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Monday message board

September 12th, 2005

It’s time, once again for the Monday Message Board. Civilised discussion and no coarse language, please. I’m hoping to do a post looking at the four years since 11 September 2001, but in the meantime I’d be interested in your thoughts.

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  1. September 13th, 2005 at 22:43 | #1

    Pity the tourists had no time to form a buddy network!

    That is an interesting point Ros, though the authorities were doing what they thought was right – creating a large public awareness campaign to tell people they were on their own. The DVD was nearly finished.

    I suppose the civic society coped in the way we deal with bushfires – people had made contingency plans, they had fair warning as the hurricane flowed towards them, and hopped into their cars. They are used to the violence of nature. They had already worked out their civic networks.

    And there was no choice about staying, unlike our position with fires where you can save your home if you keep your nerve. I am still surprised so many people left their pets. And what about all those cars still in town to get washed around?

    You are putting aside the question of whether the government should have agreed to evacuate everyone. The decision created, as you say, the situation in which civic groups took up the responsibility, and there are pretty good reasons for doing that. It worked at the necessary level of detail, in a society full of cars.

    But within this framework, the big issue presumably in leaving was security. By not evacuating the people without cars, the government created a situation where the surviving property of the evacuees was at risk. In this situation its the crooks and the crazy people who stayed, as well as the simply poor.

    There are stories that AMTRAK offered trains before Katrina and were turned down. Aside from that, I suppose the rational strategy to deal with those too poor to evacuate themselves – assuming you can’t do it because there aren’t enough buses – is to make sure you have food and water dumps, and a continuing police presence.

    But by any criteria, they certainly failed badly by leaving the tourists, the sick and the old to fend for themselves. That was an unmitigated humanitarian disaster.

    I was particularly struck by some remark in the blogosphere about someone describing loading their ancient car and driving away from the city. But no-one had any cash, or viable credit cards. Broke, you see. They made it to a petrol station, and some stranger just stood there and paid for their petrol, and the next five people – all I presume low on the necessary readies.

    A lot of people in that town lived on a fine line financially. There was another moving note on the times-picayune website where someone left the position of their car and where she hid the key, once she realised the town was filling up with water. And another blogger who got out because a friend gave him the directions to the truck in his garage, and where to find the keys.

    But I think the idea of simply providing a car based escape plan and leaving it at that is completely alien here. Even in the bushfire country I know of there are well marked survival and evacuation points.

  2. September 13th, 2005 at 23:51 | #2

    Yes UM — you will pay more tax. Because you earn more money. That is a good thing.

    Consider an example.

    without company — $100 invested. 10% return. Get $10. Pay 50% tax. Get $5. Reinvest. $105 invested. 10% return. Get $10.50. Pay 50% tax. Get $5.25. Take out all profit = $10.25 after two years.

    with company — $100 invested. 10% return. Get $10. Pay 30% tax. Get $7. Reinvest. $107 invested. 10% return. Get $10.70. Pay 20% tax on old income ($2) and 50% on new money ($5.35). Take out all profit = $10.35 after two years.

    Trust me. Lots of people do this.

  3. September 13th, 2005 at 23:52 | #3

    And that tax reform 30/30 (30% tax, $30k tft) idea is brilliant… who thought of that? :)

  4. SJ
    September 14th, 2005 at 00:10 | #4

    John Humphreys says:

    And that tax reform 30/30 (30% tax, $30k tft) idea is brilliant… who thought of that?

    I note that your link says:

    I first wrote about this policy proposal in 2004.

    So I guess that the answer is Paul Keating, some 20 years or so before you thought of it. John Hewson, some 15 years before you thought of it would also be an acceptable answer.

  5. observa
    September 14th, 2005 at 01:53 | #5

    Nice debate about income tax guys. Defining true income, sheeting it home to the individual and then taxing that entity requires the wisdom of your maker and an awful lot of Santa’s helpers. Notice that total reliance on resource and carbon taxing does away with most of the problems. Pay as you consume and who cares whether it’s an individual, corporation, trust, religious or charitable organisation doing the consuming? The more you consume the more you pay and carbon taxing takes care of the equity bit. Has conservation benefits too. Shifts the costs of capital and labour more favourably toward the latter. No income tax and no company tax. What multinational in their right mind wouldn’t want to headquarter here if we offered them that? They could transfer price to their big heart’s content and ours too.

  6. September 14th, 2005 at 05:43 | #6

    SJ — I would be honestly fascinated to see previous 30/30 plans. Would you be so kind as to pass me some links? Pls feel free to e-mail me directly.

  7. GDP
    September 14th, 2005 at 07:16 | #7

    lurch,

    My memory is fuzzy but you are probably correct that there is more than one trust->company layer in there in order to get the 30%. I have heard that this kind of thing is the way many accountants/lawyers structure their affairs. I have also heard that the trust is not usually controlled by the ultimate beneficiary, but whether that is for tax or asset protection I don’t know.

    Are loans to trust beneficiaries subject to the same tax requirements as those to company directors?

    Of course all this is nuts: as has been pointed out a flat 30% across the board would fix it. And it has less to do with “efficiency” or other economic motivations and much more to do with our general sense of what is fair. Somewhere around 25%-30% marginal tax I basically don’t care what the govt does with my money – I’d rather go out and make more money than devote excessive energy to tax minimization. But start taking any more than that and I sure do care.

  8. Ros
    September 14th, 2005 at 09:31 | #8

    Professor Peter Leech was on Radio National Breakfast this morning discussing some of the economic impacts of terrorism. Two were, risky projects with high returns inhibited by terrorism and business seeking out and outsourcing to low cost locations, terrorism was affecting externalisation of activities. These effects would seem to be bad news for the developing nations.
    Also made the point, those large amounts of infrastructure that have to be protected but are very difficult to protect. With the costs going up to meet these demands expenditure in other areas is reduced, eg R & D, and this will have effects over time.

    It would seem reasonable to assume that the seminal event in making terrorism an issue of major importance was Sep 11. Don’t know how much of this happens in Australia but certainly post 9/11 US firms started training their employees travelling or working overseas on how to minimise their likelihood of being terrorist victims.

  9. Uncle Milton
    September 14th, 2005 at 09:43 | #9

    “Consider an example …”

    Without company, I get $5 income after tax in the first year and $5.25 after tax in the second year, NPV of total after tax income = $9.77

    With company, I get no income in the first year and $10.35 after tax in the second year, NPV of total after tax income = $9.41.

    I’d rather not have the company.

  10. Ros
    September 14th, 2005 at 09:50 | #10

    David those stories of decent people doing decent things, and there would be many more stories like that. And your argument that the authorities were also doing what they judged to be right and possible is a reasonable one on reflection.
    But instead of the decent people stories we are subjected to an avalanche of abuse from all seeking to blame and condemn. That the responses were insufficient inadequate and wrong, that the people of the USA have failed. What is this disaster being judged against, how do all know (with hindsight) that the horror was avoidable. I don’t wish to see the USA humbled, but some humility might cause them to look a little differently at this, that even the people of the most powerful nation in the world can be confronted with events they cannot manage (and as this was a weather event, not predict either). The first round of the game was Katrina was down to Bush and the failure to sign Kyoto (Congress and the Senate would have to be included in this). If the belief is that Kyoto is crucial and now was the time to say so, surely a more effective message would be, it is the case that the earth can throw up more than even you can manage, so consider that you may be wrong in thinking that even global warming is under your control. Or the evacuation orders came too late, you didn’t have the necessaries. That concerns re the cost of an unnecessary evacuation were without foundation (again with hindsight, now that it has happened) But Katrina was a Cat 3 until it made landfall or just before. Ha, Gotcha closes minds and allows for the learning of nothing.

    Yes many did do the right thing in authority as well. The bridge thing (police shooting over the head of evacuees trying to cross) is examined by a blogger in more detail and in the end it is hard to judge what was going on and whether the behaviour of those police was unreasonable under the circumstances. But the MSM had no problem deciding how to report it.

    So all the while the ordinary decencies, let alone the heroic behaviour, are ignored in a rush to excoriate.

    On the blogosphere you get a better sense of how the American people are rallying and helping. But even that kindness and giving is questioned. Heard one commentator saying, oh yes the people of Houston are being very generous but wait awhile and see what the impact of this influx of people from New Orleans means to them. It insulted the people of Houston and the people of New Orleans.

    The pet thing was awful. Darwin if I remember had the same problem. Don’t understand people who say listen old boy your pets aren’t relevant. We would not leave ours. Was nice to see the Guard taking out one old chap and his nine large dogs. Bet his ex neighbours who saw it wished it had been done years before.

    That the bastards were left to rape and kill and steal seems a reasonable proposition. Could they have been controlled? Sadly the image of the people of New Orleans was formed by the emphasis on these sods being temporarily enabled and empowered by the disaster.

  11. econwit
    September 14th, 2005 at 10:58 | #11

    SJ

    “I should point out, though, that if you did the same exercise via a super fund, you could end up with as much as $337,000 after tax. That’s an extra $172,000″

    If you are compounding @10% annually $100k for ten years you end up with $259K assuming no tax in the equation. $337k is 13% compounded pa. How does a supa fund get 13% when we initially are investing at 10% pa?

    JH

    30% tax: idea is brilliant who cares who thought of it.

    (30% tax, $30k tft): idea is brilliant

    GDP
    “But make it something like a $10K tax-free threshold + $10K for each dependent, and get rid of family tax benefits”: idea is brilliant too.

  12. GDP
    September 14th, 2005 at 13:35 | #12

    It’s well past Monday so rather late to change the subject, however I’d like to point people to a piece by Janet Albrechtsen in today’s Australian on the current state of left-wing academic publishing:

    http://www.theaustralian.news.com.au/common/story_page/0,5744,16595301%255E32522,00.html

    Thoroughly enjoyable read.

  13. September 14th, 2005 at 17:56 | #13

    re: Scott Parkin – what is it with Texans trying to run the world. Bush with his cowboy hat, and this other guy with his ‘non-violent’ balaclavas.

  14. September 14th, 2005 at 17:58 | #14

    re: GDP I found the following line in the Albrechtsen article interesting: “Dennis Glover talks of the “triumph of nasty right-wing populism, which cheapens our democracy”. Well, Latham (according to the Loner bio) scribbled CRAP all over Mr Glover’s work.

  15. SJ
    September 14th, 2005 at 18:53 | #15

    econwit says:

    How does a supa fund get 13% when we initially are investing at 10% pa?

    It all depends on the original source of the $100k. If it comes from after-tax savings, you can do better by salary sacrifice. $100k would be difficult to do in one hit, unless your salary was pretty enormous, but the idea still works if you divide the amount by 10 or 100.

    Basically, if you’re on the top marginal rate, salary sacrificing allows you to put almost twice as much into the super fund. You start with about $175k in the super fund, as opposed to $100k if you were investing in your own name or via the company. Plus, the fund’s earnings only cop a 15% tax rate.

  16. GDP
    September 14th, 2005 at 21:52 | #16

    Elizabeth: the left does seem to have far more problems with democracy than the right. How else does one explain their loathing for Howard – now 4 times democratically elected?

    I don’t remember Keating or Hawke being treated by the right with anything like the almost universal derision Howard receives from the left.

  17. jquiggin
    September 14th, 2005 at 22:10 | #17

    “the almost universal derision Howard receives from the left.”

    GDP, since you’ve chosen to make your comment on this left-wing blog, perhaps you’d like to back it up with specific evidence.

    I don’t recall any occasion on which I’ve treated Howard personally with derision, as opposed to vigorous criticism. I’ve always regarded him (unlike most of his ministers) as a significant political figure.

    Here’s a comparison of Howard and Beazley, noting “Howard is, and always has been, a much more substantial figure than Beazley in all but the most literal of senses.”

  18. jquiggin
    September 14th, 2005 at 22:14 | #18

    “But Katrina was a Cat 3 until it made landfall or just before. ”

    Wrong. Katrina was a Category 5 until it made landfall or just before.

    Honestly, I’m stunned by the unwillingness of the Bush cheer squad in the blogosphere to face facts on this one. Bush himself has admitted it was a stuffup, and even usually compliant MSM outlets like Fox have broken ranks, but all we get from the supposed factcheckers is “Good News from New Orleans”.

  19. GDP
    September 14th, 2005 at 23:02 | #19

    “GDP, since you’ve chosen to make your comment on this left-wing blog, perhaps you’d like to back it up with specific evidence”

    Ok, start with Philip Adams.

  20. Ros
    September 14th, 2005 at 23:08 | #20

    My apologies I didn’t read this carefully enough on physicsforum

    “It was Saturday evening, 7 PM and 10 PM, when NHC announced that Katrina was Cat 3 (with sustained with winds of 115 mph), but by 1 AM Sunday Morning Aug 28, Katrina had strengthened to a Cat 4 with sustained winds of 145 mph. That was 27 hrs before landfall (not 36 hrs).
    Landfall was Monday (Aug 29) morning just after 4 am. I posted some satellite images

    http://www.everything-science.com/i…g56430#msg56430

    Earlier on Saturday Katrina was just a Category 3.�

    The 4 am hurricane advise at that site was that it was expected that Katrina would make landfall as a Cat 4. and would move onshore at the southeastern louisiana coast just east of grand.

    Well that is what the geeks were saying, and they could disagree in a civilised manner.

    As my point was that to make the decisions (Nagin and Blanco) to require a mandatory evacuation with all the costs and dangers in an evacuation (there were reports of individuals who died as a result of the evacuation) it was a very difficult one for those two authorities to make. Hindsight makes the decision so obvious but it wasn’t that simple for them. As I said I didn’t read it carefully enough but even so up until 27 hours before Blanco and Nagin’s information would have been that it was currently a Cat 3, and then information at 1 am is difficult to implement. I would assume also that their information was that the levees could handle a Cat 3.

    Then they moved to mandatory evacuation.

    Thanks for the knee-jerk reaction and attack.. And if there is something abhorrent in finding that the people of New Orleans were not just victims or bastards rather that they showed courage and care and attacks on the local police may have been undeserved, that it is just “good news from New Orleans� well so be it.

  21. jquiggin
    September 15th, 2005 at 06:29 | #21

    Ros, apologies for picking on you. On rereading, your comments weren’t the kind of thing that I was objecting to, and I shouldn’t have criticised them in this way. I’ve just read a lot of stuff that is clearly motivated by the desire to defend Bush specifically, even in an instance where his and his Administration’s performance was clearly indefensible.

  22. September 15th, 2005 at 18:04 | #22

    This may amuse readers around here.

  23. what the
    September 15th, 2005 at 20:54 | #23

    so beazley stopped the interview.

  24. John
    September 15th, 2005 at 21:10 | #24

    UM… in my example the person re-invested their profits. As I have always claimed the benefit of a company is that it allows you to re-invest what is effectively `tax` money it makes no sense to use an example when people aren`t re-investing.

    So in my example — you are better off with a company.

    I agree that if you aren`t re-investing then there is little value in a company. But sometimes people re-invest, and so companies are a useful structure given our tax system.

    And if you don`t want to re-invest in one particular year, you can always have your company pay you an income. Well, directors fees are better because then you dont have to pay yourself super.

    Like I said — trust me. People do this. Agreed? Agreed. Good.

  25. craigm
    September 15th, 2005 at 22:36 | #25

    Tampa, children overboard, general panic over spike in refugee numbers coming by boat, Iraq, backing of government ministers and other liberal members found rorting the system. I can’t think of any reason why Mr. Howard should cop flack from the left.

  26. September 15th, 2005 at 23:49 | #26

    If Andrew Peacock was given eleven goes at a breathalyser, why? Were they seeing if it would come right, and if it had, would matters have proceeded? How many attempts do other people get?

  27. SJ
    September 16th, 2005 at 03:06 | #27

    I think you may be misinterpreting what happened:

    “The accused was asked to supply a sample of his breath 11 times, however failed to do so,” the statement said.

    Mr Peacock said he was unable to comply because he suffered diabetes and had undergone open-heart surgery several times.

    “On the 12th occasion, the accused was given a Form of Demand, and supplied a sufficient sample.”

  28. Ian Gould
    September 16th, 2005 at 21:31 | #28

    >I don’t remember Keating or Hawke being treated by the right with anything like the almost universal derision Howard receives from the left.

    True, I remember them being treated with hatred, endless abuse and accusations of treason.

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