News flash: economists agree! John Quiggin links to this interview with Nobel-laureate Joseph Stiglitz. John approves of what Sitglitz has to say. John and I may disagree on many things but this isn't one of them. Free trade and free flow of capital are two very different propositions and there is a reasonable case to be made that the introduction of the latter in many developing economies which still lack some basic institutional frameworks is not unambigiously welfare enhancing. However I think Stiglitz has a tendency to exaggerate the differences between himself and other economists as if he has come across a revelation that others never thought of before, all in order to achieve some sort of poster-boy status with the anti-globalisation crowd.
A prominent supporter of free trade and globalisation like Jagdish Bhagwati has long been saying the same things about the differences between capital mobility and free trade and doesn't exploit this as much as Stiglitz does to become the new Indymedia darling. I think insofar as Stiglitz risks being misunderstood and having his message being misappropriated by groups who share fundamentally different agendas from him, he is doing public policy a great disservice. Same thing with his use of labels like 'free market fundamentalist'. I doubt that someone like Hayek would have, had he lived to this day, saw 'shock therapy' in a different light from Stiglitz.
Nonetheless none of this detracts from Stiglitz's great achievements. A book of his to read is Whither socialism? where he grapples honestly with issues that economists would do better to grapple with.
The psychology of the terrorist According to retired US intelligence officer Ralph Peters Islamo-fascists suffer from personal issues which sound a lot like castration anxiety (link found via Kathy Kinsley):
According to Peters, there are two kinds of terrorists: practical and apocalyptic, with a large gray area in between. For decades, we dealt with the first type, but now we are faced with the second. ...
"Perhaps the most routine commonality between the practical and apocalyptic terrorist is the male terrorist's inability to develop and maintain healthy, enduring relationships with women ... The practical terrorist is more apt to idealize members of the opposite sex, who then disappoint him, and to imagine himself re-created as a storybook hero of the sort he believes would appeal to his fantasy woman," Peters writes. Timothy McVeigh, the Oklahoma City bomber, fit this model.
"...(T)he apocalyptic terrorist fears, despises and hates females," writes Peters, citing Mohammed Atta, the leader of the Sept. 11 hijackers, whose written testament, found during the investigation of the hijackings, "perfectly captured the Islamic fanatic's revulsion toward women." ...
"If women cannot fully participate in society, then that country or society is not going anywhere," Peters said. "The strategic implications (of women participating in society) are clear, they (apocalyptic terrorists) are going to continue to hate us more and more, for our success."
"Their failures are not our fault, " he added, and we are not able to change or fix their societies. We can help, but ultimately, he said, societies must change themselves.
"The world does not want rational explanations for its failures. Whether we think of individuals or entire cultures, they want someone to blame," he said.
Why Arthur is wrong about Wright Don Arthur tries to refute Paul Wright's arguments that Australia is as much a target of Islamofascism as the US and that this has little to do with 'root causes'. However in my opinion his refutation only confirms Wright's arguments.
Firstly let me explain what I interpret Wright as saying. Wright isn't saying that we should be checking for 'Islamo fascists under the bed' as much as the US should. However he is saying that the people who launched S11 were only partly motivated by foreign policy and various other pretexts that have been put up but that expansionism of some sort is definitely at least part of their objective. This is something I have always thought - it seems reasonable to me in light of OBL's references to Saladin, Islamic clerics' references to cultural pollution which they obviously take as seriously as physical pollution, and the doctrine of jihad and 'kaffirs' as interpreted by some of these types . If so, it obviously means that countries other than the US are not immune to such attacks and that foreign policy and Palestine will have little to do with such attacks being launched. As for the probability that they will be launched any time soon (i.e. whether we should be checking under our beds) that is unknown to me and I don't think was Paul's main point at all.
Secondly let's look at what Don's refutation consists of. He quotes Richard Betts as making the following points:
American global primacy is one of the causes of this war. It animates both the terrorists' purposes and their choice of tactics. To groups like al Qaeda, the United States is the enemy because American military power dominates their world, supports corrupt governments in their countries, and backs Israelis against Muslims; American cultural power insults their religion and pollutes their societies; and American economic power makes all these intrusions and desecrations possible. Japan, in contrast, is not high on al Qaeda's list of targets, because Japan's economic power does not make it a political, military, and cultural behemoth that penetrates their societies
Well, what sort of refutation is that? It's clear even from this description alone that it's more than a matter of US foreign policy? Japan isn't a cultural behemoth, the US is - this is one explanation that Betts himself takes on. In other words, the US is hated for its memes because they are so popular and wipe out competition from viruses of the mind such as fundamentalist Islam. Al Qaeda isn't too fond of globalisation - economic or cultural - and these are forces that need no military intervention to advance. Many people including in Islamic countries would vote for the memes of liberal, secular societies like the US and Australia everyday without any need for battleships pressing the cultural products into people's hands. The likes of Al Qaeda know this and resent this.
How the hell is any liberal democratic country supposed to check that it isn't "culturally polluting" other countries without turning its own society into something closer to what Al Qaeda wants? Indeed - this is the point.
Don asks why isn't Japan resented? Well, Japan has its own traditional society which is itself absorbing US and generally Western cultural values too. It's in the same position as the theocrats in Al Qaeda but is responding to all this a lot better. Don asks why isn't the Vatican resented? Well, need I state the obvious. Some infidels are better than others. The Vatican and its forces have teamed up on various occasions in the UN with Islamic countries to push common agendas. Thus the likes of Al Qaeda are doing the obvious - destroying the sources of memes.
The point is, there is not much chance for coexistence if you can become a target because of the potential strength and popularity of your memes (and someone else who was a target because of his memes was Salman Rushdie).
Unfortunately I don’t have as much time as I used to for detailed analysis of Internet censorship laws. Which is why it is helpful to have people like Dr Peter Chen around. Peter is a lecturer in politics at Melbourne University and unlike myself – Peter has completed his PhD which focuses on Internet censorship. He also has a reasonably established research profile in this area, especially for someone who might be considered ‘young’ in academic circles.
A few weeks ago I was celebrating the fact that NSW politicians seemed to have gotten a clue when it comes to net censorship. Now Peter has a very thoughtful and analytical piece in the SMH which suggests it might not have been the victory that I (and groups like EFA) thought it was.
“Careful reading of the committee report, however, leads to a far less promising conclusion. The main thrust of the NSW report was not simply that their legislation was poorly constructed to protect children from offensive online material but also that, given the Commonwealth is set to review its regulatory model early next year, concerns about Internet content should be escalated to the intergovernmental level…
…The committee really concluded that more should be done to police the Internet but at federal level where uniform laws can be developed effectively. Given the poor outcomes of Commonwealth law making in this area, Internet users should treat this cautiously.”
Since I don’t have the time to re-read the report and analyse it in the detail that Peter appears to, I’ll take his analysis as being accurate. As he points out later in his article, this could in fact lead to a worse outcome for Internet users as Senator Alston will (probably) still be holding the reigns at DCITA when the review comes around and he is a long way off getting a clue when it comes to net censorship.
The most amazing thing about this is that it is all rather ‘déjà vu’. In 1996, NSW introduced draft net censorship legislation which was also withdrawn because it recognised that the Commonwealth was about to legislate. So in 1999/2000 the Commonwealth introduced legislation which regulated ISPs but pushed content provider provisions back onto the states. Now the states appear to be handing it back to the Commonwealth!
Arrow replies Michelle Arrow, whom I strongly criticised in a recent post, writes a response to my critique:
I read your response to my Herald piece and I wanted to respond to a few points in it. The piece started as a query that arose from my teaching. I was teaching a course on the history of popular culture since the 1950s, and I was struck by the amazing breadth and depth of popular culture responses to what were mostly right-wing governments - the Nixon administration, Thatcher¹s Britain, Reagan¹s America. There seemed to me to be two major responses in popular culture to these sorts of governments - one was to simply turn away, to seek escape through popular culture, while the other was to respond directly to it, to attack it and question its values through popular culture. My question was, where was this response in Australia? I¹m not advocating that culture conform to any political agenda, or that all pop culture should be poliitical - rather, I¹m wondering why so little of it seems to be political.
I think we might be closer in our arguments than you realise. I am probably as uneasy about blatant propaganda as you are - that was where my discomfort with some kinds of satire comes from- it can come off as very smug. The brilliance of Robert Altman¹s Nashville, or Billy Bragg¹s songs (and not all of them are directly political, but the way - he wrote some lovely love songs - you should check him out), or Public Enemy¹s booming rap, is that they can transcend the political situations within which they were created. Nonetheless, they also served an important function within their time - this is what popular culture does, it¹s what separates it from ³art². Timely satire is useful as a social pressure valve, but I don¹t know if it changes anything. Maybe oppositional popular culture doesn¹t change anything either. But my question is, where is it? And if it can¹t be found, then why not?
You say that many great artists were Tories - I¹m sure you¹re right, just as there have been many great artists from the Left. I¹m not advocating a return to folk songs or politically proscribed art - I¹m just wondering why, if there is dissent in the community (and I think we can agree that there is, regardless of how organised or substantial it is), then why isn¹t it showing up in our popular culture? Popular culture reflects so many social, cultural and political changes that dissent is bound to show up somewhere. Again, I would ask why, for the most part, it hasn¹t?
(Incidentally, I agree with you that my reference to Les Murray was a bit harsh. However, the description was largely in reference to the way he was presented in Gillies¹ show as being full of conspiracy theories about the Australia Council and proclaiming his affinity with ³the people² while jetting around the world on taxpayer-funded fellowships.)
You argue that I¹m anti-intellectual because I have a narrow view of art - did it ever occur to you that people express political views in their art because those views are a deep part of themselves? Elvis Costello has written some truly great songs on all sorts of themes, and his intense hatred of Margaret Thatcher was just one of these themes (he wrote about her on several albums). Even Les Murray has written poems about Helen Demidenko and Pauline Hanson. Politics can be part of great art, just as they can impede it - so who¹s the one with the narrow view of culture?
Insofar as the real purpose of Arrow's piece was to raise the question from a sociological perspective of why there was not an uprising of creative protest energy against the Howard government rather than a discourse on the desirability of 'art in the service of politics' per se, then regardless of how much Arrow and I would differ politically in many respects, she has a point. The differences drew out in my response were ... overdrawn.
I readily admit to approaching Arrow's article from a more tangential perspective and using it as a hook on which to hang my more general meditations on the undesirability of overpoliticised art as inferior to less politically self-conscious art. If she says that she too obviously has a limit to the 'politics to art' ratio then we wouldn't seem to disagree in principle on this issue though we undoubtedly would on whether the lack of an artistic tidal wave of bad vibes against Howard is such a loss to civilisation.
However I still wonder whether 'intense hatred' of a political figure is such great art. I suspect we would differ on where this 'political propaganda to art' ratio would be. She argues that after all Les Murray was pushing a party line too in his Subhuman Redneck Poems. However I think his view of Hanson was considerably more nuanced as compared to that of a typical Hanson supporter. I am pointing this out for its artistic significance, not its political significance for it is this nuance that makes all the difference in the world between art and propaganda, it is this nuance which allows the artist to explore more perennial themes and ensure that the art outlives the topicality of the day. This is regardless of whether that propaganda is worthy or unworthy.
Paul Wright goes ballistic Paul Wright is an Australian blogger who's straight thinking and has an enviably clear and straight talking prose style. In his latest post he explains to all those Australians who haven't figured it out yet why we do have an Enemy (regardless of how many John Pilger books we may read) and what the implications of having an Enemy are. You'd think it would be a fairly obvious argument. You'd be wrong - read him, then go read the SMH Letters page.
Stem cells update Reader Joanna Knott writes to draw my attention to this piece in the Herald from yesterday which covers the embryo stem cell debate I've been blogging about recently. Joanna is co-founder of the Australasian Spinal Research Trust and is interviewed in the Herald article which looks at two very different views by two people who would stand to benefit medically from stem cell research:
Ms Knott said she is hopeful MPs will use their conscience vote to reflect the fact that 72 per cent of Australians support embryonic stem cell research.
She is critical that opponents have distorted the significance of recent research showing rare adult stem cells found in bone marrow are as versatile as embryonic stem cells.
The US authors of that landmark study emphasised that their findings did not mean embryonic stem cell research should be stopped, she said.
Parallel studies on both embryonic and adult cells were needed, they said, because it was too early to know which would prove most useful for different diseases.
A leading Australian adult stem cell researcher, Perry Bartlett, of the Walter and Eliza Hall Institute, agreed: "I think we absolutely should do both."
Well, Tim, always trust your first instincts. If you agree with Margo on something, think not twice, but thrice. Margo Kingston is as capable of engaging in logical thinking as Bernie Ebbers is of proving the Riemann Hypothesis as her 'discussion' with Gerard Henderson on Lateline last night demonstrates:
MARGOT KINGSTON: Well, the explanation that Laurie gives is that once you know this big secret, it puts a whole different tenor and a whole different interpretation on some of the things Cheryl describes in the book, like Beazley not wanting to have much to do with her, and so on.
It also helps explain some of her, you know, behaviour at certain times.
I mean, to me -- and, you know, I just thought watching Laurie tonight that the person that came out terribly from this was Gareth Evans ...
MARGOT KINGSTON: No, not at all.
That's why I say if it's a precedent, it's a very particular precedent.
Cheryl Kernot put out her jaw to have it punched by writing that book, and, you know, it's Cheryl all over: It is just the saddest, saddest thing.
To me the real villain in this is Simon Crean.
Neither of those people have any duty or any obligation to say anything.
GERARD HENDERSON: You just said the real villain was Gareth Evans.
Now it's Simon Crean.
Who is the real villain here?
Now, I have no love of Cheryl Kernot (and I really mean that!) I've always thought her an overrated mouther of silly platitudes and pieties. But that's no reason to disagree with the logical assessments of Gerard Henderson in that interview, which are, once again, the assessments of a political observer of rare common sense and level-headedness.
1) Firstly, how do we know how significant a motivating factor the affair between Kernot and Evans was. After all, isn't this the real issue which supposedly underlies the 'deception' alleged by Laurie Oakes?
GERARD HENDERSON: We're dealing with two retired politicians about what may or may not have happened some time ago, and there is no evidence of causality.
If Mr Oakes's case is correct he hasn't proved a causal relationship with what may have happened and what we know did happen in relation to Cheryl Kernot moving from the Democrats to the Labor Party.
It seems to me if you're going to justify this, you have to demonstrate causality.
He hasn't done so.
As Shona Martin said earlier on, there is enough evidence as to why Cheryl Kernot may have wished to switch sides from the Democrats to Labor without any involvement of any personal considerations whatsoever.
2) Secondly, so what if the 'personal consideration' as Henderson diplomatically puts it was a significant motivating factor? Does it matter that Kernot declined to mention this in her book? As Henderson once again sharply observes:
GERARD HENDERSON: Well the test here is to name a politician who's written a memoir in recent years in Australia who has done a tell-all book.
I mean who has actually done it?
There are plenty of holes in most memoirs.
I mean Laurie Oakes's essential criticism was, tonight on Channel Nine, that Cheryl Kernot had purported to write a political history when it was based on a falsehood.
I mean how many memoirs are based on falsehoods or -- or ignore issues?
We know heaps of cases, but nobody in the media in Canberra has chosen to write these up before, and in my view, rightly so.
But I think what you have here is a very unpleasant double standard.
If everyone is going to have their private life, or alleged private life, revealed because they've written what Laurie Oakes regards as a false history or a bad book, where will we stop?
Not that I think that there should be any 'privacy rules'. No, it's simply a matter of personal judgement. My judgement is 'yawn' - this is of no inherent public interest and Tim should settle down. The ABC isn't covering up the equivalent of Watergate. And Australian right-wingers should be wary of moving into American Spectator territory.
Quote of the day I've been too busy to post substantively this week but here's a great quote which those I call 'kneejerk' libertarians (especially of the Randian or 'natural rights' variety) should take heed of:
As far as the great field of the law of property and contract are concerned, we must … above all beware of the error that the formulas ‘private property’ and ‘freedom of contract’ solve our problems. They are not adequate answers because their meaning is ambiguous. Our problems begin when we ask what ought to be the contents of property rights, what contracts should be enforceable, and how contracts should be interpreted or, rather, what standard forms of contract should be read into the informal agreements of everyday transactions.
Weatherall's Law A big Oz blogging community welcome to Kim Weatherall a Lecturer at Sydney Law School (just one year ahead of me when we were both students there) who is the new Blogmistress of cyberlaw, a Jessica Litman in the making. She promises 'news and views on intellectual property and technology-related law' and there are already plenty of entries on her blog which she started only very recently (just last week she emailed me to say that she was 'taking up my challenge' for more Australian academics to enter the blogosphere - does that make her my blogchild?)
Art in the service of politics Some academic by the name of Michelle Arrow is all upset that our arts community isn't all up in arms against the Howard government. Now, I'm all for academics getting out in the public more and being more involved in public policy debates, but is this the best she can do? She laments:
Once, artists, musicians and film-makers could always be relied on to adopt an oppositional perspective. Like the explosion of punk in the mid-1970s, Rock against Racism, Springsteen, the anti-Thatcher cinema of Ken Loach and Mike Leigh, or the American political rap act Public Enemy.
Dissent is there, but it's becoming harder to find (or perhaps just harder to motivate). There is a lot of despair and sadness over the policies of the Howard Government on everything from refugees to tertiary education and the GST - Woomera is surrounded by protesters, students continue to protest in vain at the encroachment of user-pays tertiary education, and disabled people turned out in large numbers to protest against "reforms" targeted at their welfare payments.
Without Margaret Thatcher the British probably wouldn't have got Billy Bragg, that wonderfully talented songwriter and passionate critic of her economic rationalism and cold-heartedness. So where is our Billy Bragg? Or our Spike Lee? What have we got to show for our six years of right-wing government?
I don't approve of all Howard government policies either and I'm not attacking her on the basis that she obviously doesn't like them, but her view of the role of artists is so one-dimensional and anti-intellectual. That's right. Just look at her examples. Spike Lee - political perhaps but hardly taking a simplistic party line. 'Doing the right thing' isn't a movie that would exactly warm the hearts of the Kumbaya brigade. Some of his depictions of the black community and other ethnic minorities and the prospect of interracial mixing would seem reactionary if they came from a white director. Yet it's all great art and human drama. Who cares whether Spike Lee votes Democrat?
I don't know enough about Billy Bragg to judge but I am a Bob Dylan fan and Billy Bragg from her descriptions sounds to me like a British Bob Dylan who's spent his entire life doing variations on 'Blowing in the wind', preaching to the converted. Good ol' Bob had his political stuff too but it wasn't his best work.IMHO 'Blowing in the wind' is a catchy tune but it isn't great art. 'All along the watchtower' is and though it could be said to be implicitly political it isn't just about promoting a party line. Some of Dylan's most explicitly political songs have been comparatively banal, even coming from a brilliant spinner of words like Dylan. This isn't true of all them but you get my idea. The album 'Blood on the tracks' was one of his artistically finest achievements - but where is the politics in that? So is 'John Wesley Harding'. Arguably so are many of the songs on his 'Infidels' album which he wrote when he was in his Christian fundamentalist phase. And his meditations on ageing in 'Love and theft'. Dylan didn't get his well deserved reputation by singing songs about how evil Ronald Reagan was. One of his most under-rated songs, My back pages on his under-rated 'Another side of Bob Dylan' even mocks simple political pieties and implicitly mocks people like Michelle Arrow:
Half-wracked prejudice leaped forth
"Rip down all hate," I screamed
Lies that life is black and white
Spoke from my skull. I dreamed
Romantic facts of musketeers
Foundationed deep, somehow.
Ah, but I was so much older then,
I'm younger than that now ...
In a soldier's stance, I aimed my hand
At the mongrel dogs who teach
Fearing not that I'd become my enemy
In the instant that I preach
My pathway led by confusion boats
Mutiny from stern to bow.
Ah, but I was so much older then,
I'm younger than that now.
In fact some of the greatest artists have been strongly reactionary or conservative. It's interesting to note Arrow's snide remark on Les Murray:
Sure, we've had a couple of clever dissenters in theatre: Max Gillies and Guy Rundle's savage and smart satire, Your Dreaming: The Prime Minister's Cultural Symposium, which not only skewered Howard and his band of intellectual vandals (Les Murray and co) but also the ineffectual and self-obsessed response from some on the left (hello, Bob Ellis).
So Les Murray, a genuinely talented poet who won the TS Eliot Prize in 1997 is to Arrow merely a 'intellectual vandal' because he doesn't toe the party line. If I were Arrow, I would only wish to attain the status of 'intellectual vandal'. Speaking of TS Eliot, he was a High Tory and anti-semite to boot. Then there's Ezra Pound, the later Wordsworth and Coleridge (who reacted strongly against the French Revolution they initially supported). Now, I'm not going to the extreme and saying all good artists are Tories. Many great artists are politically unclassifiable. Such as Bob Dylan. If they weren't they'd be predictable and boring. Art is all about ambiguity and nuance. There is more to life than politics. If you want politically motivated art of the sort that Arrow seems to yearn for, go look at the artistic treasures of the former Soviet Union. Or compare Bob Dylan's work with Joan Baez (who never really moved away from all that preachy anthems stuff) - who will have the stronger legacy?
Who's the stupid book buyer? Don Arthur does a 'gotcha!' on Tim Blair who was calling people stupid for buying Michael Moore's latest scholarly tome for $49.95 when you can pick it up for cheaper at Amazon. Don notes:
Sure you can buy Moore's book for around 26.50 AUD from Amazon. But unless you pay another 21.20 AUD in shipping you'll have to fly to America to pick it up. Let's see, $26.50 plus $21.20 equals $47.70. Great... you save $2.25 and you only have to wait 2 or 3 weeks for it to arrive.
Well, that is still a saving but Don has a point. Unless you're a real tightwad that $2.25 doesn't seem worth deferring the instant gratification of letting Michael Moore do a mind dump into your skull. Nonetheless, Don isn't being entirely fair. Never ever have I gone to the trouble of buying just one book from Amazon. I don't know if other people do, but I'd doubt it. What any rational buyer would do is let your wish list bunch up and then do a huge order from Amazon. That way your shipping charges get spread over a whole bunch of books and amount to almost nothing per book (what's 21.20 AUD among 10 books?)
Arthur on education Struth. Whaddya know? I was going to respond to Don Arthur's most important component of his arguments on education policy, namely the human capital vs positional good (or signalling) theory of education as articulated here. I was going to do this properly by collecting examples to demonstrate that not only philosophers but also economists have long recognised the 'signalling' aspect of higher education but that the consensus of opinion and evidence (to the extent that that's worth anything) favours the human capital theory. However John Quiggin has also discussed Don's post and cited his own article here which saves me the trouble of doing so.
I asked my co-blogger Andrew Norton what his own views on this were, assuming as a worst case scenario that the 'positional good' theory was nonetheless of some empirical significance and his reply to me also makes some sense. He could blog this himself but since I'm writing this I'll quote him:
There is some truth to the signalling argument, and I think for employers not buying specific skills it explains a large part of the earnings premium. However, most people are doing courses with specific skills, and there obvious ways of improving their learning. Would you let someone operate on you because they went to a flashy university? But in any case it is no argument against deregulation. If you want to 'signal' education status, why can't you buy a decent education, the same way you can buy a nice house, a fast car, and stylish clothes? Why are we so puritan about higher education?
Furthermore note the new trend of pairing together degrees like Arts and Commece, something that David Morgan reminded me of in an email. Many employers are starting to appreciate that Arts degrees (that one could argue seem the most generic of all degrees and therefore even less of a 'human capital' thing than, say, IT) do confer skills that are highly valued. Are they really deluded or is there a human capital aspect to Arts degrees and are even universities reflecting this under the current, at least partially deregulated environment by reflecting student preferences for a compromise between 'learning for learning's sake' and learning things that bore you to tears like Accounting (excuse me if I'm misrepresenting Accounting. I've never done a single course in Accounting in my life - I took Economic History instead). Yes, I think so.
It's also worth noting that the sandstone universities are, despite their taking in the supposedly 'brighter' students not successful on all measures. Indeed, they are starting to be outpaced on various indicators like employment prospects in particular professions by upstarts like UTS. Are such indicators imperfect for guiding students as potential users? Yes. Is the system I'm proposing worse overall than what we currently have? I'm not so sure.
In my previous post I speculated on the possible fallout of WorldCom on the Australian ISP market. According to today’s news, AOL7 is eyeing off OzEmail. AOL7 is a joint venture of Australia's Channel 7 television network and Internet heavy-hitter AOL – with some added support from AAPT..
So just what is at stake here. According to the article:
“OzEmail, which is owned by WorldCom's subsidiary MCI, is estimated to have a market value of about $300 million. It has about 600,000 customers and annual revenues of $135 million. AOL7, which is ranked the nation's fifth largest ISP, would face fierce competition from rivals including Melbourne-based Primus, which has expressed interest in WorldCom's Australian assets.“
As I argued in my earlier post, allowing any of the dominant players (such as AOL7) to pick up the entirety of OzEmail’s subscribers will lead to a further consolidation of the ISP market and possibly to a lessening of competition. Therefore any buy-out is likely to face a certain amount of scrutiny from the ACCC.
The big gain for AOL7, in picking up OzEmail is a ready made entry route into broadband. It seems we could have a few interesting weeks ahead in the Australian Internet marketplace.
A lot of the commentary so far on WorldCom has been on the impact on stock-markets and what governments will do to tighten up on corporate accounting practices. But there hasn’t been a real lot of discussion about what this will mean for the Internet sector in Australia, aside from some superficial comments from OzEmail that they will continue to operate unaffected by the scandal involving their parent company.
As a private netzien and economist, it would be a shame if OzEmail disappeared from the Internet scene in Australia. OzEmail was one of the first ISPs in Australia. Without the advantage of being an incumbent in the telco sector, OzEmail managed to establish itself as one of the dominant players.
If OzEmail were to disappear from the Internet scene the most immediate impact would be on the dial-up ISP market. OzEmail is one of the largest providers of dial-up Internet access. What happens to these dial-up subscribers will have a major impact on that segment of the market right now.
In terms of broadband Internet access, if OzEmail disappears the immediate impact won’t be so noticeable. OzEmail have only just entered the broadband market with the launch of their ADSL product.
However whilst the immediate impact isn’t that significant if OzEmail goes – the longer term impacts on the broadband market could be quite significant. Even if the WorldCom scandal causes OzEmail to approach the broadband market more conservatively, (for example by not rolling out its proposed wireless broadband ) – then this will noticeably reduce the level of broadband competition there might otherwise have been 12-18 months from now.
And whilst this might seem like goods news for Telstra and other broadband providers – with the interventionist mood of both the legislature and the ACCC at the moment, OzEmail’s competitors might actually be better off with OzEmail in the market. A smaller number of ISP’s is far more tempting for the government to attempt to regulate than a larger number of more diverse firms.