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.