Australia's fiscal deficit has been a long time coming

Ross Gittins in Blame for budget woe widely shared makes the point that our structural deficit is the result of policies of the Howard, Rudd, Gillard and Abbott Governments:

With Hockey busily shifting all the blame for this daunting outlook onto Labor, it's worth examining its political antecedents. Since we've known we had a long-term ''fiscal gap'' problem at least since the first intergenerational report of 2002, the blame for making things worse must be shared not just by the former Labor government, but also by the Howard government and even the Abbott government.

The Howard government probably did most to add to the existing problem by the way it frittered away the proceeds of the first phase of the resources boom, which it treated as a permanent rather than temporary boost in tax collections.

Pick 2 out of 3: Cheap housing, low density housing, no urban sprawl

In When you buy a house, you shouldn't buy the neighbourhood with it Matt Cowgill looks at the rising cost of housing and makes the point:

I think we've tipped the scales too far in favour of those who want to restrict development. The consequence of this is that housing is more expensive than it otherwise would be. That's fine for people who already own their own home, but it hurts the young and the poor.

There's a trade-off at play here, one that can't be wished away or ignored. With a growing population, you can't restrict rising density in established suburbs, prevent sprawl on the urban fringes, and prevent housing from being unaffordable. Pick two out of the three. The urge to preserve historic neighbourhoods, the desire the conserve all the green bits around our cities, and the wish to maintain affordable housing are all noble impulses with which I sympathise. But, again, we can't have them all.

If you stop density from rising in the inner city, you push people further out to the fringes. If you try and stop this sprawl, prices will soar. People will spend longer living at home or in share houses than they’d like, and we'll suffer through more of those tiresome pieces in newspaper lifestyle supplements speculating about the deep cultural cause of this allegedly dysfunctional generation's protracted adolescence.

Could higher unemployment be helping corporate profits?

Paul Krugman in The Fear Economy writes:

The economic recovery has, as I said, been weak and inadequate, but all the burden of that weakness is being borne by workers. Corporate profits plunged during the financial crisis, but quickly bounced back, and they continued to soar. Indeed, at this point, after-tax profits are more than 60 percent higher than they were in 2007, before the recession began. We don’t know how much of this profit surge can be explained by the fear factor — the ability to squeeze workers who know that they have no place to go. But it must be at least part of the explanation. In fact, it’s possible (although by no means certain) that corporate interests are actually doing better in a somewhat depressed economy than they would if we had full employment.

What’s more, I don’t think it’s too much of a stretch to suggest that this reality helps explain why our political system has turned its backs on the unemployed. No, I don’t believe that there’s a secret cabal of C.E.O.’s plotting to keep the economy weak. But I do think that a major reason why reducing unemployment isn’t a political priority is that the economy may be lousy for workers, but corporate America is doing just fine. 

And

Weak labor markets are a main reason workers are losing ground, and the excessive power of corporations and the wealthy is a main reason we aren’t doing anything about jobs.

Too many Americans currently live in a climate of economic fear. There are many steps that we can take to end that state of affairs, but the most important is to put jobs back on the agenda.

Solving homelessness might be cheaper than doing nothing

Jenny Shank in Utah Is on Track to End Homelessness by 2015 With This One Simple Idea writes:

Utah has reduced its rate of chronic homelessness by 78 percent over the past eight years, moving 2000 people off the street and putting the state on track to eradicate homelessness altogether by 2015. How’d they do it? The state is giving away apartments, no strings attached. In 2005, Utah calculated the annual cost of E.R. visits and jail stays for an average homeless person was $16,670, while the cost of providing an apartment and social worker would be $11,000. Each participant works with a caseworker to become self-sufficient, but if they fail, they still get to keep their apartment.

Solve congestion with more roads, rather than more public transport?

Brian Lee Crowley in Sick of congestion? Build roads, not transit notes that cities that invest in roads rather than public transport have less congestion and lower travel times.

This relationship between density and travel times is another counterintuitive puzzler for those who believe cars and roads are the problem, rather than the solution to transit woes. How easy it is to assume that travel times must be shorter where cities are dense and people therefore have shorter distances to travel to work.

What the real world shows us, though, is that when urban population density is lower, and jobs widely dispersed rather than concentrated in a city centre, commuter traffic is more widely scattered on the road network, lowering commuting times. This is a real challenge for the advocates of heavy investment in subways and light rail, which are reliant on commuting patterns focused on a hub-and-spoke model bringing workers downtown along densely developed transit corridors.

I think things are more complicated than that. There are also environmental and social costs associated with greater urban sprawl. Lower population densities lower the economic efficiency of public transport, while higher population densities will by itself increase congestion. It's also much easier to build or expand a new road in environments were there's little or no urban development - imagine trying to build a six lane freeway in the middle of Manhatten.

Higher tax paying companies appear to create more jobs

Laura Clawson in Lower corporate taxes don't mean more jobs has this interesting graph:

It appears that companies, at least in the USA, that pay higher taxes are also more likely to create more jobs. Some might argue this might be because large companies pay more taxes and employ more people than smaller companies. However looking at the graph, the "tax-shirking job-shedders" had larger profits.

Clawson makes the point:

If corporations paid 35 percent of their $1.8 trillion in 2012 profits as taxes, that would have accounted for $630 billion in revenue. Instead, large corporations paid less than 13 percent in taxes, according to the Government Accountability Office, and total corporate taxes came to just $242 billion. If even half of that gap was filled, the American economic picture would look a lot brighter.

Australia's future isn't looking so rosy

David Llewellyn-Smith writes in Australian entitlement is in for a great shock that the Australian economy is bloated and uncompetitive and we have a reckoning on the way.

We have, in short, done absolutely nothing to prepare for what is coming. We have pretended it's not happening in the hope that something will come along.

None of this is new but I wish to make two points today. First, this week has shown that despite our denial, the adjustment is accelerating. Throughout the last three years, MacroBusiness has argued that we face a long and arduous period of below trend growth because of our multiple adjustments. And so it has proven to be.

Despite a brief spike in growth in 2011/12, the post-GFC period has been the lowest average growth period anyone can remember. We are now growing more slowly than the supposedly broken United States. This week's national accounts illustrated why very clearly. The terms of trade correction which is central to the adjustment is pulling down national income.

RIP Nelson Mandela

Mediocre people seek power through division. Great men like Mandela bring a nation together.

Annabel Crabb posted this wonderful Mandela quote on Twitter this morning:

Resentment is like drinking poison and then hoping it will kill your enemies.

Rest in peace Madiba. The world is a poorer place for your passing.

A week's meals for $17

Jack Monroe, the author of the A Girl Call Jack blog has achieved success developing really cheap meals. Check our her food and recipes archive. Daily Life had an article on her: Feeding your family for $17 a week.

Why you need to tip in America

Chelsea Welch on why you should leave a tip in American restaurants -Tips are not optional, they are how waiters get paid in America:

We make $3.50 an hour. Most of my paychecks are less than pocket change because I have to pay taxes on the tips I make.

After sharing my tips with hosts, bussers, and bartenders, I make less than $9 an hour on average, before taxes. I am expected to skip bathroom breaks if we are busy. I go hungry all day if I have several busy tables to work. I am expected to work until 1:30am and then come in again at 10:30am to open the restaurant.

I have worked 12-hour double shifts without a chance to even sit down. I am expected to portray a canned personality that has been found to be least offensive to the greatest amount of people. And I am expected to do all of this, every day, and receive change, or even nothing, in return. After all that, I can be fired for "embarrassing" someone, who directly insults his or her server on religious grounds.

In this economy, $3.50 an hour doesn't cut it. I can't pay half my bills. Like many, I would love to see a reasonable, non-tip-dependent wage system for service workers like they have in other countries. But the system being flawed is not an excuse for not paying for services rendered.

I need tips to pay my bills. All waiters do. We spend an hour or more of our time befriending you, making you laugh, getting to know you, and making your dining experience the best it can be. We work hard. We care. We deserve to be paid for that.

As an Australian the idea of regularly tipping is quite foreign. The American system stinks. It's something I have never understood when visiting the USA. However, the world is what it is. When visiting the USA we need to remember to tip, people's livelihoods depend on it.

Low carbohydrate diet for those with type 1 diabetes

Dr Norman Swan interviewed Dr Troy Stapleton on the benefits of a Low carbohydrate diet to manage type I diabetes:

This is the personal story of Dr Troy Stapleton, who developed type I diabetes at the age of 41. In the beginning of his disease he followed the standard dietary advice for diabetics to consume up to 250g of carbohydrates per day and then balance this with insulin injections. However, after extensive research he decided to go on a very low carbohydrate diet, which has improved his life quite dramatically.

It's an interesting interview. I would recommend people consult their doctor before acting on any of the information in this interview. I'm certainly not qualified to offer medical advice, or to make any recommendations.

"How 'Skeptics' View Artic Sea Ice Decline"

An interesting interactive graph tweeted by Peter Martin @1petermartin. The original can be found at http://cloudfront.mediamatters.org/static/images/countyfair/arcticescalator2012.gif

Comments on Antartic sea ice

I found some interesting comments over on The Poll Bludger blog. "PeeBee" wrote the following in comment 310:

If the Southern Ocean is warming, why is sea ice increasing? There are several contributing factors. One is the drop in ozone levels over Antarctica. The hole in the ozone layer above the South Pole has caused cooling in the stratosphere (Gillet 2003). A side-effect is a strengthening of the cyclonic winds that circle the Antarctic continent (Thompson 2002). The wind pushes sea ice around, creating areas of open water known as polynyas. More polynyas leads to increased sea ice production (Turner 2009).

Another contributor is changes in ocean circulation. The Southern Ocean consists of a layer of cold water near the surface and a layer of warmer water below. Water from the warmer layer rises up to the surface, melting sea ice. However, as air temperatures warm, the amount of rain and snowfall also increases. This freshens the surface waters, leading to a surface layer less dense than the saltier, warmer water below. The layers become more stratified and mix less. Less heat is transported upwards from the deeper, warmer layer. Hence less sea ice is melted (Zhang 2007).

Amazing isn’t it?

"PeeBee" also wrote in comment 317:

There is a trend for sea ice around Antarctica to be increasing in extent, though this is not of the same order of magnitude as what is going on in the Arctic. It certainly doesn’t mean they somehow balance out and everything is fine, we can keep on emitting carbon. Most of the ice in Antarctica is in fact on land, and the volume of that ice is decreasing. If you look at all of the data rather than isolate selective facts, the overall picture is something everyone should be concerned about.

"imacca" wrote in comment 359:

Always amuses me how some among the Grumpy True Disbeliever demographic have issues understanding that the dynamics of sea ice formation may be different between the Arctic and Antarctic.

One has a thin layer of ice over an pretty well contained deep sea. The other has a layer of ice around a large continent surrounded by a circulating ocean that is generally covered in a layer of ice up to 3km thick. But they should both behave the same Wot??

Tow back not working in the US and won't work here

The Coalition have been citing the US practice of "turning back" boats as justification for their turn back policy. In an opinion piece, Abbott's copycat tow-back plan won't stop the boats, Azadeh Dastyari explains that the US policy breaks international law and doesn't work.

Finally, as the Coalition has itself acknowledged, the US practice of trying to stop sea vessels has been going on for more than 30 years. Had the boats stopped as a result of the policy, the US would not need to continue this costly practice. After more than 30 years of ''tow back'', the US is no closer to stopping people from taking to the sea in an attempt to enter the country. Nor has the practice of ''tow back'' prevented thousands of people from reaching the US every year. In other words, the US practice has not achieved what the Coalition hopes to achieve. There is nothing to indicate the Coalition would have any more success at stopping the boats than does the US government.

What the US experience has shown is that there is no quick and easy solution to the problem of asylum seekers who are escaping persecution. A bad copy of a ''tow back'' policy that has not worked and is unlawful in the US context, is not going to be the silver bullet the Coalition is looking for.

Australia is facing a future of lower growth...

Macro Business has a post looking at the budget debate: The delusional budget debate.

Australia is in the early stages of an historic adjustment downwards in its income growth as the terms of trade fall.

...

The problem Pascoe is identifying is that by definition in a current account deficit country when the public sector runs a surplus (or smaller deficit) then the private sector must run a larger deficit to offset it or growth will fall. That is, the private sector will have to borrow more (or sell more assets).

That might be OK, a return to the Howard/Costello growth model as it were, but our situation is actually worse than Pascoe is arguing. Credit growth is not at such low levels entirely by choice. It is kept low because APRA insists that all new loans are funded by deposits. This limits credit distribution (not price) by driving up credit standards. This in turn is the result of Australian banks no longer being able to borrow money endlessly offshore or they will have their credit ratings stripped. We are, in fact, in a slowly tightening current account squeeze.

This is the vice that I have described for the Australian economy for the past five years. Private credit cannot grow too fast lest it threaten the banks’ credit ratings. Public credit cannot rise too fast because it will threaten the national credit rating which still guarantees the bank ratings. Yet you can’t cut back too fast on either lest growth plunges. We’ve been supported through it so far by massive growth in the external sector (the mining boom) but that is ending.

This election should be about this: which party offers the best path forward out of the trap. The right solution will look something like this:

•     a huge productivity drive
•     modest public deficits aimed very much at productivity boosting soft and hard infrastructure
•     private sector disleveraging and probable deleveraging
•     above all, measures to lower the dollar and boost tradables growth without firing up greater credit growth

The budget deficit and reported decline in revenue explained

In Labor in a budget quagmire of its own making Greg Jericho looks at the changes in revenue and spending over the last few budgets and compares them to the situation in the nineties. As usual there are plenty of graphs to back up his reasoning.
This week the budget situation is being spoken of in grave terms. News articles are full of dire prognostications, the Prime Minister is being sombre, and the opposition is free to run every scare campaign it wishes.

But back in the 2009-10 Budget - the first after the GFC had smacked the bejeezus out of the revenue - Wayne Swan predicted by 2012-13 that the budget would be in deficit of 2 per cent of GDP. Back then we weren't expected to return to surplus until 2015-16.

...

In reality its predictions of the budget situation were pretty much on the money - perhaps even too conservative. But a year later the Government in a misconstrued desire to win the race of economic management through achieving speedy returns to a surplus, shifted the goal from 2015-16 to 2012-13.

Rudd vs Gillard

A couple of articles on the topic.

Drag0nista in Crean, Rudd and WTF? explains what happened in the non-spill of March 2013. It's probably the best analysis I have seen up to now.

Josh Bornstein, an employment lawyer, explains in When you understand hate, you understand Rudd's fall why so many of Kevin Rudd's colleagues hate him and thus would rather lose than make him leader again.

The decline of whom

In For Whom the Bell Tolls Megan Garber writes about the slow death of "whom".

Household income distribution

Matt Cowgill posted this table of working age population household income distribution to Twitter:

Government debt - it's more complicated than what it seems

Bernard Keane and Glenn Dyer in Here’s the real story of Australian debt explain why Australia's debt is not a problem. They highlight that if Australia had tried to maintain surpluses during the GFC the country would probably have gone into recession. They also have concerns about future Governments:

The danger, as the continuing depression in Europe illustrates, comes if politicians take seriously the sort of cant about debt pushed by News Ltd and start treating budget outcomes and debt reduction as ends in themselves, rather than tools of economic management. A fiscal policy that goes beyond addressing the structural problems of our tax and spending frameworks to a cut-debt-at-all-costs policy not merely has the potential to drive the economy into recession, but it would risk thereby increasing what little debt problem we have through reduced economic growth and tax revenues.

But Eslake doesn’t see much danger from austerity-driven politicians. Instead, he is concerned that an incoming Coalition government, should one eventuate, will repeat the mistakes of the Fraser years and fail to use its position to drive necessary fiscal discipline. “Like the Fraser government, an Abbott government may be divided between a leader who distrusts markets, has little interest in economics and is actually contemptuous of economists, a National Party that has reverted to its traditional agrarian socialism, and reformist liberals like Hockey, Robb, Turnbull and Sinodinos.”

As it turns out, the world of debt is a lot more complicated than journalists and editors might have us believe.

American health care costs compared

Ezra Klein in 21 graphs that show America’s health-care prices are ludicrous highlights how much more expensive the US health system is compared to other developed countries.

457 Visas

457 visas have been in the news lately. Here are a couple of articles on the topic:

Peter Mares, adjunct fellow at the Swinburne Institute for Social Research, in Temporary migration is a permanent thing discusses the benefits of the 457 visa and the implications for the permanent migration cap and processing queue as temporary visa holders seek permanent residence.

Tim Colebatch in The books are being cooked on 457 visas discusses how the visas are being abused just as happened with student visas.

Brett Winterford in Why we use 457s in Australian IT projects quotes an executive as explaining whey they use 457 visa workers:

1. There are generally insufficient skilled Australian IT workers available to ramp up large scale IT projects.
2. The cost of employing Australian resources, even if you can find them, is very high in relation to the rates available via third party companies.

Sylvia Pennington in Employers want a 'cheapie, just arrived off the boat', Aussie IT workers told quotes IT workers as saying that employers are using 456 and 457 visas to cut staffing costs and undercut local businesses when tendering on outsourcing contracts.

Turnbull on Abbott's climate change policy

Abbott's climate change policy is bullshit is an old op-ed by Malcolm Turnbull on Tony Abbott's climate change policy. Since it was written the Coalition has released its Direct Action policy. However, much of the criticism still stands.

Global warming is accelerating

Dana Nuccitelli writes in In Hot Water: Global Warming Has Accelerated In Past 15 Years, New Study Of Oceans Confirms that global warming is actually increasing with much of the warming taking place in the deep ocean:

Perhaps the most important result of this paper is the confirmation that while many people wrongly believe global warming has stalled over the past 10–15 years, in reality that period is “the most sustained warming trend” in the past half century. Global warming has not paused, it has accelerated.

The paper is also a significant step in resolving the ‘missing heat’ issue, and is a good illustration why arguments for somewhat lower climate sensitivity are fundamentally flawed if they fail to account for the warming of the oceans below 700 meters.

Most importantly, everybody (climate scientists and contrarians included) must learn to stop equating surface and shallow ocean warming with global warming. In fact, as Roger Pielke Sr. has pointed out, “ocean heat content change [is] the most appropriate metric to diagnose global warming.” While he has focused on the shallow oceans, actually we need to measure global warming by accounting for all changes in global heat content, including the deeper oceans. Otherwise we can easily fool ourselves into underestimating the danger of the climate problem we face.

Krugman on Cyprus

Paul Krugman has now written several articles on the current financial crisis in Cyprus.

In Hot Money Blues he ponders whether we might see a move to increase limits on international capital flows.

In Cyprus, Seriously he suggests that the best thing for Cyprus to do is to withdraw from the Euro.

Artic sea ice loss causing extreme weather in Europe

John Vidal writes that Scientists link frozen spring to dramatic Arctic sea ice loss.

Soil carbon sequestration costs $80 per tonne of CO2

Actual viability of soil carbon sequestration for farmers studied looks at work by UWA researchers into estimating the impact of using soil carbon sequestration to mitigate carbon emissions:

NEW UWA research looking at the economic impacts of implementing soil organic carbon (SOC) sequestration methods into farming practices, is showing that these impacts may prove impractical for farmers.

...

The authors found that while altering certain practices can be used to increase carbon sequestration it is costly and farmers would require high levels of compensation to make it a viable option.

By modeling the cost of these practices researchers estimate the profit loss for each additional tonne of CO2 stored on the model farm was $80.00 which is far more than the initial buying price of $23.00 per tonne under carbon tax legislation.

A/Prof Kragt says there are also a number of other barriers for the implementation of many practices of carbon sequestration.

“There are a lot of opportunities to increase soil carbon but pretty much most of those are categorised as conservation practices and those conservation practices won’t be eligible for carbon credits under additionality”, A/Prof Kragt says.

Additionality is the requirement that any practices implemented create additional sequestration or reductions in emissions than would have occurred under a business as usual scenario.

In summary, Direct Action will cost $80 per tonne.

Irrational nonsense - a Venn diagram

The Venn Diagram of Irrational Nonsense (from https://twitter.com/Adenovir/status/315652686995390466/photo/1):

Using The Wire to explain horizontal fiscal equalisation

In The Wire and horizontal fiscal equalisation Matt Cowgill uses examples from the HBO series The Wire to explain why we have and need horizontal fiscal equalisation:

It’s this sort of ruthless indifference to poorer areas that underpins the American approach, illustrated so vividly on the Wire. I’m not claiming that a recalibrated Commonwealth Grants Commission funding formula would lead us to a situation like Simon’s Baltimore, but I am suggesting that any deviation from the principle of citizens’ equal entitlement to government services would be a disastrous and repugnant step, however tentative, in that direction.

Renewables may be reducing power prices in South Australia

Dylan McConnell, Research Fellow at University of Melbourne, writes in Power of the wind – how renewables are lowering SA electricity bills that:
Renewable energy sources such as wind and solar power appear to be the impetus behind a South Australian proposal to substantially drop electricity prices, just as other states are hiking theirs.
...
And while it is not specifically acknowledged in the determination, this may be the first time the “merit order effect” of renewable energy sources can conclusively be seen flowing through to consumers in Australia.

Mark Lathams' Quartely Essay - Not Dead Yet

The latest Quarterly Essay features Mark Latham's Not Dead Yet: Labor's Post-Left Future. As the Quarterly Essay in not free I am unlikely to read it. There have been some positive reviews on Latham's essay, and a few critical analysis.

Matt Cowgill's Back to the future with Mark Latham’s Quarterly Essay concludes with:

The essay isn’t all bad. I applaud Latham’s goal, announced in the first chapter, of producing a work that is more focused on policy proposals than on blood-letting and carping from the sidelines. I do, strange as it might seem, agree with him about many aspects of policy. Labor has always been a pragmatic party, a party that seeks to govern. It’s not a dogmatic party, driven by purist ideology. Latham has that right. I think that Labor was right to float the dollar and to pursue many of the more market-oriented reforms it has implemented over the past three decades.But I think that Latham is wrong to miss the other half of the picture, Keating’s view that if people “fall off the pace you will reach back and pull them up.” Some members of the Clause IV generation are too keen to leave behind central elements of the centre-left agenda.

Mark Bahnisch, who seems to have had a run in with Latham in the past, isn't a fan of the essay. His post Mark Latham Redux: Just a step to the right? concludes with:

I’ve enjoyed a lot of Mark Latham’s occasional writing in the Financial Review and in Crikey, but I don’t think Australian Labor has a lot to learn from ‘Not Dead Yet’. Nevertheless, it’s a good thing that he’s written the essay, as debate among Labor people and sympathisers about its political philosophy and strategic direction is much to be welcomed.

In Mark Latham and the return of the underclass Don Arthur writes that Latham's plan to end poverty won't.

Latham on education

In The real education revolution Labor needs Crikey has an extract from Mark Latham's contribution to Quarterly Essay 49, Not Dead Yet: Labor’s Post-Left Future.

Politics of Narcissism

Matthew Yglesias in Rob Portman and the Politics of Narcissism notes that Senator Rob Portman of Ohio has changed his mind on gay marriage after learning that his son is gay.

But what Portman is telling us here is that on this one issue, his previous position was driven by a lack of compassion and empathy. Once he looked at the issue through his son's eyes, he realized he was wrong. Shouldn't that lead to some broader soul-searching? Is it just a coincidence that his son is gay, and also gay rights is the one issue on which a lack of empathy was leading him astray? That, it seems to me, would be a pretty remarkable coincidence. The great challenge for a senator isn't to go to Washington and represent the problems of his own family. It's to try to obtain the intellectual and moral perspective necessary to represent the problems of the people who don't have direct access to the corridors of power.

Senators basically never have poor kids. That's something members of Congress should think about. Especially members of Congress who know personally that realizing an issue affects their own children changes their thinking.

Recently Tony Abbott was on TV explaining how his attitude to women had changed because of his daughters (this seems to have been a rather slow change). Likewise his attitude to gays had changed after his sister's recent coming out. This is exactly what Yglesias is writing about in his article.

Probability of warming being due to random chance

Philip Bump in If you’re 27 or younger, you’ve never experienced a colder-than-average month quotes the National Oceanic and Atmospheric Administration in October 2012 as saying:

The average temperature across land and ocean surfaces during October was 14.63°C (58.23°F). This is 0.63°C (1.13°F) above the 20th century average and ties with 2008 as the fifth warmest October on record. The record warmest October occurred in 2003 and the record coldest October occurred in 1912. This is the 332nd consecutive month with an above-average temperature.

Bump goes on to write:

If you were born in or after April 1985, if you are right now 27 years old or younger, you have never lived through a month that was colder than average. That’s beyond astonishing.

Josh Voorhees in It Has Been Nearly 28 Years Since We Have Had a Colder-Than-Average Month quotes the above Bump article (although I couldn't find the reference to February 2012 in the article myself):

The last below-average month was February 1985. The last October with a below-average temperature was 1976.

I assume Voorhees came up with February 1985 by subtracting 332 months from October 2012 (the month referred to in the NOAA quote above. It's now March 2013. So last month makes 336 consecutive month with an above-average temperature.

What's the chance of that happening by random chance? Let's assume that there's a 50% chance that temperatures in any given month could be above average (it's actually slightly less than 50% because temperatures could be above, equal to or below the average, but it's close enough for our task and if anything will understate things). The equation is basically 2³³⁶. According to Microsoft Excel the probability is 1 in  139,984,046,386,113,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 (note Excel rounds numbers this large). The Windows calculator puts the probability at 1 in 1.3998404638611276315984014253553e+101. Either way that's a very large number.

So what does it mean? It means that it's not random chance that we have had 336 consecutive months with an above-average temperature. Something has caused it and all the evidence indicates that to a large extent it's us.

Higher taxes for the 1% might be a good idea

Chrystia Freeland in Putting the magnifying glass on the one percent writes about economic research on growing income inequality and the 1%.

One of the most striking findings will probably give comfort to the plutocrats: In contrast to previous generations, the super-rich today tend to have earned their fortunes rather than inherited them.

Steven Kaplan of the University of Chicago and Joshua Rauh of Stanford University in California studied Forbes magazine’s annual list of the 400 richest Americans. They found that in 1982 just 40 percent of these plutocrats had built their own businesses. By 2011, the super-rich had gotten much richer — the combined wealth of the Forbes 400 was $92 billion in 1982 and had surged to $1.53 trillion by 2011 — and many more of them had, as the meme of the 2012 U.S. presidential election campaign had it, built it themselves: 69 percent.

“This isn’t the ‘Downton Abbey’ rentier class,” explained Van Reenen, who has found a similar trend in Britain. “These incomes come from the labor market. You can say it is a triumph of the human capitalists over the physical capitalists.”

Interestingly it seems that these researchers are calling for higher taxes for the very rich:

Among economists who study the surge in pay at the top, it is pretty much a truth universally acknowledged that taxes should rise at the summit, too. “Economics would suggest that when you have big increases in inequality, the top tax rate should rise,” Van Reenen said. “That seems very right and very reasonable.”

The impact and the structure of higher taxes for the rich are a more complicated and controversial issue. Timothy Besley and Maitreesh Ghatak, both of the London School of Economics, make a robust case for higher taxes on bankers’ bonuses. Their work is theoretical, but beyond the campus green what may be particularly interesting is the way they frame the wider debate.

“Little undermines the case for a market economy more than the perception that there is injustice in the rewards that it generates,” they argue in a recent paper. “The greatest clamor for reform should come from those who support the market system.”

“We have shown that some form of bonus taxation in the financial sector is optimal above and beyond standard progressive income taxation,” they conclude. “We have identified a form of taxation that we believe makes the market system both fairer and more efficient.”

...

Emmanuel Saez, an economist at the University of California, Berkeley, who is one of the pioneering students of incomes at the very top, has offered an even more provocative suggestion. At the American Economic Association meeting, he argued that when tax rates at the top are low, “top earners extract more pay at the expense of the 99 percent.” Higher tax rates for the rich, he suggested, “reduce the pretax income gap without hurting economic growth.”

The global is still warming

YouTube has a video showing Global warming over the last 16 years. The accompanying website containing the methodology behind the video is at 16 years - Update and Frequently Asked Questions.

What we need to do to support teachers

Jane Caro in Hey politicians, leave those teachers alone argues that we need to make teaching desirable again if we want to attract the best and brightest:

If we really want to help our teachers, both new and experienced, to do their jobs to the best of their ability, we need to do some fairly obvious things. First, give the teachers in the toughest schools the support they need. Larger class sizes may be fine in nice middle-class schools, but in schools dealing with the really tough social and behavioural problems that generational poverty and marginalisation can cause, they will make everything worse. The really tough schools may need teachers aides, social workers and behavioural psychologists on staff to free teachers up to do their job.

We need to lower the workload on teachers, particularly for young teachers and those in tough schools, so that they can de-stress and get the support they need to survive. We certainly don't need to add to their stress with more testing or hoops to jump through.

We need to give them time to do specialist professional development and experienced mentors to coax them out of the fetal position and give them strategies to cope. (By the way, the current mentoring program is being scaled back.) Just as you can only help children develop effectively by supporting their mothers, so you only help children learn effectively by supporting their teachers.

If we simply raise the ATAR and the hurdles that must be jumped over before you can do a teaching degree, but continue to throw young teachers to the lions unsupported, all we will do is have an even higher churn. The brighter the teacher, the more choices they have, so if this is all we do, expect teacher retention problems to get even greater.

But if we support, nurture and respect our teachers, and acknowledge and reward the degree of difficulty they face in their extremely demanding jobs, we won't have to artificially fiddle about with ATARs and interviews. If we make teaching a desirable job again, the ATARs will rise all on their own.

Interesting article on stopping the boats

In Stop The Boats. Seriously. Damien Walker documents the tragedy of SIEV-221 and the reasons why the the Houston Expert Panel on Asylum Seekers, including Paris Aristotle recommended the policies they did. Walker criticises those who think that other policies are more humane.

This is a well researched and argued post by Walker. Recommended reading.

Our productivity is rising despite the rent seekers

In Productivity rising, but few notice Ross Gittins documents the increase in labour productivity over the last year. He also suggests that those who were previously complaining about a productivity crisis were more probably just business rent seekers.

You could call it the mystery of the disappearing productivity crisis. Last week's national accounts for the December quarter confirmed that, if we ever really had an underlying problem with weak productivity improvement, we don't have one now. By now, that's not such a mystery. No, the puzzle is why the people who made so much noise about the supposed productivity crisis show little sign of having noticed its evaporation.

...

Call me cynical, but it makes me suspect all the tears shed over productivity were little more than cover for an exercise in big-business rent-seeking. Shift the rules in my favour and it'll do wonders for the economy.

...

Big business is wedded to the happy notion that productivity improves when governments do things to make business's life easier. If these guys were a bit better versed in economics [as opposed to rent-seeking] they'd know the truth is roughly the opposite: productivity improves when governments either do things, or allow things to happen, that make life tougher for business.

So why had productivity improved? What did the Government do?

What the Gillard government did was do nothing to lower the high dollar - not that there was anything sensible or effective it could have done - and limit the budgetary handouts to only part of manufacturing industry.

The result was a lot of pressure on export-and import-competing industries to raise their efficiency (or, at the very least, cut costs) or go under. As well, a lot of other industries, including retailers and much of the media, have been subject to pressure on sales and profits coming from the digital revolution and structural change.

Gittins quotes Reserve Bank governor Glenn Stevens:

As we go through a period of transition from mining-led growth to stronger growth in the rest of the economy, he said, ''the pressures to adapt business models, contain costs, increase productivity and innovate will remain. But such adjustments are actually positive for longer-run economic performance.''

Gittins concludes his column with a great piece of advice:

Moral: Don't get your economics from overpaid chief executives - or crusading newspapers.

How to do pushups

Amy Rushlow - Are You Doing Pushups Wrong?

Poverty is another country

Alex Andreou in You’ll Never Live Like Common People talks about the almost 16 months he spent homeless and living in extreme poverty:

I was homeless from 3 January 2009 to 27 April 2010, and I can tell you - poverty is another country. You have either lived there or you have not.

This is not something I want to ever experience. Recommended reading.

Updated hockey stick graph shows unprecedented warming

Michael Marshall in True face of climate's hockey stick graph revealed has reported on research extending the hockey stick graph back to the end of the last ice age:

Earth's temperature is changing faster now than at any time since the last ice age, according to a new analysis of global temperatures spanning the last 11,300 years.

The study has produced the first extension of the notorious "hockey stick" temperature graph all the way back to the end of the last ice age.

It suggests that we are not quite out of the natural range of temperature variation yet, but will be by the end of the century.

...

Marcott's graph shows temperatures rising slowly after the ice age, until they peaked 9500 years ago. The total rise over that period was about 0.6 °C. They then held steady until around 5500 years ago, when they began slowly falling again until around 1850. The drop was 0.7 °C, roughly reversing the previous rise.

Then, in the late 19th century, the graph shows temperatures shooting up, driven by humanity's greenhouse gas emissions.

...

Over the Holocene, temperatures rose and fell less than 1 °C, and they did so over thousands of years, says Marcott. "It took 8000 years to go from warm to cold." Agriculture, communal life and forms of government all arose during this relatively stable period, he adds. Then in 100 years, global temperatures suddenly shot up again to very close to the previous maximum.

How fast temperatures change is the real issue of climate change, says Mann. "That's what challenges our adaptive capacity." Rapid change means farming practices must alter quickly, and preparations for extreme weather events must also be rapidly put in place.

Here's the updated graph from http://www.newscientist.com/data/images/ns/cms/dn23247/dn23247-1_300.jpg

Edit: The Atlantic reports on the same study: We're Screwed: 11,000 Years' Worth of Climate Data Prove It with a similar graph:

As does Scientific American: Global Average Temperatures Are Close to 11,000-Year Peak
And the ABC: Earth on track to be hottest in human history: study

Before and after of Arctic sea ice

Before and after: Arctic sea ice in 1984 and 2012 "NASA has released maps showing sea ice coverage of the Arctic in 1984 and 2012, after researchers revealed that sea ice melted to its lowest level on record this year". The interactive graphic in the above link compares the two.

Some scary global warming math

Take a look at the image below from How Many Gigatons of Carbon Dioxide...? on Information is Beautiful.

Australia's rising productivity

In Waking up to a productivity promised land Jessica Irvine looks at why Australia's productivity is now increasing and what we can do to ensure future increases (e.g. better infrastructure, breaking up cartels, removing artificial barriers).

Cheaper supermarket prices aren't all bad

People in business, and this includes farmers, need to understand that the world doesn't owe them a living. In Coles, Woolies and misguided outrage Michael Pascoe writes that it's no bad thing that Woolworths and Wesfarmers are screwing suppliers down as the benefits are then split between shareholders and customers.

How did predictions for the 2012 Australian economy do?

Not so good actually. Glenn Dyer and Bernard Keane Mythbusting the great economic claims of 2012. They also explain the difference between nominal GDP and real GDP:

Now: nominal is growth with inflation, real GDP is growth without inflation. Governments like nominal GDP to be higher than real GDP because it allows their revenues to rise faster than outlays; “fiscal drag” happens under high nominal GDP.

What happens when real GDP is higher than nominal GDP? Not much in the real world — but it does mean tougher budgets for federal, state and local governments.

So memo to Joe: there’s a simple reason. The national accounts showed the two main measures of inflation remained low. The implicit price deflator for household consumption rose 0.5% in the December quarter to be 2.4% over 2012. The GDP deflator — a broad measure of prices received by producers — fell 0.1% per cent last quarter to be 1.1% lower over the past year. This slowed growth in nominal GDP. That’s the strong dollar exerting downward pressure on prices and costs. And the smaller rise in nominal GDP underlines the strength of GDP growth in the economy because more of it came from higher demand than from inflation, which is surely a good thing — at least if you don’t have a government budget to run.

The shifting goalposts of anti-Keynesians in recent years

Brad DeLong on The Current State of the Macro Policy Debate: Musings on Paul Krugman vs. The Three Tweeters of Bruxelles.

Articles on the purpose of the Australian Labor Party

In Labor’s Best Strategy: Become A Party For True Liberals Andrew Leigh wrote an article suggesting that Labor should embrace the philosophy of social liberalism inspired by Alfred Deakin.

By contrast Tim Watts suggests in Labor’s Future Lies In Progressive Leadership, not Progressive Liberalism that Labor should embrace the political tradition of TJ Ryan "a path of consensus-driven, progressive electoralism".

An explanation for the demise of Ted Baillieu

In Right, said Ted, Liberal factional gangs have me done Charles Richardson explains some of the factional power plays in the Victorian Liberal Party.

Vectoring not a solution for NBN

In Blowing Thought Bubbles Like A Preschooler With Bubblegum the Sortius is a geek blog looks at Turnbull's proposal to use vectoring technology on ADSL instead of fibre.

Things are getting worse for the world's refugees

The Economist has an interesting article on the growing refugee problem the world faces: Flight to nowhere.

The decoupling of wages and labour productivity

In Labour’s shrinking share Matt Cowgill shows that real hourly labour income growth has fallen behind real output per hour growth. That is, over the last decade or so hourly wages have not kept pace with productivity growth. As a result labour share of national income has also fallen

House Republicans aren't accountable to the people, they're accountable to the Tea Party

In It’s almost like the Tea Party won Steve Kornacki looks at the ongoing tussle between the White House and Republican members of the House over the Sequester, the debt ceiling, etc. He concludes with the following:

It’s an outcome almost no one saw coming a year ago, and one made all the more remarkable by the fact that the most recent election seemed to represent a rebuke of the GOP and its embrace of Tea Party fiscal values.

I think Kornacki and many others are making a fundamental mistake in their understanding of the members of the Republican Party in Congress. Thanks to gerrymandering most Republicans in the House pretty much occupy safe seats. The greatest threat they face is not at the next election but in the preceding primaries. That's where the Tea Party, with its organisation and money, is at its strongest. House Republicans who do a deal with Obama that helps the nation but puts them offside with the Tea Party may well lose endorsement at the next election. On the other hand, not doing a deal no matter what the consequences for the nation could see them re-elected. What option do you think they'll take?

RICE Project

Finlay Macdonald in The Snow-Readers looks at the RICE project that is examining CO2 levels in drill cores taken from the Ross Ice Shelf.

Ice contains a “memory” within its compressed crystals that we can now recover and turn into climate records. From the savage Antarctic comes a team of ice-core drillers — and arriving in New Zealand imminently is their ice, possibly the strongest evidence yet of the vulnerability of great ice sheets to global warming.

Permafrost tipping point

Julia Whitty in We're Scarily Close to the Permafrost Tipping Point has an interesting map showing the extent of the permafrost in the Northern Hemisphere. If the permafrost starts melting we could see a massive release of methane and carbon dioxide that will significantly accelerate global warming.

Howard Government wasteful according to the IMF

Peter Martin reports in Hey, big spender: Howard the king of the loose purse strings that, according to the IMF:

Australia's most needlessly wasteful spending took place under the John Howard-led Coalition government rather than under the Whitlam, Rudd or Gillard Labor governments, an international study has found.

The future on journalism and outsourced education

Robert W. McChesney has written a rather bleak article on the future of journalism in Mainstream media meltdown! Basically he says that there's not enough money to support quality online journalism.

However, it's the summary that I want to highlight:

There is probably no better evidence that journalism is a public good than the fact that none of America’s financial geniuses can figure out how to make money off it. The comparison to education is striking. When manag­ers apply market logic to schools, it fails, because education is a cooperative public service, not a business. Corporatized schools throw underachieving, hard-to-teach kids overboard, discontinue expensive programs, bombard stu­dents with endless tests, and then attack teacher salaries and unions as the main impediment to “success.” No one has ever made profits doing qual­ity education—for-profit education companies seize public funds and make their money by not teaching. In digital news, the same dynamic is producing the same results, and leads to the same conclusion.

Unfortunately there's nothing in the body of the article discussing corporatised education. Judging by the one paragraph above I think it's a topic probably worth an article in itself.

Graph of weekly ordinary time cash earnings distribution

Matt Cowgill posted the graph below to Twitter with the caption: 'One for the "$150k is a lot of money" file'. From https://twitter.com/MattCowgill/status/309089483612098560/photo/1

How "skeptics" view global warming

I think I might have posted this before:

From http://www.skepticalscience.com/pics/SkepticsvRealistsv3.gif

American conservatives have an ideas crisis

In American Conservatism’s Crisis of Ideas J. Bradford DeLong gives a brief history of conservative ideas then examines the floors with current ideas:

So what is the problem that America’s new generation of conservative critics of social insurance sees? It is not that raising poor people’s standard of living above bare subsistence produces Malthusian catastrophe, or that taxes and withdrawal of welfare benefits make people work, at the margin, for nothing.

For Eberstadt, the problem is that dependence on government is emasculating, and that too many people are dependent on government. For Brooks, it is that knowing that public programs make one’s life easier causes one to vote for non-Republican candidates. For Murray, it is that social insurance means that behaving badly does not lead to catastrophe – and we need bad behavior to lead to catastrophe in order to keep people from behaving badly.

The crucial point is that America’s conservative elites believe Brooks, Eberstadt, and Murray. To this day, Mitt Romney is convinced that he lost the presidency in 2012 because Barack Obama unfairly gave Latino-Americans subsidized health insurance; gave women free reproductive health coverage (excluding abortion); and gave other groups similar “gifts.” He could “never convince them that they should take personal responsibility and care for their lives.”

...

The problem for American conservatives is not their choice of candidates or the tone of their rhetoric. It is that their ideas are not politically sustainable.

Why you shouldn't drink too much coffee

Linette Lopez highlights 10 Things That Drinking Too Much Coffee Can Do To Your Body.

Climate change debate flowchart

A handy tool: How to Win Any Climate Change Argument.

Video showing wealth inequality in the US

This video is apparently going viral: Video on Wealth Inequality in the U.S.

Alpine glacier changes shown over 100 years

Repeat photos of Vadret da Morteratsch and Vadret Pers shows the decline in glacier size over the last 100 years.

New monetary trilemma?

The Economist looks at an interesting issue in The low rate conundrum:

LONGER-TERM interest rates have been low for quite some time now across much of the rich world, and there is little sign of an upturn any time soon. This is disconcerting. As Ben Bernanke put it in an interesting speech delivered Friday, there are two reasons to worry about low long-term rates: that they'll rise and that they won't. As rates remain low, financial market participants may be encouraged to "reach for yield", by taking dangerous risks and leveraging up. Alternatively, if rates rise sharply then there could be large financial losses in the system. As Mr Bernanke notes, the two risks are mutually reinforcing; reach-for-yield behaviour may increase exposure to losses in a rising-rate world.

...

But we should also anticipate that longer-run real growth rates may be higher given higher inflation. Why? Because we have learned that the odds of hitting the ZLB at low-inflation rates are greater than many anticipated prior to the crisis. And because we have learned that the Fed systematically under-responds to demand shortfalls when stuck at the ZLB, because it has concerns about the risks of unconventional policy. Higher inflation therefore implies fewer, shallower recessions and faster recoveries.

It is perhaps premature to declare the existence of a new monetary trilemma, that over the medium-term central banks can choose at most two of the following: low inflation, low unemployment, and financial stability.

Labour productivity increasing

In Why cutting wages is a fool’s way to boost the economy Malcolm Farr notes that recent declines in productivity are entirely capital driven, employee productivity has actually been increasing.

The history of the issue is this: From 1993-94, labour productivity rose consistently in what Mr Parham called “very, very strong output per hour worked’‘. Meanwhile, capital productivity was flat, meaning machinery, buildings and mines were less efficient.

There has been a big change in the past 10 years. Capital productivity has tanked, said Mr Parham, dropping 20 per cent since 2003-04.

“And it’s capital productivity that has been the drag on Australia’s overall productivity performance. Because you can see multi-factor productivity, which is often the key indicator of efficiency, has done nothing. If anything it has gone backwards,’’ he said.

And what did labour productivity do while capital efficiency tanked? In recent years it has risen 3.3 per cent a year. Over the same period capital productivity has fallen by 3.4 per cent a year.

The not very rational voter

The Gordon's Thoughts blogs has an interesting post: Voting against one’s rational interests. The blog argues that:

People make decisions and behave emotionally and justify their decisions and behaviour rationally!

The blog later makes the point the following point:

Framing and communication matter! It’s all well and good to cite long policy lists of achievement and what the data says in regards to how certain policies are working but if you aren’t dealing with people on an interpersonal level and there is no process of illustration or persuasion mechanism to get people to buy what you’re saying, it all falls on deaf ears.

I found it informative.

It's not a tax, you can't buy and sell a tax

In this memorable quote from Rob Oakeshott says:

Source https://twitter.com/TaodeHaas/status/307386638953222145/photo/1

CSIROh! shown to a toxic mix of conspiracy theories and antisemitism

In Toxic legacies: Malcolm Roberts, his CSIROh! report and the anti-Semitic roots of the “international bankers” conspiracy theory The Watching the Deniers blog systematically tears apart the Malcolm Roberts written CSIROh!. Malcolm Roberts is project manager for the Galileo Movement - an organisation that denies the existence of human induced global warming.

According to parts of the climate sceptic movement, the world is not as it seems.
The CSIRO is a tool of international bankers, who over the past century have also orchestrated every major financial boom and bust since 1913. The United Nations was created at the urging of international bankers, who are using it as a vehicle to usher in a New World Order.

The Rockefeller and Rothschild families have been working behind the scenes for centuries manipulating events. These same banking families instigated both the First and Second World War in order to profit from the chaos. Every Australian Prime Minister of the post-War period – except John Howard – was a Fabian-socialist-Manchurian candidate.

Or so claims Malcolm Roberts, project manager for the Alan Jones sponsored Galileo Movement .

...

Background: the perceived antisemitism of Roberts conspiracy theories

For those readers not familiar with Roberts, he is the project manager for the climate sceptic group the Galileo Movement. The mission of the Galileo Movement is to see the “carbon tax” repealed and to cast doubt on the science of climate change.

Last year in an interview with Sydney Morning Journalist Ben Cubby Roberts claimed a cabal of international bankers were behind the climate change “scam”. This revelation ultimately lead to conservative columnist Andrew Bolt repudiating both Roberts and the Galileo Movement due to the implied whiff of antisemitism of his claims.

Since then Roberts has clearly been smarting, and in CSIROh! he attempts to set the record straight and vindicate his claims.

However, CSIROh! is not an ordinary report. In it Roberts creates an alternative history of the world, in which the Rockefeller’s and Rothschild’s have been working behind the scenes to wreck and profit from financial chaos, incite major wars and build the foundations of a tyrannical world government.
Basically the blog shows that CSIROh! is built upon a web of absurd, and often contradictory, conspiracy theories and anti-semetism.

Trade deficits forever

Matthew Yglesias makes the point that America Can (And Will!) Run a Trade Deficit Forever as Australia has successfully done.

The free market is not a god to be worshipped

In The Sequester's Market Utopians Adam Gopnik argues that the free market is not a god to be worshipped but a tool to be used when it works. He argues that some services (e.g. health, opera, the US Postal Service) are not best left to the markets. He makes this great point:

Society is about running at a loss, because profit and loss are, above all, human terms to be given a human measure. Societies run at a loss so that their citizens can live at a profit, in productive comfort.

The NBN vs the Coalition's proposal

In The vast differences between the NBN and the Coalition's alternative Nick Ross has written a detailed comparison of the Government's NBN and the Coalition's proposal:

The Coalition's broadband policy slogan states that they will "Complete the current NBN cheaper and faster." This simply isn't true.

Ross goes on to justify this statement in great detail. Whilst Ross comes across as a little on the strident side (and I'm not sure the suggested savings in health costs would ever eventuate) I think his argument is essentially correct.

5 false political assumptions

In 5 False Assumptions Political Pundits Make All the Time Molly Ball analyses work published by political scientist Morris Fiorina. The five false assumptions are:

1. The electorate is not "polarizing." It's "sorting."
2. Candidates change more than voters do.
3. Independents aren't partisans.
4. "Division" is easy to overstate.
5. Campaign ads really, really, really don't make much difference.

This is an American article and the rules reflect the US political system. However some of it holds true for Australia. Worth a read.

A good article on American debt

Nobel laureate Robert M. Solow, emeritus professor of economics at the Massachusetts Institute of Technology,explains why US Government debt does and doesn't matter: Our Debt, Ourselves.

Why Christopher Pyne is wrong to claim the current education funding model works

In Why Christopher Pyne should go back to school Bernard Keane applies the blowtorch to Opposition Education Spokesman Christopher Pyne's claims that the current funding model works.

The entrenching of privilege

In The Ego Behind Anti-Welfarism Ed Butler has written an interesting article on they way "Australia is actively entrenching wealth and privilege, to its own long-term disadvantage":

This ego manifests itself in an archetype which no doubt we’re all familiar with. The successful child of privilege who ‘earned’ all of their success. Born into a probably white, reasonably comfortable family in a reasonably comfortable, perhaps even well-off, part of town.

Good school, stable family, probably a little socially conservative, almost certainly not a rebel. Good school led to good uni, and now they’re a solicitor, banker, accountant or management consultant.

It could be the kid born into privilege who is sent to the best schools, with a stable family, and has friends with equally happy households.

It could be the woman born into the family that owns the bulk of the Pilbara.

Of courseNo doubt they’ve worked hard to get where they are, but the ego arises in their belief that their success is entirely attributable to their hard work and smarts. It’s the logical fallacy made famous in The West Wing – ‘post hoc, ergo propter hoc’. In short, ‘A’ happened, then ‘B’ happened, hence ‘A’ must have caused ‘B’, ignoring the myriad ‘C’s’ that also contributed.

To quote a US President, they didn’t build it.

....

But once embedded, this mentality colours everything. Voters feel that those worse-off than them deserve minimal support, while any attempt to limit their own access to the public teat is merely tossing obstacles in the path of their hard-won successes.

It seems we need our sleep

In Sleeping less than six hours a night skews activity of hundreds of genes Ian Sample reports on new research indicating that "Genes affected by lack of sleep include those governing the immune system, metabolism and the body's response to stress".

Greg Barns on Julia Gillard

In Media should play fair with PM, former Liberal Party adviser and candidate Greg Barns writes:

JULIA Gillard is no Paul Keating, John Curtin or Ben Chifley to name three of the best prime ministers this country has had in the past 75 years.

But nor is she so poor a performer and leader that she deserves the daily excoriation to which she is subjected by many in the mainstream or traditional media, by which I mean newspapers and electronic broadcasters both public and commercial.

...

The media campaign against Ms Gillard and her government can have only two foundations -- a dislike of a woman as prime minister or a nasty conservatism that seeks to protect privilege. Either one is unacceptable. We should call on our mainstream media to play fair or not play at all. It is far from healthy for the media in a liberal democratic society to become so unbalanced on matters pertaining to politics.

It seems a Mediterranean diet is good for you

In Mediterranean Diet Shown to Ward Off Heart Attack and Stroke Gina Kolata reports on a study showing a 30% reduction in cardiovascular disease amongst a high risk group after they changed to a Mediterranean diet:

About 30 percent of heart attacks, strokes and deaths from heart disease can be prevented in people at high risk if they switch to a Mediterranean diet rich in olive oil, nuts, beans, fish, fruits and vegetables, and even drink wine with meals, a large and rigorous new study has found.

It seems the American media have also picked up on this study. Lizzie Crocker writes Eat Like a Greek: The Mediterranean Diet That Could Save Your Life.

How the RBA maintains the cash rate

In an address to the University of Adelaide Business School (In The Reserve Bank's Operations in Financial Markets) Guy Debelle, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, explained how the RBA sets interest rates and deals with exchange rates:

I will talk about how the Reserve Bank actually implements the target interest rate set by the Reserve Bank Board at its monthly meetings. I will then describe how this interest rate, known as the cash rate, affects all the other interest rates in the economy, including mortgage rates, business borrowing rates and deposit rates. So that affects you one way or another.

I will also talk about the Reserve Bank's transactions in the foreign exchange market and finish with some thoughts about the exchange rate more generally.

Rules for running an economy

Greg Jericho, as usual, has some excellent advice in Listen up, Swan: five rules for running the economy.

Australia's increasingly inefficient and costly superannuation system

Mike Steketee has taken a detailed look at superannuation tax concessions in Unfair, inefficient and expensive: what went wrong with Australia’s superannuation system.

Why the R&D tax break needed reform

John Kehoe in Rent seekers ride the R&D gravy train explains how many businesses were exploiting the R&G tax break to claim deductions that were not really research and development (e.g. banks claiming on IT upgrades, mining companies claiming new roads and mines) and that would have gone ahead regardless of the tax break.

Change from below in North Korea

The Economist has an interesting article looking at how change is bubbling up in North Korea: Rumblings from below.

Governments need to prioritise spending commitments

In Step right up to a budget sensation Stephen Koukoulas has written an interesting article highlighting the need for Governments to prioritise spending commitments (as most people do not want to pay more tax):

So many demands for worthy projects, so few people willing to pay for them.

Having spent some time recently working in the Prime Minister’s Office, I got to see the difficulties and inevitable trade-offs involved in making these decisions. The decisions are not difficult because there is much wrong with most ideas, but rather the dilemma is how each initiative will be funded and whether there is another item on the agenda that has greater importance. Priorities, in other words.

Questions like, do we spend a few billion dollars on a fighter jets for the air force now or do we spend a few billion dollars on education? Should we raise the tax free threshold to boost workforce participation or spend money on private health insurance subsidies for those earning more than $150,000 a year?

Almost always, you can’t have both – or if you do, the funding offset takes money from someone or somewhere else in the budget. Much of the commentary about government spending, cuts and taxation cherry picks at only one side of this dilemma.

Articles analysing Gillard and Abbott speeches at the NPC

In January Prime Minister Julia Gillard and Opposition Leader Tony Abbott each gave speeches at the National Press Club. Someone following the news might have been under the impression the only item of note in the speeches was the announcement of the date for the next election.

In actual fact the Prime Minister had much more to say. Unfortunately, I have only come across three articles that offer any in-depth analysis of either speech:

Bernard Keane: Gillard’s speech — the other 3500 words
Ross Gittins: Gillard talks tough in election year
Greg Jericho: Easy solutions and complex realities

Recent articles on taxing superannuation

Peter Martin: Skewed. Why Labor is finally rounding on super tax breaks

Ben Eltham: Canberra's Would-be Super Heroes
Ben Eltham: No Country For Young Voters

The beige dictatorship

Charles Stross has written an interesting post on his blog: Political failure modes and the beige dictatorship. He basically argues that political parties will naturally transform into oligarchies. He concludes with:

So the future isn't a boot stamping on a human face, forever. It's a person in a beige business outfit advocating beige policies that nobody wants (but nobody can quite articulate a coherent alternative to) with a false mandate obtained by performing rituals of representative democracy that offer as much actual choice as a Stalinist one-party state. And resistance is futile, because if you succeed in overthrowing the beige dictatorship, you will become that which you opposed.

Stross also briefly covers why we end up with parties dominated by political apparatchiks and why many parties have similar policies ("did this policy get some poor bastard kicked in the nuts at the last election? If so, it's off the table").

One of the points he makes is:

The news cycle is dominated by large media organizations and the interests of the corporate sector. While moral panics serve a useful function in alienating or enraging the public against a representative or party who have become inconveniently uncooperative, for the most part a climate of apathetic disengagement is preferred — why get involved when trustworthy, reassuringly beige nobodies can do a safe job of looking after us?

I wonder if News Limited views the Gillard Government as "inconveniently uncooperative"?

Well worth a read.

Stross cites Michels's iron law of oligarchy in his post. That's also worth reading up on.

Gittins on baby boomers, demographics and work force participation rates

In Employment numbers game is not so simple Ross Gittins explains how the demographics of the baby boomer bulge is affecting the work place participation rate.

One thing Ross did not comment on in his article is the effect an aging work force will have on productivity (I have a feeling older workers may not be as productive as their younger colleagues).

Why Tasmania is the poorer state

Jonathan West documents the cultural issues that prevent Tasmania from succeeding in What’s wrong with Tasmania, Australia’s freeloading state?

Does Europe need a shared identity?

In Somewhere over the rainbow in a utopia called Europe Waleed Aly argues that "Europe must have a clear identity for its members to make a genuine commitment".

Government regulation of the Internet

A couple of interesting articles:

In You use a computer, you think you're safe... Peter Martin explains how violating the terms and conditions of a web site may be a criminal offence in the USA.

In For Our Information: Politicians Need To Let Go Suelette Dreyfus looks at why Governments want to control and regulate the Internet.

Do you have a child with autism - an iPad might help

Leslie Neely, Mandy Rispoli, Siglia Camargo, Heather Davis and Margot Boles had released the results of their study The effect of instructional use of an iPad® on challenging behavior and academic engagement for two students with autism. Here's the abstract:

iPads® are increasingly used in the education of children with autism spectrum disorder. However, few empirical studies have examined the effects of iPads® on student behaviors. The purpose of this study was to compare academic instruction delivered with an iPad® to instruction delivered through traditional materials for two students with autism spectrum disorder who engaged in escape-maintained challenging behavior. An ABAB reversal design was utilized in which academic instruction with an iPad® and academic instruction with traditional materials were compared. Both participants demonstrated lower levels of challenging behavior and higher levels of academic engagement in the iPad® condition and higher levels of challenging behavior with lower levels of academic engagement during the traditional materials condition. These results suggest that the use of an iPad® as a means of instructional delivery may reduce escape-maintained behavior for some children with autism. Suggestions for future research directions are discussed.

Are the Diaoyu/Senkaku Islands Chinese?

In The Inconvenient Truth Behind the Diaoyu/Senkaku Islands Nicholas D. Kristof argues that the Diaoyu/Senkaku Islands rightly belong to China.

Scott Morrison's original preselection

In Nasty saga you nearly missed Paul Sheehan writes that Michael Towke won preselection for the seat of Cook in 2007 polling 82 votes and beating a large number of candidates. Former state director of the NSW Liberal Party Scott Morrison received 8 votes and was eliminated in the first round. Four days after Towke won preselection a campaign started against him in the Daily Telegraph:

Four different Telegraph journalists, two of them very senior, wrote those four stories, so the campaign of leaks and smears was assiduous. There is insufficient space to detail all the claims made and disputed. Towke was portrayed as a serial liar, an exaggerator. He disputed every such imputation with factual evidence. After it was obvious his political credibility had been destroyed by these stories, he started defamation proceedings. A year of legal attrition ensued.

Shortly before the matter was to begin in court this month, Nationwide News paid and settled.

It is telling that experienced Telegraph journalists appear to have based their stories on sources they trusted, suggesting those doing the leaking were both senior figures and seasoned in dealing with the media.

Though Towke would eventually win his legal war, the damage had been done. The adverse media coverage set in train a reaction within the party to get rid of him. A second ballot was ordered, in which the balance of power was shifted away from the grassroots in Cook and to the state executive. The second ballot gave the preselection to Scott Morrison. Amazing. He had been parachuted into the seat over Towke's political carcass. Morrison clearly had backers who wanted him to get the seat. ''These guys were prepared to ruin my life,'' Towke said.

Towke sued the publisher of the Daily Telegraph who settled before trial:

On the eve of the trial, Nationwide came up with another offer: $50,000, plus costs, plus removing the offending articles from the internet and dropping the confidentiality requirement. On the advice of counsel, Towke accepted.

Both the major parties engage in dirty tricks when it comes to internal politics. It would be interesting to know who was behind it in this case though.

Edit 5th March: Nick Bryant's So Who the Bloody Hell Are You?: Scott Morrison

Interesting graph on real earnings growth for men and women

Matt Cowgill has published an interesting graph on Twitter showing real earnings growth for men and women working full time by decile for the period 1980 to 2005:

Maybe the Government should target family trusts

The ever interesting Michael Pascoe takes a look at tax avoidance via family trusts in Obeids' trust is the best ad for tax reform. He concludes with an interesting story:

A little while ago I had a chance social encounter with an accountant. As people will talk ailments with doctors, crime with police and scandal with journalists, chat fell to occupations and structures. The accountant was a little perplexed that I operate as a sole trader with no company structure, let alone a family trust.

He suggested I really should consider setting up a trust as I could save several thousand dollars a year in tax, after the initial set-up costs. He said I'd have no trouble meeting the three ATO legitimacy tests – the third of which was that the trust wasn't being set up to avoid tax.

On JFK and Cuban missile crisis

Articles on JFK and the Cuban missile Crisis:
Martin McKenzie-Murray: Cult of celebrity feeds our hunger - and our gullibility

Richard Chirgwin takes apart the Daily Telegraph on spectrum costs

In Wireless spectrum scare-story: $400 per year per user? Richard Chirgwin finds the Daily Telegraph wanting when they claim that the Government's spectrum floor price will cost broadband users $400 per year. Mind you this should hardly be surprising given that surveys regularly show the Daily Telegraph to be the least trusted newspaper in Australia.

What triggers changes in macroeconomic thought?

Simon Wren-Lewis ponders the question of whether history of macroeconomic ideas is a series of reactions to crises in Misinterpreting the history of macroeconomic thought. Really he's trying to address the rise of New Classical economics:

However it is too simple, and misleads as a result. The Great Depression led to Keynesian economics. So far so good. The inflation of the 1970s led to ? Monetarism - well maybe in terms of a few brief policy experiments in the early 1980s, but Monetarist-Keynesian debates were going strong before the 1970s. The New Classical revolution? Well rational expectations can be helpful in adapting the Phillips curve to explain what happened in the 1970s, but I’m not sure that was the main reason why the idea was so rapidly adopted. The New Classical revolution was much more than rational expectations.

He goes on to write:

The New Classical revolution was in part a response to that tension. In methodological terms it was a counter revolution, trying to take macroeconomics away from the econometricians, and bring it back to something microeconomists could understand. Of course it could point to policy in the 1970s as justification, but I doubt that was the driving force. I also think it is difficult to fully understand the New Classical revolution, and the development of RBC models, without adding in some ideology.

He concludes:

While I see plenty of financial frictions being added to DSGE models, I do not see any significant body of macroeconomists wanting to ply their trade in a radically different way. If this crisis is going to generate a new revolution in macroeconomics, where are the revolutionaries? However, if you read the history of macro thought the way I do, then macro crises are neither necessary nor sufficient for revolutions in macro thought. Perhaps there was only one real revolution, and we have been adjusting to the tensions that created ever since.