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 It still adds up to the standard liturgy chanted by the high priests of business being as dangerously outdated as the Catholic Church's celibacy and men-only rules.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.