Australian democracy is in very serious jeopardy | Macrobusiness

By Houses and Holes on November 4, 2016:

Australian democracy is in very serious jeopardy. China is making great strides towards it and its intentions are not benevolent. It’s obvious in local, regional and global trends and if we do not do something soon to protect our freedoms they are going to be sold into the burgeoning Chinese empire, as well as political hegemony, by a corrupt oligarchy.

Some of you will tell me to take off my tin foil hat for writing this. To you I say ‘listen up’.

For the next few decades the global political economy will be a contest between post-cultural free moving capital and deeply cultural labour. This will mean ebbs and flows between investment and regulation in an overall trend towards de-globalisation.

As nation states rise from the past few decades of globalisation to protect their respective labour pools, there will be an increasing Balkanisation of trade and investment flows, particularly in terms of regions. One can foresee a time when a European trading bloc competes with American and Asian trading blocs as each’s respective hegemon – US, China and Germany – muscles out its sphere of influence.

In terms of the magnitude of these respective spheres, the biggest loser will be the United States as it is increasingly contested in North Asia. Europe may also lose as the eurozone either disintegrates or shrinks. China will win big.

Don’t get me wrong, I am not arguing that China will grow to rule the world, nor that the US will decline and fall. In fact, I expect US economic dominance to outlast China’s great leap forward owing to its immense sophistication, markets, research capability and excellent demographics. On the other hand, China faces an extremely difficult transition through the ‘middle income trap’ and terrible demographics.

Nonetheless, the sheer magnitude of these economies and powers mean that the great regional Balkanisation will transpire.

Thus Australia will find itself an object of contest within a region caught between respectively receding and advancing Super Powers. We are already seeing this very clearly in the shifts undertaken by both the Philippines and Malaysia. Both nations are led by highly dubious democratic leaders under intense pressure from a traditional US ally to come clean on corruption.

Yet both have instead turned to China to prop up their respective regimes with enormous investment deals that have come with fabulous reciprocal endorsements for Beijing, Manila and Kuala Lumpur. This while the US’s rather foolishly self-serving TPP dies on the shelf.

At the risk of stereotyping, these new Asian power relationships much more resemble a Confucian model that privileges patronage and filial bonds above the probity and meritocracy of democracy.  China’s goals here are very obviously to undermine not just US influence but to empower local entities that are sympathetic to its interests. It may or not be an explicit goal to undermine democracies as well but if promoting local ‘strongmen’ does so then all the better!

Now turn to our local circumstances. Australia is the midst of a terms of trade boomlet engineered exclusively in Beijing. After decades of stupidly pro-cyclical policy-making Australia is now little more than a southern province of Chinese economic policy. With the flick of a pen in an obscure public service department, China delivers tens of billions to our shores in coal revenues and our monumental trade deficit evaporates overnight.

There is no other economy on earth that I know of that works with this dependence. We call it lucky. And it is. But it also comes with strings attached and they have been on display for a decade or more. Australian policy attitudes towards China have morphed steadily from a middle power engagement that included dialogues on human rights and democratic process to today’s pragmatic “do what you like boss” attitude.

I’m not writing to judge that. The kids of Tibet and Tienanmen are not Australian and there are limits to how much anyone can care about far flung folk. Especially when you’re offered a hundred billion dollar blindfold. Moreover, China needs Australian dirt to power its development so the power transmission is not all one way. The natural asymmetry of the political relationship is counter-balanced by the natural asymmetry of the economic one.

That’s the past. The future is very different indeed. China is going to need less and less dirt over time as it grows richer and more regionally powerful. And that’s where the recent events in the Philippines and Malaysia are a very important cautionary tale for Australian democracy. As we’ve seen, the next phase of Chinese development will be to throw off enormous sums of capital and people. Australia is happily gobbling up both at the moment to offset the declines in its dirt fortunes.

But this wave comes with much more explicit power compromises than we have already seen in action. The Sam Dastayari donations and rampaging property developer corruption scandals are the tip of the iceberg. Since then we’ve seen more and more Chinese bids for Australian strategic assets. This week we saw barely former trade minister Andrew Robb take a job advising the Landbridge Group, the owner of the Darwin Port. Landbridge is a shadowy firm involved in all sorts of stuff from chemicals to armed militias. It is widely considered to be beholden to Beijing in some way. At the very least the Darwin Port is the butt end of Beijing’s One Belt, One Road trade bloc monster. So here we have a trade minister out of the job for six months, a job that involved intimate consultation on the US’s competing regional trade deal, the TPP, tipping his intelligence directly into the Beijing trade bloc.

A less generous analyst might see this as some form of commercial treason. I will say that it is indicative of just how unprepared Australian parliaments are to address Chinese soft power influence in its manifold forms. Indeed, with the current crop of money-grubbing mock-libertarian ideologues in charge, we are a complete bloody pushover. Our checks and balances appear gossamer-thin in the executive. The intelligentsia is under assault from the Chinese student pipeline and pseudo-intellects like Bob Carr and his Chinese apologism. Nor can we rely on the media to hold any to account. Of the duopoly, Murdoch will give China the nod the moment the deal is good enough. Fairfax is dying and in its death throes has grabbed for a real estate lifeline that is itself China dependent.

It is not at all hard to imagine a circumstance like that that has engulfed the politics of the Philippines and Malaysia happening here. An Australian PM finds himself under siege and turns to Chinese patronage to bail him out. Explicitly or otherwise it will only take one desperate narcissist and Australia too will be welcomed into the waiting arms of Beijing patronage with all of its carrots and sticks determining precisely who wins and who loses Downunder. The following election would be fought between a candidate armed with hundreds of billions of dollars of firepower versus a guy promising recession.

So, I worry. I worry a lot, actually, that Australia is on the verge of giving away its most prized possession – its freedom – quietly in the dark for a few pieces of silver. To stop it we must move now, not tomorrow. We need:

• a big to cut the immigration intake and a rein the “citizenship exports sector”;
• an overhaul of the Chinese investment regime such that it be placed alongside the nation’s strategic objectives;
• a ban on foreign political donations (where is it?) and a Federal ICAC;
• a proper enforcement of rules governing foreign buying of real estate;
• a reboot of foreign policy that engages the US much more heavily in Asia.

Another couple of years of current policies and a few more Andrew Robbs and Aussie democracy as we know it is toast.

Reproduced with kind permission from Macrobusiness.