend looks set to continue.

I emigrated to NZ in 1985 just as the Reagan/Thatcher neo-liberal dogma was taking root in western government ideologies and as David Lange’s government was making NZ’s final gesture of independence by opting out of the USA’s nuclear armed alliance, which was then, as it still is, intent on winning its tepid war with Russia. Many changes have occurred in New Zealand in the thirty years that have since passed. The population has grown by more than 30% and is now just under five million. On my arrival, the arable area of the province of Marlborough, in which I settled, was mainly devoted to sheep grazing, specialised seed growing, garlic and a wide diversity of orcharding. I recall there were also three or so wineries, the first vines having been planted by Montana in 1972.

In just thirty years, the orchards, the seeds, the garlic and the sheep have now been almost entirely supplanted by dairy cows and mono-culture grapes, which are processed by several hundred wineries. The land, which was once farmed by local owners, is now subject to multiple and absentee ownership, much of it from overseas and without any noticeable concern for community values. The local Marlborough Sounds, potentially a tourist Mecca, which teemed with fish when we arrived, are now under severe catch-limits in an attempt to preserve the remaining breeding stock. The scenic aspect above water and the water quality below, has been degraded by numerous and often, overseas owned aqua-farming ventures.

When we arrived in New Zealand you could drink out of nearly every river. Now, you would think twice before drinking from any river. Some you wouldn’t even swim in. Items such as this are common in the NZ media. Click: dairy pollution This situation is entirely caused by excessive dairy farming – adding nitrogen rich pollutants and lowering the level of the rivers through massive irrigation projects. (Put another way, from an off-the-cuff calculation, for every kilogram of human bio-mass defecating in New Zealand, there are approximately twenty-five kilos of bovine bio-mass spreading their waste across the land – and ultimately, into the rivers and coastal waters.)

polluted-riverAlongside changes in the environment there have also been noticeable changes in the population. Whereas almost every vehicle on the roads used to have a tow-bar fitted –now such vehicles are the exception rather than the rule. Practical, mechanically competent, sport-playing (rather than sport-watching) fit (not fat) with adult children living nearby, are all descriptions I would have given to NZ provincial society thirty years ago, which are no longer as applicable. Obviously, not all the changes are the consequences of decisions made within New Zealand. The rapid development of Informational Technology over the same period could not have been resisted and was bound to bring about massive social changes. Nevertheless, it is not microchips that are polluting the rivers. Much of what is happening is happening with the consent and the active encouragement of neo-liberal politicians.

What we are witnessing is a convergence of two sets of factors. On the one hand, we have increased risk associated with climate change, increasingly weaponised and unstable international confrontations and a highly volatile international financial system, which is now, so in debt and so incredibly complex that it has moved beyond the understanding of the economists responsible for its operations. On the other hand we have a society which is rapidly forgetting how to repair its own machinery, grow and cook its own food or sew its own clothes. All the above changes can be summarised as being characteristic of a society, which is no longer as self-reliant and robust as it once was and which is, therefore, increasingly exposed to, and vulnerable to, damage inflicted by external events.

economyIn my blog on my submission to the Defence White Paper (an abridged version of which was published last month in the New Zealand International Review) Click: Defence Submission I dealt with the potential for greatly decreasing New Zealand’s reliance on others for its military protection and for incidentally and simultaneously increasing the self-reliance of the population. Just as New Zealand should take practical force- configuration and social-preparedness measures to decrease the country’s vulnerability to the increasingly dangerous military situation, so too should it take economic measures to decrease its vulnerability to economic crises. We now need a government that is capable of leading the country into decisions of longer term economic security and no more than modest, sustainable prosperity, rather than towards betting the shop on  instant gratification in an attempt to maximise short-term accruals of wealth at the expense of future generations.

Here is a list of NZ exports versus imports. (As this is a PDF you may need to copy it and search for it on Google.) https://www.treasury.govt.nz/economy/overview/2012/20.htm This gives a good indication of the extent of the nation’s dependence on trade – exporting primary goods and importing manufactured goods. Dairy, meat and forestry between them account for almost 50% of the country’s exports. The government appears to have no economic strategy other than to devote more of the national effort to increasing these resource-hungry, environmentally damaging exports, in which NZ has to be a price-taker rather than a price-setter. Click: NZ primary export targets

One very significant import is carbon credits. Instead of producing these (in theory) pollution compensating credits by planting more forests in New Zealand, we import cut-price credits of dubious authenticity from Eastern Europe and elsewhere, while encouraging the conversion of our own forests into dairy farms, which pollute immensely, but which our government excludes from any carbon offset programme. Unbelievably, our Cabinet dreams of increasing primary production by a further 100% in the next decade and no doubt, increasing NZ’s greenhouse gas emissions accordingly. This policy increases New Zealand’s exposure to risk on many counts (see for example  https://khakispecs.com/?p=1507 ) It is based on a reckless confidence that no Black Swans will alight in New Zealand waters and the hope that the global economy will maintain its current debt-financed and growth-oriented course, without significant interruptions.

The neo-liberal theory is that each nation should concentrate on producing the tradeable goods at which it is able to offer the most competitive price. In the perfectly free global market-place, the money generated by such specialised trades should be used to import goods of which other nations are more efficient producers. In theory, it is a win-win all round.

A friend of mine, CEO of a highly innovative NZ company, recently lost a major contract with New Zealand Steel. The plan was to convert NZ’s steel production away from using greenhouse gas producing coal, to a carbon neutral charcoal derived from forestry waste. He lost it because NZ Steel, Click: NZ Steel which is the only plant in NZ with the facility to produce steel from iron ore, is owned by an Australian company, BHP. BHP is retrenching due to China now having an overcapacity for steel production and forcing down global prices. Soon, it could well be that all steel currently processed in New Zealand will have to be imported.

NZSteelMelterSilverCoats_Hero.ashxGive globalisation another few years, and access to everything that New Zealanders need with which to maintain their standard of life, other than their food and forestry products, will be dependent on two factors. The first, will be the continued international demand for NZ’s exported primary products – in the quantities and at the price required to offset the cost of its imports. The second, will be the continued smooth running of the international trading system, despite rapid climate change, armed conflicts and wild-card disruptions to the smooth-running of the precarious global financial structure.

In my previous blog I gave reasons to doubt the continued security of the nation’s export income from the point of view of its being able to meet and maintain market demand for the primary goods in which it has chosen to specialise. My other blogs give more than enough reasons not to have confidence in the continued smooth-running of the financial structures which underpin and enable global trade at its present and supposedly, growing volume.

In the light of the above, it would appear that prudent government would be taking steps to secure the nation against having so many of its eggs in a single basket. Certain skills, facilities and characteristics need to be regarded as the bread and water on which, if need be, the nation can survive and on which a layer of the export jam can be spread – should it remain available. If retention and development of bread and water calls for increased taxation, state subsidies and the erection of tariff barriers, so be it. If the jam disappears and there is insufficient bread and water to go around, the nation will find itself in far worse straits than simply having to pay the insurance premium represented by some additional taxes. The current attempt to feed off jam alone is a high-risk strategy.

As a footnote, having thrown so many rotten tomatoes at the national government in this and previous blogs, I would like to award the government a chocolate fish – or even a slice of Black Forest Gateau! My friend’s company, which has developed the climate saving technology to convert forestry waste into derivatives of carbon, exists as a consequence of a single legislative innovation. The government recently introduced crowd-funding regulations which make it very simple for a company to raise capital or loans from private individuals with a minimum of paperwork and bureaucratic supervision.

Black Forest GateauThis greatly increases the flexibility of the capital markets and gives multiple ordinary individuals the opportunity to support commercial ventures, which they deem to be intrinsically worthy of support as well as, or even, rather than, sources of future investment income and which otherwise, might not get off the ground. My son invested in the carbon neutral company, I have other friends who have invested in films they wished to see made, in a local boutique brewery and I myself, have contributed, a very modest sum, to Scoop NZ, an independent media organisation which reports news as it is, rather than the official corporate line presented by the major media outlets. Such flexibility at the grass-roots level will certainly contribute to the nation’s ability to survive in times of crisis.

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One thought on “Autarchy v. Free Trade

  1. Murray says:

    Interesting. I don’t know if you follow happenings in Russia but they are essentially moving towards being much more self-sustaining. Sanctions and oil price collapse have made them realise they are too dependant on the outside world – world trade.

    In fact the sanctions have been a good thing for Russia in many cases, focusing the nation on developing internal systems to support themselves and reducing dependence on Europe in particular. Local farming and food production sectors have especially benefited as they have had no choice but to boost these industries as a result of sanctions. Even an increase in home gardening has helped Russians realise they simply cannot depend on the outside world as the outside would often has agendas which contradict their own.

    Which brings us to free trade – Russia has realised that while trade is good and necessary it should never be allowed to be of such importance as to be potentially damaging to the motherland. We need to learn the same lesson. Unfortunately we are not of the size and capability of Russia, and we are much quicker to allow our sovereignty and culture to be dictated by others.

    Sad, but it looks like it may ends in tears…..

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