On GDP

Geoff Edwards writes: Re. “Strong GDP result sends Australia back to top, with a promise of more” (yesterday). GDP is a backward-looking flow account and is worse than useless in measuring the health of the economy, let alone well-being. It doesn’t record depletion of stocks (of natural resources) or of financial capital (debts). It doesn’t distinguish ‘goods’ from ‘bads’ such as car crashes or pollution from mines which rack up future liabilities. It records only goods and services traded in measured markets so ignores home duties, the black market, and the value added by government such as through education or public-good research. It is not even comparable between countries because of different proportions of untaxed, unrecorded activities.

True, Australia has officially avoided a recession, but to the growing cohort of under-employed and unemployed locked out of housing, entry-level factory jobs and privatised vocational education, it must look awfully like a recession now.  Further, we can’t expect business to invest when almost any enterprise can be undercut by cheap imports or low-bid tenders from global services firms. GDP can be rising, all while the economy is degenerating in a self-reinforcing vicious cycle of unemployment, inequality, indebtedness, consumption and waste.

On the South China sea

Ralph Brading writes: Re. “Turnbull pokes the dragon, gets torched, at tense G20 summit” (Wednesday).  ‘What is going on in the South China Sea?’ Michael Sainsbury asks in Crikey.

The answer should come as no surprise to even the most casual student of Chinese history. The communists have simply done what Chinese kings and emperors have done for the last 2000 years, they have built a long wall, using new technology in a new, equally challenging environment but for the same purposes as the walls of their imperial forebears. This is a combination of defence, the securing of resources within the walled area and the control of trade and movement between the Middle Kingdom and the barbarian sources outside, in this case not as formerly to the north but to the east, west and south.

The new long wet wall along the nine dash line that defines the Nan Hai, the South China Sea, a boundary apparently proclaimed by Emperor Mao in 1949, consists of electronic surveillance under and electronic and physical surveillance on and above the sea. The built up reefs and sand islands are modern versions of the forts and garrison towns that were built along former long walls, including the now ‘Great’  long wall.

The Great Wall owes its modern place as a symbol of China’s sense of itself, pride and relationship to the outside world to Sun Yat- Sen when he proposed it as such during his later work on his Plan for National Reconstruction. His concept was eagerly adopted by Chairman Mao who ordered the reconstruction of more accessible parts of the Ming Dynasty wall and its use for diplomatic and tourism purposes. China’s current masters have clearly adopted a part of Mao’s strategy with the first internal tourist flight and a traditional one, ‘divide and conquer’, with any threatening barbarian alliance, in this case the Philippines.

 

Peter Fray

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