Wednesday 28th of February 2024

greed is the answer...

Neoliberalist theory and practice went so horribly wrong because governments that put their faith in markets forgot one word – competition.

From the early-1980s, much of the Western world began turning to neoliberalism – a faith in free markets and smaller government. The collapse of the Soviet Union by the end of that decade confirmed neoliberalism as the dominant economic philosophy. But neoliberalism is now dead. Who killed neoliberalism and what will replace it?


Who killed neoliberalism?    By Craig Emerson


It all seemed so clear back then. In 1992, Francis Fukuyama declared the end of history, with Western liberal democracy having prevailed over central planning.

Globally, neoliberalism fell to its knees in 2007, struck down by the Global Financial Crisis. AP.

Yet, just nine years later, China signed up to the rules-based global trading system by joining the World Trade Organisation (WTO). China rose to rival the US as the world’s largest economy, effectively ending any unipolarity.

Ronald Reagan and Margaret Thatcher were neoliberalism’s leading advocates.

In Australia, Bob Hawke, Paul Keating and their cabinets sought to create competitive markets as the pathway to prosperity. But their model was not neoliberalism. While competitive markets could create prosperity, Hawke and Keating knew markets alone could not spread it to the disadvantaged.

Instead, they used government regulation and institutions to ensure prosperity was shared fairly. They provided universal healthcare through Medicare, increased income support for poor families, doubled the proportion of young people finishing high school and opened the gates of universities to underprivileged students.

Keating created a superannuation system to provide security in retirement for working people.

Tony Blair rejected Thatcher’s neoliberalism and adopted the Hawke-Keating model, calling it the Third Way.

On the human side, governments have neglected to support those who lost from the opening of their industries to competition.

Globally, neoliberalism fell to its knees in 2007, struck down by the Global Financial Crisis and the ensuing Great Recession of 2008-09. Financial giants collapsed, giving governments little choice but to bail them out with bucketloads of taxpayers’ money.

In 2016, newly elected American president Donald Trump administered the last rites with his reversion to protectionism. The US, the birthplace of neoliberalism, became its graveyard.

Trump’s successor, Joe Biden, is maintaining the tariffs against China. On the sidelines of the recent APEC meeting, the US unilaterally dumped the trade pillar of the Indo Pacific Economic Framework (IPEF), which it launched only last year.

IPEF was conceived as a substitute for the Obama administration’s pursuit of the Trans-Pacific Partnership as America’s pivot into Asia, but which presidential candidates Hillary Clinton and Donald Trump abandoned during the 2016 presidential campaign.
With next year’s presidential election to be decided in six swing states where, according to polling, Trump leads Biden, don’t expect any early return to trade liberalisation.

The Republican Tea Party represented the last vestiges of neoliberalist small government. Nowadays, US federal government deficits are nudging 6 per cent of GDP, rising in each pre-pandemic year of the Trump presidency.

Where did neoliberalist theory and practice go so horribly wrong?

Governments that put their faith in markets forgot one word – competition.

Drawing on the works of Adam Smith almost 250 years ago, 21st-century neoliberalists advocated competitive markets. Smith had observed that merchants seldom got together, even for a piss-up at the local boozer, without the conversation soon turning to how they might collude in a “conspiracy against the publick”.

While businesses in competitive markets are ever mindful of the need to keep prices and costs down, provide quality service and innovate, oligopolies and monopolies are under far less pressure to do so.

Maximise sale proceeds

Political parties, too, stand to benefit from tolerating or even creating concentrated markets.

Donations flow when governments assure donor corporations that they will not confront the menace of competition.

Governments privatising business enterprises have been attracted to offering protection to the prospectively privatised entity to maximise the sales proceeds.

On the human side, governments have neglected to support those who lost from the opening of their industries to competition.
In the US rustbelt states, manufacturing plants collapsed when exposed to international competition through tariff reductions, leaving their workers unemployed as governments failed to provide financial compensation and retraining.

This failure helps explain why Trump’s pledge to make America great again was so attractive to low-income working-class voters in 2016 and why he remains favoured by them.

Instant asset write-offs

It also goes a long way in explaining the strong support for Brexit among the same voting cohort in Britain, whose architects came up with the idea that Britain was better off selling into a small domestic market than a big European one.

In Australia, a similar demographic is being targeted for votes by the Coalition, promising to keep out migrants who might compete for their jobs in what it describes as Labor’s “Big Australia”.

The Albanese government can build on the open, competitive model by reinvigorating competition policy, pressing ahead with an integrated university training scheme, better schooling and further policies for gender equality. And it might consider using instant asset write-off for company tax purposes to encourage much-needed new investment.

The APEC leaders’ statement committed their economies to a return next year to the WTO’s rules-based trading system, including a revived dispute-settling system. In an American election year, with Trump spooking the Biden administration with his promise of even greater protectionism, that seems ambitious.

A new approach is needed, based on the Hawke-Keating model of open, competitive markets and the use of some of the proceeds from those markets to ensure prosperity is shared fairly.

In The Theory of Moral Sentiments, Adam Smith, a humanitarian, advocated public funding of a quality education for the children of poor parents. That would be a good starting point for post-neoliberalism across the Western world.

Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, a visiting fellow at the ANU and an adjunct professor at Victoria University’s College of Business.

Republished from Financial Review on November 28, 2023.











Who killed neoliberalism?




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[charts] Humanity declares war on its children    By Julian Cribb


After WWII, a good many people wondered why nobody had put a stop to either Hitler or Stalin, the two greatest butchers of history prior to the modern era, before they could accomplish their wicked designs.

At Doha in 2023, the petrostates and corporations gathered with the clear intent of deploying their own ‘weapons of mass destruction’ – oil, gas and coal – against every child yet to be born in our world. Of the 97,000 delegates who attended, the majority represented either petrostates or fossil fuel companies and those who support them. The host country, the tiny oil-producing United Arab Emirates, had the largest contingent of 4,400 representatives. Men still outnumbered women two-to-one.

The chairman of the conference, UAE’s Dr Sultan al-Jaber, used his position to ridicule calls for an end to the use of fossil fuels, after he was detected by a BBC investigation plotting to use the conference as an opportunity to sell more oil and gas to 13 countries. This included UAE involvement in sales of natural gas from Australia, Canada and Mozambique. To which the UAE retorted that “private talks are private”.

In stark contrast, UN Secretary General Antonio Guterres called for a phase-out in the use of fossil fuels and stronger commitment all round to hold the world below the +1.5 degrees danger mark. He urged young people to “Keep up the pressure. Keep pushing. Keep holding leaders accountable.”

It may be too late. On Nov 17 the world’s surface temperature hit +2 degrees above pre-industrial levels for the first time in history and +1.96 degrees on Nov 26. These are single-day temperature anomalies, but the trend is unmistakeable. With 2023 forecast to be the hottest year ever recorded, we are on track to take Earth above the +1.5 degree target in less than ten years.

These numbers throw the cynicism, disinformation and sabotage by the petrolobby at COP28 into stark relief. They are using world talks designed to promote climate action as a springboard for the release of fresh carbon emissions that may claim, not thousands, not millions, but tens of millions of human lives. They know it and we know it. They simply do not care.

The World Health Organisation warned recently that 3.6 billion people already live in regions afflicted by climate disasters, and deaths are conservatively estimated to increase by 250,000 a year to 2050.

And what do the governments of the world intend to do about it? Double world fossil fuel production, that’s what. At least, they intend to increase their oil production by 110% over the level essential to keep global warming below 1.5 degrees – and by 69% over the level needed to keep it below 2 degrees. “Governments are literally doubling down on fossil fuel production; that spells double trouble for people and planet,” commented Guterres.

According to a recent estimate, somebody will die for every 1000 tonnes of fossil fuel burned. By 2050 deaths from fossil fuels will be nearly 50% greater than the annual death toll in World War II. This makes it plain that war has been knowingly declared on all future humanity. Our children are its main victims. This is a moral dereliction without precedent in history, exposing what a vicious species we have become.

If climate were the world’s only problem, this would be bad enough. But there are nine other major risks to human civilisation. Together they add up to the greatest threat humans have ever faced in three million years of our existence. These threats cannot be separated, or dealt with singly. Some of them are even deadlier in impact than climate, though they receive much less publicity. And, in many cases, industry, wealth and governments now work hand-in-glove to make them worse.

One answer, for all those who do not wish to be destroyed by this evil confederation, is an Earth System Treaty, a global legal agreement signed and ratified by all the decent people and countries left on Earth to save a habitable planet for our children. An agreement with the power to rein in the wreckers, state or corporate. The reasons for such a treaty are many – but one thing is clear: without global agreement to overcome our existential crisis, nothing can prevent it. The petrolobby and its puppets will see to that.

Thanks to their continued sabotage of the last, best hope for humanity exemplified at COP27 and COP28 it is clear that the petrolobby is willing to sacrifice a habitable Earth and its young people to their ungoverned lust for short-term riches. Riches that will vanish as soon as the global economy collapses.

Now is the time for all good citizens of Earth to stand together, speak out and act to prevent the ruin of our world. The people who are causing it must be brought to justice for crimes against humanity.







the smell of cash.....


Trading in death responsibly: ‘Woke’ funds funnel $5 trillion into arms industry


    ESG funds, once champions of environmental causes, have raised ethical concerns after investing heavily in defense stocks


    Russian Market


In the cutthroat world of asset management, my gig as an investment banker at Zurich’s top Swiss joint was a tightrope walk between challenge and monotony. Crafting portfolios for the high rollers at the biggest Swiss bank needed a delicate mix of precision and strategy. The daily grind of summarizing, stacking up, and shaping portfolios for the wealthy wasn't just a skill; it was a meticulous drill where financial stability was the goal and the payoff.

In the established 60-40 asset allocation doctrine – a fundamental principle in wealth management – the goal was straightforward: allocate 60% to stocks and 40% to bonds. This implicit guideline, honed through market wisdom, provided clients with a safeguard against the unpredictable nature of individual stocks. However, the intricacies of my role extended beyond the numerical aspects of asset allocation. Placing emphasis on securing a resilient lending value for portfolios became paramount, evolving beyond a mere metric to become a vital component ingrained in each client’s investment strategy.

Amid financial turmoil, stock selection gained extra importance, and in recent years, the spotlight turned towards ESG funds.

What is ESG investing?

ESG – or Environmental, Social, and Governance investing – provides a framework for investing in funds that take into account environmental, social, and governance factors. It is often used interchangeably with terms like “socially responsible investing (SRI)” and “sustainable investing.” ESG investments, falling under the umbrella of socially responsible investing, analyze a company’s societal impact based on three primary factors:

Environmental (E): This aspect concentrates on a company’s initiatives for environmental preservation, pollution management, responsible waste handling, sustainable land practices, and efforts to reduce carbon footprints.

Social (S): This dimension delves into a company’s commitment to fair labor conditions, equal employment opportunities, and support for community organizations.

Governance (G): This facet relates to the standards governing corporate governance, encompassing ethical business conduct, gender diversity within the board, equitable employee compensation, and overall transparency in corporate operations.

The aroma of cash

But then, where the fallible human touch resides, the scent of corruption detects the aroma of cash – a twist that even seasoned investors couldn't have predicted.

Surprisingly, these funds, celebrated for their ethical foundations, have funneled a jaw-dropping $5 trillion into the arms industry. This bombshell was dropped by Bloomberg this week.

As of Q3 2023, over 1,200 ESG funds, pledged to uphold environmental, social, and governance standards, collectively grip shares worth around $5 trillion in the defense sector. This unexpected plunge into defense investments within the ESG framework has triggered heated debates.

Questions swirl about the blurred lines between “defense” and “aggression” and why ESG fund managers aren’t putting up a fight against these investments that seem incompatible with ESG or sustainability ideals. The financial industry, once singing praises for ESG’s ethical focus, now faces a reality check as investments cozy up to an industry inherently at odds with those values.

Let’s be clear: Every ESG fund investor potentially has grounds to pursue legal action against the fund manager funneling money into weapons and defense stocks. These investments violate the core ethical principles of ESG funds, opening the door for clients to consider legal recourse.

Despite the ethical eyebrow-raising, funds dipping their toes into the defense sector are laughing all the way to the bank. Notably, the Goldman Sachs Group Inc. fund, playing the European defense game, has skyrocketed by nearly 90% since February 2022 and a cool 13% since October 2023.

US and UK fund honchos wave off regulatory hurdles blocking ESG managers from diving into defense assets. They stress the need for transparent, top-notch reporting from these funds, arguing that investments in specific defense companies can jive with responsible investing, as long as they're not cranking out banned weapons or supplying arms to sketchy countries.

Responsible investing in the war machine, all neatly packaged with the ESG stamp – what a hoot!

Mairead McGuinness, Commissioner for Financial Markets at the European Commission, goes on about how defense is “crucial for sustainability and security” of the EU, adding to “peace and social sustainability.” The intersection of ethical investing and defense industry dalliances puts a big fat question mark on the very core of responsible financial moves. The unplanned rendezvous of ESG funds with the arms industry weaves a tangled narrative, asking deep questions about whether financial smarts can align with ethical investing principles.

Indeed, we’ve reached a point where the politicians who advocate for allowing kids to choose their gender are now dictating terms to hedge funds in the Environmental and Social realm. They even endorse investments in wars and guns, branding them as “crucial for sustainability.”






here we go....

Author Reveals the ELITE'S Plans to CONTROL YOUR LIFE: Rising





oil luxury....

The Bloomberg ‘World's Richest Families 2023’ list, published earlier this week, revealed how the global wealth distribution is being reshaped by oil fortunes.

According to the rating, the House of Nahyan, the family of Emirati President Sheikh Mohammed bin Zayed Al Nahyan, which joined the list for the first time, emerged as the richest dynasty in the world. Their home emirate of Abu Dhabi is the place where most of the UAE’s oil reserves are found. The ruling family’s fortune was estimated at $305 billion.

Second-richest is the US-based Walton family, which owns the world’s largest retailer by revenue, Walmart. Their estimated wealth amounts to $259.7 billion. Rounding up the top three is the French Hermes dynasty, which owns the eponymous luxury fashion brand. The House of Hermes’ estimated wealth is $150.9 billion.

The Mars family, which owns the US confectionery giant bearing their name, is the fourth richest, with a combined fortune of $141.9 billion.

Another new entrant – the House of Al Thanis, the royal family of Qatar – took fifth place in the ranking with an estimated $155 billion. The royals’ wealth is based on Qatar’s massive offshore oil deposits. However, Al Thanis also has significant foreign assets, such as the fashion label Valentino.

The top ten also lists the Koch family, owners of the US petrochemical corporation Koch Industries ($127.3 billion), and the House of Saud, the royal family of Saudi Arabia, the world’s largest oil exporter ($112 billion). They are followed by the Ambani family, owners of the Indian oil company Reliance Industries ($89.9 billion); the Wertheimers, owners of the French fashion house Chanel ($89.6 billion); and the Thompsons, holders of a controlling stake in Reuters news agency ($71.1 billion).

According to Bloomberg’s calculations, the combined wealth of the world's 25 richest families has grown by $1.5 trillion over the past year, or roughly 43%. The agency also noted that the three Gulf families included in the ranking are “likely far richer than these conservative estimates.”

Russian families did not make the rating. According to the Bloomberg Billionaires Index, the richest Russian is the head of Interros and owner of mining giant Norilsk Nickel, Vladimir Potanin, with a fortune of $30 billion. He ranked 49th.


Chanel’s president of fashion, Bruno Pavlovsky, warned the fashion and luxury goods industry to prepare for a challenging year in the face of decelerating global economic growth. Speaking to the Financial Times on the sidelines of the company’s Metiers d’Art show held in Manchester, the UK this week, Pavlovsky emphasized the potential difficulties ahead for the industry.

According to Pavlovsky, economic conditions are currently difficult “everywhere, in every single country,” which is bound to affect the luxury sector.

Luxury is not protected from the economy. I don’t have a crystal ball, but the situation will be tougher than what we saw in 2023,” he warned.