Saturday, 31 December 2011

Monday, 26 December 2011

A couple of interesting posts on refugee policy

Sec Ozdowski has written an opinion piece in The Australian titled Real solution is Asia-Pacific pact. In it he looks at the longer term measures he thinks are needed to "deliver much better protection of refugee rights and remove key initiatives for jumping on a leaky boat to Australia". I thing much of what he advocates is interesting, but I don't support his suggestion of introducing Temporary Protection Visas (TPVs). Although, to be fair, he does suggest that they be introduced for people who bypass the "queue" after a regional solution is implemented:
Following the creation of a regional framework for refugees, there should be consequences for people who choose not to join the queue in Indonesia. Any asylum-seekers who arrive by boat without proper travel documents should not be given a right to permanent residency but instead be offered temporary protection visas if they are found to be genuine refugees.
Malcolm Farnsworth in Confusion, timidity and capitulation on asylum seekers argues that the Gillard Government is showing poor leadership on the issue:
If ever there was an issue that required leadership, this is it. The Gillard Government has not provided it. In the lead-up to Christmas, it merely begged the Opposition to rescue it.
Personally I think the above post focuses too much on the politics of the issue and not enough on the issue itself, or the policies proposed by the different parties.

In The problem with Nauru: a Christmas reflection Julian Burnside asks some interesting questions:
The first is: What is the problem we are trying to solve? Is it that boat people might come to harm on the way here, or is it just that they get here?
He advocates offshore processing, that is processing before people get on a boat for Australia.
One possibility is to process protection claims while people are in Indonesia. Those who are assessed as refugees would be resettled, in Australia or elsewhere, in the order in which they have been accepted as refugees. If Australia increased its annual refugee intake, with a guarantee of at least 10,000 places for those processed in Indonesia, the incentive to get on a boat would disappear overnight. At present, people assessed by the UNHCR in Indonesia face a wait of 10 or 20 years before they have a prospect of being resettled. During that time, they are not allowed to work, and can't send their kids to school. No wonder they chance their luck by getting on a boat. This proposal would reduce the waiting time to one or two years, and Australian officials would have an ample chance to warn people of the dangers of a trip with people smugglers.

Genuine offshore processing, with a guarantee of swift resettlement, was the means by which the Fraser government managed to bring about 80,000 Vietnamese boat people to Australia in the late 1970s. It worked, but it was crucially different from the manner of offshore processing being proposed by both major parties.

Unless offshore processing is done fairly and is coupled with swift resettlement, it is nothing but a sham to mask a desire to keep refugees out.
Jack the Insider has written an interesting summary of the issue in No deals, no hope, no policies worth a damn:
You can bet the house that an Abbott Government would not tow back boat one. It is a policy it holds in the abstract in opposition but if it found itself in government, wiser heads would conclude that the political perils would be too great. The Howard government ditched tow backs for very good reasons.

But let’s assume that all other policies are put in place in a spirit of bipartisanship.

Remember, the anticipated arrivals over the next six months are 7,000.

The government could heed Scott Morrison’s urging and reintroduce TPVs. The experts say that TPVs are not effective deterrents but let’s assume for the sake of argument that it cuts the anticipated arrivals by say, twenty five per cent during this period.

800 asylum seekers would go to Malaysia. Nauru would fill to capacity and beyond within months and Manus Island (let’s put to one side the intrinsic difficulties of the Commonwealth coming to an agreement with PNG locked in constitutional stasis, as it is) would soon fill to overflowing, too.

And then what do we do?

Be it the government, the opposition or the Greens, there is no effective policy response available to deter asylum-seekers from putting their lives at risk. After more than ten years, we have to come to the conclusion that no such policy exists within our parliament and that a little more imagination than the creation of vague deterrents of unknown or questionable value is required.
That's really the great risk: short of ripping up our treaty and moral obligations, there's probably nothing we can do that's guaranteed to "fix" the issue. For one thing, we can't agree on what the issue is. For another, none of the solutions would really scale if there was a large increase in asylum seekers. Even a regional solution, in my opinion the best of the options put forward, would run into trouble if there was a significant increase (think of the scale we're currently seeing with Somalia) and the "queues" blew out. Lastly, a regional solution would likely see more recent asylum seekers given preference over those in other regions. Effectively asylum seekers in a regional queue would be fast tracked compared to those in places like Africa.

Unfortunately, as with all wicked problems, there's no perfect solution.

Edit 31/12: The Conversation gives several academics the opportunity to put their view across in Five ways to prevent more asylum seeker tragedies.

George Megalogenis on Paul Keating and leadership

George Megalogenis is one of my favourite writers on Australian politics and the economy. I think he stands heads and shoulders above anyone else at News Limited. In the November issue of The Monthly he's written a great essay titled The Book of Paul: Lessons in Leadership and Paul Keating. In it he compares the leadership of Paul Keating to that of John Howard, Kevin Rudd, Julia Gillard and Tony Abbott.

The essay quotes Paul Keating as saying that there are "four basic divisions, which cut across traditional party lines:
The first group – the Hansonites at the extreme end – want to isolate both the economy and the society from the outside world […]

The second group – the anti-globalisation demonstrators and elements of the Democrats and the Greens – want to internationalise social issues but nationalise the economy […]

A third group believes the reverse … They are all in favour of internationalising the economy, giving free rein to the free market, but they are damned if they think foreigners and international bodies like the UN should have anything to say about social policies here in Australia.

A fourth group – and it’s obviously the one to which I belong – believes that for a country like Australia, with a small population tucked away in a corner of the Asia–Pacific, economic openness, social inclusiveness and engagement with the outside world is the only way in which we can hope to prosper.

Thursday, 22 December 2011

Is the Murray Darling plan a solution to a wicked problem?

There has been a lot written about the latest Murray Darling plan. Unfortunately, most of it isn't very informative. I have come across an exception though. Brian Davidson and Hector Malano writing in Wicked problems demand adaptive responses: how does the Murray Darling plan stack up? discuss how Murray Darling Basin Authority has recognised that water resource management is a wicked problem. They write that the MDBA is taking an adaptive approach to managing water resources.
Those who call for certainty and a one-off solution (usually couched in terms of the need to invest and/or that the river’s health is in such a dire state that it will expire and/or that the science is settled), have misread the nature of the problem. They have ignored its underlying variability. The most important thing the Authority has done is to take a more adaptive approach to the problems in the Basin within the constraints imposed by the legislation and the political environment.
And
Looking at the sector and its problems in their entirety, learning more about them and having the flexibility to respond to them is the key to dealing with these complex problems. With this draft plan, the Authority is on the right track.

Wednesday, 21 December 2011

Comparing American and Australian political leaders

In PMs and presidents: in another leader's shoes the always interesting Greg Jericho looks at how various USA presidents might fare in Australian politics and how our Prime Ministers might have gone in the US system.
In his "Plácido Domingo speech" in 1990, Paul Keating argued that Australia had never had a great leader of the stature of an Abraham Lincoln, a Franklin Roosevelt or a Winston Churchill. Whether this is accurate is one for historians to debate, but of those three only Churchill comes out of the Westminster system. When observing the current candidates and the past US presidents and past Australian prime ministers, I wonder which nation and which democratic process ends up with the better leaders, and perhaps more interestingly, which leaders from one country would rise to the top in the other country's democratic system?

Ross Gittins on getting the most happiness out of our purchases

In For it's in giving that you receive happiness Ross Gittins notes that there are ways to "get more bang from our bucks". These include giving to others or charity, paying before you buy (it increases the anticipation), avoid comparison shopping, follow the herd (if everyone else is enjoying it you probably will as well), buy many small things instead of one big one (we don't get used to them as quickly) and "buy experiences instead of things". For an explanation of all these please read the article.

Fit people feel safer

Courtney Trenwith reports in Don't feel safe walking at night? Exercise more that people who exercise tend to feel safer when walking at night.
New Australian Bureau of Statistics research shows those who participate in sport and recreational activities have significantly greater levels of trust in the community and are far more likely to feel safe walking the streets after dark.

Only 15 per cent of active people never walked alone after sunset, half the rate (33 per cent) of those who didn't exercise.
Link
More than half (53 per cent) of people who exercised felt very safe or safe walking alone in their local area after dark, compared to 33 per cent of inactive people.

General levels of trust also were much higher in people who exercised, according to the ABS.
I'm not sure if this is because they're more confident or better socialised, or both.

Tuesday, 20 December 2011

Australia has made its own luck

In If we're lucky, it's the luck of good management Ross Gittins writes that much of Australia's recent success can be put down to good economic management rather than luck. Ross highlights the fact that Australia, unlike the USA and many countries in Europe has had a commitment to "maintain budget balance, on average, over the course of the economic cycle".

Tuesday, 13 December 2011

Jonathon Holmes on tabloid TV

In 'Breaking the law': a strange tale of tabloid TV Jonathon Holmes compares Australian tabloid media to that in the UK and argues that the real excesses in Australian journalism are not amongst Australian tabloids, but in the weekly magazines and the commercial current affairs shows.

This is a reflection of where the competition is. Most Australian tabloids face no competition, at least from other tabloids, so they can maintain some minimum standards (although there might be argument as to whether the minimum standards are adequate). Where we see competition is in talk back radio, weekly magazines and in commercial current affairs. And, that's where we see the worst excesses. It's unfortunate (as I'm a big believer in competition improving markets), but when it comes to the media it seems that competition delivers a worse result.

But, then I guess that says more about us the consumer. After all, competition is only forcing the media to produce what we want to consume.

Malcolm Turnbull on the future of newspapers

The ABC has a transcript of The future of newspapers, the end of journalism, a speech Malcolm Turnbull gave to the Advanced Centre of Journalism in Melbourne earlier this month. It's interesting, informed and balanced. Recommended reading.

Bill Gates pushing new nuclear reactor technology

The Register has reported that Bill Gates is in discussions with the Chinese Government about a new breed of nuclear reactor. Apparently these reactors would be fuelled by depleted uranium, something normally thought of as radioactive waste. To quote from the article:
Papers published by the company claim that the system is 40 times as efficient as current light water reactors and that there is enough available fuel to provide 10 billion people with US per-capita energy usage levels for million-year timescales. As an additional bonus, depleted uranium is plentiful, cheap, and is of limited use in atomic weaponry.
Bill Gates is a shareholder in the company developing the technology.

Monday, 12 December 2011

Some interesting articles on the Eurozone and Keynesian economics

Kevin O'Rourke writes in A Summit to the Death
One lesson that the world has learned since the financial crisis of 2008 is that a contractionary fiscal policy means what it says: contraction. Since 2010, a Europe-wide experiment has conclusively falsified the idea that fiscal contractions are expansionary.
He's also critical of the recent European summit and the agreement reached:
What is needed to save the eurozone in the medium term is a central bank mandated to target more than just inflation – for example, unemployment, financial stability, and the survival of the single currency. A common framework for regulating the financial system is also required, as is a common banking-resolution framework that serves the interests of taxpayers and government bondholders, rather than those of banks and their creditors. This will require a minimal fiscal union; a full-scale fiscal union would be better still. Yet none of this was on the summit’s agenda.
John Cassidy asks in the New Yorker article The Demand Doctor "What would John Maynard Keynes tell us to do now—and should we listen?". This is an interesting article on Keynesian economics.

A lot people seem to think that Keynesian economics is all about budget deficits. They're only partly right. Governments may need to run deficits when economies are in recession so as to stimulate demand. However, and this is something Keynes well understood, when economies are going well Governments should be saving -that is running budget surpluses. As the old cliché goes, make hay while the sun shines.

Police sniffer dogs waste of time?

It seems that drug sniffer dogs have an 80% false positive rate in NSW although the Police still asy that they're highly accurate.

Sunday, 11 December 2011

Graeme Orr and industrial action

Associate Professor Graeme Orr has written Whatever you might have heard, industrial action is in decline. Here's an excerpt:
Industrial action in Australia is rare, by both historical and developed world standards. Take the last financial year. 166,000 working days were lost to industrial action, whether strikes by employees or lockouts by employers.

Is that a lot or a little? Let's picture it in absolute terms. Imagine sitting outside a factory gate for a whole year. In an employed workforce of over 9.5 million, last year’s level of action equates to seeing just one employee in every 57 emerge, for just one day of the year, to miss work. Industrial action in Australia remains near record lows. To picture it in historically relative terms, consider the graph below, which I compiled from Australian Bureau of Statistics figures.

Saturday, 10 December 2011

The better side of politicians

Paul Daley reported politicians sometimes soar with the angels:
Amid all the rancour of that final sitting week, Labor's Michael Danby introduced to the House of Representatives a motion that highlighted the best in public debate.

He called on Parliament to recognise each July 11 as Srebrenica Remembrance Day, as a reminder of the evil that led to the genocide of more than 8000 Muslim men and boys at the hands of the rebel Serb forces of Ratko Mladic in Bosnia in 1995.

It was, Danby said, ''what the Russians would call an act of pamyat - memory''.

''It is very important to never forget the legacy of these horrors; not from the point of view of torturing ourselves but to educate future generations that, if people are to act out of racial prejudice and kill masses of others, this will happen again and again.'' Danby recounted a description by a Muslim woman, Zumra Shekhomerovic. It is too long to detail here but I urge you to track it down on the internet because rarely will you find more moving - or deeply disturbing - words spoken in our Parliament.

The Serb soldiers separated her from her husband.

She said: ''I never saw him again and I don't know what happened to him. I regret so much that I did not say 'Don't take him', that I didn't scream or shout for help. Maybe it would be easier to live now. I just left silently … while my tears were flowing like a river.''
The motion was seconded by the Liberal MP for Casey, Tony Smith.
A host of other MPs - including Slipper and the NSW Labor MP Ed Husic - gave similarly thoughtful speeches.

The "Bali drug boy" and the missing media deal

While the 14 year old from Lake Macquarie was on trial for drug possession in Bali media reports in Australia were claiming that his family had signed a six figure exclusive deal with Channel 9 to tell their story. Both the family and Channel 9 denied this. Well the boy is back in Australia and it seems that there isn't a deal after all. So who invented this story? What does this say about our media that a story like this could be fabricated and reported, even though it might well have detrimental to the boy's case? Perhaps the ethics of our media aren't that different to what's been on display in the UK.

Measuring wellbeing rather than just GDP

Ross Gittins in There's so much more to wealth than money discusses the limitations of using GDP as a measure of a nation's bottom line. He then discusses a measure developed for Fairfax by Dr Nicholas Gruen.

Edit 12/12: Jessica Irvine compares some of the measures of national wellbeing in How to measure the national wellbeing. She then goes on to discuss the findings of the Herald/Lateral Economics Index of Australia's Wellbeing in Nation richer, older and a little bit wiser. She also discusses why the media tend to focus on interest rates (despite only one in three households having a mortgage) and GDP rather than other measures of economic wellbeing in Fixation on rates just obscures big picture.

Friday, 9 December 2011

Our hardworking MPs

In The everyday politics of perpetual electioneering James Panichi looks at the huge amount of work that Australian politicians carry out in support of their electorate.

Australian Exceptionalism

In Australian Exceptionalism Possum Comitatus has analysed Australia's economic performance over the last 25 years and it's astounding:
So this is our economic reality – we are the wealthiest nation in the world with 75.5% of our adult population making it into the global top 10%, our economy has grown faster than nearly all others (certainly faster than all other developed countries), our household income growth has been one of the fastest in the world (including our poor having income growth larger than everyone else’s rich!), we have the highest minimum wages in the world, the third lowest debt and the 6th lowest taxes in the OECD and are ranked 2nd on the United Nations Human Development Index.

And this didn’t happen by accident.

This happened by design.
I thoroughly recommend this article.

Wednesday, 7 December 2011

Sally Sara says goodbye to Afghanistan

Sally Sara has been the ABC's correspondent in Afghanistan. I've found her articles from this war torn country interesting and informative. She's written an article on ABC's The Drum about her thoughts on leaving. They do seem mixed.

Crikey's quality journalism project and Ross Gittins

Crikey have been running a series where they profile one of Australia's quality journalists. Their latest subject is Ross Gittins. I have a great deal of respect for his work (I've probably linked to more of his articles than to anyone else). So it's interesting reading what he considers quality journalism and where he gets his news from. Have a read.

I guess Gen Y isn't as selfish as some say

It seems that one of the constants in history is of the older generation bemoaning the faults of the newer. This seems especially so with Generation Y. So it's good to read stories that contradict some of the myths.

Ross Gittins on the importance of relationships

In Ruthless pursuit of profit at all cost is an excess that can't last Ross Gittins writes about the work of Dr Michael Schluter.
I get to meet a lot of famous and interesting people in my job, but few have had more influence on me than Dr Michael Schluter, the social thinker, social entrepreneur and founder of Britain's Relationships Foundation.
Dr Schluter is advocating a relational approach by company management. That is, promoting relationships between all the stakeholders in a company: shareholders, employees, customers, suppliers and the community. It's an interesting approach that would probably make for a better society. Recommended reading.

Tuesday, 6 December 2011

Iran and street diplomacy

Mark Corcoran has written an interesting article on pro-government protesters in Iran and politics within the country. It's worth a read.

Monday, 5 December 2011

David Marr's new book "Panic"

David Marr has written "Panic", a book that explores how so much of Australia's politics is driven by fear and panic. There's an edited extract available online.

David Marr defines panic, at least in the context of his book as "reasonable fears twisted out of recognition". He goes on:
A decent face has to be put on the passions aroused. Appearances count. Language matters. Skilled panic merchants find ways of suggesting, however vaguely, that the survival of the nation is at stake. The argument always is that desperate times require tough laws and strong leadership. Panic is a rallying cry for power.
It recounts some of the more infamous instances of panic in Australia's history (e.g. fear of non-existent German saboteurs in WW1, fears of communists, more recently fear of boat people, fear of terrorists, fear of Aboriginal land rights). He also discusses the politicians, Labor and Liberal, past and present, who whip up or exploit these panics for their own political ends.

The extract includes a couple of interesting points on tabloids:
There is a cynical old saying that the purpose of tabloid journalism is to maintain a perpetual state of false alarm.
and
There is another adage about the tabloids: that their purpose is to persuade the working class to vote Tory. I once put this to Bob Carr. He replied: ''I think it is incontrovertible.''
It sounds like an interesting read.

Sunday, 4 December 2011

Ross Gittins on Business Economics vs Political Economics

Joe Hockey has a great political one liner - "This government never has delivered a surplus Budget and it never will deliver a surplus Budget". Politically it's devastating. However, there are two things wrong with it:
  1. Given the GFC and the fall in Government revenue it's highly unlikely that any Government would have been able to deliver a surplus during Labor's current time in office.
  2. It's also bad for the country because it potentially forces the Government into adopting an economic position (a surplus for 2012/13) for political reasons even it might not make sense economically.
Joe Hockey's line is probably one of the main reasons why the Government has invested so much effort and political capital in bringing the budget back to surplus as quickly as possible. The danger for the Government is that Europe's economic woes might very well make the goal of a surplus next financial year both undesirable and unachievable.

Lately we've been hearing various business economists say that there's really no difference between a tiny surplus and a tiny deficit and if the Government only achieves the latter it's no big deal (and a small amount of stimulus might actually help). However, as Ross Gittins explains in Days that require a line in the sand these economists are missing the political importance of the Government achieving a surplus. He also makes the point that it's probably no bad thing that Governments make commitments that require self discipline for them to be achieved.

Interestingly, virtually the same article by Ross Gittins is published at Economists are playing politics over surplus. However the latter article has a much more political focus.

Saturday, 3 December 2011

Jessica Irvine looks at the value of gifts

In Just what you need: a Christmas audit Jessica Irvine writes about the value of Christmas gifts and the concept of a "deadweight loss".
When you shell out $50 to buy me that handmade macrame handbag, but I value it at only, say, $25, there is what economists call a $25 ''deadweight loss''. This deadweight loss is the difference between how much you are out of pocket and the benefit I derive out of receiving that gift.

Sunday, 27 November 2011

The reason for the Occupy Wall Street crackdown?

Charlie Stross in More news from our Martian Invaders quotes from a Naomi Wolf op-ed The shocking truth about the crackdown on Occupy. Naomi Wolf describes three main wants of the Occupy movement:
  1. Get the money out of politics.
  2. Reform the banking system, and in particular, bring back the Glass-Steagall Act.
  3. Close the loophole that "currently allows members of Congress to pass legislation affecting Delaware-based corporations in which they themselves are investors".
They both then note that it was the Department of Homeland Security that coordinated the Occupy crackdown:
OWS had become a direct threat to the personal prosperity of the members of the House homeland security subcommittee (to whom DHS is answerable). If allowed to gather momentum and turn into an independent third party, why, OWS might actually put an end to the corruption. Certainly they're pointing at the right targets.

Wednesday, 23 November 2011

Possible News Limited Scandal

It seems that Federal police are investigating allegations by Bill O'Chee, former National Party Senator from Queensland, that News Ltd offered him a "'special relationship' involving favourable coverage if he crossed the floor on a vote of financial interest to the company".
Mr O'Chee, a Queensland senator between 1990 and 1999, has had a long and difficult relationship with the Murdoch press, which spent years reporting on his large parliamentary superannuation payout and an acrimonious split with his first wife.
And
A week later he called the executive and told him he would not cross the floor. 'After this conversation, it became almost impossible for me to get anything published in the Queensland newspapers which News Corporation controlled, even though I had been able to do so before the lunch meeting.'

Mr O'Chee lost his Senate position three months later.


Link

Ross Gittins on the Mining Boom

Ross Gittins has written an interesting column on the contribution of the mining industry to the Australian economy. Although it only makes up 10% of Australia's GDP and employs less than 2% of the workforce, the flow on effects contribute significantly to the service sector of the Australian economy.

Monday, 21 November 2011

Fairfax might remain free

Alan Kohler in Fairfax calculates risk of a paywall-free presence records that Fairfax might continue to publish its (non AFR) content for free. Fairfax also seems to be admitting that the expensive paywall (the highest in the world) on the AFR might have been a mistake.

I find many of the columnists published on the various Fairfax websites to be interesting and insightful. Let's hope Alan's article is right.

Arctic sea ice or the lack thereof

Stefan Rahmstorf in Can we ignore the second warning? looks at declining sea ice in the Arctic:
In 2007 sea ice in the Arctic was at an all-time low. Dismissed as a fluke, it has re-occurred in 2011. It doesn't look much like a fluke any more.

Police tactics on Occupy protesters

Alexis Madrigal in Why I Feel Bad for the Pepper-Spraying Policeman, Lt. John Pike looks at how Police in the USA have changed their tactics in dealing with protesters.

Bernard Keane also comments on Police tactics in Occupy crackdowns perfectly illustrate the movement's claims.

Fair Work Act may assist employers implement structural change

Paul Barry in Gillard's IR test: first Qantas, now the nurses union writes that the Fair Work Act might be tougher on unions than many people think.
According to Ron McCallum, Professor of Industrial Law at Sydney University, "Fair Work Australia will not arbitrate over how you should run your business."

This makes compulsory arbitration an attractive outcome for employers—so attractive that Qantas was prepared to lock out its workforce and ground its entire fleet to ensure it got there. "The reason why Qantas shut down the airline," says McCallum, "was that Joyce's advisers at Freehills would have told him that arbitration would bring an end to the industrial action but would not stop the strategy to shift jobs offshore."
The article then looks at how the Baillieu Government may be trying to "goad" the nurses into industrial action so it can seek compulsory arbitration and so get through cost cutting measures that would not be achievable through negotiation.

Laura Tingle ponders the impact of the changes at News Ltd

In Labor reads a lot into news about News Laura Tingle looks at the anti-Labor tone in News Limited papers and wonder's if there will be any changes under new CEO Kim Williams (the son-in-law of Gough Whitlam).

Some bad press for Tony Abbott

Over the last few weeks there's been a few columns that have been critical of Tony Abbott and the Coalition. I don't know if this is the start of a trend or not (something Drag0nista also ponders). He's a summary of some of the recent columns.

On October the 15th Laurie Oakes in Both sides in trust shortfall noted that Tony Abbott had form when it came to broken promises.
What's more, senior Liberals admit privately that their leader has made more promises than he can keep; he has made promises that are unaffordable.
On October the 21st Andrew Probyn in Future not so simple for Abbott noted that while Tony Abbott will probably win the next election, he's currently sowing the "seeds of his own destruction":
But unless he sets about seriously reconfiguring various policies, when he becomes prime minister he will either have to break promises, commit humiliating backdowns or attempt to wheedle his way out of controversy.

This could be the death of his prime ministership, as it was with Kevin Rudd. But more of that later.
He noted that the "simple message is what often hooks voters" but seemed to question the policies that lay behind them.
Stuff that sounds neat and well-packaged can pass muster on presentation but when unwrapped and analysed it is much more thorny.
On October the 22nd Peter Hartcher in Biz-bashing rewards Abbott looked at how Tony Abbott seemed to be upsetting the big end of town:
But Abbott's opposition shuts down debate about workplace reform, shows signs of being tempted away from a wholehearted commitment to free trade, proposes a new tax on big business to fund an expensive parental leave scheme, and, while it certainly monitors government spending closely, has yet to explain its own fiscal policy.
On the same day Lenore Taylor wrote in Ignore all facts and just run with the bluster that the Coalition seems to be avoiding facts when it came to carbon taxes or asylum seekers:
Whether it is because The Lie has given it cover or just a manifestation of the age of post-truth politics, the Coalition has proceeded to attack the carbon pricing scheme with virtually no reference to facts.
Shaun Carney in Blood oath reality is taking Abbott out of comfort zone noted that Tony Abbott's attacks on the Government had been "almost entirely policy free":
For the first time in a long time, a small window of opportunity has opened up for the government to go after Abbott. Now that what he calls the toxic tax is to take effect, he must at last move outside his comfort zone of highly charged rhetoric into the place where what he says has real consequences.
On October the 23rd Drag0nista's Blog asked Is the tide turning for Tony Abbott?

On October the 28th Laura Tingle in Labor hopeless, Abbott a hollow man (which I've quoted from before) called Tony Abbott a hollow man and noted that the Government's unpopularity shouldn't "stop some proper scrutiny of the nonsense Abbott keeps sprouting". She then tore apart his policies on refugee boats.
Yes, he has been there shielded from the implications of these views by the fact that voters like the PM even less. But two years is a long to get away with being such a negative, opportunistic and hollow man.
On October the 31st Alister Drysdale in Dr No cant' last forever noted that "over the past couple of weeks some of the more respected scribes who’ve make a life-long living from political reporting out of Canberra – and have seen the birth and death of dozens of Party leaders – have started to question the 'no' strategy of the Opposition Leader." Borrowing from the Melbourne Cup he's noted that this political race has turned out to be a "long distance endurance test" rather than the spring that Tony Abbott had wanted.

On November the 1st Geoff Gallop in Tony Abbott and the role of the Opposition looked at the problems created when Oppositions only oppose:
Firstly by opting out of so much policy consideration the ability to influence outcomes is diminished. I say diminished rather than sacrificed because oppositions can still have an indirect influence on policy through the public pressure they generate.

It guarantees an adversarial Parliament and can't be good for a legislative process which requires input from a range of sources. We live in a world of complexity that needs serious deliberation across the traditional ideological boundaries if solutions are to be found.

Secondly, it feeds into the populist culture and the short-termism it creates. If they are to act in the public interest governments will need to tackle vested interests opposing change. Bad opinion polls – at least in the short-run – may have to be accepted.
I hope to come back to this topic at a later date.

On the same day Marius Benson pondered what sort of Government Tony Abbott would lead in Passion-driven policy: picturing an Abbott Government.

On November the 5th Laurie Oakes in Mining tax has exposed Abbott questions Tony Abbott's stance on the mining tax. He also attacks the Coalition's response to the Government's support for improved resourcing of the IMF.
Politicians don't come any more ferocious and brutal than Abbott. He reverted to the wild the moment he got his paws on the Liberal leadership.

His style is pure attack dog, as feral as you'd get. Everything, irrespective of merit, has to be opposed and torn to pieces.
On November the 7th, Michael Pascoe in Abbott's gross failure of economic credibility attacks Tony Abbott's opposition to the mining tax and questions the need for a surplus at the moment. He opens with:
It's not just Europe and the United States where base politics can make for bad economics. There's a danger that cheap populism is about to lock in a bad outcome for Australia in the next financial year and, depending on the extent to which you can trust political leaders to lie, worse beyond that.

For all the opinion poll perceptions though, it's not the government that's guilty of a gross failure of economic credibility. It's the opposition, both in the short and medium terms.
And finishes with:
Further out, there are bigger worries if the likely events come to pass and Abbott is elected prime minister and Hockey becomes his treasurer.

Hockey's apologists claim he just has to run with the policies Abbott invents, but that excuse is wearing very thin. Hockeynomics looks like a dangerous cult – a world in which Canberra increases services but cuts taxes, while building up a massive surplus. No, it does not add up.
On November the 9th Paul Kelly in Super backflip breaks dam for Abbott argues that the Tony Abbott lead opposition has been running a negative argument for too long and is fighting on too many fronts.
Why is Abbott vulnerable? He is vulnerable because he has become Dr No, rejecting policies on populist grounds regardless of principle and past Coalition belief. By opposing virtually everything, he cheapens his case and credibility for opposing what matters.
On November the 23rd Phillip Coorey in Abbott victim of friendly fire as Liberals criticise Coalition leadership noted that there was some dissent within the party ranks. He also noted that "Mr Abbott grew testy and shut down the debate". That's not going to make the troops happy, although it is consistent with how he handles door stops and press conferences apparently.

On November the 24th Steven Scott in Disunity a jolt to Liberal leader Tony Abbott's lead in polls wrote that "Abbott faces growing criticism from within his party". He also reported that many Liberals believe that Tony Abbott is too close to Nationals Senator Barnaby Joyce. I suspect Steven Scott's report was written before Peter Slipper became Speaker of the House of Representatives.

On November the 26th Michael Gordon in Bitter aftertaste ruins Abbott toast to future wrote that at last year's Opposition Leader's Christmas drinks Tony Abbott told attendees that he would "See you next year at The Lodge for drinks".

Peter Hatcher in Abbott's positively negative wrote that "The Liberal Party is waking up to the realisation that their leader's insistent oppositionism is not helping the cause".

Katherine Murphy asks The question for 2012: can this man go positive?

Sunday, 20 November 2011

Will the Internet create the perfect market?

Ross Gittins in Internet commerce will foster price competition looks at how the Internet is making markets behave more like economic theory assumes they do. This should lead to more informed consumers and cheaper prices.

The myth about sporting riches

Justin Shaw in Coates and McGuire: men on a screeching mission agrees with Chris Berg that major sporting events don't offer the economic benefits their proponents claim and with Greg Jericho questioning the level of funding for Olympic sport.

Tuesday, 15 November 2011

Industrial Relations Regulation

In Shouting slogans will not further Fair Work debate Ross Gittins looks at whether industrial relations is more or less regulated since the change from Work Choices to the Fair Work Act. He also discusses the balance between worker and employees. Here's a sample:
Here's the point: the labour market has always been highly regulated. It remained highly regulated under Work Choices and it's still highly regulated under Fair Work. It's always likely to stay highly regulated for a simple reason: unlike all other markets, the labour market deals with human beings rather than the exchange of inanimate objects.

As a matter of politics, common humanity and common sense, the treatment of people in the labour market will always be carefully regulated. We are, after all, running the economy for the benefit of people.

What changes from time to time is not so much the degree of regulation as the objectives of that regulation. There's a fundamental imbalance of bargaining power between an individual worker and even the smallest employer.

So the main issue the regulation deals with is what should be done about that imbalance. The usual answer - the world over - is to permit workers to bargain collectively.

Green on Blue

Former Army officer Clive Williams writes in Shady goings-on behind latest Digger deaths how cultural issues may be major contributors to so called green on blue attacks in Afghanistan. Green refers to Afghan soldiers or police and blue refers to members of the International Security Assistance Force.

Wednesday, 9 November 2011

Psychopaths seem to be over represented in management

Paul Barry writes in Are business leaders psychopaths? that yes they are. To quote from his article:
According to the study's co-authors, Belina Board and Katarina Fritzon from the University of Surrey, this means that they are likely to display, "Superficial charm, insincerity, egocentricity, manipulativeness, grandiosity, lack of empathy, exploitativeness, independence, perfectionism, excessive devotion to work, rigidity, stubbornness, and dictatorial tendencies."

Sunday, 6 November 2011

What happened at Fukushima

24 Hours at Fukushima is a "blow-by-blow account of the worst nuclear accident since Chernobyl".

Privitisations of monopolies and management veto power

George Megalogenis in Taxpayer may be the ultimate loser looks at how:
When a monopoly or national interest business is privatised, management assumes the veto power the trade unions once held over the economy.
George claims that management of both Telstra and Qantas have gone on strike in an attempt to get their own way. He argues, and I would agree, that this is not something a normal enterprise would do in a competitive market. he finishes with:
The trade unions that cover Qantas accuse management of trying to sneak the airline offshore. If that is really the long game, then both sides of federal politics would need to think carefully about the next step.

The Telstra standoff was finally resolved through a form of de-privatisation. The NBN was Labor's way of restoring the community obligation that Trujillo passed on under the Coalition.

The national interest demands that Qantas and the trade unions find common ground, fast. Otherwise the tab to keep Qantas alive may eventually fall on the taxpayer.

The right to manage

One of the frequent comments made after the recent Qantas dispute was that employers manage an enterprise, not employees. I think this is bullshit and I had hoped this sort of ideology had disappeared over the last decade.

Everyone who works for a company is an employee. Companies, or more specifically their management, who take the view that it's the role of management to manage and employees to do as they're told are probably not going to maximise returns to their shareholders. Organisations work best when there's a cooperative approach, not a culture of mistrust.

George Megalogenis makes the comment in That stale old 70s IR debate again that:
Herein lies the rub of globalisation. If Australia wants to remain on the right side of history, labour and capital have to continue to co-operate as they did during the GFC.
Edit 21/11: Ross Gittens notes that Change is worker's only certainty and looks at how structural change generally makes us all better off. However, such changes may be quite disruptive to some people:
The trouble with structural change, of course, is that the benefits go to the customers - new products, wider choice, lower prices - while all the problems go to the people working in the disrupted industries.
He then looks at Qantas. Qantas is being forced by the market to undertake radical changes. However, the costs of these changes are being resisted by it's employees:
Half the trouble at Qantas is the employees' failure to recognise how the game has changed for their company, robbing them of their former bargaining power. The other half is the arrogance of management in their resort to ''managerial prerogative'', in their failure to explain and debate the new realities with their staff.

It's painfully clear management-employee relations within Qantas are utterly poisonous. The blame for that should be shared equally. The fate of Qantas is important in its own right, but it's more important as a case study in how big, unionised companies cope with structural change.

The good, the bad

Good news: Laura Tingle's Canberra Observed column has come out from behind the AFR's paywall.
Bad news: George Megalogenis' writings are now hidden behind the Australian's paywall.

I greatly respect the work of both these journalists.

Saturday, 5 November 2011

Hama

Kimberley Ramplin publishes entries from her 1997 diary of her visit to the Syrian city of Hama in Cry, the Pariah Country (Part I). Hama is currently one of the centres of the uprising against the Syrian Government and is currently under attack by the Syrian Army.

US General in Afghanistan sacked for critical remarks

US Army Major General Peter Fuller, deputy commander of NATO's mission to train and equip Afghan forces has been sacked after making some critical comments about the country's leaders, including President Karzai. The comments were made in an interview published by website Politico. Based on what the ABC has published I have a feeling they were probably pretty accurate.

Abbott's real carbon plan?

In No republic on a dead planet: Abbott's real carbon plan Greg Jericho looks at the similarities between the tactics used in the Republic debate a decade ago and the current debate on pricing carbon. He also calls the Coalition's policy "pure carbon snake oil". He also makes the point that Tony Abbott does not care about a 5% reduction in carbon emissions (despite it being his policy), he only cares about winning the next election.

Greg Hunt on Taxing Polluters

Peter Martin has dug up a thesis Greg Hunt, the Coalition's environment spokesman, co-authored and titled A Tax to Make the Polluter Pay. Of course, Greg Hunt now opposes such an idea - although I suspect that's only because he's following the party line.

It does though raise the question, if a person advocates a party position he knows to be wrong what does that then say about his own integrity? And what will he say if in the future the party corrects its position?

The mining boom is a double edged sword

Peter Hartcher in Nation brainwashed by cult of boom looks at the history of mining booms and busts and compares our cultural reliance on it to cargo cults in the South Pacific. The mining industry, although earning substantial export income for Australia, is a relatively small employer in Australia and only makes up 8.4 % of the country's GDP. Unfortunately, not all that it brings is good. The higher exchange rate is damaging to other parts of the economy, especially manufacturing, tourism and education.

Thursday, 3 November 2011

Some great charts on what's motivating the Occupy movement

In CHARTS: Here's What The Wall Street Protesters Are So Angry About... Henry Blodget produces some very interesting charts that look at US employment and unemployment statistics, wages growth over the last 20 and 50 years (average production worker wages have increased by 4% since 1990, CEO pays has increased by 300%, real average hourly earnings have hardly increased at all in the last 50 years and dropped since the early seventies).

Edit 20/11: A map showing the Gini coefficient of national income distribution around the world.

According to Wikipedia:
The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality. It has found application in the study of inequalities in disciplines as diverse as sociology, economics, health science, ecology, chemistry, engineering and agriculture.

It is commonly used as a measure of inequality of income or wealth. Worldwide, Gini coefficients for income range from approximately 0.23 (Sweden) to 0.70 (Namibia) although not every country has been assessed.

Tuesday, 1 November 2011

Article in Industrial Relations Law

In Qantas dispute no reason for rushed IR reform Michael Janda looks at the current rate of industrial disputes and talks to Professor Andrew Stewart about the differences between the current Fair Work Act and the old WorkChoices. It seems that both acts are pretty similar, the big difference being the lack of individual contracts in the Fair Work Act.

The article includes:
However, be aware that if commentators use the Qantas dispute to call for industrial relations reform to reduce strike action and boost productivity it is really the return of individual contracts they are seeking.
and
"The Labor Government are utilising the corporations power, and the Labor Government understand that in this globalised world corporations, which are bringing in taxpayers' money to the Government, need to operate at a profit."

Some Articles on the Parliamentary Budget Office

I'm not sure who Peter Martin is but I think he's written a great article Labor takes aim at itself. The tragedy of its Parliamentary Budget Office.

Greg Jericho, who I have a great deal of respect for, in Our media! They couldn't report a PBO in a brothel also thinks the PBO is a great idea, but doesn't agree that policies submitted during an election should remain confidential.

On this issue though, I think I side with Peter Martin.

Monday, 31 October 2011

Laura Tingle on Tony Abbott

I've respected Laura Tingle's work since she was with the Australian (back when I regularly read it). Unfortunately most of her work is inaccessible behind a pay wall. Luckily we can see a recent effort for free. Last week she wrote Labor hopeless, Abbott a hollow man where she equates the Opposition Leader to King Arthur of Monty Python and the Holy Grail:
... in his chain mail and ill-fitting crown, riding an imaginary horse while porters walk behind him banging coconut shells together is more the ticket.
She then goes on to tear apart his policies on Asylum seekers and look at his recent pronouncement on poker machine reform. She finishes with:
But two years is a long time to get away with being such a negative, opportunistic and hollow man.
Edit 5/11: Ben Eltham discusses Laura Tingle's article in Will negative Abbott get a positive result?

Saturday, 29 October 2011

Changes coming in the power industry

Paddy Manning has written Power providers energised for coming of a green age:
Electricity companies are preparing to shift to a green future by investing in the industry of energy solutions.

A SMARTER, greener future for energy use may be coming too slow for some, but it is coming nonetheless. Eventually our dirty old electricity grid may provide little more than back-up power, giving us plenty of scope to retire ageing coal-fired power stations.
Meanwhile Ben Harvey looks at why Western Australian power bills are going up and up in The shocking truth about your bill:
It's an inconvenient financial truth, but if you think your electricity bill is big at present you are, pardon the pun, in for a shock.

And it's an inconvenient political truth that there is no white knight waiting to save you - we are going to get screwed on power prices regardless of whether the ALP or the Liberals are in office.

Colin Barnett is doing a very good job of apologising for raising prices and is gently putting out the message that things might not be so bad in the future.

Eric Ripper is doing an even better job of making everyone think that life will be easier if you vote for him in 2013.

Both these men - who are generally decent and trustworthy - are full of it: prices are going up far higher than either is letting on.

Both want to ensure that our bills cover the cost of delivering electricity to our houses.

9-9-9 may not be so good for the other 90%

US Presidential candidate Herman Cain has put forward a "9-9-9" tax reform plan:
which would replace all current taxes (including the payroll tax, capital gains tax, and the estate tax) with 9% business transaction tax; 9% personal income tax rate, and a 9% federal sales tax
This sounds great at first glance. However it might not be as attractive as it sounds. There's a great graph on the "Effect of proposed '9-9-9' tax reform plan on average tax liability. Basically, the graph shows only the top 20% being better off. The graph is well worth a look.

The Downside Of Monetary Easing

In The Downside of Monetary Easing William F. Ford and Polina Vlasenko look at the impact of the Federal Reserve's monetary stimulus initiates and ask if the programs may have actually had a negative impact of employment. They argue that the lower interest rates as a result of the initiative have a negative impact on the income of retirees, who in turn spend less.

Friday, 28 October 2011

Is trickle-down economics a myth

Since the Occupy Wall Street movement started there has been a lot written about the growing inequality in wealth and income, particularly in the USA. Saul Eslake in Why some incomes are just gross writes:
According to data published in the Paris School of Economics' World Top Incomes Database, the share of total household income accruing to the top 10 per cent of the income distribution in the US rose from 34.6 per cent in 1980 to 48.2 per cent in 2008 - an increase of 13.6 percentage points.

Put simply, the top 10 per cent of Americans control almost half the country's household wealth.

Over the same period the share accruing to the top 1 per cent of the income distribution more than doubled, from 10 per cent to 21 per cent; while the share accruing to the top 0.01 per cent of US households ranked by income increased almost fourfold, from 1.3 per cent to 5 per cent.

Indeed, from 1980 to 2008 the average gross income of the richest 1 per cent of American households rose by 172 per cent in real terms.

Over the same period the average real incomes of the bottom 90 per cent of American households rose by just 2 per cent.

Quite staggeringly, the average gross income of households in the bottom 90 per cent of the income distribution was, in real terms, lower in 2008 than it had been in the early 1970s.
He also states:
An increasingly polarised distribution of income and wealth can have adverse consequences for economic performance.
and:
But there's absolutely no guarantee that the distribution of income and wealth produced by markets will be socially desirable, or politically sustainable; indeed, there's plenty of evidence to suggest that more often than not, it won't be.

Thus, if there's to be less government intervention in the means by which incomes are generated by the operation of market forces, based on the belief that the result will be a higher aggregate level of income, there may well need to be more government intervention in the way in which that higher level of income is distributed, in order that the end result is socially and politically sustainable.
To quote Wikipedia:
"Trickle-down economics" and "the trickle-down theory" are terms used in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole. The term has been attributed to humorist Will Rogers, who said during the Great Depression that "money was all appropriated for the top in hopes that it would trickle down to the needy." The term is considered pejorative by some proponents of tax cuts.

Proponents of these policies claim that if the top income earners are taxed less that they will invest more into the business infrastructure and equity markets, it will in turn lead to more goods at lower prices, and create more jobs for middle and lower class individuals.[citation needed] Proponents argue that economic growth flows down from the top to the bottom, indirectly benefiting those who do not directly benefit from the policy changes. However, others have argued that "trickle-down" policies generally do not work, and that the trickle-down effect may be very slim, if indeed it even exists at all.
So, the idea is that the more income available to the wealthy, the more money will flow to everyone else. Yet the reality, as seen in the statistics quoted by Saul Eslake above, seems to suggest that this is not the case.

Edit 03/11: Jessica Irvine is of the opinion that Top bosses' riches are undeserved. Dan Ariely, Professor of Behavioural Economics at Duke University, looks at level of executive compensation, particularly in the financial sector in Better (and more) Social Bonuses. He has a great graph comparing the pay of the leaders of the world's top banks to their market capitalisation. For example, James Dimon of JPMorgan earns $19,651,560. JPMorgan has a market capitalisation of $158.6 billion. Jiang Jianqing of ICBC earns $235,700 while ICBC has a market capitalisation of $250.2 billion.

Edit 20/11: Bruce Guthrie writes that They're not the messiahs, just very overpaid and wonders if executive salaries should be capped at 10 times the Prime Minister's salary. Of course that would mean a significant pay cut for many CEOs.

Edit 21/11: Tony Webber on Why executives are worth their fat salaries.

Spending $400 million by mistake

In $400,000 sweetener became $400m Phillip Coorey mentions an anecdote from Peter Hartcher's new book "The Sweet Spot".
The GST negotiations were in 1999 and Mr Howard needed the support of the Australian Democrats to pass the legislation through the Senate.

The Democrats leader, Meg Lees, was horse trading. One demand was for the government to establish a greenhouse gas abatement program.

The former treasurer Mr Costello tells Hartcher: ''This was 1999. Neither Howard nor I had much of an idea of what a greenhouse gas was, let alone how to abate it … Trying to co-operate without blowing the financial position, I whispered to Howard, 'Offer her four hundred.'

'''Okay,' he said. '$400 million.'

''She accepted. I tapped him on the shoulder and whispered in his ear, 'That's not what I meant. I meant we should offer her $400,000'.''

There was no way to retract the offer.

''It was how $400 million got expended by mistake.''

The cost of living aint so bad

Michael Pascoe looks at cost of living issues in They're spending money, Jim, but not as we know it and writes:
That is the other thing we forget – that household incomes have been rising faster than the inflation rate. Therefore, on average, it shouldn't be the electricity bill that breaks the budget, but all the other stuff we spend money on.

And while we're complaining about the rising cost of living, we tend to overlook all the things that haven't been rising, or not rising much. Over the past three years, the all groups CPI has risen by 7.7 per cent, an average of about 2.8 per cent. The categories with the biggest increases have been alcohol and tobacco up 19 per cent thanks to higher taxes, followed by education up 18 per cent and that housing group ahead 15 per cent.

But at the same time, clothing and footwear didn't increase, transport and recreation and culture costs fell and communications increased by just one per cent.

It's swings and roundabouts, or perhaps shoes and school fees, in the cost of living game. Smoke and pay private school fees for a pile of kids who like airconditioning and leaving the TVs and computers on and you'll go backwards. Ditch the coffin nails, send the kids to state schools or, better yet, don't have kids and stay at home letting your parents pay for the power bills and you'll have no trouble living the good life. There are plenty of cost of living choices we make for ourselves.
Bernard Keane is wondering Who killed economic reform? Maybe we all did. He also references a Ross Gittins post from 2010 - Economists help cause gutless government.

Thursday, 27 October 2011

Opinion over News

mUmBRELLA has an article where they cite Lachlan Harris, Kevin Rudd's former press secretary as saying that opinion is now more important than news:
The news cycle has been replaced by the opinion cycle, with Andrew Bolt now the most significant media voice, Kevin Rudd’s former press secretary Lachlan Harris has argued.

Tuesday, 25 October 2011

The BEST project proves global warming

The Berkeley Earth Surface Temperature (BEST) project was set up by Richard Muller, a University of California astrophysicist. Rik Myslewski has written about the project's findings in Massive study concludes: 'Global warming is real'.

A wide range of groups contributed funding to the project, including Bill Gates and the Koch Foundation (the latter being well known for its hostility to the idea of climate change).

To quote the above article:
The study – the Berkeley Earth Surface Temperature (BEST) project – was set up by a University of California astrophysicist who was concerned about the "climategate" dustup over email messages hacked from the UK's University of East Anglia (UEA) that led many observers to believe that climate data had been fudged to exaggerate global warming.

The core of UC Berkeley scientist Richard Muller's concern was not, however, that the UEA scientists were getting a raw deal; in his opinion they had brought the worldwide criticism upon themselves.

"I was deeply concerned that the group [at UEA] had concealed discordant data," Muller told BBC News. "Science is best done when the problems with the analysis are candidly shared."
The article goes on to say:
The BEST team, however, had a stated goal of neither proving nor disproving global temperature increases. As expressed by project cofounder Elizabeth Muller, Richard's daughter, the goal was to conduct an analysis so data-rich and objective that it would "cool the debate over global warming by addressing many of the valid claims of the skeptics in a clear and rigorous way."

The "valid claims" didn't survive.
In other words, this project was set up by a skeptic (in the true sense of the word) to prove or disprove whether the world has warmed. And the conclusion - the world has warmed.

It's worth noting that the project has not looked at the cause of that warming - whether it's anthropomorphic or not:
Muller also cautions that observers should not take the BEST results and use them to prove something that they can't. When we asked him if it were possible to extrapolate from his team's results and predict whether the temperature increase will continue, he told us: "I don't think that is possible. The key issue is what fraction of the observed change is anthropomorphic. We don't shed much light on that."
The article also makes the excellent point:
The development of those models will require sober analysis of data and cooperation among scientists, technicians, and mathematicians, both from supporters and skeptics of predominantly accepted climate-change science.

And during those discussions, The Reg humbly suggests that we keep two things in mind. One, that although "predominantly accepted" means neither true nor false, automatic contrarianism is of value only when its proponents remain open to data-fueled persuasion.
So, where is the value in this project if it hasn't, yet, looked at the cause of warming? The value is in the claims by some (who I wouldn't call skeptics as I don't believe that they have an open mind on the issue) that the Earth has actually cooled over the last decade. This project proves that not to be the case.

Edit 16/Feb: The BBC has an excellent article on the study.

Floods, globalisation and disk drive shortages

For those that aren't aware, there are reports that the current floods in Thailand will lead to a shortage of disk drives. Some might wonder how, in a global industry floods in one country could cause a world wide supply shortage? In Disk drive crisis: Economists are terrible weathermen Tim Worstall explains why this has happened.

Kimberley Ramplin on Clowns to the left of me, jokers to the right

Kimberley Ramplin in Clowns to the left of me, jokers to the right has a critique of a rather manipulative poster at Occupy Melbourne. It's a great blog post.

Matt Cowgill on Albrechtsen, tax and the Laffer curve

Matt Cowgill has a go at Albrechtsen, tax and the Laffer curve. I'm not to sure how much I agree with what he says, but it's an interesting read. Cowgill cites N Gregory Mankiw as saying that US President Ronald Reagan's tax cuts didn't raise more revenue as President Reagan expected. Cowgill, and the Tea Party Movement, fails to mention that President Reagan actually ended up having to increase taxes to combat the rising deficit as tax revenue declined. Of course, this does sort of prove the point Mr Cowgill is trying to make.

Monday, 24 October 2011

Bernard Keane on the Internet changing media and politics

Bernard Keene, in How the internet messes with the game of media and party politics has written a thought provoking essay on the traditional media, politics and the Internet. Bernard puts forward the proposition that TV leads to isolation whilst the Internet, through avenues such as social media, leads to greater interconnection. He concludes with:
The problem isn’t so much whether the major political parties and the media will work out a response to the challenge of the internet, it’s whether they’ll do so before someone else does. The short history of the internet says they won’t, that they’ll be left behind by smarter, more innovative digital natives who grow organically on the internet, rather than trying to make the internet fit the demands of the analog era or bolt it on to analog models. The politicians and the press probably have more time than other industries to understand their plight and react to it. But society is being rewired once more, and not in a way that benefits them.
I think it's worth a read.

Sunday, 23 October 2011

Good inequality and bad inequality

Jessica Irvine in Like cholesterol, inequality cuts both ways looks at one of the major motivators for the Occupy Wall Street movement, inequality in income and wealth, and how there's good inequality and bad inequality. She writes:
Milanovic argues the global financial crisis is a direct result of this kind of ''bad'' inequality taking hold in the US. An excessive build-up of wealth and income in the hands of the financial elite meant they soon ran out of ways to consume it in caviar and champagne, meaning it needed to be invested in ever riskier vehicles. Meanwhile, US politicians sought to hide the uncomfortable truth of declining middle and lower class wealth by turning a blind eye to a massive loosening of credit standards, which enabled people to borrow and feel rich, even as their incomes stagnated. A more equitable path of development ''would have spared the United States and the world an unnecessary crisis''.

IKEA and tax (or the lack thereof)

Michael Pascoe has written before about how IKEA seem to have a very unprofitable operation in Australia. In Another enormous store, but why does IKEA bother? Michael looks at the issue again:
The mystery, though, is why IKEA bothers. The Dutch (yes, Dutch) retail giant appears barely profitable in Australia. According to the most recent accounts filed with the Australian Securities and Investments Commission, IKEA's bottom-line profit margin was barely 1 per cent of the $556.6 million it took from shoppers in its 2010 year. And, as IKEA doesn't make much profit here, it doesn't pay much tax - just $2.5 million last year.

The mystery, though, is why IKEA bothers. The Dutch (yes, Dutch) retail giant appears barely profitable in Australia. According to the most recent accounts filed with the Australian Securities and Investments Commission, IKEA's bottom-line profit margin was barely 1 per cent of the $556.6 million it took from shoppers in its 2010 year. And, as IKEA doesn't make much profit here, it doesn't pay much tax - just $2.5 million last year.
A greater mystery for me was the way the company's cost of sales blew when other Australian retailers' gross profit margins were doing very nicely out of our appreciating currency. IKEA's revenue rose by $23 million but what it paid for stuff jumped by $38.6 million. Despite all those lost-looking souls queuing at checkouts, the company's gross profit margin fell from 44.7 per cent in 2008 to 40.5 per cent in 2009 and 35.6 per cent last year.
He then looks at IKEA's ownership:
It's an odd business - just like IKEA's ownership. The once-Swedish corporation is now housed in the Netherlands, where it is owned by a ''charitable foundation'' that receives very little of the many billions of IKEA's global profit and disperses even less for good works.
Far be it from me to say that IKEA is seeking to minimise it's tax (is that a euphemism of avoid or evade), but obviously it is. Perhaps the ATO needs to look at transfer pricing at IKEA. Mind you, this sort of thing is not that uncommon.

Edit 25/10: A Guardian article - Quarter of FTSE 100 subsidiaries located in tax havens. I have to say that when I read this Guardian article, it occurred to me that just because a multinational company has a subsidiary in a jurisdiction "that offer low tax rates or require limited disclosure to other tax authorities", it doesn't necessarily mean that the subsidiary is there just to allow the parent to avoid tax. It might well be there for legitimate reasons.

Carbon tax starting to cause problems for Tony Abbott?

In Blood oath reality is taking Abbott out of comfort zone Shaun Carney observes that:
Climate change policy is the tar baby of Australian politics: get too close to it and you can really get into a sticky situation. The passage of the carbon pricing legislation through the lower house has forced Liberal leader Tony Abbott to finally place his mitts on it, and he is starting to get into strife.

Tea Party vs Occupy Wall Street

In Tea Partiers: The self-hating 99 per cent Heather Digby Parton compares the Occupy Wall Street movement to the Tea Party movement. It's an interesting read if you take an interest in US politics.

Saturday, 22 October 2011

Lenore Taylor on a fact-less Tony Abbott

Lenore Taylor in Ignore all facts and just run with the bluster looks at how Tony Abbott seems to be a fact free zone when it comes to pricing carbon and asylum policies.

She finishes with:
No politician would, or should, unthinkingly accept all advice they receive. But it's a bit worrying when they seem to reject out of hand, and without coherent arguments or reasons, all advice that contradicts their focus-group-tested case.

Monday, 17 October 2011

A few links on economics

Ross Gittins talks about how economists should be on the side of the consumer in the article In a better world more economists would speak on behalf of consumers. He then goes on to discuss Dr Diane Coyle's book "The Economics of Enough" and quote Dr Coyle on the issue of executive pay, especially in the banking system.

Jessica Irvine in Agile minds edge out nimble bodies talks about the decline in the proportion of people working in "production industries". She finishes with the paragraph:
If you want to worry about the future of jobs growth, spend less time worrying about protecting declining industries and more time worrying about the fact that Australian government spending on higher education as a proportion of gross domestic product is one of the lowest of all member countries of the Organisation for Economic Co-operation and Development.
Adele Ferguson discusses moves to give shareholders some say over executive remuneration in CEOs not enjoying the payback from shareholders.

Misha Schubert notes that Even conservatives say the dole is too low.

Fairfax economics writer Jessica Irvine in Economics by book not for Abbott notes that the Government is following the economic text book but Tony Abbott seems to be rejecting it:
But in Tony Abbott's hands, the economic textbook seems little more than a handy blunt object with which to whack one's opposition. The Opposition Leader appears hell-bent on styling himself as some sort of economic Antichrist.

Wednesday, 12 October 2011

Michael Pascoe on housing affordability

Michael Pascoe has some interesting things to say in Housing affordability: the summit we really need. I'm not sure I agree with everything he says, particularly in regards to negative gearing (disclaimer, I don't have an investment property or any negative gearing). I'm also not sure I support a land tax. Still he has a point.

Edit 12/10: Michael Janda discusses negative gearing and the tax summit in Let's talk about tax.

Edit 19/10: Jessica Irvine in The true cost of NIMBYism discusses modelling by economists from the Reserve Bank that looks at some of the causes of the housing shortage.
Through a combination of empirical research and new economic modelling, the authors Mariano Kulish, Anthony Richards and Christian Gillitzer highlight some factors that contribute to Australians living in more expensive, smaller and lower density housing than we would if the housing market was not constrained by a number of structural factors, including high transport costs, restrictions on density and costs imposed on new housing supply.
Edit 22:10: In Urban Densities: Keep it Real Bob Carr discusses Jessica Irvine's above piece and notes that although it's correct, it fails to address two recent developments that will lower housing density in NSW (with the implication that the increased sprawl will decrease affordability):
One, Barry O’Farrell in April this year gave control over density and zoning decisions to local government. As a result, this will see more high and medium density developments rejected.
and
Two, the Land and Environment Court has overruled attempts by the previous Labor government to have high density development along the North Shore rail link in Ku-ring-gai shire, boosting densities near the railway station and along a major transport artery. This decision means 10,000 more future dwellings will have to be delivered on Sydney’s urban fringe.
He concludes with:
Jessica finishes her piece saying “Interestingly, the … researchers found evidence that Sydney’s population density has increased in recent years.” Yes, it is interesting. It was also the product of 16 years of sound planning policy. Sydney has the highest population density of any Australian capital. Over the past decade only 21 percent of new homes were built in greenfield areas, compared to over 50 percent in other Australian capitals. Melbourne is going for growth on the fringe. Cities either grow up or out. Stop them growing up and they sure as hell will grow out.

Sunday, 9 October 2011

Ross Gittins on Big Business and Tax

Ross Gittins in Bleatings of big business tax credulity and deserve no sympathy wonders if business leaders believe that politicians owe them a living and if they're really committed to tax reform.

Wednesday, 5 October 2011

A Fox News interview that didn't make it to air

Fox News were interviewing people at an Occupy Wall Street protest. This is one interview that, unsurprisingly, didn't make it to air. There's the video, a transcript and background at Occupy Wall Street Activist Slams Fox News Producer In Un-Aired Interview. The actual video can also be seen on Youtube.

Personally, I think the Occupy Wall Street movement probably has as much economic credibility as the Tea Party. However, I think Jesse LaGreca's (the interviewee) answers are well articulated. I can see why it wouldn't air on Fox News - apart from the criticisms of Fox News, News Corp and Rupert Murdoch, Mr LaGreca probably talks too fast for the average Fox News viewer.

Eli Pariser warning of online filter bubbles

TED has a video of Eli Pariser warns of the dangers of Internet companies tailoring their services to our personal tastes in Beware online "filter bubbles".

Wednesday, 28 September 2011

Tony Abbott a better fit in the DLP?

For the last month or so I've been wondering if Tony Abbott is politically closer to the Democratic Labor Party than he is to the Liberal Party. After all they have many things in common:
  • A conservative Catholic outlook on life
  • A lack of commitment to, or rejection of, the traditional Liberal Party preference for individual rather than collective bargaining
  • A rejection of neo-liberal economic policies
  • A role in the running of unions
If Tony Abbott had joined a political party some forty years ago, would it have the Liberal Party, or might he have sort out the DLP?

According to Phillip Coorey in Abbott must stick to values: Costello Peter Costello might well be asking the same question. Indeed, Peter Costello reports in Liberals must protect values of freedom and choice that:
Over that time, most of the DLP membership slipped away. Some went back to the Labor Party - their home before the split which led them to form their own party in the 1950s. Some joined the National Party and many joined the Liberal Party. In his recent memoir, the Coalition finance spokesman and former federal director of the Liberal Party, Andrew Robb, tells of working for the DLP at elections in the 1960s. Tony Abbott also worked closely with the DLP in his student days.
Mr Costello then goes on to write
The Liberal Party was also fiercely anti-communist. It didn't have a significant Catholic membership and Catholics in senior positions in the parliamentary party were the exception rather than the rule. The fact that many of the old DLP supporters were able to find a home in the Liberal Party indicates how it widened its appeal, at least in terms of religious background. Most senior players in the federal Coalition today were educated in the Catholic school system - the leader, the leader of the house, the shadow treasurer, shadow attorney-general and finance spokesman. This development is a credit to that education system and also, I think, to the leadership of the Catholic Church which has managed to retain the orthodoxy of its flock as the Protestant churches have drifted into theological liberalism and political trendyism.
I think Mr Costello might be showing his Baptist roots in that last sentence. Mr Costello then goes on to look at the statements of National Senator Barnaby Joyce on protectionism and against free trade, inferring that Senator Joyce might also be politically closer to the DLP.

So, it seems that the Liberal Party, at least at the Federal level, is now run by the DLP.

Tuesday, 27 September 2011

Taxing the rich

The economist looks at taxation and the class war in Hunting the rich. The article suggests that it would be more appropriate for the rich to pay more - although it advocates doing so through a reduction in deductions rather than an increase in marginal rates.
There is a basic bargain to be had. Imagine a tax system which made the top rates on wages and capital more equal, and which eliminated virtually all deductions. To avoid taxing investments twice, such a system would get rid of corporate taxes. It would also allow for a much lower top rate of income tax. The result? A larger overall tax take from the rich, without hurting the dynamism of the economy. Now that would be worth blowing your horn about.
I guess no one has ever told them about dividend imputation.

As I mentioned, the article advocates making the tax system more efficient by reducing deductions allowed:
The scope for doing so is most obvious in America, which relies far more than other countries on income taxes and has a mass of deductions on everything from interest payments on mortgages to employer-provided health care, so taxes are levied on a very narrow base. Getting rid of the deductions would simplify the code and raise as much as $1 trillion a year. Since the main beneficiaries of the deductions are the wealthy, richer folk would pay most of that. And since marginal rates would be untouched (or reduced), such a reform would do less to discourage them from creating wealth.
I partly agree with this. I personally think that, generally speaking, deductions should only be allowed for legitimate income producing expenses. However, Governments also use deductions as a legitimate way to encourage certain activities - e.g. donations to charity (although you could argue that it's a fairly inequitable method as it tends to favour those on higher marginal rates). I'm not sure what the impact on the rather depressed US housing market would be if the deduction for interest payments on the home mortgage was taken away. On the other hand, it would help reduce the tendency of Americans to over capitalise their family home.

The author of the article also suggests shifting more of the taxation burden from income to property:
In Europe, where tax systems are more efficient, one option would be to shift more of the burden from income to property, which would collect more from the rich but have less impact on their willingness to take risks. The “mansion tax” proposed by Britain’s Liberal Democrats would thus do less damage than the 50% rate. And on both sides of the Atlantic there is room to narrow the gap between tax rates on salaries and bonuses and those on dividends and capital gains. That gap explains why Mr Buffett, most of whose income comes from capital gains and dividends, has a lower average tax rate than his secretary. It is also the one hedge funders and private-equity people have exploited to keep the billions they rake in.
The above paragraph really looks at taxing the value of assets (a "mansion tax"), capital gains and dividends. I think there's a great danger in property taxes - it's very easy to tax someone beyond their ability to pay. An income tax does seem more equitable than a "mansion tax".

Taxing capital gains is a little complicated - on the one hand the gain is income, on the other it's probably not appropriate to tax it at the tax payer's full marginal rate unless there's an offset for the impact of inflation. That's why, in Australia, we only pay 50% of our marginal rate if the asset has been held for more than 12 months. There's also the Laffer Curve to consider as detailed in last year's The Register article Bloody George's Budget: How bad is it really?.

There are several options for taxing income from dividends. Treat them as normal income and tax them accordingly, recognise that tax has already been paid and so tax them at a lower rate, or implement dividend imputation. As a share holder I do prefer the latter and it does seem equitable.

The Economist also suggests removing corporate taxes. This to my mind, would be a mistake. A superficial argument can be made that corporate income would be taxed when it's paid as dividends. However, this ignores certain realities:
  • Not all companies pay dividends
  • Not all dividends are paid to shareholders in the country where the income is earned
  • There would be additional incentive for people, especially higher income earners, to use corporate vehicles to avoid tax
In summary, I think the article in The Economist is interesting, but I don't necessarily agree with some of the solutions they put forward.

NAB Article: The Productivity Puzzle

The National Australia Bank has written a paper on productivity growth: The Productivity Puzzle. The paper looks at labour productivity and suggests that recent productivity declines might well be due to cyclical fluctuations; activity in the mining and utilities industries (as they build new productive capacity); and declining real labour costs (which may encourage more labour intensive production).

It's worth a read if you have any interest in this area.

Edit 28/9: Alan Kohler addresses the issue, and the NAB paper in Digging into productivity, the Aussie miner's way.

Edit 12/10: Ross Gittins in Look within to pick up productivity discusses the management style in those businesses that are most productive:

Edit 18/10: Glenn Dyer at Crikey discusses a Sydney Morning Herald report on employee productivity in At last, something that makes sense on productivity. The report includes the findings on a survey of employees on drains on productivity and identifies the main culprits as management issues, organisational structure, lack of innovation and outdated technology. Dyer looks at the performance of Goldman Fielder as an example.
The management practices that do best, according to the study, are being highly responsive to changes in customers' and suppliers' circumstances, encouraging high employee participation in decision-making, achieving on-the-job learning through mentoring and job rotation, making effective use of information and technology and attracting and retaining high quality people.

Of course, different managers have different cultures or styles. Some emphasise results, some their people and some coping with change. The study finds all three approaches can make a high-performance workplace. The one style that doesn't work is the ''control'' culture.

Wow. How'd you like to work for such a boss in such an enlightened business? Pity is, such firms accounted for only 15 per cent of the sample.