Rupert Murdoch, “Australia — ‘Venice of the Southern Hemisphere’,”
Asian Business Review, November, 1992, pp. 19-22.

Rupert Murdoch was optimistic about Australia’s opportunities at the Asia-Pacific Business and Investment Congress in Sydney last month. His address at the Congress, slightly abridged, follows.

The 18th century Irish bishop and philosopher George Berkeley, reflecting on the successive rise to power of Babylon, Greece, and Rome, wrote, and I quote: “Westward the course of empire takes its way.”

Anyway, it seems Bishop Berkeley’s 250-year-old prophecy is still operating. The course of empire is still moving westward. The centre of global gravity appears to be making a further shift — into the Pacific. Which is not to say, incidentally, that I think the United States is going to be left behind. In fact, I think exactly the opposite. And this is without knowing the presidential election result.

The sheer size, scope and complexity of the American phenomenon means that it can never be written off. As ex-Prime Minister Nakasone said in the Economic Magazine a few years ago: “The 20th century was the American century, the 21st will be the American century.” But I do think, however, that the American imperium is going to be shared — at least economically. After all, that’s what happened in the last century. Several powers industrialised — following Britain’s lead — and together they shared western Europe’s moment of greatness. In this next century, the fastest-growing of the several powers sharing America’s moment of greatness seem likely to be around the Pacific rim.

This is a region whose share of the world trade was about 13 per cent in 1980, and is projected to reach some 33 percent in the year 2000. It’s a region that already contains eight of Australia’s top export markets; whose total trade with Australia is greater than that of the European Community.

Recently, Milton Friedman, the Nobel prize-winning economist, said: “The combination of political and technological change (that we have recently witnessed) … constitutes a real revolution in possible co-operation between capital-rich countries and labour-rich countries.”

And he made this prediction: “It could give us the equivalent of another industrial revolution.”

“Another industrial revolution” — that’s why I say that in the Asia-Pacific region we are looking at something that affects the future of humanity itself. Because in all of human history, there’s never been anything like the industrial revolution in terms of the way it transformed the lives of ordinary people.

After the industrial revolution, people lived lives that were radically improved in terms of economic goods, that were recognisably human. We sometimes overlook this fact because we hear so much about the transitional disruption that was involved. But Karl Marx, for example, was in no doubt that the industrial revolution was a breakthrough for humanity.

Well, now we have the chance to make another breakthrough — to extend to the whole of humanity the benefits that we enjoy in the developed world. And what’s powering this breakthrough, in very large measure, according to Milton Friedman, is that we are now able to tap potential of new areas and that pre-eminently means the Asia-Pacific region.

But there is a problem. The problem is Government.

Friedman expressed it as follows: “What bothers me is this: not only the US but other countries seem to be missing this enormous opportunity. The capital-rich countries are going in a protectionist direction, building walls around their blocs. Fortress Europe. The US with Canada and Mexico.”

Obviously, this is a problem we are all too familiar with in Australia.

But let me give another example. Obviously, the untapped potential of the East Germans is a tremendous asset to the world economy. But it has almost been turned into debt, because of the way the West German Government chose to handle it. The hasty unification of the currencies, the extension of West German regulations and benefits, distorted and in fact virtually destroyed the system of price signals that would otherwise have guided East Germany efficiently into its appropriate place in the free world.

So let me summarise my thoughts on the significance of the Asia/Pacific region. The emergence of the Asia-Pacific economies is a cause for great hope but not for complacency. It’s a great boon for mankind. But it’s not beyond the wit of mankind to mess it up.

Now where does this leave Australia? We can state it simply by adapting a famous phrase. What has happened is that technology has abolished the tyranny of distance.

We have to get used to a new reality: Australia is now well-located.

It’s well-located with regard to the Asia-Pacific region, firstly, as a matter of geographical reality. We are, after all, only 8 hours from Hong Kong. California is 12 hours. Europe is 24 hours. But the technology that is truly reducing the importance of geographical reality, however, is electronic. If you have a computer and a telephone, you can dispatch vast volumes of information to the other side of the globe just with a keystroke, and at insignificant cost.

Whole new industries are developing around this fact. And they are developing in some remarkable places. For example, every time I fly from Los Angeles to the Rockies, I cross the Utah desert. I can look down on a little town in which there now lives one of the hottest software operations in America. For those of you who follow these things, it’s the home of the Word Perfect word processing program.

It’s the equivalent of finding a major industry in Alice Springs. And — and this is the point — there’s absolutely no reason why that company couldn’t be in Alice Springs. Australians could have written that software. They could be sending it all over the world. In the future, I believe they will.

And this ties right back to Australia’s role in the Asian/Pacific region. The prosperity of this region is not a question of tapping great new reserves of national resources, or even unskilled labour. It’s not like the opening-up of Africa in the 19th century. What counts in this region is skills.

Australia is lucky in that its natural resources complement this great regional surge in economic activity. It means that Australian prosperity has strong underpinnings. But ultimately, to participate fully in the Asia/Pacific boom, Australia has to get right beyond natural resources altogether.

I don’t mean by that to repeat the conventional wisdom that Australia has to go from extraction to processing from primary industries to secondary industries. That kind of thinking still reflects a natural resources fixation, the fallacy that only tangible products are real. I mean exactly what I said: Australia has to get beyond natural resources altogether — into the tertiary sector, the knowledgeable industries.

Prosperity in this hemisphere is going to be a great arch of skills, vaulting from Australia to the emerging economies of the north. Australia will participate to the extent that it develops its skills.

In the case of the computer industry, for example, it is a mistake to focus on trying to stimulate hardware manufacturing here by keeping imports out. That reflects the natural resource fixation again.

Instead, Australia should allow as many imports as it can afford, to drive down the cost of computer power and encourage the computer hackers — because it’s from this hacking subculture that software products emerge. And that’s an industry with vastly more potential than bolting any number of widgets into circuit boards — and an industry in which Australia is at no competitive disadvantage.

Finally, there is a third sense in which Australia is well-located. And that is in a political, cultural and historic sense.

Australia is the representative in this hemisphere of the larger English-speaking world. It is and should be much more so, the point of intersection, the nexus, between that world and the emerging economies of east Asia.

The fact that Australia is part of the English-speaking world is a crucial asset. English is the international language of trade and technology. For this reason, as well as because of recent history, English is going to be the lingua franca of the Asia/Pacific region. That’s a critical advantage for Australians doing business there.

And it’s potentially a great source of invisible earnings for Australia. For example, Australian schools and universities are becoming national profit-centres. They are finding a rich market among the citizens of the Asia/Pacific region who want their children to learn English and the ways of the English speaking world. And, I don’t have to remind you, invisible earnings of that sort are just as real as the manufacture and export of physical goods.

More generally, however, there’s the issue of what we might call historical location.

The Asia/Pacific region is entering the world economy because it is passing through the peculiar process sociologists call modernisation. Its societies are being forced to become more open and decentralised, less hierarchical and authoritarian.

And this is not just because of the moral force of the democratic idea, although we saw in China that this cannot be indefinitely denied. It’s because openness and lack of hierarchy are functional necessities if any society is to absorb and adapt, let alone advance, technological change.

Well, the English-speaking world wrote the book on modernisation. In fact, nowadays modernisation to a very large extent really just amounts to Americanisation. And this is something that Australia understands and has shown itself able to handle easily.

Australia has achieved that very rare prize: freedom combined with political order. And I think this is too easily taken for granted. I’m not sure we’ve achieved it in Los Angeles.

For that reason, in the Asia/Pacific region Australia has a historic role; to serve both as a model and as a guide. To the extent that Australia can influence the emerging powers of Asia to follow the example of the English-speaking world, all of humanity will be in its debt.

So, summarising my view on Australia:

  • The tyranny of distance has been abolished.
  • Australia is no longer on the periphery.
  • It is now strategically located.
  • It has the potential to become a great cultural and commercial entrepot.

Australia could be the Venice of the Southern Hemisphere — profiting from the Asia/Pacific boom as Venice profited from trade following along the ancient silk road into the Mediterranean.

Of course, we’ll have to do without the canals. But Sydney Harbour is good enough.

I say Australia could be the Venice of the Southern Hemisphere because, as I mentioned earlier, it is certainly not beyond the wit of mankind to mess this opportunity up.

Obviously, Australia must avoid West Germany’s mistake. Australians must learn to read the signals of the market if they are to identify and exploit all the possibilities that are open to them. Anything that interferes with those signals — tariffs, regulations, controls, discriminatory taxation — is going to damage Australia, in profound ways that cannot even by fully predicted.

Fundamentally, Australia has to shift from a defensive to an offensive approach.

There’s a precise analogy to sailing a yacht — you can sail along slowly, being content with slow but sure progress. Or you can spread your sails and catch the winds, it takes intelligence and quick reflexes. But it’s faster. And more fun.

On top of which, there’s this further point: when the wind blows strongly enough, it will capsize you anyway — even if your sails are furled. And some of Australia’s protected and obsolete industries are already shipping water.

I saw this process at work in British newspapers, for example. Unions, managements and government effectively collaborated in an attempt to contain and control change. And it was strangling the industry. Since we opened it up, by moving our printing operations to Wapping and finally introducing the so-called new technology, there’s been a silver age in British journalism with more newspapers and better jobs for everyone.

I say this is obvious, but let me make a personal confession here. I would not have said this 30 years ago. At that time, I assumed with a lot of other people — and I’m thinking particularly of my old friend Jack McEwen — that Government could and should intervene — that market forces can be contained and controlled. I absolutely understand the sentiments of those who still want to do things in that satisfying direct fashion.

But I’ve learned the hard way in my own business that it just doesn’t work. We don’t have the predictive powers it would require, and there’s the question of moral hazard — our efforts too easily become corrupt and self-serving.

And that’s even though television continues to erode total readership. Because television is a classic example of a wind of change that’s blowing up anyway, that cannot ultimately be contained or controlled by regulation, that will one day capsize all media businesses that try to ignore it — or be immensely beneficial to the companies and countries that catch it in their sails.

So, in conclusion, the Asia/Pacific region offers the potential for a new upsurge of global economic growth.

Australia has the opportunity to become the Venice of the Southern Hemisphere. But it must learn to read the signals of the market — and not to repress them.

And then, we may well see Bishop Berkeley’s prophecy finally completed, with the world reaching new heights as it comes full circle, and Australia — and Sydney — playing an important part.