WOLLONGONG DOWNTURN

Four Corners on ABC will feature the economic problems of Wollongong.

At ABC News Online,Matthew Carney reports:

Regional Australia is being hit hardest by the current recession, and it shows, with double digit unemployment rates in many parts of the country.

It’s easy to see why. When Four Corners started filming in Wollongong, the crew went to the industrial complex of Port Kembla to gauge economic activity – but there was none. Bluescope, Australia’s largest producer of steel, wasn’t shipping any. Worldwide demand has slumped and the workers are being laid off.

At the port I met Garry Burley, a casual waterfront worker who felt lucky to get one shift a fortnight.

Although Wollongong’s unemployment rate is bad at 9 per cent, the pool of underemployed, of which Mr Burley is one, is much larger.

From the outside, Garry’s house looked neat and tidy but behind the front door there was pain and struggle. It was everywhere and everyone wore it, especially Garry’s teenaged daughters.
He was counting his coins to make sure he could get dinner on the table. Garry had worked hard all his life. He had never been on the dole, and at the age of 54 he was about to lose his house.

But the real cost of unemployment here was the erosion of pride and self-esteem – the destruction of the human spirit.

The boom really bypassed much of Wollongong so there is little reserve to call on. This recession is going to add more to the ranks of the unemployed.

In the 1980s the steel industry lost about half of its workforce and the Wollongong area never really recovered from those massive job losses.
The steel city was hammered again in the recession of the early 1990s.
The consequence of all this has been chronic long-term unemployment and the southern suburbs, built around the steelworks, copped the worst of it.

The cruel legacy of the Illawarra’s economic stagnation is the way unemployment is inherited from one generation to the next.

Unemployment is a way of life in the Illawarra and Tanya believes her sons will be out of work for “10 or 20 years”. The local economy just can’t generate the jobs. Youth unemployment is a staggering 40 per cent – one of the highest rates in Australia.

One million Australians are expected to be out of work by the end of this year. It’s a frightening number. If there was an epidemic of disease spreading across Australia that crippled and devastated individuals and families, a national emergency would be declared. Instead we seem resigned to accepting this social disaster.

The story of the southern suburbs of Wollongong, and the people who supplied the labor force to the Steel Mill and the coal mines is not different to other similar areas around the world. The Ruhr in Germany, and locations in the rust belt of the United States would have experienced similar or greater problems.

Globalization destroys but it does not necessarily create. An industrial workforce is not necessarily suited to work in the service industry, which is characterized by what is euphemistically described as “flexible labor” conditions, or part time work, low wages and outsourcing.

What I think has been over looked is the dismantling of the technical education structure necessary to support a quality industrial labor force.

Few seem to be thinking about the practicality of developing a different and more sustainable economic model. Some suggest that entrepreneurship and freedom are the answer. It is not just lack of demand but the increase of labor productivity due to mechanization, automation, and “cybernation”.

In the capitalist/corporatist model the economy does not serve human needs but financial return on invested capital, so the dominant rationale of the political economy might need be reconsidered and recast.

ELSEWHERE:

Gary at Public Opinion considers “After Capitalism”. Nobody could be more pessimistic than Geoff Mulgan who suggests that the possibility for capitalism is about the same as the disappearance of war. Nonetheless, a good example of my reading something, and losing track. Reading on the screen is not like reading a book. For one thing the quantity is harder to judge.

Nassim Taleb is very quotable (even if he is smarter than Plato -still he is smart):

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crises less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.

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