Thursday, 20 September 2012

British Columbia's carbon tax

In How would a carbon tax work? Let’s ask British Columbia Brad Plumer looks at the impact of British Columbia's carbon tax and finds that the province appears to have reduced its emissions more than the rest of Canada whilst enjoying higher economic growth.

Not all calories are equal

In The Hidden Truths about Calories Rob Dunn looks at how not all calories are the same. The net calories we get from eating will vary depending on amongst other things, "the biology of the plants and animals you choose to eat", how processed they have been, the energy needed to digest them, our genetics and the microbes in our gut. It's an interesting article.

Saturday, 15 September 2012

The new iPhone and Keynesian economics

In The iPhone Stimulus Paul Krugman uses talk of an iPhone led recovery to explain Keynesian economics
What I’m interested in, instead, are suggestions that the unveiling of the iPhone 5 might provide a significant boost to the U.S. economy, adding measurably to economic growth over the next quarter or two.

Do you find this plausible? If so, I have news for you: you are, whether you know it or not, a Keynesian — and you have implicitly accepted the case that the government should spend more, not less, in a depressed economy.

The core of his argument is this:
And to believe that more spending will provide an economic boost, you have to believe — as you should — that demand, not supply, is what’s holding the economy back. We don’t have high unemployment because Americans don’t want to work, and we don’t have high unemployment because workers lack the right skills. Instead, willing and able workers can’t find jobs because employers can’t sell enough to justify hiring them. And the solution is to find some way to increase overall spending so that the nation can get back to work.

He also gets it right with this:
Yet far from using public spending to support the economy in its time of trouble, our political system — driven by a combination of ideology, exaggerated deficit fears and Republican obstructionism — has moved to make the depression worse. Yes, unemployment benefits and food stamps are up, because so many more people are in need; but government employment has plunged, as has public investment.

Thursday, 13 September 2012

Wednesday, 12 September 2012

Nobody tells the truth about the economy

In With the economy, the truth is out there Jessica Irvine lets us know the truth: "Nobody tells the truth about the economy". She explains why you can't trust politicians, economists, business leaders or journalists on this subject.

Great Vanity Fair article on Barack Obama

Michael Lewis has written a great article on Barack Obama: Obama's Way.
To understand how air-force navigator Tyler Stark ended up in a thornbush in the Libyan desert in March 2011, one must understand what it’s like to be president of the United States—and this president in particular. Hanging around Barack Obama for six months, in the White House, aboard Air Force One, and on the basketball court, Michael Lewis learns the reality of the Nobel Peace Prize winner who sent Stark into combat.

A young Tony Abbott on universities

An interview with Tony Abbott from his student days where he argued that there had been a "fundamental decline in academic standards". He argued that standards were slipping because of the the increase in the numbers of students, the "huge increase in education spending that took place in the late sixties" and "the influence of small but influential groups of Marxist academics who are actively promoting the corruption of academic standards"

Thoughts of an Isreali checkpoint guard

Oded Na’aman has written The Checkpoint where he describes the surreal life of an Israeli soldier manning a checkpoint. It's subtitled Terror, Power, and Cruelty.

Can poor diet cause Alzheimer's?

In Alzheimer's could be the most catastrophic impact of junk food George Monbiot discusses the possible link between Alzheimer's disease and diabetes.

Friday, 7 September 2012

It seems beer is becoming more popular in Asia

At least according to the BBC: Beer in Asia: The drink of economic growth

Paul Krugman on the US economy

In his speech to the Democratic National Convention Bill Clinton summarized the Republican argument as "We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in." In Cleaning Up the Economy Paul Krugman looks at Clinton's line and asks if the mess is "really getting cleaned up". His conclusion is that, while Obama could have done more on debt relief, the policies he did push through "the auto bailout and the Recovery Act — that made the slump a lot less awful than it might have been. And despite Mitt Romney’s attempt to rewrite history on the bailout, the fact is that Republicans bitterly opposed both measures, as well as everything else the president has proposed." He concludes:
So Bill Clinton basically had it right: For all the pain America has suffered on his watch, Mr. Obama can fairly claim to have helped the country get through a very bad patch, from which it is starting to emerge.
However, that's not the best part about Krugman's article. Before he could critique Clinton's claims Krugman first had to provide background to them. He did this by looking at the three main problems facing the economy when Obama was inaugurated and then explained why the recovery has been so slow. This is where, I think, the article's real value lies. Krugman's explanation is short and easily understood. Recommended reading.

The effectiveness of tin foil hats

Tin foil hat as according to Wikipedia.

It's not all doom and gloom

In The boom that keeps on giving Michael Pascoe looks at recent economic data and concludes that things aren't anywhere near as bad as many commentators are saying.
According to the research discussion paper by the RBA's Leon Berkelmans and Hao Wang, China's extraordinary surge in housing construction will indeed peak and then fall back — but the peak isn't expected until 2017 and it should then stabilise at elevated levels, not falling back to the current amazing level until some time around 2030.

The authors very reasonably point out that such a forecast is based on a number of assumptions and that there are downside risks, but there are risks on the upside as well. It's the sort of thinking that has the RBA suspecting our terms of trade will remain historically high, even as last year's bubble prices have been blown off the top of the boom.

The World Economic Forum Competitiveness Report isn't much chop it seems

In World Economic Forum turns its forensic gaze on competition Bernard Keane and Glenn Dyer look at the latest Competitiveness Report from the World Economic Forum and find it to be severely flawed. It seems that much of the report is based on a survey of a fairly small number of executives. Some of the results of the surveys are ludicrous. For example:
Indeed, a recurring theme of the WEF report is its lavish praise for the oil sheikdoms. It coos over Saudia Arabia’s “solid institutional framework, efficient markets, and sophisticated businesses” and how Qatar’s “high levels of security are the cornerstones of the country’s very solid institutional framework”; Bahrain, which had to call in Saudi troops to brutally suppress an Arab Spring uprising, rates ahead of Australia in “trust in government”, and Qatar’s judiciary is rated as more independent than Australia’s (another area where executives thought Labor had dropped the ball), even though it is hand-picked by the kingdom’s ruling family.
Other points Keane and Dyer make include:
The question absent from the report, though, is: out of all the countries that WEF ranked ahead of Australia, where would you like to be doing business right now?

Switzerland? It came first, of course — the WEF is based there. That’s where the country’s central bank has spent the last year intervening daily in forex markets to keep its currency low to protect its exports. Second placegetter Singapore? It’s on the verge of recession after contracting in the second quarter this year; employment has shrunk for 14 straight months, and inflation is 4%. Bronze medalist Finland? That’s heading for a recession too — its economy contracted more than 1% in the second quarter. Unemployment is more than 8%.

How about the UK, mired in a depression? The US, struggling to get beyond feeble growth? Japan, facing its third lost decade and continuing political paralysis? Or Hong Kong? It pegs its currency to the US dollar and has done so for years.
It does seem to have good point though:
The only good thing about the report is the format — it’s the best, most accessible and user-friendly international report we’ve ever seen, and should be a template for every local and international comparative analysis.
Richard Chirgwin also gets stuck into the report in WEF dressing political polling as “research” calling it a joke and wondering "why, in spite of the report’s glaring flaws of methodology, does anyone take it seriously". He notes:
As I said, the report is no more than a gathering of political feelpinions from people whose entire interest stands or falls on their willingness to support whatever status quo they find themselves in.

The only appropriate response to the WEF’s report is to laugh and point. But because it’s the WEF, and the world’s entire cohort of business journalists – that is, stenographers of corporate announcements and worshipful acolytes of a ten-thousand-dollar suit – should be laughing. But they won’t: the number of business journalists in any country who aren’t either doe-eyed worshippers or advertorial captives could be counted without anyone pulling down their trousers to get to “twenty-one”.

So they’ll treat the WEF report as if it were serious research.

You’d be better trusting your weight to the anus-auctioneers of the international ratings agencies than giving any credence whatever to the WEF’s “competitiveness report”.
In other words, it's rubbish.

Not a normal recession in the US

In Fox Attacks Clinton's DNC Speech With Scrambled Jobs Numbers Justin Berrier fact checks Fox News claims that Ronald Reagan oversaw a larger drop in unemployment in his first term than Barack Obama has done. There are a couple of interesting points in the article:
One contributing factor to the discrepancy is that the recession Obama faced was far more severe than the one Reagan faced.

The Congressional Budget Office explained that Reagan's recession was caused by an effort to reduce inflation, which allowed Reagan to begin a recovery by lowering interest rates, a solution that is not possible now due to rates that are already near zero.

Further, the recession faced by President Obama was caused by a financial crisis, not a monetary adjustment. As several economists have noted, recessions associated with financial crises are more severe and hamper recovery far more than other kinds of economic downturns. Writing for Bloomberg View, economists Carmen Reinhart and Kenneth Rogoff explained:

    "After a normal recession (which for the average post-World War II experience in the U.S. lasted less than a year), the economy quickly snaps back; within a year or two, it not only recovers lost ground but also returns to trend.

    "After systemic financial crises, however, economies of the postwar era have needed an average of four and half years just to reach the same per capita gross domestic product they had when the crisis started. We find that, on average, unemployment rates take a similar time frame to hit bottom and housing prices take even longer. With the Great Depression of the 1930s, economies on average needed more than a full decade to regain the initial per capita GDP."

Wind turbine syndrome

Ketan Joshi in Anti-wind turbine syndrome: We need to clear the air looks at claims about wind turbine syndrome:
Wind turbines are subject to a disproportionate array of myths, compared to other generation technologies. From throwaway lines about bird deaths, to catastrophic misunderstandings of science and engineering, the opponents of wind energy tirelessly propagate odd falsehoods, based on a ferocious antagonism towards wind energy. These fictions, often deployed in rapid sequence, are difficult to combat. Significantly, the anti-wind lobby binds these falsehoods to a passionately emotive ethos, manifesting as unfiltered hostility. This tactic exposes an unnerving and worrisome fact – to influence public sentiment, evidence is unnecessary – myth and contempt might easily suffice.
To counter this trend, the wind industry must engage in a full, frank and scientifically defensible effort to quash the many myths that invariably orbit wind developments in Australia. As is always the case, scientific truth is significantly more valuable than falsehood. Safe, efficient and most importantly, non-invasive to communities and the environment, wind energy has a vital role to play in transitioning away from energy sources that damage the planet’s physical systems.

Significantly, individuals will come to harm as they experience needless anxiety as the direct result of unscientific health claims. The onus is on the wind industry, and the media, to present clear and relatable information. We need to cast light on this regrettably murky topic.
Edit: 25 Oct 2012
ABC Radio National's The Science Show had a report on the topic: Curious Distribution of Wind Turbine Sickness.

New taxed needed?

In Henry lives! Big new taxes coming ... some day Michael Pascoe highlights the crunch coming as governments are facing a tax shortfall and tax reform is needed:
The Henry Review of Taxation is alive and kicking, the flame kept burning in places as diverse as the federal Treasury, the Moody's ratings agency and anywhere that the nation's future is seriously considered.

And the great irony is that inevitable “big new taxes” will need to be introduced by the coalition parties. Wonder how that will play at the Billy Tea Party end of the spectrum ...

There's also irony in that this week's effective ditching of the business lobby's immediate corporate tax cut hopes is an another step towards achieving them. The demonstrated inability to massage a revenue-neutral tax cut underlines the need for greater changes.

The latest instalment of the Henry revival came in yesterday's speech by Treasury secretary Martin Parkinson. There was nothing particularly new in it, but retelling the story of our fiscal reality is a necessary part of inching unwilling politicians towards taking up the responsibilities of their office. (That the job has to be primarily left to a public servant rather than our elected representatives says plenty about the current crop.)
For the states things might well be worse.

The economic benefits of education

Jessica Irvine, in her new digs at News, has written If the mining boom busts, education could step in. Jessica looks at the economic benefits to the individual and the country from higher levels of education.

Efficiency vs Equity

In Reform is a delicate act of balance Ross Gittins has an interesting column on the need to balance equity and efficiency:
A lot of the problems the nation struggles with and argues over boil down to the considerable potential for conflict between what economists summarise as ''equity'' and ''efficiency''.

We act as though one is right and the other wrong but, in truth, sensible people want a mix of both. So, though we don't always realise it, the hard part is finding the best trade-off between the two.

''Efficiency'' means taking the scarce resources of land, labour and capital available to the community and employing them in such a way that they produce the combination of goods and services that maximises the satisfaction of the community's material wants.
Taken narrowly, ''equity'' refers to the fairness with which the proceeds from all this efficiency are distributed between individuals and households. Is income being shared more unequally between the top, middle and bottom, or less?

Australia is facing a shortfall in tax receipts

Greg Jericho blogs about the shortfall that Australia is facing in tax receipts in No avoiding the new tax reality:
You can't spin your way out of the reality that less tax revenue means less money to spend


In Smoke and mirrors Matthew Reisz writes about
'Agnotology', the art of spreading doubt (as pioneered by Big Tobacco), distorts the scepticism of research to obscure the truth. Areas of academic life have been tainted by the practice, but some scholars are fighting back by showing the public how to spot such sleight of hand

The good and the bad

In And now for some good news the News with Nipples blog has an interesting post looking at a couple of cases of good and bad journalism. They aren't kind on Ben Cubby:
Contrast Hasham’s story with the story placed above it on page three, from Environment Editor Ben Cubby, who’s been pulled up here before for lazy journalism: Cause for optimism on global warming.
It’s 475 words about a report that he doesn’t name so readers can’t easily find it and therefore have to take his word for it that he’s reporting it accurately (I assume it’s The Critical Decade: International Action on Climate Change), with a quote from Opposition climate spokesman Greg Hunt that ranges from clearly wrong (South Korea) to somewhat wrong (the US and Canada) but is left unchecked by Cubby. Like all politicians, Hunt knows that he can pretty much just make shit up and journalists will report it without pointing out that there’s no evidence to support the claims. There’s a general quote from Minister for Climate Change Greg Combet and a general quote from Climate Commissioner Tim Flannery that sound like they’re from the media release that arrived with the report. I’m happy to be wrong about that. If a journalism student submitted this story for an assignment, they’d be lucky to pass.

But back to the good bit. Nice work, Nicole Hasham.

Forbes approves of Australia's carbon pricing

Tim Worstall is of the view that The Australian Carbon Tax: Finally, Someone Gets it Right!

Monday, 3 September 2012

The IT contribution to productive growth

Ross Gittins, in Ready to receive a techs message, argues that the large productivity gains of a decade ago may have mostly been the result of technology improvements rather than microeconomic reforms:
Particularly over the longer term, the primary driver of multi-factor productivity improvement - and the rise in material living standards it brings - is technological advance. That's why it never ceases to surprise me how little interest most economists take in technology and innovation.