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Monthly Archives: March 2011

The Economist has written a fascinating article on how far corporate personality should extend.|mgt|03-30-11|management_thinking

Here’s a topic I’ve blogged about in the past – how far should corporate personality extend? I jokingly blogged about giving corporations marriage rights, and I discussed the Citizens United case and why giving corporations free speech rights makes little to no sense doctrinally. Essentially, the argument boils down to corporations obtaining their legal personality, their powers and rights from legislation. Therefore, their rights, including political rights can be terminated by legislation. It makes a mockery of the law to say that Congress can pass a law to ban corporations but it cannot pass a law to stop those same corporations from ‘speaking’ (by which I mean donating money to politicians and lobby groups).

Naturally, the Economist does a better job in terms of content and eloquence. But, I think the article fails to make a distinction between political rights and constitutional rights. I have no doubt that corporations play a valuable part in our democracy and should be given certain free speech rights in terms of arguing for business regulation, making submissions to Congressional hearings on a range of issues outside of business. After all, ‘corporations’ include unions, trade associations, and all other incorporated lobby groups.

But these rights should be granted by legislation so they can be amended by a carefully considered Congress rather than having a majority of Justices reinterpreting the Constitution on a post hoc basis without careful consideration of the consequences. Congress may take evidence of the real world consequences of creating such rights, whereas the Court can only make intuitive guesses as to these consequences. The Court is unable (because of separation of powers) to make the political judgments necessary to ensure the right balance is maintained. In other words, the Court is institutionally impaired in terms of making the right decision.

I’m not sure if this column was written by an American, but often those writing from other countries (including myself) misunderstand the American way of thinking about Constitutional law. The Economist has a particular disadvantage, as it comes from the UK which doesn’t have any form of constitutional rights as exist in the US and even Australia.


With 50% of the votes counted, we have enough data to make some firm conclusions (and some not so firm conclusions)

Kristina Keneally has conceded defeat, has resigned as Labor leader and has returned to the backbench.

Labor Left seats

There are some key losses for the Labor Left, with hopes that they would keep some weak seats being dashed quickly. On the other hand, the two leading lights of the Left, Carmel Tebbutt and Verity Firth, have survived or possibly survived a Green attack.

  • Toongabbie (14.5%): Nathan Rees appears to have lost, but insists that there is insufficient information to call the seat
  • Marrickville (6.3%): A very surprise result, with only a 2% swing towards the Greens. Carmel Tebbut will clearly survive
  • Balmain (3.7%): Verity Firth may not fall, though the Greens are ahead. The seat is complicated by the presence of an independent and a strong Liberal vote.
    • Looking purely at primary votes, the Liberals (32.5%) are AHEAD of both Labor (30.7%) and Greens (30.5%).
    • The result will turn on who comes third, directing the preferences to the winner. It would be ironic if the Greens defeated the most progressive and inspiring Labor MP and replaced her with a nameless Liberal.
  • Granville (11.1%): David Borger appears to have lost. This was one of the few seats under 15% margin that the ALP hoped to keep. Sorry.
  • Swansea (10.8%): The other <15% seat, that has also been lost

I’m not familiar enough with the Labor Left to do a full analysis of Left seats lost. I imagine the wipe out of the Labor Party affected the Left and Right in equal proportion.


This has been a shocking campaign for the Greens. They have captured a weak 2% swing in Marrickville (far short of the 6.3% swing required) and a very weak 1.5% swing in Balmain. The Legislative Council results haven’t started flowing in yet, but the Statewide lower house vote only shows a pitiful 1.4% swing towards the Greens.

It has been a consistent theme of this blog that the NSW Greens are unworthy of the name Greens that the Bob Brown Greens have rightly built up. It would be easy for me to claim that this victory proves me right. But, I think this election was about the Liberal National Party and defeating Labor. The Greens didn’t have a chance to get media focus, nor to push their message broadly. That is the reason and the major reason why they have suffered such a dismal swing.

That said, the incompetence of the Greens demonstrated itself in their candidate selection. Why choose Jamie Parker – a clearly dodgy and shifty character. He was marketing manager for a company which the TGA said had flagrantly false advertising. He was associated with people who allegedly shopped cars. Why did they choose to boycott Israel in the Greens-controlled Marrickville Council? What idiocy – and driven, as I’ve always said, by their ideological intransigence and stubborn belief in impracticality.

The Greens have to reform themselves and kick out some of these dinosaurs who inhabit the NSW Greens. They need to embrace the human rights left and the libertarian left rather than the socialist left and those who embraced communism in decades past.


The independents have taken a loss, with only Richard Torbay (Northern Tablelands) and Greg Piper (Lake Macquarie) surviving. But the long term implications of this are unclear.

Did these candidates lose as a result of a turn of the tide against independents? Were they turned off by a minority government and the actions of Oakeshott, Windsor and Katter? That doesn’t seem to bear out. Besseling’s primary vote actually went up, whereas Draper’s vote went down. It seems that the Nationals were caught up by the LNP sweep, rather than the independents beaten by the federal independent’s antics. In other words, there are no federal implications in this NSW election.

On the other hand, this is a major victory for the Nationals. They have been suffering a loss of seats to the independents for many years now. In recapturing these seats, we have to wonder if they will be taken back by independents. Independents aren’t like the ALP – they can’t keep their party machinery inactive whilst they return to find other paying jobs. We won’t see Beseling and Draper recontesting next election. Even if this election doesn’t vindicate the Nationals in the long term, they have staved off death in NSW for another decade.

Edit: It was pointed out to me that this analysis is incomplete, given that Richard Torbay’s State electorate also falls within Tony Windsor’s expansive Federal electorate. Without looking through the numbers, it seems that this merely suggests that the result is complex and no easy conclusions can be drawn. Commentary by both the Nationals and some media that this is an obvious victory by the Nationals should be construed in that light. It was not a permanent victory over the independents, but a brief reprieve – a delay, and the gaining of some strategic ground in future elections.

Peter Besseling, a State independent sitting within Rob Oakeshott’s federal seat, has lost his seat. Interestingly, his primary vote is roughly the same as what he gained when he was first elected during a by-election. However, because the National’s sea

Peter Draper, a State independent sitting within Tony Windsor’s seat, has lost 8% on primary votes and suffered a loss as well.

Richard Torbay has suffered a 11.1% swing, but remains on a very comfortable 63% primary vote.

Politician’s reactions

The Liberals, as expected, have been very humble and cautious. They haven’t been crowing in victory yet they have strongly stressed that the election was a vindication of the Liberal/Nationals (rather than a rejection of Labor incompetence), as demonstrated by the very mild Greens swing.

The Labor Party put Luke Foley, the Left’s deputy secretary on the ABC. That meant he could feel free to criticise the behaviour of the Labor Right and its sub-factions. The message the Labor Party is putting forward is accepting their loss humbly, and emphasising they recognise their wrongs. They say they will stand up for their base again and return to core Labor values.

Personally, I think these two stances show very little of how either party will react into the future. Luke Foley even claimed he hoped the next Labor Leader would be elected without factional influence. Hah. Fat chance.

Labor Leadership

The first Opposition Leader will not win the next election and he will not survive until the election after. I don’t know who will be stupid enough to contest, but I suspect it will be John Robertson. Unlike many pundits however, I recognise a strong possibility he will not contest for these reasons.


Legislative Council

With only a small portion of the vote counted, we have some preliminary votes. They are unsurprising (and not too different from my predictions).

Liberals (19) + Shooters (2) + Christian Democrats (2) = 23>22 can form a majority to pass bills

Liberals (19) + Greens (5) = 24 > 22 can also form a majority to pass bills

Therefore, the Liberals have a choice between these two coalitions when passing individual bills. In some cases, it will be easy to cobble a bill that both shooters and CDP can agree upon. In other cases, the fractitious minor parties will be hard put to agree and it will be easier for the Liberals to negotiate with the Greens.

I would have preferred a 21:21 split between the left and right wings, but this is a reasonable result as well.

You may recall a series of posts I wrote on high speed rail in Australia, especially as proposed by the Greens (originally here, followed up on here). Before the election, the Federal Labor Government had conducted a feasibility study and found the idea wanting (for rather obvious reasons explained in my first post). After the election, with the Greens holding the balance of power, they pushed the idea harder. Several lobby groups began issuing free reports on the issue from a pro-rail POV. My critiques of these reports are in those earlier posts.

But the whole issue was dealt with by sending it off for an expert committee to release a report. And we never heard from them again.

Today, the SMH has an article about the benefits of trains over planes (in the context of Europe). As I’ve said consistently, trains are a very good idea in areas with constant population centres, such as Europe or New England in the US. However, they become economically infeasible when travelling long distances without many passengers getting on or off between your major destinations (a la Sydney-Melbourne or most places in the US).

The article itself isn’t that interesting. But they’ve clearly chosen a route which is most favourable to trains (given that there isn’t even an economy class plane fare, so the cost ends up being at least $463 for a plane and $110 for a train.

What’s so interesting is that the article is so biased towards trains that it makes me think that the committee is about to release its report and the Greens are pushing for publicity and awareness ahead of the report.

So, I never got around to finish my 4 part series on the NSW Election, but I thought it would be worthwhile jotting down a few things to watch out for tomorrow night.

Tomorrow’s election coverage will be incredibly dull. Some people recommend a drinking game – one shot for every time a Labor MP concedes his seat is lost and two shots for every Minister who loses. But that’s a recipe for a very painful hangover. That’s in the order of 40 shots, I think. But there are important things still left to fight over in this election.

Will the Labor Left survive?

I don’t have the best handle on who’s who within the NSW Labor Party but my understanding is that many key players within the Labor Left will be annihilated tomorrow – foremost being Deputy Premier Carmel Tebbutt and second being rising star Verity Firth. Both stand to be eliminated by the Greens. But others, such as David Borger, also stand in the firing line in the lower House, opposed by Liberal candidates. Ironically, Nathan Rees, whose seat is well within the 15% uniform swing may be the only Labor Left icon left in the lower house. Penny Sharpe, a Left MLC also stands for re-election (though in the very winnable 3rd spot). I regard Firth, Tebbutt and Sharpe to be some of the few shining lights within the Labor Party and I think the Labor Left is one of the sole things keeping the NSW Labor Party falling into utter corruption. If they are eliminated, the rebuilding process within NSW Labor could take even longer.

Who will control the Upper House?

The SMH has written a last minute op-ed recommending that people not only vote for the Liberals in the Legislative Assembly but also with the explicit purpose of giving them a majority in the Legislative Chamber as well. The argue that the process of renewal in the State, making tough choices that shouldn’t be subject to populist criticism.

Naturally, I disagree. Our liberal philosophy of government holds that we should give power to no one person or party, and that divided power makes for a stable society. O’Farrell’s strong mandate for change should carry the day against any but the most stringent and worthwhile criticisms. That’s why I would encourage anyone undecided (I doubt any undecideds read my blog) to vote either for Labor or the Greens.

In terms of what to look for, I would wonder whether the Liberals may govern outright or with the support of minor parties.And who might those minor parties be? With 42 seats in the LC, a majority is 22 seats. On current polling, it seems unlikely the Liberals will get more than 19 seats. It seems unlikely that either the CDP, Family First or Shooters alone will get the remaining 3 seats. Each of these parties only has 1 MLC not up for election, and therefore must win two seats to gain 3 seats. On the other hand, the Greens have 2 MLCs not up for election and can easily gain 3 seats. Projections show it will control 4 seats.

Therefore for each Bill before the LC, the Liberals have a choice of partnering either with two (or more) right-wing parties, or with the Greens. This is the same choice that has been faced by the Labor Party and they have opted to partner with the Shooters and the CDP as often as not. But that is because the danger for the Labor Party is appearing to veer to the left and losing valuable swinging voters. The Liberals fear the appearance of veering to the right, so perhaps it is more attractive to ally with the Greens occasionally.

Furthermore, whilst Fred Nile and the Shooters might (occasionally) get along, he strongly dislikes Gordon Moyes the Family First candidate (and former CDP candidate, until he was expelled for criticising Nile and the CDP as being Nile’s pet party). So forging a coalition from these parties in individual circumstances may be possible, but remaining difficult. It all depends on which minor parties win which seats. If each holds one seat, then the Greens have the upper hand (for all 3 must agree together). If Nile holds 2 seats, then he may choose to partner with either FF or the Shooters on an issue by issue basis. Possible, but slow and difficult for the Liberal Government.

Needless to say, having a populist right-wing LC is not a recipe for good policy. Unfortunately, these right-wing minor parties embrace the worst of conservative ideology whilst rejecting the belief in individualism and liberty that defines the best of conservatism. Perhaps voting for the Greens might be best.

The Greens

This is an interesting election for the Greens. They stand a very strong chance of holding 2 lower house seats and gaining as many as 6 upper house seats. But what I will find important is their primary vote. Will it be the record high 17% vote recorded in the Federal election? Or will it be the dismal and quite ordinary 11% recorded in the Victorian state election? Either will have implications for the Greens’ long term ability to grow. If the latter, perhaps the Federal election was a fluke. Perhaps the electorate has seen a hostile Greens Parliament and been frightened away. If the former, then the Greens have demonstrated an ability to capture an increasing share of centre of the road voters. That could spell real trouble for the Labor Party in the long run.


An unremarked aspect of this election is the number of independents contesting the election. I would categorise them into two groups. Firstly, are the rural independents challenging National Party seats (or seats formerly Nationally held). They are akin to the Federal rural independents and their survival will prove an imperfect proxy for the electorates’ attitudes towards those federal independents. Here is a good SMH summary of the issues and why they are such imperfect proxies.

Another set of independents are those challenging traditional Labor seats. Newcastle, Charlestown, Maitland, Wallsend are the ones most often named as they have less than 10% margins (measured against the Liberal Party’s result in 2007). But there is also a strong challenger in Wollongong, a seat with a 25% margin (against the Liberals) who is far less reported. What ties these seats together is their regional status, in industrial cities whose swathes of working class people were a surefire vote for Labor. Whether these independents win or lose has less long term consequences for Labor but it may be a symptom of the permanent decline of Country Labor. (Of course, the last election, Country Labor was one of the few things that saved Morris Iemma from defeat, so the jury is not yet in).

Politicians’ Reactions

Finally, the election coverage is always great to watch as politicians struggle with conceding or not conceding their own seats. Personally, I think trying to create a theme from these reactions is ephemeral at best and not dissimilar to examining the entrails of goats.


My attention has been drawn to the fact that the Australian Sex Party is actually running a candidate in the upper house, namely Huw Campbell. However, he’s technically an ungrouped independent and hell will freeze before enough people vote beneath to line and enough of those people preference Campbell for him to be of any consequences whatsoever.

On the other hand, the Australian Sex Party fills a valuable niche in NSW politics. They are quite distinct from the NSW Greens, who I’ve continually emphasised have far deeper roots in the fringe, crazy left (as opposed to the human rights left or the libertarian left) than the Victorian Greens or Federal Greens. And they’ve polled well accordingly, with stronger support in their first election than the Greens had in their very first election. They’ve made a strong media impact, because of their provocative nature, but that belies their reasonable progressive views (as opposed to the Greens whose progressive social views are saddled with highly impractical solutions to just about any problem).

I wonder why they’re not running proper candidates this election. Were they unable to get enough members to run as a Grouped Party? (Not to mention being registered as a proper political party). Even the Australian Democrats managed that.

On the other hand, the Sex Party is just a mouthpiece for the sex industry and the prostitutes union (literally), so perhaps they felt it didn’t give them an effective return on investment.

Lower House:

Not that it matters, but I’ve revised my predictions for the Lower House as well. It seems that the ALP will not get a last minute bump in the polls due to a sympathy vote, and it seems like the Liberals have been able to get feet on the ground in formerly super safe Labor seats (in which Labor has the political infrastructure to wield a frighteningly effective campaign).

My new seat tally is that the ALP will hold 16 seats (cf my previous estimate of 20 seats), down from the 51 seats they hold currently. The 4 seats lost were in the 10-15% margin range. However, because the Greens’ vote hasn’t increased in recent polling, I am still holding out for a Labor victory in Balmain.

My upper house prediction is Liberal (19), Christian Democrats (2), Shooters Party (2), Family First (1) will hold the balance of power but that the shifting array of beliefs between these minor parties will ensure the Greens (4) will hold considerable sway over Parliament as well.

This is a cross-post of a link I posted on Facebook, because it’s such a novel idea that its worth preserving.

Is it possible for the Labor Party to disappear, never to return? The Labor machine has produced successive governments which leak constantly, are unable to announce controversial policies and lack the political courage necessary to govern effectively.

This is the story of the ‘Progressive Conservatives’ in Canada who fell from having169 seats and a hundred year history to between 2 and 20 seats, never to recover

For the record, I think the argument is overstated. The Greens do not form a viable third party and their achievements are overrated. Look at the Victorian election where they achieved a middling 11% of the vote and won no lower house seats. They are on track to earn the same 10-13% vote in NSW tomorrow.

I just wanted to state that there is a very modern precedent in a very similar democratic country for a party to disappear without trace.

For a more comprehensive argument for why the Labor Party might be on the decline, see Peter Hartcher’s article.

Personally, I just don’t see it happening. There are maybe five inner city seats that can be stolen by the Greens in each State election (and 2-3 in each city at most during Federal elections). It reduces the probability of a Labor victory in each election, but not by much. Most elections are won by a larger margin of seats.

As I said, the greater damage is coming from the factionalism and the poll-driven nature of the Labor Party. That is what is causing the leaks, backflips and backroom deals that demonstrate to the public (regardless of belief in the ideology or policies of the ALP) that the Labor Party is less fit to govern.

I would also note that (without knowing any history) the Progressive Conservatives was swept out of power by the Bloc Quebecois and the centre-right Reform Party. The Bloc is highly popular in Quebec, one of the largest provinces and one with many seats. The Reform Party, unlike the Greens is a centrist party that a broad church of people might vote for.

NSW politics is terribly dull. It’s just debacle after debacle; scandal after scandal with very little ground with which to defend the NSW Labor Government. And, equally, the NSW election would have been dreadfully boring too. The NSW Labor Party will lose this election, and that would have been that.

Until December of last year when Eric Roozendaal decided to sneakily privatise some electricity assets as though no one would ever notice. It’s a decision I find distressingly confusing because I can’t see why any politician – even (or perhaps especially) a conniving poll-driven vote-grabbing politician. I understand Roozendaal’s ideological commitment to privatisation (and I understand that selling it off was even the correct policy choice, even if the State didn’t get the best price)- but why do it just before an election? Was it to add a tiny amount to the Budget for pork-barreling projects? Whatever the reason, it backfired badly.

And that’s when State politics became interesting. It’s almost like watching a car crash – you’re entranced and horrified at the same time. What’s worse is that words cannot describe the devastation without inappropriate comments post-Japan’s tsunami. The words tsunami and nuclear are off the table. The only apt expression is zombie apocalypse (which would only have been more apt if Peter Debnam remained Opposition Leader).

Labor began with a workable strategy to sandbag 30 of its safest seats. This was not an optimistic strategy. The record uniform swing of 7.4% in any election was recorded in 1975, the election right after the Whitlam Dismissal. The 30 safest seats all have margins above 10%. In other words, the Labor Party’s greatest hope was to only lose 1.5 times as badly as the worst drubbing the ALP had ever faced.

After the privatisation debacle, things became a lot worse. Opinion polls show uniform swings of between 15-20% against the Labor Party. That’s more than double the drubbing that Whitlam faced in 1975. What’s worse is that some opinion polls show 20-25% swings in some seats. The Premier’s own seat of Heffron couldn’t withstand a 25% swing. Labor risks having less lower House seats than Shadow Cabinet seats.

In the face of such devastating certitude, what surprise can there be in this election result? I think several interesting questions can be posed:

  1. How will the Greens fare in this environment? Can they replicate their success in the Federal election?
  2. Will there be a sweep of independents to balance the power of Barry O’Farrell?
  3. Who will control the upper house?
  4. What are the consequences in a democracy where the Opposition hasn’t even enough members to form a Shadow Cabinet?

1. The Greens

I commented in a previous blog (mainly here but also here) on the likelihood of the Greens sweeping NSW given their performance in Victoria. I stand by much of that analysis (particular my description of Victoria as “a small to middling State to our south“).

To reiterate my point, the poor performance of the Victorian Greens overall suggested that there was not a permanent structural shift to a genuine three-party system in Australia. Whilst the Greens gained a tiny shift in first preferences (of 1.17%), they failed to gain any lower house seats (despite 4 promising seats). This was attributed by the media to the Victorian Liberal’s strong principled decision not to direct first preferences to the Greens in those seats. I concluded, however, with a warning. The election of the Federal Greens demonstrated that the right confluence of events in the factual matrix could provide the impetus for a Green revolt.

How does that play out in NSW? Whilst the opinion polls leading up to the election increased to a peak of 17% in October 2010 and February 2011, the most recent poll in March has them back down to 11%. As the election comes nearer, voters are beginning to really think through the consequences of voting Green and the inadequate, impractical solutions they offer. And they inevitably turn back to the major parties who have practical, if imperfect, solutions to offer.

What factors favour the Greens?

In an issueless election, the Greens don’t have those hot button issues they could latch onto in the 2009 Federal Campaign. Global warming, foreign affairs, immigration are all Commonwealth jurisdiction. The Greens have been reduced to campaigning on a platform of motherhood statements about creating more national parks, funding public education and public transport. The Greens’ upper House candidate, David Shoebridge has been reduced to making negative comments about the major parties’ announcements with few policy announcements of his own. The Green-dominated Marrickville Council has even decided to make foreign affairs a local government issue (of all things!) by announcing a trade embargo with Israel.

The lack of discipline within Green ranks is also showing. The Marrickville-Israel issue being the perfect example. Unlike the Federal Greens, with the strong leadership of Bob Brown and his loyal deputy Christine Milne, the NSW Greens are as rotten as the NSW Labor Party. Disagree with his policies and his practicality all you like, you can’t say that Bob Brown hasn’t embraced the new language and ideals of the Left in the 2000s. He speaks the language of human rights, accountability, environmental sustainability without treading the old paths of socialism. The NSW Greens (as I’ve been told by those in the know) are the remnants of the communists and various malcontents from the 1980s. In the NSW Upper House, they’ve been obstructionist using arguments of accountability to demand documents and obstruct progress without actually enhancing democratic accountability and transparency. Under their watch, national parks have been weakened and they have allowed the Shooters Party and Fred Nile to dominate the Upper House which could easily have been prevented by aligning themselves with the Labor Party (on some issues at least).

These discipline issues are showing up in the Greens’ statewide campaign. With bland, unenthusiastic campaigning, the Greens aren’t pressing home their advantage to gain more upper house seats. They’re recycling tired old arguments and the same pitch they’ve given year after year. Where are the vivacious arguments we might have seen? Why not use their bright, shiny image to push through a package of accountability reforms? That would present themselves as a genuine third party alternative to the battered Labor Government and the non-existent Liberal Party. Why not push for euthanasia laws, which apparently have 85% support? That’s a strong, moral issue that people can connect with. More importantly, raising the issue will put the Greens in the spotlight where they surely want to be. Or why not even push the case that we need the Greens to hold the balance of power in the Legislative Council, or else One Nation, the Shooters and Fred Nile will hold it?

The Federal Greens are also hampering the NSW Greens by their tough negotiations with the ALP. The Greens are openly fighting with the government, and the Government seems to have made it clear to the public that it is the Greens who have forced a carbon tax on the Australian public. The greatest danger, though, is that the Federal Greens by their mere presence have shown that the Greens are now a real force and not merely a protest vote. As a result, people are less likely to vote for them.

Realistically, the only thing buoying the Greens is the same thing that’s buoying everyone else. And that’s the methane emanating from the rotting carcass of the NSW Labor Party. I don’t doubt the Greens will win 2 lower House seats and roughly the same number of upper House seats. But I can’t see them performing much stronger than they have in past elections.

As part of a tipping competition for the 2011 NSW State Election, I just finished looking through all the electorates in NSW and figuring which way they would go. The consequences of my conclusions are frankly astonishing.

According to my calculations, the ALP is left with 20 seats, which is more favourable than the 13 seats some people are predicting. But the outlook is incredibly dire.

For one thing, the current NSW Cabinet has 19 Ministers in it. If the ALP is reduced to 20 seats, that means almost every single lower House MP will be a Shadow Minister, with one or two upper House Ministers. Have pity on the one or two Parliamentary Secretaries whose uselessness is visibly placed on display for all to see.

For another thing, my calculations are actually reasonably ‘optimistic’. I’ve called Balmain for Verity Firth and the ALP and I’ve saved every seat for the ALP under 15% that could possibly be saved (except Macquarie Fields). All those seats could easily swing the other way. So my predictions are justified upon the facts, and I have predicted some Liberal gains that the ALP might have held.

There is a certain logic to favouring the ALP in my predictions. If we face a statewide swing of X% and X is a very large number, then deviations from uniformity are more likely to be in favour of the ALP because there is only so far you can swing before hitting the ideologically blind fools who always vote one way out of convenience or sheer ignorance of the political world. Plus, swings in polls are always exaggerated since voters want to make a point to the government. Care about me! Care about my issues! When it comes to making the hard decisions, people quickly revert to type.

It’s even scarier to see the seats of quite senior Ministers falling. We’ve already seen the former Deputy Premier, John Watkin’s seat falling, but that was always destined to be a marginal seat.

We’re seeing Labor heartland seats falling. Not just Balmain (the literal birthplace of the Australian Labor Party), but every single seat in the Hunter region. The Hunter and Newcastle regions are heavily industrial areas that were Labor gold seats. We’re seeing seats with names like Parramatta and Strathfield not just being lost – but being safely lost to the Liberals.

In fact, the results are so spectacular they literally make no sense. Take for example Lakemba, Morris Iemma’s old seat. In 2007, it had literally the highest margin of any seat in the whole State, including Liberal, National and independent seats. It sat on a 34% margin. When Iemma quit after Nathan Rees toppled him, the seat swung 21.5% against the ALP. That means, the seat has a notional margin of 7.1%

As crazy as it sounds for a seat to swing a further 7.1% (for a total of 34%) is not impossible. The perception of a rotting Labor Government has been worsened by 2 more lost premiers since the by-election. There’s been a recent sneak attempt at privatisation (again) with the dodgy use of a prorogation of Parliament. And unlike the last by-election, the Greens pose a real alternative vote for the left-aligned voters in Lakemba who might not have voted for the Liberals.

So, despite my calculations showing 20 seats to the ALP, I figure that because of chaos theory, the true seat count will be 17-18 seats. In the main, because my predictions are optimistic, the fall of random chance is more likely to be against the ALP than in favour. The swings are just so unprecedented many of my calculations will be wrong (as will everyone’s). I think this election will be full of surprising results.

Watching the weary world from afar, I can barely substitute thoughts for words. As water and atomic fire lash Japan, floods sweep Brisbane, Adelaide, and New South Wales then the very ground loses substance beneath Christchurch, what can we say that can begin to express the suffering felt? I think only the ancients have eloquence enough to say:

sunt lacrimae rerum et mentem mortalia tangunt

– Aeneid, I, 462

Or as Fagles translated it: “The world is a world of tears, and the burdens of mortality touch the heart”. The words uttered when pious Aeneas, ragged from travel and travail, gazed upon the memorial to the Trojan race upon the Carthaginian shore.

I think its particularly apt, as the paintings would have lain in modern day Tunisia, where the seeds of Arabian democracy first grew anew. Those lines, also happen to be amongst my favourite lines in all of Latin verse. And the name of my iPod.

It makes you wonder what’s going wrong with the world. But then you remember that from the ruins of Troy, sprang the line of Anchises, from whom came Aeneas and then Iulus Ascanius all the way until Romulus and Remus and even unto Caesar himself.* From destruction comes renewal. Schumpeter understood it well.



* Genealogical claims may not pass Australian Truth in Political Advertisements requirements; readers are advised to seek independent historical verification.

As promised, I’m going to post one of the half-written articles that I have lieing around my harddrive somewhere. Today’s article is about AOL’s acquisition of the Huffington Post. I think this is actually one of the biggest stories in politics and in the social media space, but its gotten very little publicity. (The other big story in the social media space, aside from the fact Facebook is heading towards a 2011-2012 IPO is that Linkedin is also heading for an IPO even sooner – another little known fact).

The following article was written when I flew from Hong Kong to Sydney, so it is dated. In fact, my only sources were the NYT, the Economist and the Financial Times which Singapore Airlines provided me lol. It tackles the issue from a business POV, I hope to write a more thorough blog on the political and social media ramifications of the deal later. After all, Huffington Post is one of the most visited sites in the world (and I believe the most popular news site in the world, ranking ahead of the NYTs). What happens when the Huffington Post, whose quality control standards are already notoriously low, is acquired by a major corporation like AOL? What happens when the Huffington Post, whose sensationalist tactics to lure viewers into its website are already rock bottom is forced to go even lower to match the ridiculous growth forecasts it has set for itself? This has serious ramifications for US politics and for the respectability of political blogs in the social media discourse.


Anyway, here is the original article:

AOL has just acquired the Huffington Post. As many of you are not familiar with the historical and financial aspects of this deal (or of the tech industry) I shall endeavour to provide a brief overview. It may, of course, be wrong. I’ve never had to deal with tech companies before and they are valued quite differently to bricks and mortar companies.

AOL has been active in the M&A field in the past. In fact, AOL’s acquisition of Time Warner is the textbook example of how a merger can destroy shareholder value rather than creating value – in that it is literally the example most textbooks use. AOL paid $150b (in shares) for Time Warner in what was to be the media marriage of the decade.

AOL, back in 2000 was primarily a provider of dial-up internet services, piggybacking its website(s), a few services (like AIM and AOL email). It’s business model was to funnel all those subscribers onto its website and then earn money from online ads. To do this, that website required strong content that would draw viewers to come back again and again. Time Warner was a company simply brimming with ‘content’, ie online news and entertainment. The rationale is not hard to see – AOL is a business that needs to generate more content to attract more ad revenues, and Time Warner had plenty of content.

Unfortunately, none of those predicted synergies ever eventuated, the merger went haywire for all sorts of reasons. Two years later, in 2002, AOL Time Warner made the biggest loss of any corporation to date US$99b. Things got so bad that in 2003, the AOL Time Warner conglomerate was renamed simply Time Warner. In 2009, Time Warner spun off its former acquirer, AOL as a separate company. Oops.

What’s shocking is that ten years later, AOL is still primarily dial-up internet provider (!!) and is still attempting to expand its content empire. Who even uses dial-up internet? Apparently 38 million poor sods living in the most technologically advanced nation on Earth. AOL made US$1.02b in revenues from its dial-up subscribers compared to US$1.28b in revenues from online advertising.

Now, I wouldn’t have thought that remaining a dial-up company would have been a very smart corporate strategy, but then again I am that ignorant fool who didn’t know AOL was still (a) still alive and (b) still a dial-up internet provider. Fortunately, Tim Armstrong, AOL’s CEO agrees with me. AOL’s old strategy was to funnel is dial-up subscribers onto its website. Now Armstrong wants to funnel Huffington Post visitors into its other websites.

But can’t you see that its exactly the same gambit that AOL made back in 2000? It paid far too much for Time Warner (which was larger than AOL even in 2000) and its paying far too much for HuffPo now. AOL is using almost half of its cash to purchase HuffPo for US$315m in cash ($300m) and stock ($51m). That US$315m valuation is at 10x 2010A revenues (not profits)  is surprisingly high. For good, stable companies, I would expect a valuation of 10-15x profits, not 10-15x revenues. But HuffPo isn’t exactly a growth business (although 2011E revenues are expected to double 2010 revenues). As the largest online US news provider (ahead even of, I can’t really foresee much further organic growth in revenues unless HuffPo expands internationally. Needless to say, international expansion is difficult for any company but especially so for domestic news networks whose business is literally tied to domestic governments. No wonder Ms Huffington and the other HuffPo shareholders demanded cash and not shares.

[The article ends abruptly here]