The false hope offered by talk of a living wage



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Supporters outside the offices of the Fair Work Commission in Melbourne on Friday, June 1, 2018 after it lifted the minimum wage by 3.5%
JOE CASTRO/AAP

John Freebairn, University of Melbourne

Labor is promising a “living wage” rather than a “minimum wage” if elected.

It will ask the Fair Work Commission to first determine what wage would offer a “decent standard of living for families”, and then to determine the time frame over which it should be phased in, taking into account the capacity of businesses to pay, and the potential impact on employment, inflation and the broader economy.

It is selling the idea of what would be a very big increase on the present minimum wage as “good for workers and good for the economy”.

“Consumer spending makes up 60% of the Australian economy,” its employment spokesperson Brendan O’Connor said. “When low-paid workers get a pay rise, they spend it in the local shops and help small businesses. It’s good for everyone.”

The idea harks back to the 1907 Harvester judgement, in which an arbitration court judge decreed that wages at a Melbourne factory should be based on the cost of living “for a worker and his family”.




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To get there from the current bare minimum wage of A$18.93 per hour would almost certainly require increases bigger than the sum of productivity growth and inflation, which are running at a combined annual rate of around 3%.

Unacknowledged by Labor in spruiking the policy this week was the fallacy of its consumer spending argument, the cost of the proposal to jobs, and the likelihood that it won’t much help many of the people who need it.

The false increased spending argument

One of the claimed benefits of a living wage is that employees will spend most of their extra income, resulting in large increases in national spending, national income, and even the tax take.

An implicit assumption is that the extra money comes “as manna from heaven” with no second-round effects.

But given that other labour costs won’t come down (it is hard to see executive pay being cut), the labour cost for each affected business will climb, pushing down returns to the providers of capital, including the returns to shareholders and small business owners.

With lower returns, less capital will be put up to invest.

Where businesses can, they will pass on the increased costs not matched by increased productivity by increasing prices.

They will get away with it unless they face competition from imports or other exporters.




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‘Once upon a time, when Australia had a steel industry …’


Where import competitors and exporters face international competition, they will reduce output. In turn, the greater amount of money sent out of the country will eventually push down the Australian dollar, pushing up the Australian dollar price of import and export products.

In the short term, the increases in prices of goods and services will cut the purchasing power of the wage increase. In the longer term, it might create a vicious cycle of wage and price hikes, with adverse economic consequences.

The bad news on jobs

It is well established that wage increases above the rate of productivity growth plus inflation lead to less employment than there would otherwise be, in both the number of employees and the hours worked per employee.

Labour costs are a major expense for most businesses.

In response to higher labour costs, many employers will choose less labour-intensive ways of making their products. The large and rapid wage increases in the mid-1970s and early 1980s resulted in sharp reductions in employment. In contrast, the recent low rates of labour cost increases have helped drive significant increases in employment and a fall in unemployment.

With the Australian economy facing a likely slowdown over the next year or two, a large increase in wages might be particularly poorly timed.

The false hope for those most in need

Universal education and health care, and the redistribution of income via social security payments funded by a progressive income tax, are the most direct and effective ways to fight household poverty.

The world today is very different to the world of the Harvester case in 1907. Then, most workers were in full-time employment and needed a living wage to support a family. Now, about a third are employed part-time. Redistribution via the tax and payments system is how we support families who need it.




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A national living wage is on the table. Now let’s talk about a global living wage


A higher minimum or “living wage” would provide minimal assistance to some on low incomes, and would lift the incomes of many others not generally considered in need of support.

Many of those below the poverty line who are only employed part-time or not at all would not be lifted out of poverty. A higher living wage would provide more to those already in full-time jobs than it would to part-time workers.

And it would provide more to low-wage employees who are members of high-income families, who probably shouldn’t be our first concern.

We can do more more directly to alleviate poverty by reforming the income tax and social security systems. They are specifically designed to redistribute income according to need.

We should start by reducing income tax on low earnings, automatically indexing tax brackets, and increasing Newstart.The Conversation

John Freebairn, Professor, Department of Economics, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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A national living wage is on the table. Now let’s talk about a global living wage



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Australia’s Harvester Judgement of 1907 defined a living wage as ‘fair and reasonable’ payment sufficient for an unskilled worker to support a family in reasonable comfort.
http://www.shutterstock.com

Shelley Marshall, RMIT University

The idea of the living wage is back on the political agenda. In the United States the Democrats are proposing to double the federal minimum wage. In Australia the federal Labor Party has promised to deliver a living wage.

“A living wage should make sure people earn enough to make ends meet, and be informed by what it costs to live in Australia today – to pay for housing, for food, for utilities, to pay for a basic phone and data plan,” Opposition leader Bill Shorten said this week.

The principle of the living wage is the subject of my book published in January. To write the book I spent five years researching working conditions in countries including Australia, Bulgaria, Cambodia, India and Thailand.

What my research underlines is that there are limits to thinking about a living wage for Australian workers without also making the principle global.

A ‘reasonable’ standard

Australia first embraced the living wage more than a century ago in what is arguably the nation’s most famous labour law case. The Harvester Judgement of 1907 defined a living wage as “fair and reasonable” payment sufficient for an unskilled worker to support a family in reasonable comfort.

In deciding exactly how much income was needed to assure this, Australia’s Conciliation and Arbitration Court examined 11 households to determine the cost of typical living expenses. These included lighting, clothes, boots, furniture, insurance, union membership, sickness, books, newspapers, alcohol and tobacco.




Read more:
Explainer: what exactly is a living wage?


Twelve years later the principle was enshrined in international labour law, when the International Labour Organisation was established in 1919. It defined a living wage as one “adequate to maintain a reasonable standard of life as this is understood in their time and country”.

A century on, Australia’s industrial relations system has long abandoned the central premise of the living wage. Around the world being paid enough to live on remains elusive. We are all intimately connected to many of these workers. They have assembled the phones we handle. They have sewn our clothes.

Women in Bangladesh who make clothes for brands such as Big W, Kmart, Target and Cotton On earn as little as 51 cents an hour, according to an Oxfam report published last month.

The report is based on interview with 470 garment workers in Bangladesh and Vietnam. Three-quarters of the Vietnam workers and all of the Bangladeshi workers earned less than a living wage (as calculated by the Global Living Wage Coalition).




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It would cost you 20 cents more per T-shirt to pay an Indian worker a living wage


Fear of capital flight

It is very hard for workers to mobilise for higher wages in many countries around the world. In January 5,000 garment workers in Bangladesh were sacked after going on strike for higher wages. During protests, police shot dead one worker. More than 50 others were injured.
Striking garment workers in Cambodia have also been shot dead by police during protests.

Especially in price-sensitive industries, globalisation exerts strong pressure on governments to keep minimum wages low, lest any increase lead to “capital flight”. This competition pits countries in a race to the bottom.

Should labour costs go up in Bangladesh, for example, its government fears garment brands moving production to, say, Ethiopia. It’s a legitimate fear; in my 15 years of research I’ve seen whole garment factories dismantled and trucked across borders to countries where the labour is cheaper.

Cooperation is the answer

The obvious solution would be for countries to cooperate and raise minimum wages collectively and incrementally (at an agreed percentage every year). This approach would help overcome “first mover risk”. Business would have less incentive to look for cheaper labour elsewhere.

For this to occur would, of course, require huge amounts of international political good will. Nation states would need to put aside the tendency to think in terms of immediate self-interest and work cooperatively for mutual benefit.

Here we face a problem with the architecture of international law in general, and labour law in particular.

Though the principle of a living wage was enshrined in the treaty that formed the International Labour Organisation, it is not codified in any of the eight fundamental international labour conventions. These cover forced labour, child labour, workplace discrimination and the right to unionise.

But even if it was, that wouldn’t necessarily make much difference. International law isn’t the same as national law. Most international treaties, conventions and agreements are not enforceable. There is no real penalty for any country that refuses to sign, nor for any signatory failing to meet its obligations. The ILO cannot enforce targets in the way needed to address a problem this big.

Emulating trade law

However, there is one area of international law that comes close to what we usually think of as law: international trade and investment law.

In addressing goals like reducing tariffs, countries faced similar coordination problems. Beginning with the General Agreement on Tariffs and Trade, which came into effect in 1948, half a dozen major multilateral trade deals were negotiated before the agreement in 1994 to establish the World Trade Organisation.

The WTO has since adjudicated hundreds of disputes in which one nation has accused another of failing to meet its WTO commitments. Investors can also take states to tribunals to seek compensation for unfair behaviour. States take these tribunals very seriously.

Why not emulate this architecture of international trade law for living wages?

Concrete targets for raising wages could be set through multilateral agreements. Countries would increase wages incrementally, by a certain percent each year, in a coordinated fashion, until they reached a living wage level.

An international tribunal would hear claims against states accused of failing to raise or enforce minimum wages as agreed. National tribunals would adjudicate cases involving corporations.

Cambodian garment workers, for example, would be able to take their government to the international tribunal for failing to raise wages or enforce minimum wage laws. A state held liable to pay compensation for wage breaches could pursue factory owners or their international buyers through national tribunals. This would be an incentive for states to police their own labour laws.

Instead of having separate national conversations about living wages, now is a good time to start the conversation at a global scale.The Conversation

Shelley Marshall, Vice Chancellor’s Senior Research Fellow, expert in corporate accountability, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Explainer: why is Australia adopting the global refugee compact but not the migration compact?


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A young girl protesting at a rally to bring refugees on Nauru and Manus Island to Australia.
AAP/Penny Stephens

Azadeh Dastyari, Monash University

Australia was one of 176 countries to vote in favour of the Global Compact on Refugees (refugee compact) in mid-November this year. The United Nations General Assembly will adopt it by the end of 2018.

However, Australia did not join the Global Compact for Safe, Orderly and Regular Migration (migration compact) at a conference in Morocco on December 10-11.

What are the compacts and what do they aim to do?

There is much confusion about the two compacts, with commentators often conflating the two documents. However, they are distinct agreements with differing subjects.

The term “refugee” used in the refugee compact has a specific meaning under international law. It refers to a person outside their own country who fears persecution because of their race, nationality, membership of a particular social group or political opinion.

As a signatory to the Refugee Convention and Refugee Protocol, Australia has particular obligations to refugees under these two treaties. The refugee compact does not replace these obligations. Instead, it is a non-binding agreement that “intends to provide a basis for predictable and equitable burden- and responsibility-sharing”.

The Refugee Compact lists four objectives. They are to:

  1. ease pressures on host countries
  2. enhance refugee self-reliance
  3. expand access to third country solutions
  4. support conditions in countries of origin for return in safety and dignity

Unlike the term “refugee”, the term “migrant” does not have a precise meaning under international law. Australia does not have any specific international legal obligations to migrants beyond respecting their human rights under the human rights treaties to which it is a party.

The migration compact does not create any new binding legal obligations on states such as Australia. Instead, it has a range of 23 objectives for safe, orderly and regular migration. These include the collection and better use of data on migration; strengthening responses to smuggling and trafficking; eliminating discrimination; using detention as a last resort; saving lives; managing borders in an integrated, secure and coordinated manner; addressing and reducing vulnerabilities in migration; and strengthening international cooperation.

Where did the compacts come from?

The two compacts have emerged from a need for the international community to better cooperate and respond to unprecedented numbers of people on the move, particularly into Europe. This includes refugees fleeing persecution from conflicts such as Syria.

In September 2016, the United Nations General Assembly unanimously adopted the New York Declaration for Refugee and Migrants to address such concerns. The declaration contained a commitment to begin two separate tracks of negotiations: the refugee compact and the migration compact.

Australia’s response

Australia has been relatively silent on the refugee compact, but has objected to the migration compact on the grounds that it would compromise Australia’s sovereignty.

The migration compact has also been accused of failing to:

adequately distinguish between people who enter Australia illegally and those who come to Australia the right way.

In addition, Australia has cited its success with migration as a reason for its refusal to adopt the migration compact. It has stated:

when we are asked to sign up to international agreements that we believe will compromise our successful way of doing things, we will pass.

The criticisms regarding the threat to Australia’s sovereignty and the lack of distinction between categories of migrants is surprising. As has been explained by Goodwin-Gill and McAdam, it is a misrepresentation of the document.

As with the refugee compact, the migration compact does not create any binding legal obligations on states. It affirms that “within their sovereign jurisdiction, States may distinguish between regular and irregular migration status”.

Furthermore, irrespective of whether Australia signs the migration compact, it is obliged to protect the human rights of migrants under existing international law. This includes, for example, the obligation to refrain from arbitrary detention. Thus the illegality of arbitrary detention, including on Nauru and Manus Island, under international law will not change whether Australia signs the migration compact or not.

Why has Australia signed the refugee compact but not the migration compact?

The United States is the only country to vote against the Refugee Compact. In contrast, the United States, Australia, the Netherlands, Austria, Bulgaria, Hungary, Czech Republic, Poland, Dominican Republic, Chile, Latvia, Slovakia, Estonia and Italy either withdrew from the migration compact negotiations or expressed reservations, often citing concerns about sovereignty as the reason.

But rather than being a real threat to sovereignty, the migration compact appears to have taken on a symbolic meaning that the refugee compact has not. Its opponents are governments with strong anti-immigration and asylum seeker policies. For such states, the migration compact has become a convenient strawman against which states can demonstrate a show of power and resistance to serve domestic political interests.

Syrian refugees at a camp at Haouch El Nabi in the Bekaa valley, Lebanon.
AAP/EPA/Wael Hamzeh

A reason why the migration compact has been used as a foil in this way may simply be in the timing. The United States has led the rejection of the migration compact. It was early to withdraw from the process. In contrast, it continued to support the refugee compact until close to the last minute.

The earlier withdrawal of the US may have contributed to the galvanisation against the migration compact. Each state rejecting the migration compact adds to its perception as problematic, even if such a characterisation is unreasonable.

There may also be a fear that signing the migration compact may lead to new binding international obligations to migrants in the future. By contrast, the refugee compact may be viewed as less of a threat since states have existing obligations to refugees under international law.

However, adopting any hypothetical additional binding legal obligations will be a choice that governments can make in the future. Signing the migration compact does not bring an obligation to sign any future binding agreements.

In addition, the reluctance to join the migration compact but vote for the refugee compact may be because of the perception that the refugee compact requires less of states. The refugee compact has been criticised for lacking concrete mechanisms for governments to take on burden and responsibility sharing.

This may be true, and is an issue that has been addressed in part in the latest version of the refugee compact, which calls for indicators that will track progress by states. But again, the non-binding nature of the agreements means that states do not have to do anything they do not wish to do.

As the opening lines of the New York Declaration attest:

since earliest times, humanity has been on the move.

Rejecting international cooperation cannot and will not stop people from fleeing danger, migrating for better economic opportunities or moving to be with loved ones.

However, without international cooperation the system is uneven, dangerous and unsustainable. The migration and refugee compacts are not perfect. But they offer countries the opportunity to do better for themselves, for those on the move and for the international community as a whole.The Conversation

Azadeh Dastyari, Deputy Director of the Castan Centre for Human Rights Law, Senior Lecturer in the Faculty of Law, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

All eyes on November’s G20 meeting as tensions between China and the US ratchet up



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Much attention will be on the next meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 in late November.
AAP/EPA/Roman Pilipey

Tony Walker, La Trobe University

When G20 finance ministers met in Bali last week to review economic developments in the lead-up to the annual G20 summit, they could not ignore troubling signs in the global economy driven by concerns about an intensifying US-China trade conflict.

Last week’s slide in equities markets will have served as a warning – if that was needed – of the risks of a trade conflict undermining confidence more generally.

China’s own Shanghai index is down nearly 30% this year. This is partly due to concerns about a trade disruption becoming an all-out trade war.




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The risks of a new Cold War between the US and China are real: here’s why


IMF Managing Director Christine Lagarde’s call on G20 participants to “de-escalate” trade tensions or risk a further drag on global economic growth might have resonated among her listeners in Bali, but it is not clear calls to reason are getting much traction in Washington these days.

Uncertainties caused by a disrupted trading environment are already having an impact on global growth. In its latest World Economic Outlook, the IMF revised growth down to 3.7% from 3.9% for 2018-19, 0.2 percentage points lower than forecast in April.

IMF Managing Director Christine Lagarde has called on G20 members to
AAP/EPA/Made Nagi

The IMF is predicting slower growth for the Australian economy, down from a projected 2.9% this year to 2.8% next year. The May federal budget projected growth of 3% for 2018-19 and the following year.

Adding to trade and other tensions between the US and China are the issues of currency valuations, and a Chinese trade surplus.

In September, China’s trade surplus with the US ballooned to a record U$34.1 billion.

This comes amid persistent US complaints that Beijing has fostered a depreciation of the Yuan by about 10% this year to boost exports, which China denies.

These are perilous times in a global market in which the US appears to have shunned its traditional leadership role in favour of an internally-focused “America First” strategy.

So far, fallout from an increasingly contentious relationship between Washington and Beijing has been contained, but a near collision earlier this month between US and Chinese warships in the South China sea reminds us accidents can happen.

This is the background to a meeting at the G20 summit in Buenos Aires late in November between US President Donald Trump and Chinese President Xi Jinping. That encounter is assuming greater significance as a list of grievances between the two countries expands.

US Vice President Mike Pence’s speech last week to the conservative Hudson Institute invited this question when he accused of China of “malign” intent towards the US.

Are we seeing the beginning of a new cold war?

The short answer is not necessarily. However, a further deterioration in relations could take on some of the characteristics of a cold war, in which collaboration between Washington and Beijing on issues like North Korea becomes more difficult.

By any standards, Pence’s remarks about China were surprising. He suggested, for example, that Chinese meddling in American internal affairs was more serious than Russia’s interventions in the 2016 president campaign.

He accused Beijing of seeking to harm Republican prospects in mid-term congressional elections and Trump’s 2020 re-election bid. This was a reference to China having taken its campaign against US tariffs to newspaper ads in farm states like Iowa.

Soybean exports to China have been hit hard by retaliatory tariff measures applied by Beijing in response to a first round of tariffs levied by the US.

“China wants a different American president,” Pence said.

This is probably true, but it could also be said that much of the rest of the world – not to mention half of the US population – would like a different American president.

All this unsteadiness – and talk of a “new cold war” – is forcing an extensive debate about how to manage relations with the US and China in a disrupted environment that seems likely to become more, not less, challenging.

Australian academic debate, including contributions from various “think tanks”, has tended to focus on the defence implications of tensions in the South China Sea for Australia’s alliance relationship with the US.

This debate has narrowed the focus of Australia’s concerns to those relating to America’s ability – or willingness – to balance China’s regional assertiveness.

This assertiveness increasingly is finding an expression in China’s activities in the south-west Pacific, where Chinese chequebook – or “debt-trap” – diplomacy is being wielded to build political influence.

Australian policymakers have been slow to respond to China’s push into what has been regarded as Australia’s own sphere of influence.




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Despite strong words, the US has few options left to reverse China’s gains in the South China Sea


Leaving aside narrowly-focused Australian perspectives, it might be useful to get an American view on the overarching challenges facing the US and its allies in their attempts to manage China’s seemingly inexorable rise.

Among American China specialists, few have the academic background and real-time government experience to match that of Jeffrey Bader, who served as President Barack Obama special assistant for national security affairs from 2009-2011.

In a monograph for the Brookings Institution published in September, Bader poses a question that becomes more pertinent in view of Pence’s intervention. He writes:

Ever since President Richard Nixon opened the door to China in 1972, it has been axiomatic that extensive interaction and engagement with Beijing has been in the US national interest.

The decisive question we face today is, should such broad-based interaction be continued in a new era of increasing rivalry, or should it be abandoned or radically altered?

The starkness of choices offered by Bader is striking. These are questions that would not have entered the public discourse as recently as a few months ago.

He cites a host of reasons why America and its allies should be disquieted by developments in China. These include its mercantilist trade policies and its failure to liberalise politically in the three decades since the Tiananmen protests.

However, the costs of distancing would far outweigh the benefits of engagement to no-one’s advantage, least of all American allies like Japan, India and Australia.

None of these countries, in Bader’s words, would risk economic ties with China nor join in a “perverse struggle to re-erect the ‘bamboo curtain’… We will be on our own”. He concludes:

American should reflect on what a world would be like in which the two largest powers are disengaged then isolated from, and ultimately hostile to each other – for disengagement is almost certain to turn out to be a way station on the road to hostility, he concludes.

Bader has been accused of proffering a “straw man argument’’ on grounds that the administration is feeling its way towards a more robust policy, and not one of disengagement. But his basic point is valid that Trump administration policies represent a departure from the norm.




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At the conclusion of the IMF/World Bank meetings in Bali, Christine Lagarde added to her earlier warnings of “choppy” waters in the global economy stemming from trade tensions and further financial tightening. She said:

There are risks out there in the system and we need to be mindful of that…bIt’s time to buckle up.

That would seem to be an understatement, given the unsteadiness in the US-China relationship and global geopolitical strains more generally.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Tech giants are battling it out to supply the global internet – here’s why that’s a problem


Claudio Bozzi, Deakin University

The US Federal Communications Commission last month granted Elon Musk’s SpaceX permission to launch 4,425 satellites that will provide affordable high speed broadband internet to consumers.

The Starlink network will be accessible in the US and around the world – including in areas where the internet is currently unavailable or unreliable.

SpaceX isn’t the only company investing in global internet infrastructure. Facebook, Google and Microsoft all have various projects underway to deliver high speed connectivity to remote and rural areas.

It’s all part of a trend of private companies attempting to breach the digital divide and wage a battle for the global internet.




Read more:
Connecting everyone to the internet won’t solve the world’s development problems


But entrusting market forces to build critical internet resources and infrastructure is problematic. These companies aren’t obligated to operate in the interest of consumers. In some cases their practices could serve to further entrench the existing digital divide.

Half the world’s population can’t access the internet

The internet is embedded in social, personal and economic life across the developed world.

But access varies significantly between industrialised nations that boast high per capita incomes, and developing nations with largely poor, rural populations.

For example, 94% of South Korean adults and 93% of Australian adults have access to the internet, compared with just 22% of Indians and 15% of Pakistanis.

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As society becomes increasingly dependent on the internet, nations and communities need equal access. Otherwise legacy inequalities will become further entrenched and new divides will emerge, potentially creating a “permanent underclass”.

Tech giants battle it out

The tech giants have been investing heavily in critical infrastructure in recent years.

Google owns the FASTER trans-Pacific undersea cable link, which has carried data (at 60 terabits per second) between the US, Japan and Taiwan since 2016. Meanwhile, the Microsoft and Facebook funded MAREA trans-Atlantic cable has connected the US to southern Europe (at 160 terabits per second) since in 2017.

New investments centre on atmospheric, stratospheric and satellite delivery strategies.

Along with SpaceX’s constellation of small satellites, Facebook’s internet.org uses atmospheric drones to deliver internet to rural and remote areas. Google’s Project Loon uses high altitude navigable balloons for the same purpose.

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The privatisation of a public good is problematic

Private investors who build infrastructure are driven by commercial imperatives rather than a need to deliver social benefits. And that dynamic can entrench and exacerbate existing – and create new – digital, social and economic divides.

This can be innocuous enough, such as when the company that makes League of Legends built its own internet network to ensure its players weren’t upset by slow speeds.

But it’s more of a problem when faster connections can tilt investment and trading playing fields in favour of those with access, leaving ordinary investors out in the cold.




Read more:
How the internet is failing to drive economic development where promised


Facebook’s Free Basics is a program that aims to provide cheap internet services to consumers in developing countries. It currently operates in 63 developing nations.

Critics say the service is a blatant a strategy to extend Facebook’s global dominance to the developing world. It’s also been accused of violating net neutrality by strictly controlling participating sites to eliminate Facebook’s competitors.

Technology is not neutral

Privately owned and operated internet infrastructure can also become a means of social control.

Termination of internet services is a notorious tactic used by authoritarian regimes to repress dissent by disrupting communication and censoring information. But private entities may also exercise control over infrastructure outside of government regulation.

For example, when WikiLeaks published government correspondence in 2010, Amazon and AnyDNS withdrew the services that maintained the Wikileaks website. Mastercard, Paypal and VISA terminated services through which the organisation received funding for its activities.

These companies were not acting under government direction, citing violations of their Acceptable Use policies to justify their decisions. Harvard professor Yochai Benckler said at the time:

Commercial owners of the critical infrastructures of the networked environment can deny service to controversial speakers, and some appear to be willing to do so at a mere whiff of public controversy.

SpaceX must meet a host of technical conditions before Starlink can be activated. But we shouldn’t assume that providing internet access to developing countries will lead to an ecosystem from which economic or social benefits will flow.

The ConversationWhen the logic of corporate capitalism dominates the provision of internet services, there’s no guarantee that the internet’s founding principles – an egalitarian tool where users share information for the greater good – will be upheld.

Claudio Bozzi, Lecturer in Law, Deakin University

This article was originally published on The Conversation. Read the original article.

Where will the global political hotspots be in 2018? (Spoiler alert: it’s not all about Donald Trump)



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With so many global flashpoints, and so little diplomacy, 2018 could be a turbulent year.
AAP/The Conversation

Tony Walker, La Trobe University

Writing for Foreign Policy, Robert Malley, the newly appointed head of the International Crisis Group, makes a good point when discussing global challenges in 2018:

It is not all about Donald Trump.

To be sure, an erratic American presidency contributes to unsteadiness around the globe. American global leadership is now contested as never before since the Allies triumphed in the second world war.

Even in the depths of a Cold War marked by various crises – including the Berlin Blockade, an ill-starred military adventure in Vietnam, and the Cuban Missile Crisis – American leadership would still assert itself.

Let’s not forget American post-second-world-war diplomacy spawned international institutions like the World Bank and International Monetary Fund, the General Agreement on Tariffs and Trade, the United Nations and NATO. In Australia’s case, it also gave birth to the ANZUS Treaty, initialled in 1951.

… although it is a little bit about Donald Trump.
Reuters/Jonathan Ernst

There was hardly any component of post-war global architecture that did not involve Washington in a leading role.

ANZUS, and with it the American alliance, remains the cornerstone of Australia’s security arrangements – notwithstanding a frequent misinterpretation of the treaty as a security guarantee as opposed to an agreement to consult in the event of either party’s security being threatened.

In essence, America is godfather of post-war multilateralism. An American-led consensus on how best to manage its global responsibilities is now in danger of unravelling, buffeted by domestic “America First” disagreements at home and a contested security environment abroad.

Australia’s place in the world

From an Australian perspective, it is all about a shifting power balance in the Indo-Pacific.

This might be described as the pre-eminent challenge in the year(s) ahead, as Australia navigates between the idiosyncracies of a Trump White House and its successors. Then there is the relentless Chinese push to spread its power and influence.

Above all in the foreign policy sphere, Australian policymakers are faced with the task of expanding Canberra’s foreign and security policy room for manoeuvre between its security guarantor and principal trading partner, without endangering the alliance relationship itself.

China, led by Xi Jinping, will continue to push to spread its power and influence.
Reuters

This will require a sophistication that has not always been apparent among policymakers. Their instinct has been to cling to the alliance like a life raft and, on occasions, discreditably, use it as a wedge issue against political opponents.

China’s rise is encouraging a more realistic view of Australia’s geopolitical circumstances, and none too soon.

The following extracts from Australia’s Foreign Policy White Paper, released in November, provide a flavour of that greater realism:

Navigating the decade ahead will be hard because as China’s power grows our region is changing in ways without precedent in Australia’s modern history.

And:

Powerful drivers are converging in a way that is reshaping the international order and challenging Australia’s interests. The United States has been the dominant power in our region throughout Australia’s post-second-world-war history. Today, China is challenging America’s position.

And:

The government recognises there is great debate and uncertainty in the United States about the costs and benefits of its leadership of the international system.

And:

In the decades ahead we expect further contestation [between the US and China] over ideas and influence, directly affecting Australia. It is imperative that Australia prepare for the long term.

All of this exposes Australia’s biggest challenge in the next several decades. Simply put, this is to build its own self-reliance, including smart investments in defence capabilities, along with nurturing security relationships in its own region.

Most desirable in all of this would be to involve – not exclude – China in building a regional security architecture. This could possibly be along the lines of the Helsinki Accords, which helped stabilise Europe during a long stand-off with the former Soviet Union.

Australian officials might want to expand a quadrilateral Indo-Pacific security partnership – involving the US, Japan, Australia and India – envisaged as a hedge against China to others, including China itself.

Creative regional diplomacy of the sort that brought about the establishment of the Australia Pacific Economic Co-operation (APEC) forum would seem to be required.

Closer to home

This is the big global challenge for Australia in 2018 and beyond. Now to what might be described as “localised” challenges.

We’ll restrict that number to five, including:

  • North Korea’s nuclear ambitions;

  • the Middle East more generally, and potential conflict with Iran in particular;

  • the Rohingya crisis and pressures that is exerting on Myanmar and surrounding countries. Alongside this is the “identity politics” across Asia, in which minorities (like the Rohingya) are threatened;

  • Afghanistan, in which Australian forces are still involved in a training capacity; and

  • threats of cyber-terrorism: what Ian Bremmer and Cliff Kupchan of the Eurasia Group describe as a “global tech cold war”.

At the top of the regional challenges is North Korea, led by Kim Jong-un.
Reuters/KCNA

Top of this list is North Korea, where the risk of overreach and accident with terrible consequences is real. As Malley puts it in his Foreign Policy paper:

Without a viable diplomatic offramp, Washington risks cornering itself into military action. Even a precisely targeted attack would likely provoke a North Korean response.

From Australia’s perspective, and given that the bulk of its trade goes to the countries of North Asia (China, Japan and South Korea), conflict on the Korean Peninsula would be crippling.

Second on my list, as it is on Malley’s, involves the risks of open conflict between Iran and Saudi Arabia, egged on by the US and Israel. Such disruption could not be contained. It would spread, risking oil shipments from the region and wider conflict between Sunni and Shia.

As Malley puts it:

With so many flashpoints, and so little diplomacy, the risk of an escalatory cycle is great.

From an Australian perspective, an escalation would be alarming, given the deployment of our forces in a training capacity in Iraq.

Third is Afghanistan, where the tempo of US-led strikes against the Taliban is set to increase, along with pressure on Pakistan to desist in its covert support for the insurgency.

Malley recommends:

US allies in Afghanistan should push for a greater diplomatic political component to the US strategy. As it stands, that strategy sets the stage for more violence while closing avenues for de-escalation.

With troops in the field in a training capacity, the Australian government should be pushing for a regional settlement, involving Afghanistan’s neighbours and the insurgents.

Rohingya refugees continue to flee from Myanmar to neighbouring Bangladesh.
Reuters/Tyrone Siu

Fourth on my list is the issue of identity policy in southern Asia, including the displacement of the Rohingya to neighbouring Bangladesh.

As Bremmer and Kupchan put it:

Identity politics in southern Asia comes in several forms: Islamism, anti-China and anti-other minority sentiment, and intensifying nationalism in India.

From Australia’s perspective, displacement and persecution of minorities in its neighbourhood is a particularly worrying development, along with Islamic State-inspired eruptions in countries like the Philippines.

Finally, looms the issue of cyber conflict.

The biggest fight over economic power centres on the development of new information technologies. Competition for dominance in the areas of artificial intelligence and super-computing between the US and China has serious implications for Australia’s national security.

The cyber issue, which potentially includes the weaponisation of AI, is becoming the new contested space.

And that’s not all …

Now, to a less concerning issue, for the moment: the global economy.

In its latest overview, the World Bank expects global growth to edge up to 3.1% “after a much stronger-than-expected 2017, as the recovery in investment, manufacturing and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices”.

As one of the world’s biggest commodity exporters, this is good news for Australia. The World Bank says:

2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity.

However, it also warns of a slowdown in potential growth as stimulatory fiscal and monetary policies run their course.

The ConversationWelcome to 2018.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.

Australia’s tenuous place in the new global economy


Richard Holden, UNSW

The Committee for Economic Development of Australia (CEDA) has released a report titled Australia’s Place in the World, which considered how Australia should respond to changing attitudes to globalisation.

At home and around the world, there is a backlash against free trade and globalisation. The report asks what course Australia should navigate through these choppy economic and political waters.

The backdrop, of course, is the UK Brexit vote and the election of Donald Trump as US President.

If that’s not motivation enough, one could easily add to CEDA’s list: the performance of Marine Le Pen in France’s recent presidential election, the election of the far-right AfD to the German parliament, and the looming role of Pauline Hanson’s One Nation in the Queensland election.

Tariffs and trade

The report is broken into three sections: Global Economy, Global Security, and Global Governance, but it is the first and third that speak directly to Australia’s economic fortunes in the age of Trump.

One obvious, but correct and important observation the report makes is that Australia has been a huge beneficiary of free trade over the past 30 years. Not only have our exporters gained access to major overseas markets, but consumers in Australia have also benefited from reduced tariffs.


Read more: With a free trade deal Australia can win China’s dairy market


For example, the price of a typical sedan has basically halved in real terms due to the removal of a 100% car tariff. But while trade and globalisation have made the economic pie bigger, the sharing of those benefits has been much more uneven. Just ask manufacturing workers.

What is missing from the report’s recommendations is how to deal with and compensate the losers from globalisation in Australia. That is important, both economically and politically.

Global rise of populism

The rise of populist parties around the world has been associated with this failure to compensate globalisation’s losers.

Part of what it takes to address this issue is so-called “place-based policies” which Rosalind Dixon and I have previously discussed. Broadly, this refers to the people who are affected when industries move away from particular areas and employment opportunities dry up.

The CEDA report argues, however, that:

Policies such as moving from transaction taxes on property to broad-based land tax to address housing affordability and labour mobility need to be designed along with transition pathways. GST reform with a broader base to remove the need for stamp duty could be another option.

The report also points out that Australia’s company tax rate is uncompetitive, and that the proposed shift to a 25% rate under the Coalitition’s “Enterprise Tax Plan” would only happen by 2026-27, if it happens at all. These are all good points, and would make for good policy. Yet the only one that looks vaguely likely to happen is replacing stamp duty with land tax – and that would be done at a state government level.


Read more: Lessons from Brexit: the fruits of globalisation must be shared with low- and middle-income groups


The federal government floated the idea of GST reform and retreated almost immediately after the opposition predictably attacked it viciously and effectively as being “regressive”. The Enterprise Tax plan also looks to be in danger, as several crossbench MPs seem likely to side with Labor and want tax cuts only for small businesses. That’s utterly stupid economics, but apparently good politics.

Middle power leadership?

As the report notes: “Global cooperation is growing increasingly important in a world that faces a number of crises that require cross-border solutions.”

This is surely true, although the report paints a rosy picture of Australia’s potential role as a “middle power”, claiming that we were important in the establishment of the United Nations.

True, Australia played a relatively important role in establishing APEC and the G20. But that involved leadership from figures like Hawke, Keating and Rudd. I, for one, don’t see anyone on the present political landscape with those leadership and persuasion skills.

Perhaps the bigger challenge is that President Trump seems determined to radically undermine international institutions. Even Canadian Prime Minister Justin Trudeau was unhelpful in the Trans Pacific Partnership rebound effort that Malcolm Turnbull and others were trying to arrange.

What can Australia do in the face of orchestrated attacks on global institutions by the biggest and most important nations? Very little, I fear. The age of Trump is a difficult time for Australia and its leaders. Many things are out of our control.

What we can do, however, is resist the tide of populism at home, and provide stable and functional government. Both major parties have a patchy recent record in that regard, and the federal opposition has made some populist-type moves on trade and protectionism.

The ConversationLet’s hope they don’t really believe it.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.

North Korea tests not just a bomb but the global nuclear monitoring system



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Lassina Zerbo, Executive Secretary of the CTBTO at a press briefing following the recent suspected nuclear test in North Korea.
CTBTO, CC BY-NC

Trevor Findlay, University of Melbourne

North Korea’s apparent nuclear detonation on September 3 has drawn our attention to a remarkable international organisation that helps detect and identify nuclear tests.

For the Vienna-based Comprehensive Test Ban Treaty Organization (CTBTO), the latest North Korean explosion was easy to detect and locate. With a seismic magnitude of 6.1 and a blast yield of 160 kilotons (Hiroshima was around 15), the purported hydrogen bomb test mimicked a major earthquake. It was quickly sourced to North Korea’s nuclear test site.

Confirming that the event was definitely a nuclear test, as opposed to another type of explosion or an earthquake, is trickier.


Read more: King Jong-Un’s nuclear ambition: what is North Korea’s endgame?


For that we rely on detection of short-lived radioactive isotopes that may leak from the test site, notably the noble gas xenon. The CTBTO has not yet announced such a finding, although South Korean monitors have reportedly detected xenon-133.

Other potential sources of the gas must be eliminated before a definitive conclusion can be reached.

Global network of seismic and radionuclide monitoring stations.
CTBTO / The Conversation, CC BY-ND

In the past, such fallout has usually been discerned after a North Korean test, but not always. Much depends on whether the cavity created by the test leaks or collapses.

Nuclear test ban treaty

The CTBTO’s International Monitoring System, which detected the North Korean test, is designed to verify compliance with the 1996 Comprehensive Nuclear Test Ban Treaty, which bans all nuclear tests in all environments for all time.

Network of infrasound monitoring stations.
CTBTO / The Conversation, CC BY-ND

The International Monitoring System comprises 321 monitoring systems worldwide, using four technologies:

  • seismic – to detect tests under ground
  • radionuclide detection – to detect breakdown products
  • hydroacoustic – to detect tests under water, and
  • infrasound – for atmospheric tests.

The CTBTO’s international monitoring system is sensitive enough to detect underground nuclear tests below one kiloton.

Construction of the system began in 1996 and is now 90% complete.

Network of hydroacoustic monitoring stations.
CTBTO / The Conversation, CC BY-ND

Australia hosts six seismic, two infrasound and one hydroacoustic station, including a large seismic array and infrasound station at Warramunga in the Northern Territory.


CTBTO / The Conversation, CC BY-ND

Data from the International Monitoring System is transmitted to Vienna via a global communications satellite network, mostly in real time, where it is compiled, analysed and distributed to member states. Sixteen laboratories are available for analysing radioactive fallout.

The treaty also provides for on-site inspections to confirm that a nuclear test has been conducted. The system is funded by member states according to the usual United Nations formula based on national GDP.

A difficult, important achievement

As a member of the Australian delegation, I observed the complex preparatory scientific talks on the system at the Committee on Disarmament in Geneva in the early 1980s. It is a miracle of statecraft and science that this collaborative international infrastructure has actually come into being.

The scientists did not get everything they wanted due to political and financial constraints. Some errors were made in the rush to complete the technical specifications. Installation of some of the stations in remote and inaccessible areas has proved daunting.

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The hydroacoustic system, for instance, passed a significant milestone in June when the final station was completed, on France’s Crozet Islands in the southern Indian Ocean.

After 20 years of planning and construction and the investment of millions of dollars, not only is the International Monitoring System almost complete, but it is functioning far better than its designers anticipated.

It also has unexpected side benefits, such as providing early warning of tsunamis and detecting nuclear disasters. The network successfully detected the 2004 Indian Ocean tsunami and tracked radioactive plumes from the 2011 Fukushima nuclear disaster.

Nuclear test ban treaty

The test ban treaty itself is not in such good shape. More than two decades after it was opened for signature it is still not in force, rendering the CTBTO only “provisional”. This is due to the requirement that all 44 states with a significant nuclear capacity must ratify it.

Currently 183 states have signed, and 162 have ratified. But 8 of the 44 with a nuclear capacity have still not ratified: China, Egypt, India, Iran, Israel, Pakistan, North Korea and the United States. China, Egypt, Iran, Israel and the US have at least signed. China says it is awaiting US ratification before it moves.

After a flawed lobbying effort, President Bill Clinton’s administration failed to secure Senate approval for US ratification in 1999. The treaty has not been resubmitted since, despite President Barack Obama’s undertaking that he would try.

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Given President Donald Trump’s apparent focus on emphasising American military prowess, it seems unlikely that he will favour ratification of the treaty.

More immediately threatening is the return of periodic Republican attempts to defund the CTBTO. These are usually beaten back on the grounds that the US benefits greatly from the worldwide monitoring that only a global system can provide, notwithstanding impressive US national capabilities.


Read more: What earthquake science can tell us about North Korea’s nuclear test


As it has in the past, the Australian government should make representations in Washington in support of CTBT ratification and preservation of funding for the system.

Paradoxically though, even if the other seven holdouts ratify, the one country that continues to conduct nuclear tests into the 21st century, North Korea, can stymie entry into force forever. Its accession to the CTBT should be part of any negotiation with North Korea on its nuclear program.

The good news is that the global monitoring system continues to go from strength to strength, providing reassurance that all nuclear tests, including those less brazen than North Korea’s, will be caught.

The ConversationThe CTBTO’s verification system provides hope that science can quietly triumph while political solutions elude us.

Trevor Findlay, Senior Research Fellow Department of Social and Political Sciences, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Cyberspace aggression adds to North Korea’s threat to global security



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People participate in a Pyongyang mass rally held at Kim Il-sung Square.
KCNA/Reuters, CC BY-ND

Joe Burton, University of Waikato

Claims that North Korea could fire nuclear weapons at the continental US present a serious threat to global security. But its hostile activities don’t end there. North Korea has also become an aggressive cyber power, regularly using cyber attacks to advance its interests.

Last month, a threat intelligence firm, Recorded Future, reported that North Korea may have been using New Zealand’s internet networks as proxies to launch cyber attacks worldwide. The New Zealand government’s Communications Security Bureau is assessing the veracity of these claims.

The report suggests that North Korea may have both a physical and a virtual presence in New Zealand. It raised the possibility of a network of “patriot hackers” using New Zealand cyber networks to pursue the aims of the North Korean regime.

North Korea’s history of cyber attacks

Cyber attacks have become a wide-ranging tool in the arsenal of authoritarian governments to coerce and intimidate foreign governments, to subvert democratic processes, and to impose costs on their adversaries.

In North Korea’s case, this pattern of activity stretches back many years. North Korea is estimated to have an army of 6,000 hackers, engaging in malicious cyber activity regularly.

In March 2013, hackers linked to North Korea attacked South Korean banks and media agencies, causing widespread disruption. In November 2014, cyber attacks against Sony Pictures followed the release of the film The Interview, which caricatured and mocked the North Korean leader.

The attack led to the release of personal information on thousands of Sony employees and the cancellation of the film’s launch. The incident quickly escalated into a serious diplomatic dispute between the US and North Korea.

In 2016, a Bangladeshi bank became the victim of North Korean hackers. Reports said that US$81 million were lost through compromised financial transactions.

Most recently, the WannaCry ransomware attack, which affected computers in more than 150 countries, has been linked to the Lazarus group of hackers, which has links to the North Korean regime. This suggests North Korea is now using state-sponsored hackers to help raise revenue for a country starved of access to international markets and funding.

Cyber attacks further threat to nuclear security

Analysis of North Korea’s activities often misses the connections between cyber and nuclear security. North Korea’s nuclear program has itself become a victim of cyber attacks.

A report in the New York Times in March this year revealed that the Obama administration ordered a campaign of cyber subversion aimed at North Korea’s nuclear and missile programs. It mirrors the now infamous Stuxnet attacks directed against Iran in 2010.

In the absence of progress on North Korean disarmament, delaying its ability to pursue nuclear weapon programs through cyber attacks has become a feature of US strategy. It’s a strategy that may yield short-term results, but presents significant escalatory dangers.

Proliferation risks

Cyber attacks pose increasingly serious risks to classified nuclear information, the security of nuclear facilities, and the integrity of the components that nuclear arms and missile technologies rely on.

Last year, the UK government was warned that its trident nuclear submarine program was vulnerable to cyber intrusions. The think-tank report Hacking UK Trident: A Growing Threat argued that a cyber attack directed against the submarines could:

… neutralise operations, lead to loss of life, defeat or perhaps even the catastrophic exchange of nuclear warheads (directly or indirectly).

In June this year, the US government reported multiple cyber breaches of its own nuclear installations. This followed similar revelations about attacks directed against South Korea’s nuclear reactor operators Korea Hydro and Nuclear Power Co Ltd in 2015.

Another concerning aspect of the cyber-nuclear nexus is that hacking could facilitate the proliferation of nuclear materials and technology to other aggressive states and non-state actors.

Reining in North Korea

The growing connections between nuclear and cyber security are changing the strategic balance between nuclear powers in subtle and undetermined ways. Approaches to dealing with the North Korean regime must treat these issues as related.

So what can be done about North Korea’s aggressive use of the internet? Unfortunately, just as with its nuclear program, there few good options. Sanctions imposed on the regime for its cyber activity, such as those following the Sony hack, have proved ineffective at changing the regime’s behaviour.

China and Russia may have a role to play in persuading Kim Jong-un to “play nicely” in cyberspace, but both countries also have a long history of malicious cyber operations.

There are examples where states have given up destructive weapons programs. These include Colonel Gaddafi’s regime in Libya and the more recent Iran deal. However, the difficulty of verifying whether offensive cyber programs have been dismantled presents a major obstacle.

Cyber armies operating from a virtual realm can easily be hidden. Given that punishing the North Korean regime for its behaviour has not yielded results, it may be time to start thinking about a range of positive inducements to bring the country back into the international community, including offering diplomatic talks without precondition.

The ConversationRewarding North Korea for its errant behaviour may be unpalatable, but the combined danger of its nuclear and cyber capabilities would appear to warrant a significant shift in strategy.

Joe Burton, Senior Lecturer, Institute for Security and Crime Science, University of Waikato

This article was originally published on The Conversation. Read the original article.