1-23-08, 9:47 am

The Australian federal government has shown itself to be powerless to control the big banks and corporations. These huge institutions have thumbed their noses at the timid words of the Federal Treasurer. The banks are no longer prepared to be restrained by the federal government or the Reserve Bank. The banks have always made their own laws — a fact that is now screamingly obvious. It’s the same story in the United States, Britain and other 'free market' capitalist countries. But the chickens are now coming home to roost.

Whirlwind

The whirlwind of consequences are being seen in the sub-prime mortgage crisis in the US which is steadily spreading its virus throughout the world. In the US tens of thousands have already lost their homes and are being evicted. Millions of investors have lost their savings and investments as companies go to the wall. Many more millions are set to lose their bank savings as banks are unable to make up for the huge losses being incurred as borrowers default on interest and principle repayments. It is the customers with small investments or small savings who are at the bottom of the pile. The banks and lending institutions will get first priority.

Credit card rates and other bank charges are being pushed up to make consumers pay for the irresponsibility of the banks and other financial institutions. Superannuation funds which have accumulated billions of dollars of workers’ money are also having their investment returns cut and some may lose all their money if some banks are bankrupted.

Restore control

To restore some control by governments over the economic direction being followed it is essential that any further privatisation be stopped immediately and key industries and institutions be returned to public ownership. This must include telecommunications, transport, water, electricity supplies, main resources, education and universities, and hospitals.

A new public bank must be set up by the government in order to provide low-cost home loans. A massive injection of funds into public housing projects will provide jobs and affordable public rental housing and housing for private sale. These latter two mechanisms will force the private banking institutions and landlords to substantially lower their profit gouging margins in order to compete in the market.

The tens of billions of dollars being spent on the military also distorts the economy. The bulk of that money should be used to strengthen health, education and other vitally important services.

Public ownership would restore some power to regulate and control the economy, and plan the use of financial and other resources in the interests of the working people who comprise the overwhelming majority of the people in all developed countries.

The politicians and governments which continue to believe that capitalism is the best and only economic system are incapable of even considering the socialist alternative and, even if they did, lack the courage to advocate and work for it. They do not have the wit to draw the conclusions from those countries that do not solely rely on the 'market' to solve the economic problems that are now piling up. They fail to even notice that some other countries are achieving consistent economic rates of development that are way ahead of those of the developed capitalist countries.

Razor gang

Rather than take serious measures to control the banks and corporations the response of the Australian government is to send in the 'razor gang' to government departments and government programs. They will cut jobs and slash services. It means that working people will pay the price of the failed capitalist system and the inability of the government to do what is necessary.

If governments plough millions or even billions of dollars of taxpayers’ money into enterprises facing severe crisis the same governments should also control them. It is unlikely that the present government would even consider such measures.

They will hang on to their illusions while thousands upon thousands of working people lose their savings and their homes until anger eventually boils over and they demand a government which has the ?will to take action against the anarchy of 'free market' capitalism.

The road to crisis

The road to crisis started in Australia in the early 1980s when the policies of Milton Friedman were adopted and first implemented by the Hawke/Keating government. These policies became known as 'economic rationalist' in Australia or 'neo-liberal' in overseas countries.

It started with the floating of the Australian dollar against other currencies by Paul Keating when he was the Treasurer in the first Hawke government. This meant that the currency was pushed up or down according to the whim of the stock exchanges around the world with governments having no control over the outcome.

This was followed by the introduction of the so-called 'competition policy' which was really a cover under which publicly owned enterprises were privatised and incorporated into the capitalist system completely. Competition was never enforced when it came to the corporations. This is evident in the oil industry and, quite recently, in the interest rate rises imposed by the banks. The very small differences in the rate increases imposed by all the major banks show that competition is just a joke. There are many other examples.

In a number of other major industries the process of mergers and take-overs has gone on apace until the market is dominated by one or two major enterprises which make cartel agreements controlling prices or by carving up the market between them.

In the rush to privatisation in Australia, telecommunications (Telstra) has been handed over, Qantas and the Commonwealth Bank were privatised, airports, port facilities, power, water, railways and many other vital industries or services have been wholly or partly privatised. Some government services have been handed over to the private sector — it is euphemistically called 'outsourcing'.

Underlying all these measures goes the systematic intensification of the exploitation of labour. This is behind the talk by governments and employers about increasing productivity — more production by fewer workers. The Howard government followed the Labor governments’ introduction of enterprise bargaining and the gutting of awards by savagely attacking workers’ wages, conditions and rights. The Rudd government is using the mantra of 'fighting inflation' — not the inflation caused by banks putting up interest rates or the oil companies putting up petrol prices but the attempts of trade unions and workers to fight for higher wages and the restoration of penalty rates, holiday pay and other conditions stolen by employers in recent years.

All these policies will be continued by the Rudd ALP government as has already been made clear by the empty platitudes and meaningless appeals made to the banks when the private banks put up interest rates in the last couple of weeks.

From The Guardian