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Monday Message Board

June 3rd, 2013

I’m back in Australia, catching up on a few things, and getting ready to resume normal blogging in a week or so. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

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  1. Ikonoclast
    June 3rd, 2013 at 07:27 | #1

    ABC News reports:

    “Queensland’s power prices will soar after July with a 22.6 per cent increase.

    The average household will pay an extra $268 a year for electricity.

    The Queensland Competition Authority (QCA) has blamed the spike mostly on rising network costs and state and federal government policy decisions.”

    The causes of these price rises need a full analysis. If all factors other than population growth remained unchanged, Australia’s electricity should slowly get cheaper. This would occur due to economies of scale. So, what is really contributing to the price rises? Does anyone have a comprehensive analysis or links to same?

    Possible contributing causes are;

    1. Privatisation and rising private sector profits.
    2. Alledged “gold plating”of the network (Some upgrades are necessary to meet higher demand peaks).
    3. Public sectors taking larger dividends also (possibly to cover other revenue shortfalls).
    4. Rising energy prices.
    5. Solar power and general mandating of “green energy”.
    6. The carbon tax.

    My reading on the topic suggests that all these factors might be contributory. However, it suggests that the main effect is coming from points 1, 2 and 3 and indeed that the above list is in order of importance from greatest impact to least impact on prices.

    It makes my decision to go solar (solar PV, 5.5 kW nameplate capacity, plus evacuated tube hot water system) look good. However, I am now expecting the Newman government to add a large feed-in connection charge to households like mine.

    Some analyses I have read suggest that solar power saves the network and other consumers money rather than costing it money even after accounting for the solar feed-in tariff bonus. It is suggested that solar feed-in in summer daytime peaks – coinciding with high air conditioning use – actually voids a significant portion of the need for very high cost peak dispatch from stationary generators.

    The same analyses suggest that home air-conditioning is a significant culprit in the rise of network costs.

    “About 80 per cent of the price rises experienced in the past three years are due to increases in the cost of the electricity network. … Estimates put the network cost of one standard 2-kilowatt air-conditioner at about $7000. Double that for a 4kW system. Because of the way bills are structured, this cost is spread across all consumers, bundled vaguely into “network costs”, even if you don’t have an air-conditioner.” – Herald Sun, Sep 6, 2012.

    The problem is the network capacity and peak generation dispatch capacity that have to be built to meet peak power demand even if overall power demand is flat.

    So, people sitting in air-conditioned rooms, opining that the carbon tax and other peoples’ solar panels are the cause of their high power bills, could not be more wrong. The causes are a little closer to home.

    Honesty note: I have a heat pump airconditioner in one room which I run on hot afternoons and evenings for about 60 days a year. My solar panels, on a sunny day, deliver more power than the air-con unit uses. At dusk however, I am probably contributing to the cost increasing peak. Later in the evening, I doubt it is an issue. But if we are honest, we can all see we play a role in creating these problems.

    However, I still strongly suspect that privatisation along with profit and dividend taking from the electricity system are the main causes of the price rises.

  2. June 3rd, 2013 at 15:12 | #2

    How about the latest Dilbert cartoon? I would be interested to hear JQ’s feedback on the beard correlation.

  3. Daniel
    June 3rd, 2013 at 16:17 | #3

    If, hypothetically, we capped peoples wealth to lets say a generous $5oomillion, with anything above that mark going back into the economy, how significant would that be? How much would that increase our GDP by etc…. since $42billion was enough for Australia to avoid a recession.

  4. Ikonoclast
    June 3rd, 2013 at 17:02 | #4

    @Daniel

    A start would be to cap individual wealth to $50 million for an individual. No individual needs even that much but that would do for starters at current values. Next step would be to cap individual income to no more than 20 times the minimum wage. Finally, input of capital should provide no more right to run an enterprise than input of labor. In the long run, we need full worker democracy. Until the workplace is democratic, the society is not democratic.

  5. Hermit
    June 3rd, 2013 at 17:06 | #5

    @Ikonoclast
    If you had a 6 kwh battery that would tolerate full discharge you could run the 2 kw aircon for 3 hours after sunset. That charge would engage about 6/4 = 1.5 kw of your current panels during the day. Then at the very least the power co should drop connection fees since you’ve eased the burden on them.

    However if you do the maths say 4m homes each had a battery worth $10k (similar to EV batteries) we’re talking a lazy $40 bn that needs to be repeated every few years as the batteries degrade. Some cheaper kind of energy storage or realtime generation is needed for low light conditions.

  6. John Quiggin
    June 3rd, 2013 at 17:09 | #6

    @P.M.Lawrence

    I’ve tried both treatments, and found no significant difference in the number of Nobel Prizes received.

  7. Sam
    June 3rd, 2013 at 17:39 | #7

    @Hermit
    EV batteries are more expensive than standalone, because they are light. Household storage can be much cheaper. A quick google search brings up 12V deep cycle batteries with 100Ah of storage for less than $200. Five of these would get you to 6Kwh for under $1000.

  8. Newtownian
    June 3rd, 2013 at 17:45 | #8

    A couple of new items from the wondrous world of superannuation bubbles.

    http://smh.domain.com.au/real-estate-news/boomers-put-super-squeeze-on-first-home-buyers-20130601-2nihw.html

    A friend alerted me to this interesting item and wondered how much this reflected the rise in self managed superannuation and do it yourself conservative investment (i.e. buy an investment property) – as well as the rise of SMSF facilitation currently being spruiked by banks and sundry – the ones at least who recognise that people are mightily annoyed with paying ‘financial advisors’ 20-30% of their aspirational income targets for the privilege often of losing money – and who recognised the need for a new spin suggesting they are on our side.

    As a result we see the older generation’s disillusionment with self managed superannuation stopping first home buyers (other than those with access to parental superannuation funds) while simultaneously enriching in-the-know developers.

    This phenomenon is not new at least in inflated inner city locations where price and value are different beasts. One wonders what gas is being used – helium (safe as houses?), nitrous oxide (laughing all the way to the climate change), or hydrogen (promising a Hindenberg size bang?)

    Separately an item from Blighty – http://www.guardian.co.uk/money/2013/jun/01/thames-water-raise-bills-inflation?INTCMP=SRCH

    Where else can these lonely Australian super funds go but into other people’s privatized infrastructure?

    Hawke and Keating sold privatized super to us as securing the nation’s future and prosperity but thanks to the contradictions in capitalism which they discarded as no long relevant to their neoliberal brand of socialism they appear to have created a monstrous self interest machine a version of which is probably undermining Europe and could now do something similar here – albeit alternately.

    A couple of day ago NC had a story on the ‘Dutch Disease’?
    http://www.nakedcapitalism.com/2013/05/richard-alford-the-dutch-disease-and-once-and-future-economic-crises-in-the-us.html

    While technically the term applies to booms in physical resources, it is interesting to ponder whether booms in financial resources have the same distorting effects?

  9. Jim Rose
    June 3rd, 2013 at 17:56 | #9

    @Ikonoclast Rawls opposed progressive income taxes and preferred progressive consumption taxes because it “imposes a levy according to how much a person takes out of the common store of goods and not according to how much he contributes”. A simple way to have a progressive consumption tax is to exempt all savings from taxation. Rawls excluded envy from considerations behind the veil of ignorance

    Consider the J.R. Rowling parable: A Scottish welfare mum decides to cheer her-self up and write a book, going to local cafés to do so to escape from her unheated flat. The initial print run was 1000 books, five hundred distributed to libraries. Today, such copies are valued between £16,000 and £25,000.

    Rowling is the first to become a billionaire by writing books. G.A. Cohen twisted and turned to argue that the fruits of Rowling’s mind, in effect, belonged to us all?

    How many more Harry Potter books would have been written if Cohen is right and his ideas applied, and the suggestions here on this blog for a maximum wage and wealth applied?

    Are you willing to risk explaining your answer to the young fans of Rowling’s books about how it would be part of a better world for them that these additional harry potter book were not written?

    Instead of just let people buy books if they want them, we must put up with constant interference with people’s liberties to prevent injustices from J.K. Rowling’s royalties getting too high.

    Liberty upsets patterns. Allowing individuals freely to use their equal wealth and income as they choose will inevitably destroy any distribution advocated by socialists and egalitarian liberals. If anyone evaluates how just a wealth distribution is based on how things end up, they must support constantly interfere with people’s lives.

    What happens to share prices when there is a surprise CEO resignation? Up or down? Apple share values went up and down in billions on news of Steve Jobs’ health.

    When Hewlett Packard’s CEO Mark Hurd resigned unexpectedly after a sex scandal, the value of HP shares dropped by $10 billion! His $30 million in annual pay was a bargain for his shareholders. Hurd was exploited by his employer – he was underpaid.

  10. June 3rd, 2013 at 19:07 | #10

    @John Quiggin

    I did prefer the “Ned Kelly” look.

  11. June 4th, 2013 at 00:19 | #11

    I see there’s been some rumblings about the censoring of comments and input on the, ironically named, ‘YourSay’ page of the “you Beaut-can’t argue with that-pure genius- shut up and don’t ask any questions” NDIS official page:

    Craig Wallace Comment 8 20 Mar 2013, 9:39 PM

    Hi folks – I’ve been really supportive of Your Say as its a good example of open engagement and this is why it is so disappointing that you removed the comments thread on the name. If we are at the centre of the scheme then it is not acceptable to censor what we have to say.

    The NDIS needs to be a co-design process and this action reflects the increasingly rushed, top down reality of the consultations and the design as its being experienced by people with disability.

    The new name does not reflect the person centred, individualised nature of the scheme which is about people pursuing empowered lives – not about care.

    Craig Wallace, President PWDA

    I’ll now accept apologies from all those who slammed me earlier for daring to question the wonder of this cynical neo-con scam. Apologies can either be in alphabetical order or descending order of vitriol. I’m not too worried, because it was always the affected I was more concerned about rather than advocating some kind of ‘roadmap’ to a free-market paradise.

  12. Ikonoclast
    June 4th, 2013 at 07:04 | #12

    @Jim Rose

    Actually, from a children’s literature point of view, it would have been better if J.K.R. had stopped at book three of the H.P. series. The quality declined markedly from that point.

    With regard to “important people” like Jobs or Hurd, don’t confuse changes in paper estimates of wealth with real value.

  13. rog
    June 4th, 2013 at 07:27 | #13

    @Ikonoclast

    However, I still strongly suspect that privatisation along with profit and dividend taking from the electricity system are the main causes of the price rises.

    Utilities approach the statutory authority IPART to increase rates. By their own admission IPART lack the skills to fully evaluate claims and give approval thereby underpinning dividends, which for the most part are exported.

  14. Ikonoclast
    June 4th, 2013 at 07:29 | #14

    @Megan

    The direction the NDIS takes will be another diagnostic of a system in trouble. The money calculus, the cash nexus (or should it now be called the debt nexus?) now controls everything through the agency of plutocratic and corporate capital. Nothing can be properly reformed if the entire economic and ownership system is not reformed.

  15. iain
    June 4th, 2013 at 10:04 | #15

    @Sam Wrong, and not even close.

    For starters, it is likely you mean kW, not Kw (whatever that is supposed to mean).

    Secondly, 5x 12 V 100 Ah will not hold up 6 kW for an hour. You will need at least 4 times that, and then need to be replacing every year to maintain that level of performance, in the real world.

  16. may
    June 4th, 2013 at 13:55 | #16

    Daniel :If, hypothetically, we capped peoples wealth to lets say a generous $5oomillion, with anything above that mark going back into the economy, how significant would that be? How much would that increase our GDP by etc…. since $42billion was enough for Australia to avoid a recession.

    there is that blasted “how-it’s-used”caveat.

    some people can do an awe-ful lot of damage with just a couple (or less)million.

    corporate capitalism didn’t do for the Aral sea.

    joe(watch yer back tones) hockeys’ rant about “govt should not be in business” would be nice if he could bring himself to admit that “business also has no place in govt.”
    privatisation after all,is sticky private fingers profiting from the public purse.

    our most recent experience of publically funded services being”outsourced”,where proper records have been lost and/or not collected is the NBN.

    the idea that money is a measure of merit?

    it’s not what they say it’s what they do?

    more like it’s not what they do,it’s the consequences of what they do.

    the consequences of asbestos use were known in the 1930s.

    and it was still used probably because the planners thought it would never be dug up.

    nevertheless fibre to the node is still a “pay more in the long run” and i wonder how many have realised if the coal coalitters get the reins only one fifth will get to be in the fast lane and the rest will have to pay $5000.oo to get out of the horse and buggy.

  17. Sam
    June 4th, 2013 at 14:56 | #17

    @iain
    Yes, I mean KW. I consider however, that pointing out errors in capitalisation to be a bit pedantic.

    On the more substantive point, why would you need 4 times that, replacing yearly? Having now read a bit more about lead acid batteries, it seems they can be regularly discharged to 50%, and expected to last 5 years. Granted that would double my estimate of batteries needed, to 10. Since I can find such batteries for $170, this means adequate storage would cost $1700, replacing every 5 years.

  18. Sam
    June 4th, 2013 at 14:57 | #18

    “to be a bit”=> “is a bit.” Just in case you decide to make it an issue.

  19. Fran Barlow
    June 4th, 2013 at 15:43 | #19

    @Jim Rose

    Interesting that you should cite JK Rowling on tax justice:

    I chose to remain a domiciled taxpayer for a couple of reasons. The main one was that I wanted my children to grow up where I grew up, to have proper roots in a culture as old and magnificent as Britain’s; to be citizens, with everything that implies, of a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles.
    A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug

    .

    Now I quite enjoyed the Harry Potter series. It’s not great literature but a pleasant read. That said, when I read this from Rowling, she climbed sharply in my estimation, and I felt a good deal better paying full price for each of her hardback volumes and going to see the movies. when they were released.

  20. Fran Barlow
    June 4th, 2013 at 16:11 | #20

    @Ikonoclast

    A start would be to cap individual wealth to $50 million for an individual.

    In principle, I agree (though if it were practicable, I’d set the bar much lower — perhaps 25 times AFTWE in the jurisdiction. In Australia that would put it about $1.2m, AIUI) I’m not sure it is practicable however, so the point is probably moot. You probably can’t coerce people to sell assets merely because they are too valuable, and even if you could, the results might be perverse. There would also be a good many loopholes to exploit.

    Next step would be to cap individual income to no more than 20 times the minimum wage.

    Again, this probably isn’t practicable. IMO, we ought to set the bar at about 25 times AFTWE or the wage of the lowest paid effectively full-time employee of the enterprise (including contractors) (whichever was the least). Any salary or emoluments above that figure would not be deductible for tax purposes. A surcharge would apply when the multiple reached 30 times the referent. That would scale up until at 50 times it was 100% of the differential.

    Finally, input of capital should provide no more right to run an enterprise than input of labor. In the long run, we need full worker democracy. Until the workplace is democratic, the society is not democratic.

    I agree, but this side of a society where the most important enterprises are run for and by the community, that seems improbable. I’d be pretty happy leaving the small trader and perhaps even the middle traders to run their own shows, with limitations on hiring and firing, working conditions and so forth. What is needed is a model for delivering goods and services equitably and efficiently in the foreseeable future. I can well imagine various kinds of state-backed but autonomously run co-ops in housing, waste collection and recycling, retail of essential services such as water, data, gas and power, or even the supply of groceries.

    It sounds good to me.

  21. Fran Barlow
    June 4th, 2013 at 16:20 | #21

    @Sam

    It’s also possible Sam that given the very large turnover in lead acid car batteries, that if a secondary market for them developed, both the initial design of such batteries and the business of reconditioning them might become more efficient and the price might fall.

    Does anyone here know what happens to lead acid batteries once they cease being useful in conventional vehicles? Genuine question.

  22. Ikonoclast
    June 5th, 2013 at 08:26 | #22

    Short answer, they are recycled.

    Longer answer, recycling still costs energy and other resources to recycle and prevent pollution emissions. However, if valuable materials are recovered recycling can be profitable.

    According to Wikipedia:

    “Lead–acid battery recycling is one of the most successful recycling programs in the world. In the United States 97% of all battery lead was recycled between 1997 and 2001. An effective pollution control system is a necessity to prevent lead emission. Continuous improvement in battery recycling plants and furnace designs is required to keep pace with emission standards for lead smelters.”

    A longer article is;

    http://en.wikipedia.org/wiki/Automotive_battery_recycling

    If 3% of lead is lost through recycling (assuming I guess an imperfect collection rate on old batteries) then about half of the lead is lost every 24 years. So, we would still need to mine lead even if growth plateaued. Mineable lead is a finite resource stock on planet earth. Eventually it must run out. Lost lead is scattered in unrecoverable tiny quantities throughout the environment.

  23. Ikonoclast
    June 5th, 2013 at 08:48 | #23

    @Fran Barlow

    The conceptual difficulty (for all of us) comes in imagining the full raft of laws, policies and social mores required to run a cooperative society rather than a plutocratic, oligarchic and corporate society. We would have to get there by transitional steps.

    Cooperatives work. They work well, giving ownership (in all senses) and more fairly distributed outcomes. Almost every family is a cooperative. A minority of dysfunctional families are not. Many family businesses are essentially cooperatives also. Where full cooperative businesses are created like the Alvarado bakeries in California, they work well, delivering high quality product and delivering great outcomes for the cooperative workers. Typically, the workers earn two to three times the income of workers in standard capitalist bakeries where the owners take a profit share. This gives some idea of the “take” of the capitalists and rentiers.

    A rule of thumb is that worker incomes would double if we became a cooperative society where workers owned and managed each business. The overhead or the “take” stolen by capitalists, rentiers and specialist managers is about half of society’s total production.

    http://en.wikipedia.org/wiki/Mondragon_Corporation

    The Mondargon model is good but not perfect. And Noam Chomsky has noted that “while it offers an alternative to capitalism, it is still embedded in a capitalist system which limits Mondragon’s decisions” (Wikipedia text).

    Chomsky – “Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you’re compelled to ignore negative externalities fixed on others.”

    Chomsky correctly identifies that one must go further (in the long ran) than just creating cooperative “chunks” in a capitalist martrix. However, creating these cooperative chunks is a transitional step on the journey.

  24. Ikonoclast
    June 5th, 2013 at 08:50 | #24

    In reply to Fran. (My last reply is in moderation for the severe crime of using 2 links, one a reply link.)

    The conceptual difficulty (for all of us) comes in imagining the full raft of laws, policies and social mores required to run a cooperative society rather than a plutocratic, oligarchic and corporate society. We would have to get there by transitional steps.

    Cooperatives work. They work well, giving ownership (in all senses) and more fairly distributed outcomes. Almost every family is a cooperative. A minority of dysfunctional families are not. Many family businesses are essentially cooperatives also. Where full cooperative businesses are created like the Alvarado bakeries in California, they work well, delivering high quality product and delivering great outcomes for the cooperative workers. Typically, the workers earn two to three times the income of workers in standard capitalist bakeries where the owners take a profit share. This gives some idea of the “take” of the capitalists and rentiers.

    A rule of thumb is that worker incomes would double if we became a cooperative society where workers owned and managed each business. The overhead or the “take” stolen by capitalists, rentiers and specialist managers is about half of society’s total production.

    http://en.wikipedia.org/wiki/Mondragon_Corporation

    The Mondargon model is good but not perfect. And Noam Chomsky has noted that “while it offers an alternative to capitalism, it is still embedded in a capitalist system which limits Mondragon’s decisions” (Wikipedia text).

    Chomsky – “Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you’re compelled to ignore negative externalities fixed on others.”

    Chomsky correctly identifies that one must go further (in the long ran) than just creating cooperative “chunks” in a capitalist martrix. However, creating these cooperative chunks is a transitional step on the journey.

  25. Sam
    June 5th, 2013 at 09:13 | #25

    @Ikonoclast
    Thanks for that article. I’m not sure Fran, I’ve heard that batteries can be reconditioned and used again, rather than simply being recycled, I don’t know what the cost of this would be though. Ikon, I assume that if lead became scarce enough, the economic incentive would arise to increase the recycling rate above 97%. I don’t know how much lead reserves the world has, how dispersed the discarded lead is, or how hard it would be to recollect it.

    My point was that the cost of a moderate amount of household grid storage is not that high, and that Hermit was being unduly pessimistic. $1700 replacing every 5 years doesn’t sound that terrible, and is less than the coming increases to the retail electricity rate in Queensland (supposedly justified by necessary upgrades to the grid brought on by airconditioning peak demand).

  26. may
    June 5th, 2013 at 11:51 | #26

    geez imanidiot .
    not the other one but the NBN

  27. Ikonoclast
    June 5th, 2013 at 12:19 | #27

    @Sam

    Yes, the whole electricty issue (and energy issue in general) is revealing the stupendous stupidity of neoliberal politics and of corporate power wedded to big coal and big oil.

    Our Qld minister for Energy and Water Supply made the outrageously stupid and insulting statement that people who have installed solar power pay no power bills.

    “I don’t believe that was the intent of the scheme and a debate must be had about who should pay what in regard to their power bills when you consider that a large number of people pay no power bill at all.”

    A household that installed (for example) a $10,000 solar PV system and subsequently, on balance, receives no net bill for network supply and also no net return (a parity position for the example), is still paying a power bill. (And this is ignoring the separate issue of solar hot water.) They paid $10,000 up front for their power generating capacity. Amortised and/or depreciated over 30 years and allowing for some maintenance costs this amounts to about $400 per annum. If we then allow for interest and/or opportunity costs on the investment at 6% per annum (a quite modest allowance), this is another $600 for a total of $1,000 per annum.

    Thus this household is paying $250 per quarter for its electricity not even counting its hot water costs. This household is most assuredly paying a bill for its electricity. But it is paying the bill to the suppliers and installers of solar PV and in interest to its bank where it probably borrowed the money to do it. (Or it is paying a bill in lost earnings – opportu nity cost – on saved monies deployed to install the solar PV system).

    Minister McArdle’s whinge, which is essentially that “this is not supposed to happen”, amounts to a statement that corporate energy generators profits were not supposed to be affected. He is implying that consumers should not be allowed to become producers because this interferes with large scale corporate profits. It undermines the whole neoliberal world view.

    There is good evidence to show that the solar feed in tarriff of 44 c per kWh (IIRC) is less than the cost of peak dispatch power which the generators would have to otherwise generate on hot days to meet air-con demand. Thus solar power generators are actually subsidising other users in that scenario.

    The ignorance, arrogance and crass populism displayed by McArdle is par for the course for neoliberal economics and its acolytes. McArdle had better never run into me in a street or corridor as I will give him a serious and sustained piece of my mind. (However, if TV cameras or mobile phone cameras are around and obvious I will bite my tongue and McArdle will be safe. Recorded “scenes” are undignified.)

  28. Jim Rose
    June 5th, 2013 at 18:44 | #28

    @Ikonoclast Mondargon is not a workers’ co-op. It has employees. It is a partnership whose trusted employees can, in time, apply for promotion to partner.

    Building societies, credit unions and some life insurance and power companies are or were mutually owned by their customers. Many hybrid organisations exist in ranging from joint ventures and agricultural seller and supermarket buyer co-ops to labour owned firms such as in most of the professions. Rarely do we see real cooperatives with all workers and only workers having equal ownership rights.

    Originally, most kibbutzim followed strict socialist policies forbidding private property; they also required near-total equality of wages regardless of differences in productivity, and in some cases, even abandoned the specialisation of labour.

    Kibbutzim are communities whose aim is equal-sharing. They are expected to unravel because of moral hazard and adverse selection. Other organisations subject to adverse selection and moral hazard are professional partnerships, co-operatives, and labour-managed firms because they are all based on revenue sharing.

    Like monasteries and convents, kibbutzim prevent people from fleeing through the communal ownership of property. You leave with the shirt on your back.

    Kibbutzim have persisted for most of the twentieth century and are one of the largest communal movements in history; 40% still run on communist principles.

    Ran Abramitzky is writing a book The Mystery of the Kibbutz: How Socialism Succeeded See http://www.stanford.edu/~ranabr/Abramitzky_book_presentation.pdf

    He found that high-ability individuals are more likely to leave kibbutzim. The brain drain would be worse if kibbutzim didn’t make it so costly to exit. Is this a familiar theme of socialism? Kibbutzim also put prospective members through lengthy trial periods.

  29. Jim Rose
    June 5th, 2013 at 19:09 | #29

    repost of post in moderation because of two links

    Mondargon is not a workers’ co-op. It has employees. It is a partnership whose trusted employees can, in time, apply for promotion to partner.

    Building societies, credit unions and some life insurance and power companies are or were mutually owned by their customers. Many hybrid organisations exist in ranging from joint ventures and agricultural seller and supermarket buyer co-ops to labour owned firms such as in most of the professions. Rarely do we see real cooperatives with all workers and only workers having equal ownership rights.

    Originally, most kibbutzim followed strict socialist policies forbidding private property; they also required near-total equality of wages regardless of differences in productivity, and in some cases, even abandoned the specialisation of labour.

    Kibbutzim are communities whose aim is equal-sharing. They are expected to unravel because of moral hazard and adverse selection. Other organisations subject to adverse selection and moral hazard are professional partnerships, co-operatives, and labour-managed firms because they are all based on revenue sharing.

    Like monasteries and convents, kibbutzim prevent people from fleeing through the communal ownership of property. You leave with the shirt on your back.

    Kibbutzim have persisted for most of the twentieth century and are one of the largest communal movements in history; 40% still run on communist principles.

    Ran Abramitzky is writing a book The Mystery of the Kibbutz: How Socialism Succeeded See http://www.stanford.edu/~ranabr/Abramitzky_book_presentation.pdf

    He found that high-ability individuals are more likely to leave kibbutzim. The brain drain would be worse if kibbutzim didn’t make it so costly to exit. Is this a familiar theme of socialism? Kibbutzim also put prospective members through lengthy trial periods.

  30. Daniel
    June 5th, 2013 at 21:58 | #30

    Regarding capping maxium wages, maybe we can take Mauritius as a guide where the top earner can only earn 8x the minimum earner, this is how I have heard it anyway.

  31. Jim Rose
    June 6th, 2013 at 23:14 | #31

    @Daniel Mauritius is a tax haven.

  32. rog
    June 7th, 2013 at 08:45 | #32

    Excellent exposé of climate change disinformation campaigns

    http://www.desmogblog.com/2013/06/06/campaigns-tried-break-climate-science-consensus

  33. Jim Rose
    June 7th, 2013 at 21:35 | #33

    Rog, a better round-up is at http://www.guardian.co.uk/science/political-science/2013/may/24/climate-sceptics-winning-science-policy by Roger Pielke Jr who argues that the basic flaw of those wanting to take action on climate change is there is a political will but not a practical way forward:

    The idea that higher priced energy can be used as a lever to transform the global energy system may work in abstract economic models, but fails spectacularly in real world politics. As Martin Wolf explains, “A necessary, albeit not sufficient condition, then, is a politically sellable vision of a prosperous low-carbon economy. That is not what people now see.”

  34. Jim Rose
    June 8th, 2013 at 09:08 | #34

    The Australian press council has just upheld that a complaint about the use of the word Ponzi scheme.

    the phrase ‘Ponzi scheme’ cannot be used to describe something unless it has ‘the essential characteristic of a Ponzi scheme, namely criminal fraudulence’.

    US social security is routinely described as a Ponzi scheme. None of these suggestions imply criminal fraud.

    If Ponzi scheme is out, many other colourful epitaphs about capitalism are next.

    It is dangerous to cast the first stone and make a complaint to press complaints bodies.

    Who will be next, and you cannot complain if it is eventually you. Vexatious complaints are easy to make.

    To quote Pastor Martin Niemoller in 1955:

    First they came for the communists,
    and I didn’t speak out because I wasn’t a communist.

    Then they came for the trade unionists,
    and I didn’t speak out because I wasn’t a trade unionist.

    Then they came for the Jews,
    and I didn’t speak out because I wasn’t a Jew.

    Then they came for me
    and there was no one left to speak out for me.

  35. Jim Rose
    June 11th, 2013 at 22:41 | #35

    Obama and the NSA are the victims of a political beat-up.

    what do you think signals intelligence agencies are doing if they are not tracking who phoned or emailed whom? spies spy on people.

    signals intelligence is a fundamental and lawful tool in fighting a war.

  36. John Quiggin
    June 12th, 2013 at 05:16 | #36

    I’ve deleted a number of posts (along with replies) which weren’t consistent with the policy of civil discussion.

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