Labour-Protectionism to Neoliberalism - Example

Demonstrate how the regulation / deregulation of communication sector has been affected by the move from labour-protectionism to neoliberalism College Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date Introduction Between 1890 and 1940, Australia has witnessed, as economic analysts argue, a relative economic stagnation. This is primarily because the country failed to encourage national capitalism vigorously through such frameworks as international free-trade. This failure to thrive is attributed to the deleterious effects of labourist-protectionist policies of the nation. These policies were responsible for many restrictions in the post-war period; the years that are popularly known as 'Rip van Winkle' years. Public choice theory hints at the state being too central in nature, which was captured by redistributive and sectional interests rather than those that could have catapulted it to growth. In other words the protectionism was so deeply entrusted into it that it went miles away from being growth-oriented (Anderson, 1987). There was a pervading power of monopoly that was seen as a hurdle towards growth. This power of monopoly could find its roots back to 1788, the year that is seen as having sown the seeds of a monopolistic partnership between the government and the private sector. There have been raging debates on Australia as a labour-protectionism state and critics often turn to 1820s to understand the labourist-protectionist compromise. But what is of greater interest is the period between 1920 and 1974. It was around the time Australia was emerging from the Word War - I and early 1920s were years of euphoria and confidence which, though, didn't last beyond 1926, a time when market conditions had turned very bad since Britain and Europe very now seen as stiff competitors for goods that were of primary importance to Australia. Following this, the World War - II left greater impact on Australian economy and in years from 1941 to 1949 Labour government was seen as pursuing a socialist agenda and it continued to extend public ownership of major sections of economy including sectors as coal, banks, mines, railways, airlines, suburban transport, ships, hospitals, electricity, insurance, universities, postal services and even telephones. Since there was a war emergency economic power saw federal centralisation in vogue where the power began to be exerted through banking regulation and taxation. This regulatory system was left undisturbed by subsequent conservative governments that were in power between 1949 and 1972. This was seen more as a compulsion on part of these governments as they could not have survived had they touched these regulations. The years between 1967 and 1986 can be termed as ones that saw the labour-protectionism at its worst crisis, weakening Australia's position in the global context, particularly in the traditional exporting sector of agriculture and traditional import-replacing sector of manufacturing. There was widespread stagflation on account of national policy rigidities, which got further complex as the post-oil shock recession took place. Not only this, the labour-protectionism began to crumble as the minerals export boom took place. This coincided with the scrapping of White Australian policy and as soon as that happened Asian migrants started trickling in. This was the beginning of multiculturalism as Australia removed rigidities of isolation and exclusion and began to accept large numbers of refugees towards the end of Indochina war. Neoliberalism had set its foot on the Australian land and this was the beginning of a new era, which was to change much of Australian economic demographics in almost all business sectors. Industry of Australian economy in Focus Communications A process of neoliberal transnationalisation has been seen in the global communication industry since mid-1980s. There has been a geographical expansion of communication industries either through acquisitions or foreign direct investment (FDI) and these industries have reorganised themselves as such that has enabled them to sell their effectively to audiences worldwide. The communication industry has been able to mediate increasing globalised reach; be the same from advertising, newspaper, television or other electronic media segments. It was not the case earlier as this industry was bound by protectionism. Following neoliberalisation this industry has been able to expand its role manly through capital investment, thus becoming one of the largest industries of the world to have both horizontal and vertical integration. In the communication industry there have been dramatic neoliberal transnationalisations during the past two decades. Several governments have introduced liberalisation measures in this industry across the world and Australia has also been at the forefront of it. This has been made possible by removing protectionist behaviours and reducing government intervention in this industry by opening the domestic markets and bringing about privatisation in the same. That means such moves have been made possible through deregulatory mechanisms and privatisation. This trend has not limited itself to the old socialist bloc but also to Asian and Latin American countries (Jin, 2005). Friedman (1982) has remarked that neoliberalisation has brought in policies that enable an industry to maximize profit-making and increase role of markets through privatisation and deregulation. Hart-Landsberg (2006) has stated that it has enhanced and expanded opportunities that lead to corporate profit-making. In other words neoliberalisation has unleashed international and national politics in such a manner that it tends to become highly supportive of business domination (McChesney, 2001). To quote McChesney, he has stated that "the centrepiece of neoliberal policies is invariably a call for commercial communication markets to be deregulated”. At the core of successes that neoliberalisation has brought is the mergers and acquisitions side. Such enormous structural changes in communication industry have been made possible mainly by mergers and acquisitions, which were not possible in the labour-protectionism regime (Peltier, 2004, Howard, 1998; Chan-Olmsted, 1998; Jung, 2004). Mergers and acquisitions explain the unique trend that has been seen among broadcasting stations in the world, including Australia. Between 1983 and 2005 as many as 10, 233 mergers and acquisitions have taken place, out of which 351 have been in Australia. These mergers and acquisitions have been valued at $2,153 billion, and the highest number of 5511 have taken place in the United States. In UK the figure stands at 692 companies, Germany 247 companies, France 337 companies, Canada 650 companies and Japan 219 companies. Barring the US, the rest of seven companies were responsible for 78.2 percent of all mergers and acquisitions, where in Australia Rupert Murdoch's News Corporation was responsible for the maximum number of mergers and acquisitions. These deals have taken place in newspaper, telecom, advertising and broadcast segments of the communication industry. Even as communication industry has taken many leaps in its electronic segment in the recent years, newspaper segment is not anyway lagging behind. The deals have increased rapidly in this segment as well and amounted to 3467 deals between 1983 and 2005, out of which Australia has got its share of 112 cases; US 1006 cases, UK 494 cases, Germany 295 cases, Canada 209 cases and France 227 cases. In telecommunications segment Australia again pegged itself at 625 deals, which was almost at par with Germany's 765 deals, Japan 605 deals, France 572 deals; though Canada and UK stood relatively higher at 1068 and 1175 deals respectively. This is in stark contrast to eighties and even part of nineties, periods in which national communications systems were typically owned domestically. These included all -- television, radio and newspaper segments. Around this time films, books, shows and music were considered as import markets and largely dominated by the firms based in US. Post-neoliberalisaton such scenarios have and are rapidly changing. From being just national in nature in the past, the media systems now are commercially global. Media analysts like Christopher Dixon, term this scenario as "the creation of a global oligopoly" (McChesney, 2001). He further states that what happened to the automotive and oil industry earlier is now happening with the communications industry as well. Dominant media firms look up to themselves as the global entities of this game. In Australia, all this is attributed to Davidson Enquiry of 1982, which first mooted the idea of involvement of private sector in telecommunications, thus ending decades-old monopoly of Telecom Australia. Following several developments thereafter, including establishment of Aussat Pty Lid which though was restricted to raise capital, operation of Australia's first geostationary satellite for communications in 1985 and a debacle in the form of a debt of $400 million; it was in Optus Communications soon after that changed a bit the rules of the communications landscape. Optus was a private sector entity, which belonged to a consortium that included Bellsouth, an American telecommunications company based in Georgia. Australia sold out all its satellite assets to Optus but retained non-satellite assets with the government through Telstra. In telecommunications industry, Optus was the first non-Australian entity to enter the country but limited to carry out international and national long distance telephone calls. Trade Practices Act 1975 ensured its market viability until 1997, when the telecommunication market in the country opened to full competition. The nation had begun to replace anti-competition mechanism with general competition under a law in the Australian Competition and Consumer Commission. In the subsequent years from 1999 to 2006 Australia continued to sell its stakes in the telecommunications industry. The effects of deregulation were palpable; while Australia's telecommunication facilities were controlled by over 20 licensed carriers in 1998, the number had swelled to 99 until May 2002. The revenue benefits passed on to these carriers on account of deregulation by 2001 ranged from $5.5 million to $12 million. As on date there are primarily three Optus satellites providing telecommunications services to Australia, named C1, D1 and D2, apart from several earth stations that are responsible for providing access points to networks in Australia. These include 10 earth stations of Intelsat, 2 of Inmarsat and several others of SingTel Optus Earth Stations; not to speak of the huge network of submarine cables that include Southern Cross Cables to Hawaii, New Zealand, and the US mainland, Southern Cross Cables to Fiji, Australia-Japan Cable to Japan and Guam, Sea-Me-We3 to Asia, the United States, Middle East and Asia, APNG2 to Papua New Guinea, Jasaraus to Indonesia, Telstra Endeavour, Gondwana-1 and Tasman-2 to Hawaii, New Celedonia and New Zealand respectively. On account of this move from move from labour-protectionism to neoliberalism there has been a quick shakeout in the communication industry, however with a flip side that it has triggered an 'eating out' phenomenon in which smaller firms have been taken over by medium firms and the same eaten out by big firms. This s one reason why today's communication landscape is dotted more with bigger companies than smaller players - then former simply don't find a spine to stand up. An example of this phenomenon can be New Zealand where, for instance, the newspaper industry is mainly the province of Rupert Murdoch, the Australian-American and Tony O'Reilly, the Irishman. The latter also controls commercial radio broadcasting of the country and has huge stakes in publications of magazines. Pay television is controlled by Murdoch. In other words, part of its communication system is owned by a man of Australian origin. Murdoch, thus, does not only control Australian communication scene, his empire has its wings spread out in almost all other directions; like satellite television services running from Latin America to Europe to Asia, dominance of his Star TV in Asia through seven languages telecast via thirty channels, services of his News Corporation running in Phoenix and China, reaching 45 million homes and enviable assets in the form of Twentieth Century Fox films, HarperCollins publishers, Fox TV network, cable TV channels, TV stations, over 130 newspapers, magazines, and professional sport teams. In other words, the absolute power of deregulation in the wake of neoliberalism. The current status of Australia's communications sector is that it stands fully liberalised. This includes infrastructures, voice telephony and mobile communication. Public telecommunications network, leased lines, local voice telephony networks, alternatives infrastructures like utilities, highways and railways etc, and broadcasting and cable television fall in the infrastructures part. Domestic long-distance, international communication and local communication are part of voice telephony and paging, digital, satellite communication, CDMA and analog are part of mobile communication - all these are fully liberalised. Wider Australian economy, consumers and businesses have greatly been benefited by such liberalisation. While users have been provided a number of service providers to choose from, service providers, in an attempt to sustain, are being more responsive. While prices for services have lowered, the quality has improved. The communication industry has been affected by the gradual deregulation that started from 1980s, although changes that have been hailed as significant were made in 1997. These changes included revision of competition regulation and moving of several aspects of telecommunications to Trade Practices Act (TPA) from Telecommunications Act that was in use earlier. Further, AUSTEL, which was the telecommunications regulator till then, was abolished. Most of the responsibilities were shifted to ACCC or Australian Competition and Consumer Commission. A new entity ACC or Australian Communications Authority was established to regulate technical issues. Since 1997 legislative changes, the communication industry in the country continues to make strides. However, two important factors that are seen linked to its growth are the introduction of competition and deregulation of the market. For example, any person can start a business to provide communication services in case he abides by the Telecommunications Act 1997 (Commonwealth). The most profound effect of deregulation on Australian communication industry is that today it stands comparable to Canada and the United States both in services and prices that it offers (American.edu, nd). Conclusion For over a century labourist-protectionist policies have been an impediment in Australia's growth. These polices had made Australia central in nature, where it always looked inward and not outward. There were sectional and redistributive elements at work that prevented the nation from being growth-oriented. The nation was protectionist and relied more on monopoly of power than open-mindedness. All major industries were in the hands of the government and private players were not at all in the picture, not to speak of public-private partnership. Labour-protectionism has been debates for long, though the debates ceased to exist to some extent when neoliberalism gave way to a new optimistic wave of development and growth. But that was long after the eventful years until 1874 which saw two world wars and receding interest in protectionism. However following the Indochina war when Australia began to open doors to the refugees and started embracing multiculturalism, it heralded a new beginning of neoliberalism; something that was to change the economic landscape of the country in a major way in years to come. All businesses were destined to get benefited, including that of communications. Mid-1980s are seen as years of importance in the sense that these years triggered a worldwide trend of neolioberal transnationalisation of communication industry; an attraction in which Australia could not afford to leave itself behind. Things started moving with FDIs and mergers and acquisitions and communication industry started to become global in its reach, a sudden shift from decades-old fashion of staying domestic. Australia has been liberal in removing protectionism and showing way towards neoliberalism and the benefits that the nation has been able to reap through this move are for all to see. Today the country is seen at the centre of major communication deals of the world. References Anderson, K. (1987). ‘Tariffs and the Manufacturing Sector’ in The Australian Economy in the Long Run (pp. 165-74). New York: Cambridge University Press. Chan-Olmsted, S.M. (1998). ‘Mergers, Acquisitions, and Convergence: The Strategic Alliances of Broadcasting, Cable Television, and Telephone Services’, Journal of Media Economics 11(3): 33–46. Friedman, M. (1982). Capitalism and Freedom. Chicago: University of Chicago Press. Hart-Landsberg, M. (2006). ‘Neoliberalism: Myths and Reality’, Monthly Review 57(11): 1–17. Howard, H. (1998). ‘The 1996 Telecommunications Act and TV Station Ownership: 1 Year Later’, Journal of Media Economics 11(3): 21–32. Jin, D.Y. (2005). ‘The Telecom Crisis and Beyond’, International Journal Gazette 67(3): 289–304. Jung, J.M. (2004). ‘Acquisitions or Joint Ventures: Foreign Market Entry Strategy of US Advertising Agencies’, Journal of Media Economics 17(1): 35–50. McChesney, R.W. (2001). ‘Global Media, Neoliberalism, and Imperialism’, Monthly Review 52(19): 1–19. McChesney, R. (2001, March 1). Global Media, Neoliberalism, and Imperialism. Retrieved August 30, 2014, from http://monthlyreview.org/2001/03/01/global-media-neoliberalism-and-imperialism/ Peltier, S. (2004). ‘Mergers and Acquisitions in the Media Industries: Were Failures Really Unforeseeable?’, Journal of Media Economics 17(4): 261–78. Telecommunication Regulation and Liberalization. (n.d.). Retrieved August 30, 2014, from http://www1.american.edu/initeb/mw0637a/Regulation.htm Read More