It’s time for the Monday message board, where you are invited to post your thoughts on any topic[1]. Civilised discussion and no coarse language please.
fn1. Except for GM foods, the Iraq war and Israel-Palestine. I’ve put up posts specially to accommodate those who want to debate these issues at length. Feel free to comment on whether this a good way to handlle this kind of topic, or to suggest any other innovations you’d like to see on the blog.
Following the model of my long-running GM foods thread, I’m putting up this post for anyone who wants to debate the issues regarding the Israel/Palestine dispute.
I request that debate in this thread be kept civilised with no coarse language or personal abuse – I will delete noncompliant comments and ban repeat offenders. I also request that commenters not raise general issues about the Israel/Palestine dispute when commenting on other posts. If there’s enough interest, and the general tone is constructive I’ll keep this post on the front page as long as discussion continues.
For what it’s worth, my view is that the Clinton/Barak plan was and is about right one and that both Arafat and Sharon are obstacles to peace.
The teams I back seem to be losing pretty steadily at the moment. I’m just back from seeing the Bullets go down by 2 points to West Sydney. Kevin Freeman took a difficult shot to push it into extra time on the buzzer, but missed. Still, there’s plenty of time to turn the season around.
I watched Cry Freedom last night, for the first time since it came out in the late 1980s. It’s a great film, but the scene that stuck with me this time was right at the beginning. The police were clearing a squatter settlement, burning houses, arresting and beating people and so on. The scene shifts to Donald Woods listing to the apartheid government’s news broadcast, which announces that “the raid was a complete success, and many illegals were arrested or gave themselves up”.
The latest US trade data (for August) is out, with a deficit of $US54 billion[1]. This is about 6 per cent of GDP at an annualised rate. Also, the US budget deficit for 2003-4 came in at $413 billion.
But perhaps the most interesting story is one that arose from a relatively obscure decison of the WTO which banned a tax subsidy for US manufacturers that cost the US government around $5 billion a year. For a government in the fiscal position of the US, this ought to have been a small but valuable free gift in the attempt to wind back the deficit.
So what did the US Congress do? It passed a bill that not only replicated the effect of the prohibited subsidy, but extended it by drastically widening the class of firms classed as manufacturers. Getting support proved a little problematic, so the votes were rounded up by inviting every member of Congress to insert their own preferred piece of legislation, assisting every industry from tobacco to tackle boxes (a big tackle box manufacturer is in House Speaker Dennis Hastert’s district). The total cost is estimated at more than $140 billion over ten years[2]. As Senator Charles Grassley argues, largesse distributed as widely as this ceases to be special-interest pork-barreling and becomes more like a comprehensive industry policy
“For all the unfair carping about this bill being a special-interest bill, nearly every member raised narrow-interest provisions. So, if there’s some fault about different provisions coming up, we all share that. We all do it.”
Grassley appears to be right. On this legislation, with the usual negative, carping, exception of John McCain[3], consensus ruled the land. Liberals, centrists and rightwing Republicans all lined up to support the bill.
If I was a holder of US government debt, I’d be getting a bit worried right now. But I’m a notorious pessimist.
As various people have argued, there’s a neo-Bretton Woods system in operation in which Asian central banks (formerly Japan, now China) finance whatever trade and budet deficits the US choose to run. So, there’s no need to fret. World capitalism can safely rely on the good judgement and good will of the Chinese Communist Party.
fn1. Australia is one of a handful of countries with which the US has a bilateral trade surplus. Maybe relevant in considering the FTA.
fn2. There are various offsets from closing tax shelters, which are supposed to balance the cost. But the figures are rubbery, and this was money the government should have gone after in any case.
fn3. Why does he hate America so much?
I’m five years too late, and McNeil PPC has beaten me to the name, but it struck me the other night[1] that iModium.com would have been the ideal name for an Internet/telecom/dotcom IPO in the late 1990s.
fn1. There was no medical reason for this thought, just a random neural connection
For once, there has been a little bit of encouraging news coming out of Iraq. I’ve also been encouraged by some of the reactions I’ve seen.
Read More »
As Tim Dunlop notes, the government has already started the process of repudiating its election commitments. This Age report quotes Costello casting doubt on the forecasts used to justify the spending spree, and the Fin (subscription required) gives an even clearer indication that election commitments are likely to be broken, yet again, saying
His comments raise the possibility the coalition may seek to rethink some of its election campaign promises, and the $65 billion of promises since the May budget.
Mr Costello’s warning comes after The Australian Financial Review revealed that without consultation with him, Prime Minister John Howard had opted to announce at his campaign launch all of the $6 billion in spending promises that had been proposed by the Liberal Party campaign office, rather than just one or two as was expected.
it’s safe to say that this leak could only have come from Costello or his office.
I’ll be very interested to see what government supporters have to say about this, and what it implies with respect to the swinging voters who (presumably) took the government on trust as it asked them to, and voted for them on the basis of their stated policies.
Note: Post updated to include AFR quote
It didn’t take long for the government’s FTA chicken’s to come home to roost. Not surprisingly, the US government repeated its earlier statementthat it had serious problems with the amendments introduced by Labor to stop ‘evergreening’ of pharmaceuticals (a device to extend effect patent life using trivial variations on existing patents)[1].
More interesting is that Big Pharma is already acting as if the agreement is set in concrete, heavying the Howard government over its own election promises. All of this is as I predicted, using the arguments of Christopher Pearson. Following Pearson’s summary of the arguments Big Pharma could use against the Labor amendments, I observed
What’s critical to note here is that these points have nothing to do with the specific content of Labor’s amendments. They apply to any legislation concerning the PBS that an Australian government might seek to introduce in the future and, arguably, to any administrative decisions made by Ministers. If Pearson is correct1, the FTA gives the Americans an effective veto power over anything we might attempt to do to improve the functioning of the PBS. It’s notable that Pearson’s points are almost identical to those that have previously been made by critics of the deal, and pooh-poohed by the government.
If there was ever a time for Howard to earn the “Man of Steel” moniker hung on him by George Bush. He should demand an exchange of letters from the US side making it clear that we can take whatever action we deem necessary to protect the PBS. If this isn’t forthcoming, he should walk away from the deal and see what he can get out of the next US Administration, or the one after that if necessary.
fn1. After some hamfisted interventions on other issues, the US did the right thing in waiting until after the election to raise these concerns.
Various comments have suggested that I’ve been too nice, or not nice enough, about Real Business Cycle theory, the main contribution that got Kydland and Prescott their Nobel prize. My remarks weren’t really meant as a careful evaluation, so I’ll offer a slightly more considered view now, with the warning that there are plenty of readers of this blog who know more about dynamic macroeconomic theory than me – they can set me straight in the comments section. Non-economists may want to skip on to the next post.
Read More »
John Quiggin 