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Monday Message Board

March 5th, 2018

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

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  1. david
    March 6th, 2018 at 13:10 | #1

    Before the critical Senate Committee on Education and Employment, Cash attempted to shut Dougie Cameron up by threatening to nominate female staffers in Shorten’s office who were allegedly involved in “rumours” if he persisted with questions about her staff.
    Surely threatening a Senator with such nasty, irrelevant and unsubstantiated threats must be something in the nature of contempt of parliament. How much more is required before she is given the boot ?
    These were appointees by Cash and the public should know if they were appointed because of their political alignment. The resigning staffer who apparently admitted releasing information to the media of an impending police raid on the AWU was a Liberal hack. So too was Hagdkiss the head of the ROC who resigned after admitting to knowingly posting wrong information about unions’ rights of entry giving employers false claims to non-existent rights to deny the same. Cash endorsed taxpayers’ payments of $400,000 in legal fees for Hadgkiss to defend an action by the CFMEU when his defence was always doomed to fail as it did.
    It seems clear there is a pattern of bad governance by Cash at the public expense.
    ps. this contempt is part of the pattern of the Coalition like the Yarra Three in Hunt, Sukkar and Tudge being held in contempt of the Victorian Court of Appeal.

  2. BilB
    March 6th, 2018 at 14:58 | #2

    A libertarian commenter likes to take Joe Hockey’s line that 50% of taxes are paid by 10% of taxpayers. The commenters argument is “thank goodness for the rich people”. The fact checks out. But the sub fact is that the entry level income to the top 10% is $102,000 , and the second elephant in the room subfact is that 90% of Australian tax payers earn less than $102,000 , and most of them way less than that figure.

    So it is clear that the most Australians are not paying enough tax, and the reason why that is the case is that they are not earning enough to better contribute to the running of the country.

    There are a lot of reasons as to how this situation has developed and that is at least a ten thread series, but the glaringly obvious answer is to increase the minimum wage….by a lot. To the commenter and champion of the rich I said it is obvious that there is a clear cut case for a doubling of the minimum wage to $35 per hour. The sad fact is that we usually consider how far things can be cut rather than how far things can be advanced.

    Obviously this suggesting drew howls of condemnation from the commenter who projected business collapse. I disagree that there would be any other impact other than an increase in economic performance and an improving of governments fiscal positions.

    The one negative is that there would be an increase in house prices and to that I have created a solution for housing affordability in the concept of Capital Growth Restrained Property Titles.

    Shortly there will be a website up http://www.cgrpt.com that carries all of the information about what this new property title offers, why it is important, who it helps, and equally importantly the negative aspects of the title.

    I’m interested to hear what people think about increasing the minimum hourly wage to $35, particularly if they can quantify their reasoning.

  3. Greg Pius
    March 7th, 2018 at 07:46 | #3

    This is one of the most contentious areas of the whole theory of efficiency. The least cost optimum for long run variable average cost curves is used by management planning teams even today. Of course wages can be as high as sixty percent of total variable costs. this makes wage rates a prime target during efficiency drives. The current trend to force young workers only yearly contracts is an attempt to minimize wage cists. Housing for young workers is complicated by this workplace trend. Few banks will give mortgage loans to young people working on yearly contracts. You need to research this area to counter criticisms of relevance.

  4. Ernestine Gross
    March 7th, 2018 at 09:48 | #4


    The central theme in paragraph 1 provides yet another reason for striving to improve the outcome of math teaching. Perhaps additional funds should be made available for adult supplementary math education.

  5. BilB
    March 7th, 2018 at 09:51 | #5

    That is a very good point, GregP. I’ll add that to the CGRPT document. It is a fact that lower income individuals are more likely to be on short term or casual work arrangements.The sad fact is that people on the median income of the 90% of tax payers ($55,000 and below) cannot afford to buy a house on a single income.

  6. BilB
    March 7th, 2018 at 10:25 | #6

    Ernestine, I don’t think that math teaching would help the Libertarian. His real need is for an empathy transfusion.

    I invite you to look at the http://www.cgrpt.com website when it is up, and would appreciate your critique. The Capital Growth Restrained Property Title concept is intended to provide and expanding volume of affordable housing indefinitely without the need for direct government ownership or intervention.

    The way this is done is with a new property title which sums the value of a piece of land and the buildings upon it along with subsequent improvements and from the time of the titles creation that property appreciates in value at the CPI rate rather than the market rate. In that way that property thereafter retains its affordability relative to peoples spending power and incomes.

    The CGRPT concept argues that few people ever profit directly from the appreciation of value of their primary property, and therefore its intrinsic value is unimportant while they occupy it. One person took issue with this asking “haven’t you ever borrowed against your property’s value?”, “well yes, to buy the property!”. And that is the point it is really about affordability in the first place. The person who posed the question was on an income over $300,000 and was concerned about paying private school fees, and in the so doing was making the case for the need for CGRPT’s.

    There is a precedent to this initiative in Scotland where they make the salient point that under the open market model of property ownership benelovence towards those on low incomes is rare as such is cashed up at the first sale, and not passed on to the benefit of others.

    There are a lot of other aspects to this project which you will be able to learn about on the site, hopefully early next week.

  7. March 7th, 2018 at 19:20 | #7

    Great article in the New York Times today, thank you. The use by the media of labels like Millennials and Baby Boomers is a long source of irritation. As you say they are facile and an unhelpful way of analysing society or anything else- social classes of different generations have much more in common.

  8. March 8th, 2018 at 19:20 | #8

    Advert for a blog post on US gun control, suggesting a Tokugawa strategy of buying out the gunmakers ($5bn should be ample) and imposing restrictions by managerial fiat. A longish shot, but working only on demand has failed. Obligatory mention of the Australian buyback.

  9. Luke Elford
    March 9th, 2018 at 12:25 | #9

    The RBA has made quite a splash with its report about the effects of zoning on housing prices. Because journalists are economically illiterate, what the report actually finds is being wildly misreported. This no doubt pleases the RBA, which has become increasing defensive about the role of monetary policy in affecting house prices and is keen to direct people’s attention elsewhere. Under previous management, it was more candid about its role and generally produced the best analysis of housing of any organisation in the country.

    The RBA paper’s chief finding is something that is well known to those familiar with hedonic modelling of housing markets—while land is useful for putting a dwelling on, people don’t otherwise put much value on space. The last square metre of people’s properties doesn’t have much value to them. If you could somehow assemble these last square metres, in a frictionless, costless, riskless way (no holding costs, no developer profit) and avoid any need for extra infrastructure, you could produce an additional residential lot rather cheaply. The RBA argues, in essence, that it is zoning (rather than reality) which is preventing this process, forcing up the marginal cost of developing housing in existing suburbs by a huge percentage.

    In reality, the creation of additional residential lots is a development process that would generally involve purchase of an existing house for hundreds of thousands if not millions of dollars, demolishing or moving the house, augmenting infrastructure and then selling the lots. This process involves a multitude of costs and developers expect a healthy return for their trouble. Sometimes subdivision is allowed and sometimes it is not, and the RBA could have produced (ideally, through outsourcing of the work to people with expertise) feasibility studies that demonstrated cost savings that could be achieved in scenarios where subdivision is currently forbidden. This would have been a valuable contribution to the evidence base on housing in Australia. Instead, the RBA chose to publicise sensational findings which are basically meaningless.

    The RBA paper also includes a comparison of apartment prices and costs. But it’s flubbed the cost analysis by leaving out a whole lot of development costs called “soft costs”—again, the work needed to be outsourced to people who knew what they are doing. As I’ve noted in comments here before, it’s very clear that prices for apartments in Sydney are divorced from costs—and rezoning land for more apartments (and allowing denser development) would help here. But market transactions in Brisbane aren’t consistent with the idea of a sizeable wedge between prices and costs which the RBA paper claims.

    We need higher quality public and quasi-academic debate about housing in this country.

  10. March 10th, 2018 at 01:28 | #10

    Coal update. Coal Plant Tracker have updated their database to January 2018. It gives a world total of 209,566 MW of coal generating plants under construction. In January 2017 it was 272,940 MW, in January 2016 338,458 MW. That’s a 38% drop in two years, and it hasn’t stopped. Some of the plants have finished construction and gone into operation, but many have just been suspended.

    Oddly, the database shows no six-month reduction in India, which is hard to credit. The database lists five plants totalling 3.7 GW as under active construction that Sourcewatch lists as suspended. CoalSwarm are being conservative if anything.

    Sources: *****docs.google.com/spreadsheets/d/1W-gobEQugqTR_PP0iczJCrdaR-vYkJ0DzztSsCJXuKw/edit?usp=sharing, *****endcoal.org/wp-content/uploads/2017/03/BoomBust2017-English-Final.pdf

  11. Ronald
    March 10th, 2018 at 02:12 | #11

    James, that’s an interesting article on US gun control — nationalize the gun industry. I don’t feel optimistic about it though.

    There are something like 34,000 gun deaths a year in the US and something like 16 million guns sold each year. If each gun death has a cost of one million dollars and it was decided to recoup this from new gun sales it would add $2,000 to the cost of each gun. The amount could be weighted to reflect the morbidity that results from different gun types. So bolt action hunting rifles would probably still be fairly cheap, but pistols and semi-automatic rifles would be more expensive.

    Not that I think this is likely to occur.

  12. rog
    March 10th, 2018 at 04:36 | #12

    The most recent judgement and fine against the CFMEU shows that unions have not learnt anything about management. This is the second occasion where they have been fined >$800,000, there have been many other lesser fines.

    “The CFMEU is not entitled to any leniency,” he found. “They have demonstrated a complete disregard for obeying the law in the area of industrial relations.”

  13. Ikonoclast
    March 10th, 2018 at 04:58 | #13

    @Luke Elford

    Some US data from last decade concluded;

    “(1) The finished lot generally accounts for 20 percent to 25 percent, with half of that cost reflecting development costs.

    (2) Materials represent 25 percent to 30 percent of the total.

    (3) Onsite construction labor represents 20 percent to 25 percent.

    (4) General overhead and selling expenses are each about 6 percent.

    (5) Financing costs, under current low interest
    rates, are about 2 percent.

    (6) Profits, when times are good, are more than 10 percent, although the long-
    term average profit margin is lower. (Part of the strength in profits reported recently represents implicit capital gains on land.)”

    Source: New Home Cost Components – Michael Carliner

    The obsession with land costs means ignoring other factors like excess profits (capital gains and speculation), along with labour and materials costs. I think large increases in tradesmen’s incomes (compared to the stagnant average wage) have played a significant role in increasing house prices in Australia.

  14. March 10th, 2018 at 19:47 | #14

    Thanks for the interest. Your cost recovery plan adds another demand-side condition that makes my buyout plan even less feasible. “Entities are not to be multiplied without necessity”.

  15. Ikonoclast
    March 11th, 2018 at 11:15 | #15

    What controls our fuel choices in the fossil fuel arena? Is it ecological imperatives or economics? Clearly, it is (capitalist) economics. If it were ecological (and survival) imperatives we would be de-carbonising our energy system much faster.

    “Humans must reduce net greenhouse gases emissions to zero “well before 2040” in order to ensure global warming does not go above 1.5 degrees Celsius by the end of the century, scientists have warned after carrying out a study using a sophisticated new computer model…. The new study, described in a paper in the journal Nature Communications, is one of the first to use the new FeliX computer model, which includes social and economic factors along with environmental ones.” – Indpendent (online).

    Physics dot org tells us “Global carbon dioxide emissions projected to rise (for 2017) after three stable years.” I’m not sure if final numbers are in yet.

    My lay interpretation (and opinion) is that the most likely emissions profile (graph) until 2100 will be one which results in greater than 2 C net rise but less than 5 C net rise. I would put my money on about 3C to 3.5 C rise but I don’t know when that will fully eventuate. Some time after 2100 presumably.

    Global economic collapse most likely will be what keeps matters from being worse than that. On the other hand if runaway processes of methane and CO2 release are triggered then that bet is off.

  16. Ronald
    March 11th, 2018 at 12:31 | #16

    James, an annual per gun license fee combined with voluntary buy back would reduce gun numbers, but no one knows how many guns there are in the US or who owns them and any attempt to find out would be would be opposed by people claiming gun ownership needs to be kept secret to prevent tyranny. How this works when many of them believed they were living under tyranny under Obama, a tyranny which their guns did nothing to stop, I don’t know.

  17. March 11th, 2018 at 21:37 | #17

    The gun license is itself a way of finding out the numbers, as unlicensed guns would be illegal and subject to summary confiscation. Yes, the legislation and its enforcement would be opposed, perhaps violently. Its passage assumes a steely and united Democratic leadership, still a long shot. Gun nuts are fond of saying the Feds would have to pry their guns out of their cold dead hands. Ieyasu would have asked: And where is the problem?

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