Thursday 29 June 2006


Warren Buffett's enormous donation to philanthropic causes should also impact the way we view vast wealth and social obligation

After giving most of his 54 billion USD fortune to philanthropic causes, Warren Buffett agreed with another generous American donor, Andrew Carnegie, who said that “huge fortunes that flow in large part from society should in large part be returned to society” (from Fortune magazine).

It’s an obvious point to many of us but a radical statement from one of the world’s richest men and it flies in the face of the rampant individualism that prevails in the US and here in Australia.

Most discussion of affluence in the US and Australia focuses on the individual achievement. It’s rare that the far more complex picture that creates vast wealth is painted.

Bill Gates’ wealth is founded largely on the astute appropriation of the ideas of others, the successful marketing of these ideas and an extraordinary and brutally created and maintained near monopoly in computer software. These are feats of brilliance. But they do not necessarily represent the highest in human values.

That other computer icon Steve Jobs has a reputation for being the more ethical of the two players. I’m not convinced. The biography “Icon” by Jeff Young and William Simon suggests Jobs’ greatest skill has been catalyzing others’ ideas into marketable products. Jobs’ creative achievements are in strategy and identifying opportunities. The real credit behind Apple’s wonderful product range for the most part goes to others. Jobs has exercised Gatesesque single mindedness, brutality and determination to obtain market dominance through control. This is most vividly demonstrated in the Itunes Ipod tie up that shuts out competing players.

The roles of Gates and Jobs have been vital in the success of their businesses. Their talents need not be diminished but the talents of those around them deserve plenty of acknowledgement as well.

Gates and Jobs have provided commercial acumen and raw determination more than creative talent. It’s not surprising and not to be condemned. But nor should we look at people like Gates and Jobs as individual creators of wealth. The contributors to their success are usually very close behind in terms of importance but a long way behind in terms of wealth (Microsoft cofounder Paul Allen is perhaps an exception).

The only point here is that the gap between the celebrated leaders and those who have contributed immensely to their success is usually not so great. The wealth gap from those key contributors tends to be very substantial however. As in all things, luck plays a key role in wealth creation as well.

Similarly, the wealth gap between the very wealthy and the regular worker in no way corresponds with their relative contributions to wealth and society.

There’s nothing wrong with wealth creation and rewards for innovation and commercial savvy. There may be a point where the gap becomes excessive however. Do the actions of Messrs Gates and Buffett not also represent a view that the wealth gap is too wide?

As the gap between the very very wealthy and the rest of the population grows ever greater, the acknowledgement of society’s contribution to wealth creation is a big deal. I don’t ever remember Australia’s previous wealthiest man, Kerry Packer, acknowledging society’s role in his wealth creation. The only social comment I can recall from Packer was when he “marveled” that people paid tax given the way politicians waste public money. Politicians may waste public monies but Kerry seemed not to have noticed that ordinary people’s taxes (I understand he didn’t pay much) paid for the roads he drove on, the education and health systems that provided him with a quality labour force and the legal system that protected his empire.

For all their generosity, Messrs Buffett and Gates still retain many billions. As gestures of generosity, giving away billions and retaining a few, may not be wholly remarkable. It is wonderful however to have those resources being applied to some of the world’s most pressing health and education problems. The acknowledgement of a debt to society by two of the world’s richest men increases the obligation of all of the wealthiest to recognise the same.

Sunday 25 June 2006


Here in Vietnam, if you ask a local which team they support in the World Cup, they will normally tell you Brazil. It’s not rocket science. They choose the favourite to win. It’s not creative, it’s not principled, but it has a very sound pragmatism to it. It is not dissimilar to the way John Howard takes his political positions.

John Howard has managed to establish himself in the minds of many as a strong leader. Strong he is – but it’s mainly reflected strength. It’s all about hanging around with the big guys. His strength is consistently applied to the defence of the strong. John Howard seeks out the political equivalent of Brazil in his decision making - the policy position that will keep him on the right side of the big guy, the right side of the winners. To date Howard has cleverly managed to combine staying on the right side of the big guy with staying on the right side of the electorate.

Howard’s reputation for strength has been earned on a few key issues – the war in Iraq, Asylum policies and Industrial Relations. His strongarm control of the Government and the bureaucracy has also burnished the impression of Howard as Superman.

There are some signs that Howard’s affection for the big guy may be starting to present some political challenges.

Howard dutifully followed the biggest of the big guys, George W. Bush to war in Iraq in the face of widespread international opposition and with significant electoral ambivalence. Australians are ambivalent about the war in Iraq but Howard has managed to look strong throughout. Unlike Bush and Blair, he has paid no political price for the debacle.

His recent decision to allow Indonesia to exert significant influence over Australia’s asylum policies, whilst a logical extension of Howard’s “go with the big guy” foreign policy school, leaves Australians, including a good many members of the coalition, feeling uneasy. Australians are familiar with leaders following the US into conflict. When the big guy influencing Australian domestic politics is Indonesia, concerns surface.

Howard’s abandonment of David Hicks to a system of justice that most of the rest of the world and many Americans find abhorrent may also present Howard with some problems. If the UK government takes up Hicks’ case after trying unsuccessfully to date to block his UK citizenship bid, Howard will look very silly indeed.

The US’s major ally in Iraq, the UK, refused to allow its nationals to be held in Guantanamo Bay and succeeded in having all of them released. Howard has done nothing to obtain a just legal process for Hicks. If a newly adopted UK takes up Hicks’ plight or succeeds in having Hicks released, lots of questions will follow. In any case, Howard’s acceptance of justice Guantanamo style marks him out as unique in Western democracies. Americans are nowhere to be found in Guantanamo yet Howard is happy for one of his own to be held there seemingly indefinitely without trial.

On industrial relations, Howard thought he kicked another goal for his mates at the big end of town with policies that fit more with the new China than they do with Australia’s working traditions.

The impact of these policies on working Australians is now being documented. They have functioned to reduce wages and conditions of workers at the low end of the income hierarchy. The impact is so widespread however that many Australians are feeling uneasy about what these changes really represent in terms or our values. The claims made by the Prime Minister and his Minister for Industrial Relations when selling the changes are being proven false in practice and the examples of appalling employer actions are receiving wide publicity.

The asylum seeker issue presents Howard bashing the weak at its worst. Incarceration of children, children overboard lies and the general efforts of Howard and his Government to present desperate people (most of whom have been proven legitimate refugees) as queue jumpers, terrorists or otherwise undesirable people, took Australia to a moral low point as a nation.

With the Coalition backbench rebelling on this issue, perhaps Australia is prematurely beginning to move beyond the cruelty of the Howard years.

The examples of Howard lining up behind the big guys are many. Apart from the war in Iraq, kowtowing to Indonesia and Industrial Relations, Howard has also worked assiduously to service the interests of our uniquely powerful media monopolists. In his efforts to court two big guys – or families – at once, he is facing every little guy’s nightmare – being stuck between the big guys. Rupert Murdoch’s surprising attacks on Howard’s new media duopoly preservation policies last week put him head to head with the Packers and no doubt left the PM scrambling to measure which indeed was the biggest of these very big forces.

The wealthiest private schools, pharmaceutical companies and the medical industry have all been beneficiaries of Howard’s eye for where the power lies.

On the environment, Howard’s minimalist response to global warming fits nicely with the US policy while placing us at odds with the rest of the developed world. Increasingly, the environment may express itself as a big guy in its own physical right and Howard may look like he chose the wrong big guy. Australians are looking increasingly concerned about global warming and look likely to lead government in action.

The pattern is simple. Howard looks where the power is and goes with it. It is ideological though. Howard claims to be a conservative. And he is. He exercises his conservatism in radical ways though. He looks for power and those with it and then finds ways to preserve and further entrench that power.

Howard’s pandering to power is matched by an astute political sense. His mobilisation of the “aspirationals” has shown he is strips ahead of Labor on strategy.

After 10 years, there are signs that the seemingly invincible might be starting to crack. Just like in football, if your allegiance is based purely on staying with the strength, ultimately the landscape gets complicated, competing teams emerge and new big guys turn up. If there is no principle in the platform, there is a danger of being exposed after ten years. Choosing a new team might be an option in football but it’s more difficult in Federal Government. Industrial Relations, new asylum laws framed to appease Indonesia and the Iraq War will present greater problems for Howard as the next election looms. Australians may also decide that it is time to join a credible and established international effort on global warming.

Howard may control both houses of Parliament and exercise unprecedented Prime Ministerial power but life is proving more complicated than expected. A functional opposition may be even able to pose a serious electoral challenge.

Wednesday 14 June 2006


The unfolding scandal over the massacre of civilians by US Marines at Haditha in Iraq has been frequently compared to the massacre of civilians at My Lai in Vietnam in 1968. In scale, there is no comparison. At My Lai, somewhere between 300 and 500 civilians were slaughtered by a platoon of 30 US servicemen. In Haditha the number of civilian deaths is believed to be 24.

The President is promising justice at the end of the enquiry. We’d better hope that his conception of justice is more developed than that of President Nixon.

Despite extensive testimony from witnesses as well as graphic photo evidence, the 13 officers who were charged over the massacre at My Lai were later acquitted. Lieutenant William Calley was found guilty, court-martialled and sentenced to life in prison. He spent three days in prison before being transferred to house arrest. Three years later, he was pardoned by President Nixon - an extraordinary and infrequently cited action from a President with an impressive catalogue of infamy.

Perhaps this is where the young Messrs Cheney and Rumsfeld learned their regard for civilian life and justice. They both cut their teeth in the Nixon Whitehouse.