The Daily Telegraph manufacturing fear of refugees

Amy Corderoy in Fanning the flames of asylum seeker fear looks at how The Daily Telegraph consistently uses language to evoke fear of refugees within the community.

While this one found Australians were extremely reliant on media reporting when it comes to forming their views on asylum seekers. Only a quarter of people surveyed thought asylum seekers come to Australia to flee persecution, as opposed to for economic or other reasons.

People – educated or not – tend to be influenced by the media they consume, and when the media obsessively focuses on an issue such as immigration or refugees, political parties who take extreme positions on those issues tend to gain popularity.

So next time you wonder why boat arrivals are such as massive issue in Australia, or next time you feel anger or fear over asylum seekers, take another look at your local newspaper headline. It might not just be reflecting your fear, it could be shaping it.

Peer reviewed climate change articles - as rare as hen's teath

Phil Plait in Why Climate Change Denial Is Just Hot Air looks at a post by Lawrence Powell Why Climate Deniers Have No Scientific Credibility - In One Pie Chart. Basically, Powell search peer reviewed scientific literature for all papers on "global warming" and "global climate change" and counted the results. Of 13,650 peer-reviewed climate articles only 24 reject global warming, or argue that global warming is caused by something other than carbon emissions. Here's Powell's pie chart of the results:

Manufacturing and productivity improving in Australia

Michael Pascoe, in Manufacturing not dead, just dieting, looks at the latest RBA statistics and notes that there has been a small rise in productivity and in manufacturing jobs:

Here's a surprise: amid all the headlines about the demise of Australian manufacturing at the hands of our strong currency, militant unions, interfering governments, poor productivity and the solar eclipse, employment in the manufacturing sector actually grew in the year to the end of August.

What's more, productivity also has been improving and is now running at a bit above the average of recent years – admittedly faint praise. It still adds up to the standard liturgy chanted by the high priests of business being as dangerously outdated as the Catholic Church's celibacy and men-only rules.

Taxing the wealthy may create jobs, not destroy them

Mark Summer, in Conservative Exceptionalism, looks at some of the faulty economics of some conservatives, especially around the arguments against increasing taxes on the wealth.

But the biggest problem with O'Reilly's threat–and the threat of every conservative who ever longed to go Galt–is that they forgot one thing. A kind of surprising thing. They forgot how capitalism works. 

Markets are moved by a little thing called supply and demand. If the market supports yet another talk show, then someone will probably air the show. And that show will hire construction workers and cameramen, caterers and chauffeurs. If the demand isn't there, the show won't be there. Neither will the jobs.

...

The same market rules apply whenever someone hints that, because of increasing personal taxes, he might not choose to create a new job. That's fine. He doesn't have to. Because if the demand is there, someone will. A company that refuses to expand in the face of rising demand will be supplanted by one that will. In the real world, jobs are not created or destroyed out of spite. They are created because they fill a need to create something, whether it's objects or information, that the market demands.

He concludes with:

Instead of reducing jobs, higher taxes can actually stimulate the creation of jobs. They don't prevent the accumulation of great wealth, they just expand the base that's needed to support the narrow top of the pyramid. Without any direct "redistribution" in the form of the government taking dollars from one person and giving them to another, higher taxes still act to reduce the gap between rich and poor by providing incentive for real growth rather than simple concentration of wealth.

So as the clouds of Taxmageddon gather on the horizon, don't worry. Increasing taxes are sure to reduce the deficit and slow the widening gap in incomes. They won't reduce jobs. If they do end up cutting into Bill O's salary, or even convincing him to put down his microphone, just take that as a bonus.

There's one aspect that the author has missed I believe. One of the problems in the USA is that Governments have not been spending enough money maintaining critical infrastructure (think roads, bridges, etc.). This is largely because they have not had the revenue. That is the price paid for decades worth of tax cuts. If taxes were higher, especially on the wealthy, Governments would have the funds to spend on infrastructure. Of course it takes people to maintain that infrastructure, which means more jobs (note this does not necessarily mean "Big Government" as the work can be contracted out).

On privisation and public policy

In Trains of thought on power and politics Laura Tingle has excerpts from a Quarterly Essay by former Queensland Transport Minister Rachel Nolan. It's well worth a read.

Edit 2/12:  John Quiggin's response: Rachel Nolan on the case for privatisation.

Conservatism and patriarchy

In All About the Patriarchy Paul Krugman has an interesting take on conservatism:

There’s a strand of thought — I identify it especially with Corey Robin, although he’s not alone — that says that conservatism isn’t really about the things it claims to be about. It isn’t really about free markets and moral values; it’s about authority — the authority of bosses over workers, of men over women, of whites over Those People.

The rise of the expert blogger

In Nate Silver and the Ascendance of Expertise Bora Zivkovic writes about the rise of the expert blogger.

A few more companies who don't seem to need to pay tax

Mike Seccombe in Google: Don’t Be Evil, Don’t Pay Tax describes how Google uses a Double Irish Dutch Sandwich so it doesn't need to pay tax in Australia (and many other countries).

A couple of weeks ago, Google Australia's spokesman went straight to script when media reports began appearing about Google's latest filing with the Australian Securities and Investments Commission, which showed the company had paid just $74,176 in tax in Australia on last year's estimated revenue of more than $900 million.

In Tax fury: Google, Amazon, Starbucks admit: 'we hardly pay anything' AP report that Starbucks in the UK has come in for some questioning by a UK Parliamentary committee:

In sometimes bitter exchanges, MPs said they could not accept that Starbucks had reported losses for all but one of the 15 years it has operated in the UK, suspecting the firm was attempting to minimise the taxes it pays in Britain.

"You have run the business for 15 years and are losing money and you are carrying on investing here. It just doesn't ring true," said Margaret Hodge, head of Parliament's Public Accounts Committee on Monday.

Troy Alstead, Starbucks global chief financial officer, acknowledged to the panel that its taxable profits in the UK are calculated after royalties paid to its European headquarters in the Netherlands have been deducted. Alstead acknowledged that it has a special tax arrangement with the Dutch government covering its headquarters.

Companies operating in Europe can base themselves in any of the 27 EU nations, allowing them to take advantage of a particular country's low tax rates.

Alstead insisted that Starbucks was not seeking to mislead investors or tax authorities about its performance in Britain.

"We are not at all pleased about our financial performance here. It is fundamentally true everything we are saying and everything we have said historically," he told the committee

I wonder if Mr Alstead had a straight face when he expressed his company's displeasure with their financial performance.

More on the Parliamentary inquiry, including video of an Amazon executive being questioned. At least Google admits that it is trying to reduce its taxes - Starbucks, Google and Amazon grilled over tax avoidance:

He further freely accepted that until recently, the Ireland company was paying a fee to a separate Dutch company within Google, purely for the purpose of reducing its taxes.

Australia doesn't have an economy wide carbon price

Andrew Leigh writes in Climate Change Mythbusters: An Economy-Wide Carbon Price that claims that Australia has the world's only economy wide carbon price are wrong:

In fact, Australia’s carbon price excludes agriculture, smaller emitters and household transport (although some businesses will face an effective carbon price via changes to the present fuel tax regime). Overall, it captures about 60 per cent of total carbon emissions.

Interesting article on living longer

Dan Buettner has a great article, The Island Where People Forget to Die, that looks at the Greek island of Ikaria where the local residents seem to live much longer than other Greeks, or indeed other people. A couple of things stand out for me: diet, lifestyle and the social conditions that cause them. The article is fairly long but it's well worth a read.

Ebook formats and DRM

Apprentice Alf has written Ebook Formats, DRM and You — A Guide for the Perplexed.

The link between unemployment and crime

"Possum Comitatus" has posted a great chart on Twitter showing Reported Robbery Offences as a function of unemployment for Queensland between 1997 and 2012.

Tax and Government spending is give and take

Ross Gittins in Be a happy taxpayer - the system benefits you has written a great article explaining how as we go through different stages of life we either subsidise others, or we are subsidised in turn.

See what all this proves? As well as redistributing income from rich to poor, the budget acts as a giant, multi-faceted mutual support scheme. At some points in your life you're a net contributor, at others a net recipient.

The system requires those without dependents to subsidise those with, particularly when the little blighters need educating. It requires the well to subsidise the sick. It requires those who work to subsidise those too old to work.

I think it's a good system, a sign we live in a reasonably caring, civilised society, where those in need get supported by the rest of us.

It's a reason we should pay our taxes with a lot less grumbling. The pity is, the system's so complex and convoluted it's not until you see a special study such as this that you realise how it works - it's inbuilt fairness and solidarity.

Something to think about next time you're tempted to justify a demand on government because you've ''paid taxes all my life''. You've also been benefiting all your life.

Decline in Amecian wages

Michael Greenstone and Adam Looney have looked at the decline in wages of many American workers in The Uncomfortable Truth About American Wages. They argue that the decline is actually worse than that reported because it is masked by changing role of women in the workforce and by the decrease in the male participation rate (the statistic only records people with jobs).

When we consider all working-age men, including those who are not working, the real earnings of the median male have actually declined by 19 percent since 1970. This means that the median man in 2010 earned as much as the median man did in 1964 — nearly a half century ago. Men with less education face an even bleaker picture; earnings for the median man with a high school diploma and no further schooling fell by 41 percent from 1970 to 2010.

They also report that women are also starting to see a decline in earnings:

Since 1970, the earnings of the median female worker have increased by 71 percent, and the share of women 25 to 64 who are employed has risen to 71 percent, from 54 percent. But after making significant wage gains over several decades, that progress has slowed and even reversed recently. Since 2000, the earnings of the median woman have fallen by 6 percent.

The authors attribute the downturn to a number of factors including "technological change, international trade and the decline of unions". However, what they are really concerned about seems to be the decline in skills and education:

Many of these forces have been around since the 19th century, but today, for what may be the first time in American history, we are failing to invest enough in our skills and productivity to stay ahead of these trends, and the impacts of this failure are reflected in the declining wages of many American workers.

Greenstone and Looney recommends improvements to the education system including college completion rates.

In the USA rich Democrat states subsidise Republican states

Matthew Yglesias in How The US Currency Union Works—Endless Subsidies To Low-Productivity Area:

Because rich people are Republicans but rich states vote Democratic, Democratic policies transfer wealth from Democratic places to Republican ones.

More evidence for global warming - ten charts

Joe Romm has put together Ten Charts That Make Clear The Planet Just Keeps Warming.

Why American politics is stuffed

A great article by Nick Bryant: Can Americans Agree ... On Anything?

Why I no longer buy The Australian

For most of my adult life I was an avid reader of The Australian and The Weekend Australian. I have to say that its been several years since I purchased either paper. With one exception I now no longer trust anything in The Australian or it's Saturday stablemate. The exception is the writing of George Megalogenis (but even then you sometimes need to ignore the headline).

Why don't I trust The Australian? I feel that it's no longer a newspaper of record. Instead it seems to have become an agenda driven publication. There is no way for me to tell if an article is accurate or biased.  To me the Australian is no longer impartial.

I also find the paper incredibly arrogant and thin skinned, even bullying and vindictive. Woe betide anyone who criticises The Australian.

All this is a shame as The Australian can be a very good newspaper at times. It has carried out and reported on investigations that any editor would be proud of. But for me that's now all for nought, because as I said, I no longer trust it. Nor do I need it any more, the Internet now brings me other sources of news.

It is widely reported that The Australian runs at a loss and that Rupert Murdoch keeps it going for the influence it brings. But, one day Rupert will be gone. When that day comes many expect his replacement to close the loss making venture. I will be saddened when The Australian dies. Not for the loss of what The Australian now is, but for the loss of what it might have been.

Articles on the Australian
John Quiggin: The Oz is not a newspaper
Robert Manne: Margaret Simons and the Australian
Robert Manne: Payback: The Bullying Tactics of the Murdoch Press
David Marr: The Politics of News: David McKnight’s 'Rupert Murdoch: An Investigation of Power'
Tim Dunlop: Manne up: taking on The Australian
Sally Neighbour: The United States of Chris Mitchell: The Power of Rupert Murdoch and the Australian’s Editor-in-Chief

Sex offender registers don't work apparantley

Monica Attard in Sex Offender Sites. The Facts and Greg Barnes in Isolating sex offenders doesn't make us safer both write that sex offender registers, far from making your children safer, may actually increase the risk to them.

Will the rich destroy America?

Chrystia Freeland, in The Self-Destruction of the 1 Percent argues that growing economic inequality in the USA will likely result in a long term decline in that country's economic well being. She compares the situation in the USA to the decline in Venice.

The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.

The history of the United States can be read as one such virtuous circle. But as the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.

Link for the Australian Real-Time Macroeconomic Database

Australian Real-Time Macroeconomic Database:

[P]rovides a macroeconomic database for Australia which includes measures of GDP, its components, prices, and key monetary and labour market statistics over the last fifty years as published and revised in real time. The vintages of data are collated from various sources and accommodate multiple definitional changes, providing a comprehensive description of the macroeconomic environment as experienced by Australian policy- and decision-makers.

Sexual inequality in the workplace

Jessica Irvine in Canberra's sex wars are underpinned by real sexual inequality in Aussie workplaces exposes some dreadful statistics highlighting discrimination in the work place:

5 : The number of female chief executives of Australia's top 200 companies listed on the stock exchange, or 2.5 per cent.

14.6 : Percentage of women on ASX 200 boards.

55 : Number of ASX 200 companies without a single woman on their board.

29 : Percentage of women in Parliament.

37 : Female members of the House of Representatives, out of 150 members.

29 : Female members of the Senate, out of 76 members.

$19.50 : Entry-level zookeeper hourly pay.

$15.90 : Entry-level personal carer or support worker hourly pay for providing care to our elderly on award wage.

17.5 : The percentage gender pay gap today between male and female full-time earnings, up from 15.9 per cent in 1994.

Evolutionary reasons for misogyny is no excuse

In Misogyny, Chauvinism, Sexism, or What? Mel Konner has an interesting take on the evolutionary reasons for misogyny, and why that's no excuse.

Australia's flexible labour market

Ross Gittins explains why Australia needs, and has, a "flexible labour market":

IF YOU listen to business, we still have big problems with the labour market. John Howard deregulated it, but then Julia Gillard reregulated it, and now we can't do a thing with it.

The business people are right to this extent: with an economy under so many pressures for change - the rise of the emerging market economies and the resources boom it has produced, the digital revolution, the return of the prudent consumer, and more - we do need a labour market that's ''flexible''.

But what exactly does flexibility mean? Well, not what some bad employers think: unilateral freedom to change their staff's working arrangements without recompense or consultation. That's one-sided flexibility.

No, what flexibility should mean is the ability of the labour market to adjust to shocks that hit the economy without generating excessive inflation or unemployment. There is some, but it doesn't linger for years. Another word for it is ''resilience'', the ability to take a punch, then bounce back. So how are we doing there? A lot better than business would have you believe.

Julia Gillard's speech - a timeline

Sally Baxter in Mussel flexing women destroy the joint has fleshed out some of the history to the recent controversy over Julia Gillard's speech in Parliament attacking Tony Abbott's sexism. Well done.

Why is the Southern Hemisphere getting drier?

In Southern Hemisphere Rainfall Is Decreasing, Leaving Scientists Searching For An Answer the Huffington Post is reporting on a possible reason for decreased rainfall in autumn in southern parts of Australia:

Since the 1970s, southern Australia — and other areas of the Southern Hemisphere —have seen decreased levels of rain between April and May, which is autumn in that part of the Earth. But what's causing this extended drought?

Previous research has pointed the finger at a southward shift in storm tracks and weather systems during the late 20th century.

But a study published today (Oct. 4) in the journal Scientific Reports takes the explanation one step further. Its findings suggest that changing storm patterns and the ensuing droughts are due to a southern shift in the Hadley cell, the large-scale pattern of atmospheric circulation that transports heat from the tropics to the subtropics.

The southward march of this circulation pattern has been greatest in the autumn, and has disproportionately affected southeastern Australia, according to a release describing the study from the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

In Australia, it's led to a shift in the "subtropical dry zone," a region that stretches around the world and receives little rain, by 125 to 250 miles (200 to 400 kilometers) to the south. That's bad news for ecosystems in the area, which rely on fall rain to recharge.

As yet scientists do not know what is cause this phenomenon.

Growing income equality may harm the economy

Jonathan Rauch has written an essay called Inequality and Its Perils:

Emerging research suggests that the growing gap between rich and poor harms the U.S. economy by creating instability and suppressing growth. 

The essay appears to argue three points:

• Rising inequality reduces demand within the economy. This is because the rich tend to spend a smaller proportion of their income than those on lower incomes.
• To make up for this lower demand, Governments and banks ease credit requirements, thus creating a credit splurge.
• All the income at the top needs somewhere to go. It tends to end up in the financial markets and other forms of investment with high liquidity. In the US the financial sector ended up making up around 40% of the total profits in the economy. To quote the essay: "Alas, when the recession struck, the financial sector’s gigantism and complexity helped turn what might have been a brush fire into a meltdown."

This all results in an unstable economy that far from being resilient to shocks actually amplifies them.

Dr Martin Parkinson on the Australian Economy

Dr Martin Parkinson, Secretary to the Treasury, gave a speech to the John Curtin Institute of Public Policy titled Challenges and opportunities for the Australian economy.

In his speech Dr Parkinson discussed the rise of Asia on Australia's economy:

The consequences of the growth of emerging Asian economies can be characterised as coming in three waves. The first wave is the expansion of the mining sector that we are currently experiencing, most notably here in Western Australia. The second is the growing global demand for our agricultural products. And the third is the rise of the middle class in the Asia-Pacific region.

He also discussed some of the issues around tax reform.

One issue he also touched on was that of our perception of our economy:

Joining Professor Ross Garnaut and me on the panel were Professor He Fan from the Chinese Academy of Social Sciences, and Masahiko Takeda of the IMF. Mr Takeda and Professor He Fan both commented on what they, as outside observers, perceived as the strange disconnect between Australia's economy and Australians' perception of it.

Despite the continually good news about our short-term and medium-term prospects from sources like the OECD and the IMF, there is considerable, persistent and, in my view, unwarranted pessimism.

I wonder how much of the pessimism we express is due to the fact that our Governments are not running large surpluses? Perhaps the income tax cuts promised in the 2007 election, and delivered during the GFC, have not just cost our budget dearly; perhaps they have also indirectly had a negative effect on our mood.

Anyway, judging by the transcript, it appears to have been an interesting speech.

Are you really entitled to your opinion?

No, you’re not entitled to your opinion, at least according to Patrick Stokes, Lecturer in Philosophy at Deakin University. He makes some good points.

Some articles on the Australian energy sector

Ben Eltham and Squirrel Main have written an interesting series of articles on the Australian energy sector:

Your Energy Bill Explained
Poles, Wires, Regulators and Middle Men


Ben Eltham has also written several other articles on the energy sector:
Renewables Will Win At The Ballot Box
Solar Is The Brightest Energy Option

Our Gold-Plated Electricity Infrastructure

Those opposing wind power

Mike Seccombe has written a two part series on the people and organisations behind much of the opposition to wind farms in Australia:
A field guide to the war on wind power and A field guide to the war on wind power (part two)

Sandi Keane also looks at the same people and how some residents are fighting back in Waubra Fights The Anti-Wind Bullies.

Wind and solar lead to electricty price falls in South Australia

Wind, solar force energy price cuts in South Australia by Giles Parkinson.

Why monetary policy isn't working and fiscal consolidation will makes things worse

In Monetary policy, The broken transmission mechanism The Economist has a great article on why monetary policy is not working in the USA and Europe:

SINCE the crisis hit in 2008, there has been a sharp divide between those who believe that the monetary authorities have been insufficiently aggressive and those who believe that central banks have done everything possible given that households and businesses have no interest in taking on new debts. For what it’s worth, a poll of more than 300 research associates at America’s National Bureau of Economic Research conducted for an article in the print edition reveals that the overwhelming majority (76%) believe that monetary policy has not been too tight. Nearly half believe that fiscal rectitude has been a principal cause of the slow recovery.

The article then goes on to explain why monetary policy hasn't been effective. It concludes with:

None of this is to say that asset purchases, statements about the future path of inflation and nominal income, or interventions in the foreign exchange markets will have literally no effect. However, it seems clear that current circumstances are causing these monetary policy actions to be far less effective than they otherwise would be. Marginal spenders are constrained by their desire (or need) to retrench. Most of the people who get the biggest benefit from central bank action are the people who already own lots of financial assets (the rich).

The fiscal authorities need to step up and do the job that the central banks cannot. Specifically, by running large budget deficits, governments can maintain the total level of spending in the economy while allowing households and businesses to repay their debts and accumulate savings. This is not a new insight, but it has gained popularity in the last few years thanks to the work of Richard Koo, the chief economist of the Nomura Research Institute who coined the term “balance sheet recession” to describe what happened to Japan after the collapse of its asset bubble in the early 1990s. (The paper is well worth reading in full.) Unfortunately, many governments across the globe seem more concerned with the abstract goal of balancing their budgets than with the important task of restoring their economies to health.

Recommended reading, as is the paper by Richard Koo in the above link. Here's where Koo explains how problems caused by the GFC could cause a depression if not correctly treated:

More importantly, when the private sector deleverages in spite of zero interest rates, the economy enters a deflationary spiral because, in the absence of people borrowing and spending money, the economy continuously loses demand equal to the sum of savings and net debt repayments. This process will continue until either private sector balance sheets are repaired or the private sector has become too poor to save (i.e., the economy enters a depression).

To see this, consider a world where a household has an income of $1,000 and a savings rate of 10 percent. This household would then spend $900 and save $100. In the usual or textbook world, the saved $100 will be taken up by the financial sector and lent to a borrower who can best use the money. When that borrower spends the $100, aggregate expenditure totals $1,000 ($900 plus $100) against original income of $1,000, and the economy moves on. When demand for the $100 in savings is insufficient, interest rates are lowered, which usually prompts a borrower to take up the remaining sum. When demand is excessive, interest rates are raised, prompting some borrowers to drop out.

In the world where the private sector is minimizing debt, however, there are no borrowers for the saved $100 even with interest rates at zero, leaving only $900 in expenditures. That $900 represents someone’s income, and if that person also saves 10 percent, only $810 will be spent. Since repairing balance sheets after a major bubble bursts typically takes many years — 15 years in the case of Japan — the saved $90 will go un-borrowed again, and the economy will shrink to $810, and then $730, and so on.

This is exactly what happened during the Great Depression, when everyone was paying down debt and no one was borrowing and spending. From 1929 to 1933, the U.S. lost 46 percent of its GDP mostly because of this debt-repayment-induced deflationary spiral. It was also largely for this reason that the U.S. money supply shrank by nearly 30 percent during the four-year period.

The discussion above suggests that there are at least two types of recessions: those triggered by the usual business cycle and those triggered by private sector deleveraging or debt minimization. Since the economics profession never considered the latter type of recession, there is no name for it in the literature. In order to distinguish this type of recession from ordinary recessions, it is referred to here as a balance sheet recession. Like nationwide debt-financed bubbles, balance sheet recessions are rare and, left untreated, will ultimately develop into a depression.

Koo also makes a very important point:

Flow of funds data for the U.S. (Exhibit 9) show a massive shift away from borrowing to savings by the private sector since the housing bubble burst in 2007. The shift for the private sector as a whole represents over 9 percent of U.S. GDP at a time of zero interest rates. Moreover, this increase in private sector savings exceeds the increase in government borrowings (5.8 percent of GDP), which suggests that the government is not doing enough to offset private sector deleveraging.

Koo later writes:

Countries in balance sheet recessions such as Spain are desperately in need of fiscal stimulus but are unable to take advantage of the rapid increase in domestic savings and are therefore forced to engage in fiscal conso lidation of their own. That causes the aforementioned $100 to be removed from the income steam, prompting a deflationary spiral. And since the countries receiving those savings are not borrowing and spending them, the broader eurozone economy is rapidly weakening. It is no wonder that the Spanish unemployment rate is over 21 percent and Irish GDP has fallen more than 10 percent from its peak.

Fund flows within the eurozone were following the opposite pattern until just a few years ago. Banks in Germany, which had fallen into a balance sheet recession after the telecom bubble collapsed in 2000, aggressively bought the debt of southern European nations, which were denominated in the same currency but offered higher yields than domestic debt. The resulting capital inflows from Germany poured further fuel onto the fire of housing bubbles in these countries.

There is thus a tendency within the eurozone for fund flows to go to extremes. When times are good, funds flow into booming economies in search of higher returns, thereby exacerbating the bubbles. When the bubbles finally burst, the funds shift suddenly to the countries least affected by the boom.

The problem with these shifts is that they are pro-cyclical, tending to amplify swings in the economy. Countries that are in the midst of a bubble and do not need or want additional funds experience massive inflows. Meanwhile, countries facing balance sheet recessions and in need of funds can only watch as money flows abroad, preventing their governments from implementing the fiscal stimulus needed to stabilize the economy.

[...]

One way to solve this eurozone-specific problem of capital shifts would be to prohibit member nations from selling government bonds to investors from other countries. Allowing only the citizens of a nation to hold that government’s debt would, for example, prevent the investment of Spanish savings in German government debt. Most of the Spanish savings that have been used to buy other countries’ government debt would therefore return to Spain. This would push Spanish government bond yields down to the levels observed in the U.S. and the U.K., thereby helping the Spanish government implement the fiscal stimulus required during a balance sheet recession.

The Maastricht Treaty with its rigid 3 percent GDP limit on budget deficits made no provision for balance sheet recessions. This is understandable given that the concept of balance sheet recessions did not exist when the Treaty was being negotiated in the 1990s. In contrast, the proposed new rule would allow individual governments to pursue autonomous fiscal policies within its constraint. In effect, governments could run larger deficits as long as they could persuade citizens to hold their debt. This would both instill discipline and provide flexibility to individual governments. By internalizing fiscal issues, the new rule would also free the European Central Bank from having to worry about fiscal issues in individual countries and allow it to focus its efforts on managing monetary policy.

In order to maximize efficiency gains in the single market, the new restriction should apply only to holdings of government bonds.  German banks should still be allowed to buy Greek private sector debt, and Spanish banks should still be allowed to buy Dutch shares.

In retrospect, this rule should have been in place since the beginning of the euro. If that were the case, none of the problems the eurozone now faces would have materialized. Unfortunately, the euro was allowed to run for more than ten years without the rule, accumulating massive imbalances along the way. It may take many years to undo the damage. 

Koo concludes with:

It is laudable for policy makers to shun fiscal profligacy and aim for self-reliance on the part of the private sector. But every several decades, the private sector loses its self-control in a bubble and sustains heavy financial injuries when the bubble bursts. That forces the private sector to pay down debt in spite of zero interest rates, triggering a deflationary spiral. At such times and at such times only , the government must borrow and spend the private sector’s excess savings, not only because monetary policy is impotent at such times but also because the government cannot tell the private sector not to repair its balance sheet.

Although anyone can push for fiscal consolidation in the form of higher taxes and lower spending, whether such efforts actually succeed in reducing the budget deficit is another matter entirely. When the private sector is both willing and able to borrow money, fiscal consolidation efforts by the government will lead to a smaller deficit and higher growth as resources are released to the more efficient private sector. But when the financial health of the private sector is so impaired that it is forced to deleverage even with interest rates at zero, a premature withdrawal of fiscal stimulus will both increase the deficit and weaken the economy. Key differences between the text book world and the world of balance sheet recessions are summarized in Exhibit 17.

With massive private sector deleveraging continuing in the U.S. and in many other countries in spite of historically low interest rates, this is no time to embark on fiscal consolidation. Such measures must wait until it is certain the private sector has finished deleveraging and is ready to borrow and spend the savings that would be left un-borrowed by the government under an austerity program.

There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them.

Koo has written a great paper. Compulsory reading.

Obama the conservative choice?

In The Conservative Case For Obama - Again Andrew Sullivan quotes some commentators as saying that Obama should be true choice for real conservatives. Interesting reading.

An article on writing

In How to Write Colson Whitehead has written "a few simple rules" on writing.

An NBN product review

In Product Review: The National Broadband Network Nick Ross has written a great article on the NBN.

The invasion of American evangelical ideas

Richard Chirgwin in The revolting invasion of American evangelists highlights the fact that the Cori Bernardi's slippery slope argument against gay marriage is actually a copy of the argument used by evangelicals in the USA who used it to campaign against gays in the military.

This doesn’t surprise me: Bernardi has always struck me as too stupid for invention. He is an organizer, a numbers man, an idea-free careerist, all balls, no brains.

Go back just a little distance in America, Land of the Unhinged. The debate was about permitting the military to acknowledge that some of its members are gay. Simple statistics would tell you that, but nobody was allowed to say so, in a delicious paradox for a country that deifies its First Amendment.

And out among America’s theocrats-in-waiting was the same theme. The repeal of laws banning acknowledged* homosexuality in the military was – go on, guess – touted as permitting bestiality. If you need some references, there’s this or this.

Chirgwin goes on to write:

In other words, the link – the “slippery slope” argument that draws an utterly kooky continuum starting at sex with a human and ending at sex with a different species – goes back at least that far.

It’s just another piece of the detestable invention of American snake-oil evangelism. It’s not even Bernardi’s own idea. He’s just spouting someone else’s drivel at us.

And that drivel is the demon spawn of hardline evangelistic American religion, which has been trying to invade Australia, infest our thought, and pollute our politics. In at least the latter, they have succeeded. And in the latter, Cori Bernardi - who seems to owe his loyalties to someone in the USA more deeply than anyone in Australia - deserves not a slap on the wrist, but the loss of his endorsement.

As Chirgwin writes:

If “sex with a man” or “sex with a woman” is on the same continuum as “sex with a sheep”, then doesn’t heterosexual sex sit on the same line?

Finnish education: teachers are important

John Hattie has written Finnish education guru Pasi Sahlberg: treat primary school teachers like doctors

J.K. Rowling on paying tax

Here's a great message from J.K. Rowling on why she's happy to pay tax:

Data rentention and the National Security Inquiry

A good post by Nick Ross on data retention proposals: Why are people so worried about data retention and the National Security Inquiry?

Paul Krugman on European austerity

It seems that too many policy makers and advisors have forgotten the errors of the great depression. But not Paul Krugman. In Europe’s Austerity Madness Krugman argues that all austerity is doing is inflicting additional pain on those that are already hurting. Why is this happening?

Part of the explanation is that in Europe, as in America, far too many Very Serious People have been taken in by the cult of austerity, by the belief that budget deficits, not mass unemployment, are the clear and present danger, and that deficit reduction will somehow solve a problem brought on by private sector excess.

Beyond that, a significant part of public opinion in Europe’s core — above all, in Germany — is deeply committed to a false view of the situation. Talk to German officials and they will portray the euro crisis as a morality play, a tale of countries that lived high and now face the inevitable reckoning. Never mind the fact that this isn’t at all what happened — and the equally inconvenient fact that German banks played a large role in inflating Spain’s housing bubble. Sin and its consequences is their story, and they’re sticking to it.

Worse yet, this is also what many German voters believe, largely because it’s what politicians have told them. And fear of a backlash from voters who believe, wrongly, that they’re being put on the hook for the consequences of southern European irresponsibility leaves German politicians unwilling to approve essential emergency lending to Spain and other troubled nations unless the borrowers are punished first.

Recommend reading.

Fending off food cravings

Melinda Beck has written an interesting piece on How to Fend Off a Food Craving.

Alan Kohler on the RBA, China, the AUD and interest rates

Alan Kohler has written an interesting article in Monetary policy is losing its power. His article contains a couple of interesting ideas:

• The RBA probably made a mistake in 2009-10 in increasing interest rates.
• High capital inflows, mostly for new LNG plants in Queensland are going to keep the Australian dollar high.
• Mortgage rates are unlikely to drop to where they were last time the RBA cash rate was at this level; that's because the banks are facing higher international funding costs and more competition for deposits.
• The high dollar and higher funding costs mean that monetary policy, and that means the RBA, isn't as effective as it once was. 

He concludes with:

And no-one wants to borrow anyway. Manipulating the price of credit, which is all the RBA can do, is fine when credit is in demand. Now it's like manipulating the price of beef at a vegetarians' picnic.

Should be abolish negative gearing?

I'm still not convinced, but in It’s time to abolish negative gearing Philip Soos argues that we should.

The poorer you are, the more personal responsibility you have to take

In In Which I Wish I Had 1/3 of Ezra Klein's Brain: Mitt Romney 47% Trainwreck Weblogging J Bradford DeLong quotes Ezra Klein:

The thing about not having much money is you have to take much more responsibility for your life. You can’t pay people to watch your kids or clean your house or fix your meals. You can’t necessarily afford a car or a washing machine or a home in a good school district…. [Romney] is a guy who sold his dad’s stock to pay for college, who built an elevator to ensure easier access to his multiple cars, and who was able to support his wife’s decision to be a stay-at-home mom. That’s great! That’s the dream. The problem is that he doesn’t seem to realize how difficult it is to focus on college when you’re also working full time, how much planning it takes to reliably commute to work without a car, or the agonizing choices faced by families in which both parents work and a child falls ill. The working poor haven’t abdicated responsibility for their lives. They’re drowning in it….

As economist Jed Friedman wrote in an online post for the World Bank, “The repeated trade-offs confronting the poor in daily decision making -- i.e. ‘should I purchase a bit more food or a bit more fertilizer?’ -- occupy cognitive resources that would instead lay fallow for the wealthy when confronted with the same decision. The rich can afford both a bit more food and a bit more fertilizer, no decision is necessary.” The point… is really, really hard to be poor. That’s because the poorer you are, the more personal responsibility you have to take.

New car sales highlight the impcat of the GFC

Greg Jericho in Car sales as a speedo check for the economy looks at the impact of the GFC on new car sales. New car sales are a good indicator of the strength of the economy. He highlights the link between new car sales and GDP. Well worth a read.

Viral hate emails on asylum seekers are wrong

There are a number of viral emails going around that claim that refugees get special treatment from the Government. These emails are wrong. In Talking points: Asylum seekers 'don't get cash, houses, gifts' Malcolm Farr writes about a study that addresses these emails.

NEARLY a decade of viral emails claiming refugees get taxpayer-funded cash, houses and other gifts denied to Australian citizens has been debunked by an independent study.

The emails stir up resentment towards asylum seekers settling here but are simply not true, according to the latest research paper by the Federal Parliamentary Library.

The research dismisses claims that refugees get cash payments, free houses and extravagant gifts.

"There is no truth to claims made in emails recently circulated throughout Australia that refugees are entitled to higher benefits than other social security recipients," says the study by social policy researcher Luke Buckmaster.

"Refugees have the same entitlements as all other permanent residents. They do not receive special refugee payments or special rates of payment."

A question for George Megalogenis - Do we need the states?

George Megalogenis makes the point that states are in the service business. On his blog post NSW government: killing patients with cuts Richard Chirgwin writes:

It is, therefore, a little distressing to read in the Sydney Morning Herald that the austerity fanatics in the NSW want to add hospital outpatient clinics to the list of things they want to cut.

He goes on to write:

A point about the story itself: if the Herald thinks a private specialist visit only costs $300, it's completely deluded; first, because the private specialist doesn't have to constrain charges to the officially scheduled price; second, because those visits often include pathology. Shifting the path from the hospital to the private clinic means that service is also private.

Richard knows what he's talking about in this case because:

Those who know me - either in real life or on the Internet - will probably know that my wife has a chronic illness that keeps us intimately familiar with the inside of hospitals.

Describing things in full would take an essay, but the short version is that she suffers from an immune system disorder that has knock-on effects pretty much everywhere: at the last count, she's a regular with six specialists (immunology, gastro-enterology, vascular, renal, gynocology, dermatology). 

Let's get back to George Megalogenis. George has written that the Federal Government collects the revenue and the states are in business of spending that money in providing services to their citizens. Unfortunately, I don't have a link to these comments. However he did recently state:

The four largest components of the typical state budget are spending on health, education, transport and police.

Health and education tend to take 25 per cent each of total spending, while transport and police divide a further 20 per cent between them.

So, what happens when the states decide not to provide that service? I guess we then need to ask if we still need them. Don't get me wrong, I think it far better that the states provide these services than the Commonwealth. The states are far closer to the coal face and more likely to be aware of the needs of the community. The problem is that some of the states seem to be putting ideology and politics above responsibility and service delivery.

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.

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.

Great series of charts on tax take as a proportion of GST

Tax chartacular shows an interesting array of charts from table 18 of the National Accounts.

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.

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.

And

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.

And

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

Agnotology

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!

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.

The record Arctic ice melt

Alexis C Madrigal reports on The Mystery at the Heart of This Year's Record-Setting Arctic Ice Melt.

Multinationals want the right to sue Governments

In Behind the smoke: The corporate war on us Peter Martin has blogged about the attempt of multinational corporations to have the right to sue sovereign governments:

They want what is known as an Investor State Dispute Settlement Mechanism. They want it in order to allow them to drag Australia and other sovereign governments before specially constituted international courts.

How not to cover a mass murder

Helen Lewis reports How the media shouldn't cover a mass murder.

Is eating meat environmentally friendly?

In short it's complicated, but meat production may not be as environmentally bad as some people claim. At least according to Asa Wahlquist in The Carnivore's (Ongoing) Dilemma.

Adele Horin's final column for Fairfax

In For richer and poorer, the battle goes on Adele Horin has written her last column for Fairfax. It's well worth reading and I think her contribution will be missed.

Why we need the NDIS

Read A column for a friend with a very special kid by David Penberthy. Then you won't need to ask why.

Is Australia going it alone on pricing carbon?

In Get Fact: is Australia ‘going it alone’ on pricing carbon? Crikey looks at claims by Tony Abbott on Australia going it alone in pricing carbon emissions. They conclude:

We rate Abbott’s statement that the ALP is “going it alone” on pricing carbon as “mostly rubbish”.

Some interesting posts on private vs public funding of education

Dave O'Neil accuse Julia Gillard and Tony Abbott of giving up on fairness in I see rich people.

Ross Gittins criticises the announcement of more funding for all schools in Productivity the loser in Gonski fight. He suggests that we could improve worker productivity by directing the extra funding to those who need it most.

David Gonski and his committee proposed increased funding of $5 billion a year for schools - government or non-government - according to their numbers of low-income, indigenous, disabled, non-English speaking or remote-area students.

According to the calculations of Trevor Cobbold, of the public-school Save Our Schools lobby group, Gillard's promise of extra funding for independent schools regardless of educational need could cost a further $1.5 billion a year.

See what happened? Successful lobbying by the independent schools ensured that, however much extra ends up being spent on federal grants to schools, more will go to privileged students who don't need it and less to underprivileged students who do.

Should Tony Abbott win the federal election, it's likely little or nothing extra will be spent on increasing resources for the education of the underprivileged. And that will be a lost opportunity to improve the future productivity of Australia's workforce.

The media and politicians who repeatedly lie

How do newspapers deal with politicians who go on repeating lies? looks at that very question:

But how do reporters who are doing their level best to tell their readers the truth cope when candidates move from spouting (just about acceptable) spin to telling (unacceptable) lies?

Unfortunately, he doesn't really come up with a solution. It's a bit of a shame really as we have an Opposition Leader who gets away with it repeatedly.

A simple explanation of economics

Jessica Irvine has a book out: Zombies, Bananas and Why There Are No Economists in Heaven. The Sydney Morning Herald has published an edited extract: A noble pursuit by any measure. Basically, economics looks for the most efficient way to allocate scarce resources. Have a read, it is a great and entertaining primer to an understanding of the point of the "dismal science".

Why Paris Aristotle has changed his mind on Nauru

Michael Gordon interviews Paris Aristotle in A change of heart. It makes for very interesting reading. I think Michael Gordon has done a good job with this article.

Australia's wage breakout...

... isn't happening, at least according to the facts (readers of The Australian and the Australian Financial Review are advised to check out Grog's Gamut's excellent post on the subject - as usual it also has graphs).

Great post on the NEM and carbon price

The NEM is the National Electricity Market. The blog post The NEM, Bidding Orders and the Carbon Price explains how the carbon price impacts on electricity generation. It is a good read.

Bloomburg calls for a carbon tax

In Carbon Taxes Cut Debt, Cool Planet the Editors of Bloomburg are calling for a carbon tax:

Absent some profound shift in our penchant for burning coal, oil and gas, the Earth is expected to warm as much as 11.5 degrees Fahrenheit over the next 100 years, causing more weather-related destruction.

It’s only responsible to force a shift away from fossil fuels by enacting a carbon tax. The U.S., which accounts for about 19 percent of global emissions today, should take the lead in doing so as part of broader tax reform.

The benefits of such a tax are clear: It would raise immediate revenue for a strapped nation, curtail the use of fossil fuels and, as a result, drastically lower emissions. A carbon tax of $15 a ton that rises at 4 percent above inflation annually would raise $310 billion by 2050 and cut emissions 34 percent (or 2.5 billion metric tons), according to a recent report by the Brookings Institution. The biggest hit would come from gas prices, which would initially rise by about 13 cents a gallon and increase gradually from there, according to other estimates.

To avoid one of the biggest downsides of a carbon tax -- slower economic growth -- as much as 50 percent of the revenue should be used to lower corporate tax rates for all companies. Such an offset could boost economic output by giving business a bigger incentive to invest and hire, research by Brookings and others shows. The remaining revenue should be used to help reduce the federal deficit and make the tax code more progressive, easing some of the bite from higher electricity and gas prices.

Shift in views by climate sceptics

In Climate sceptics shifting their views Sara Phillips looks at how some climate change sceptics now seem to be arguing that if the planet is warming it's not by very much.

Olive oil may help prevent osteoporosis

At least as reported in Olive oil may help strengthen bones.

When a bronze medal can be better than a silver

In Why Bronze Medalists Are Happier Than Silver Winners Jason G. Goldman writes that studies show that often the bronze medalist seem happier than the silver medalists:

Psychologists Victoria Medvec and Thomas Gilovich of Cornell University, and Scott Madey of the University of Toledo think that this phenomenon can be explained by counterfactual thinking. This means that people compare their objective achievements to what “might have been.”

The most obvious counterfactual thought for the silver medalist might be to focus on almost winning gold. She would focus on the difference between coming in first place, and any other outcome. The bronze medalist, however, might focus their counterfactual thoughts downward towards fourth place. She would focus on almost not winning a medal at all. The categorical difference, between being a medalist and not winning a medal, does not exist for the comparison between first and second place.

It is because of this incongruous comparison that the bronze medalist, who is objectively worse off, would be more pleased with herself, and happier with her achievement, than the silver medalist.

Goldman then goes on to note a study of the Judo competition in the 2004 summer Olympics that had similar findings. However, I'm not sure that other factors don't come into play in sports like Judo. In Judo judoka have to win the bronze medal contest to claim the medal. So a bronze medalist has by definition just one their last bout. By contrast, the silver medalist has just lost their last bout. I'm sure that has an effect.

131 years of global warming in 26 seconds

Go to Watch 131 Years of Global Warming in 26 Seconds to see how the impact of carbon emissions.

The powerlessness of Presidential rhetoric

There is an idea in politics, especially American politics, that a good speech by a country's leader can help him achieve his goals. Ezra Klein, in The Unpersuaded, examines this proposition. Klien looks to the work of George Edwards who finds the opposite is actually the case.

This, Edwards says, is the reality facing modern Presidents, and one they would do well to accommodate. “In a rational world, strategies for governing should match the opportunities to be exploited,” he writes. “Barack Obama is only the latest in a long line of presidents who have not been able to transform the political landscape through their efforts at persuasion. When he succeeded in achieving major change, it was by mobilizing those predisposed to support him and driving legislation through Congress on a party-line vote.”

That’s easier said than done. We don’t have a system of government set up for Presidents to drive legislation through Congress. Rather, we have a system that was designed to encourage division between the branches but to resist the formation of political parties. The parties formed anyway, and they now use the branches to compete with one another. Add in minority protections like the filibuster, and you have a system in which the job of the President is to persuade an opposition party that has both the incentive and the power to resist him.

Jim Cooper says, “We’ve effectively lost our Congress and gained a parliament.” He adds, “At least a Prime Minister is empowered to get things done,” but “we have the extreme polarization of a parliament, with party-line voting, without the empowered Prime Minister.” And you can’t solve that with a speech.

Article on Productivity and Industrial Relations

Ian McAuley at New Matilda has written Can We Be Any More Productive? It's an interesting look at labour productivity. He also explores the issue of industrial relations - in particular the need for a cooperative approach rather than the traditional adversarial approach.

A timeline on Nauru

Wendy Bacon has prepared a timeline documenting Australian policy on sending boat people to Nauru. The timeline is in two parts:

Our Nauru Amnesia
The Three Waves Of Nauru Anguish

So much for the Singularity

Wikipedia defines a technological singularity as:

the hypothetical future emergence of greater-than-human superintelligence through technological means. Since the capabilities of such intelligence would be difficult for an unaided human mind to comprehend, the occurrence of a technological singularity is seen as an intellectual event horizon, beyond which events cannot be predicted or understood.

The blog Cognitive Social Web has a post arguing that The Singularity is not coming. The post argues that a singularity requires an exponential rate of progress in science. In actual fact, according to the post, science advances in a linear fashion, not an exponential one. This happens because each area in science faces diminishing rates of return as their field progresses.

I would like to simply argue that scientific progress is in fact linear, and this despite the capitalization of past results into current research (“accelerating returns”), and despite an exponentially increasing population of scientists and engineers working on advancing it (resource explosion). And since I don’t want to argue in the realm of opinion, I am going to propose a simple, convincing mathematical model of the progress of science. Using the same model, I’ll point out that a hypothetical self-improving AI would actually see its own research progress and intelligence stagnate soon enough, rather than explode —unless we provide it with exponentially increasing computing resources, in which case it may do linear progress (or even better, given a fast enough exponential rate of resource increase).

The controversy around Ye Shiwen

16 year old Chinese swimmer Ye Shiwen swam a remarkable race to win gold in the 400m Individual Medley at the London 2012 Olympics. Afterwards doubt was cast on her performance by some in the media and within swimming circles.

I don't know if Ye has ever been involved in doping. However, while her performance is remarkable, it's also not inconsistent with that of other young swimmers who are drug free. Have a read of Don't be too quick to question Chinese success by Phil Lutton who documents other cases of young swimmers (Stephanie Rice) lowering their personal bests by significant amounts to break records. Lutton notes:

To the wider sporting world, Ye is only now becoming a notable name. Yet to swimming diehards, she has been one of the rising stars for some years, even if her surge of form in London has caught most people by surprise. Beisel and Rice had been the favourites for gold.

Ye won the 200m IM at the Asian Games in 2010 (2.09.37) and the 400m IM (4.33.79), all at age 14. At the time, she was listed at 160cm tall. Now, the official Olympic site lists her 12 cm loftier at 172cm. That sort of difference in height, length of stroke and size of hand leads to warp-speed improvement.

A swimming coach once told me that you can't swim faster than your height. In other words, the taller you are the faster you can swim (which is why there aren't any short swimmers winning medals amongst the men).

Lutton also writes:

If America - a nation of 300 million - can produced a Michael Phelps and Australia an Ian Thorpe, is it really so bizarre to think China - with a population of 1.3 billion and a state sporting program run with military precision - could have found his female equivalent?

Ye has spent time training in Australia. Her coach in Australia, Denis Cotterell has come out and said that he believes here to be clean:

Denis Cotterell, the former coach of Olympic gold medallist Grant Hackett, has trained Ye and other top Chinese swimmers.

He said he was "100 per cent certain" Ye was clean and said the questions over doping had been raised by people who do not understand the sport.

"You have to have a look at the improvements in Beijing," he told PM.

"If people do their homework and you have a look at some of the world records ... the margins that they have been dropped by some of the extremely talented swimmers that have applied themselves over the past – it is a combination of their talent and their work ethic."

Cotterell said Ye's five-second improvement to her personal best time was not a one-off.

"[There have] been great achievements by people in the sport, it's part of the history ... and talent comes along and makes a good drop and shocks a few people but we generally seem to have accepted it," he said.

"But for some reason in this case now, it's not, because of the Chinese [history]."

"Ian Thorpe, no one questioned, Michael Phelps, no one questioned. And having worked with the girl and seeing how hard she works and the talent she is, it is disappointing that the kid is in the media conference on her own with 100 journalists having to defend herself."

The Australian swimmer who won the silver medal behind Ye also defender her:

"I like to believe innocent until proven guilty. As far as I'm concerned I think she is an amazing swimmer and it's just amazing that I got to be as close as I was with how amazing she is," Coutts said.

"I have never been in that position myself, I have never been accused [of doping] but I'm sure it would be tough for the athlete knowing people are saying things like that about you. It wouldn't be a nice feeling. As I said, innocent until proven guilty. You can't speculate something about someone if you don't know."

So, why the criticism of Ye? I think partly it's because of the alleged doping by Chinese swimmers in the 1990s (guilt by association), partly because of her remarkable performance (a young Ian Thorpe also faced accusations), but mostly I think it's racism. If she had been American or Australian I very much doubt that such accusations would have been made (or at least not so publically).

So, well done Ye Schiwen.