Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard commnets.

44 thoughts on “Weekend reflections

  1. Just discovered your blog, Prof Q. Thanks! I read “economic rationalists” years ago and loved it. I think the Mike that referred to Latham’s origins as underlying the nature of his ‘vitriol’ in ‘comments’ got it right, that the aggression we see against Latham by the articulate is the same reaction we see in the ‘polite’ people at the front of the bus to those in the back who come from the outer suburbs. I have found it amusing to watch the media and the pollies and the hacks in general get upset and say either “I told you so,” or “what a sadness”. Such hypocrisy, considering the vicious and backhanded nature of their own behaviour generally. The trouble with Latham was that he got personal, and didn’t know how to take his licks and shut up. I actually never liked him, but am learning to now.

  2. The issue of rising petrol prices is being exploited by the Federal Opposition, somewhat shamefully IMO. There are essentially 2 components to the rise. The first is rising world demand for oil, largely from the tiger economies of China and India. It would appear that in the next few decades, the demand for oil will push the price ever skyward, eventually forcing us all to seek cost effective alternatives. At some stage this rising price, will make some renewables, cost effective and their use will grow, which is environmentally desirable. Also the rising price will make us all curtail our use and produce the same positive outcome. Secondly, the extra spike in the petrol price at the bowser has been caused by demand pushing on refining capacity, exacerbated by the loss of refining caused by hurricane Katrina. Instead of the situaution of excess refining capacity, which has existed now for many years, ie the market boot on the consumer’s foot, the market boot is now firmly on the oil companies foot. For some years the refiners(big bad oil companies) have been getting about 3c/litre refining margin, which the industry has known is unsustainable in the long term. Basically they and we as consumers, have been living off refinery capital. Long term, I believe thy needed around 6c/litre margin to earn ‘normal’ profits. That has changed dramatically with I believe around 9-10c/litre margin now. The oil companies are now earning ‘supernormal’ profits and the usual suspects are howling. Curiously enough they shed no tears for the refiners for all the years they didn’t earn ‘normal’ profits. The scream is now on to price fix the oil company ‘gougers’, from all those who don’t produce a drop of petrol themselves and never will.

    Now whenever there are ‘supernormal’ profits to be had in an industry, there is a clear incentive to push capital and resources into that area. There is one big snag for the oil companies here. Refineries are very large, lumpy investments with long term pay-back streams and you need to be damn sure the return stream will be there and here the refiners are naturally cautious. Once bitten, twice shy. They’ll now be very wary that the recent sharp rise in the price of petrol, doesn’t produce a sustained fall in demand longer term, as it did in the early 70s. They’ll naturally take a wait and see approach. Essentially your govt and the ACCC know this and also know there is nothing, short of building govt refining capacity(owning Telstra?), that they can do about it. Wiser heads assessing international investment risk/return must now be allowed to address these issues for us all.

    Not for the Federal ALP of course. They are running about, playing to the gallery like Chicken Littles, demanding govt ministers waste more precious jet fuel attending worthless hand wringing exercises and gabfests, along with the usual suspects. However, there is one thing our govt can be forced to do, now that a budget surplus has reared its juicy head here http://finance.news.com.au/story/0,10166,16705386-31037,00.html
    Should we use that surplus to ameliorate the price rise of petrol and thereby slow the adjustment of our downward consumption, or not? What sayeth our Kyoto protocol lovers now?

  3. I have posted over at http://eaglesplace.blogspot.com on this topic. This is the report, The Consequences of Underemployment for the Underemployed, from the Institute of Applied Economic and Social Research at the University of Melbourne. The report has found that figures for underemployment are now in excess of unemployment figures. It urges the official collection of underemployment statistics. While ever undermployment is ignored our labour force statistics lie and do not give a true picture of inequities in labour force participation and the failure to utilize skills to build the nation, the economy, the community.

  4. Democrat Senators Natasha Stott-Despoja and Lyn Allison have taken the lead in promoting pro-choice positions on abortion and women?s reproductive rights in recent Senate debates. Crikey carries a report on their initiatives .

    They have been supported by their male colleagues and the Greens, and opposed overtly by conservative Coalition Senators, until the debates have been shut down by Government Senators with Labor collusion.

    The significance of this is that since the 2004 Federal election, social conservatives in the Coalition have strained at the leash to pursue an anti-feminist, anti-choice legislative agenda. Yet all the available indicators are that public opinion is running strongly in the opposite direction, including amongst Coalition voters. I have recently commented on this at On Line Opinion . Katherine Betts’ research on this issue also supports this contention:.

    Therefore, if the wishes of NSW Young Liberal President Alex Hawke to bring on the abortion debate ‘bigger and better than ever’ are fulfilled, the Coalition will be vulnerable to wedging of its support base. Labor will probably be unable to take advantage of this because of its own internal divisions and indecisiveness over women’s reproductive rights. The Greens will gain from their unequivocal pro-choice stance. However, the biggest winners in this scenario could be the Democrats, who could come back from the dead electorally by attracting moderate voters with liberal views on issues of gender, family and sexuality.

    This calculation may well have been behind Senator Stott-Despoja’s challenge to anti-abortion Senators to ‘bring it on, boys!’ during the Senate debate referred to by Crikey, although I hasten to add that I have no doubt that the Democrats are also taking this stance because they honestly (and correctly) believe it to be the right thing to do, and are (justifiably) concerned about the lack of pro-choice action from other quarters.

  5. Well actually Brigid, while it might be nice to collect underemployment figures, it might be nicer to do something about it. For my part, taxing labour via income tax and payroll tax, seems a surefire way to reduce the quantity demanded. OTOH reliance on resource taxing, particularly carbon taxing, would appear to tax the life blood of capital and raise its price relative to labour. I’m no expert in these matters, but I have a strong hunch what that might do to the demand for labour, particularly in decentralising the demand to help you build your ‘community’. It seems to me that it’s cheap private cost fossil fuels, coupled with computerised logistical and organisational systems(globalisation), that has allowed the reach of big corpora to put the squeeze on decentralised labour, economically speaking.

  6. Goes a bit wider than that and, except it would take a little too much time, would question some of your assumptions. The use of unemployment as an abstract economic management tool devoid of humanity; the state bearing the brunt of decisions made by corporates i.e. downsizing (laying off personnel) and expecting the state (i.e. the taxpayer) to pick up the economic consequences for decisions it has no part in. The latter is a form of indirect industry subsidy – which visits industry with virtually no adverse consequence of its decision. It is not only cheap private cost fossil fuels – the same can be said for almost all factors of production. Industry – and not only agricultural industry – has been subsidised through cheap – and often unpoliced – access to water: both inward use of water and outward pollution of water. It expects cheap labour costs irrespective of the consequences and costs to the wider community. It expects breaks on land costs and tenure and it expects tax breaks. It all brings to mind that Aussie saying: if it moves shoot it, if it stands still mine it. The point is industry’s role is to serve humanity – not vice versa – and when it doesn’t act in a socially responsible manner and when it expects unreasonable support from the taxpayer there are costs and consequences. Good to see someone like Richard Pratt taking an interest in the water situation. Wonder if he would consider giving back the taxpayers’ $3m paid to his company by the Howard Govt to stop it moving to Vietnam?

  7. I agree with taxing ALL resource use other than labour Brigid. Under such a scheme petrol would certainly be highly taxed and priced. Do you believe we should reduce the cost of petrol now via the budget surplus? I certainly don’t.

  8. .Brigid re: underemployment

    Unemployment figures might be going down but the unemployable is going up dramatically.

    Are the unemployment figures published by the Government a true representation of unemployment trends and rates? The government tells us that unemployment has fallen to 5%,. A fall in the figures of about 192,000 since 1995

    See graph “unemployed persons” here:


    They neglect tell us that the fall in unemployment numbers have been more than offset by the increase in the permanently unemployable on Disability Support Pensions, where Disability Support Pensioner persons have increased about 232,000 between 1995 and 2004.
    See DSP figures here:


    Disability Support Pensioner persons have increased about 232,000 between 1995 and 2004, whilst unemployed persons have decreased about 192,000. A net increase in the underlying unemployed of about 40,000 not a decrease of 192,000.

    If we take the increase in the number of DSPs as just moving the deck chairs, then the real underlying unemployment rate is about 7.4%

  9. How come all these people with postgraduate economic degrees, Don Brash, Craig Emerson (perhaps observa also) have rejected Macroeconomics 101 and now seem to be arguing that governments should never run budget surpluses? To what level would they like current interest rates increased?

  10. Brigid said:

    “While ever undermployment is ignored our labour force statistics lie and do not give a true picture of inequities in labour force participation and the failure to utilize skills to build the nation, the economy, the community.”

    I think the debate about labour force statistics will prove to be sterile. The definition of “unemployment” is agreed internationally by technical bureaucrats. It will be virtually impossible to convince an Australian government of any persuasion to use anything technically different to the internationally agreed one. In any case, the Australian results would most likely to be “adjusted” by OECD and IMF bureaucrats to the international standard (this sort of thing does happen).

    What is important is the social costs of underutilisation of all resources in the country. In this context both unemployment AND participation rates are key indicators of volume for the workforce. School retention rates and tertiary completion rates are key indicators of quality for the workforce.

    In the looming “grey” crisis all of these things are important. It is already clear that immigration cannot solve either of the volume or quality shortfalls needed to modernise the economy and provide a reasonable standard of living for all citizens.

    It is also clear that government policies (incentives to save, forcible workforce participation through withdrawal of social security) aimed at participation and self-funded retirement are not going to do the job on the quantity front, and they seem to have a petty ideological approach to quality issues.

  11. The extended discussion about Professor Fraser’s thesis and his “censorship” by Deakin Law Review here a few days ago really got me thinking about racism, censorship and vilification and how it all fits together.

    My extended thoughts about this are here if you care to have a look. Basically, as I’ve said a few times, I think that the best way to combat bad speech is not to restrict it via legal methods. The best thing to do is to get out there, and as Donald Horne put it “keep talking”. That way, society is not subjected to censorship by subjective censorship monsters (on both sides of the spectrum) and the discourse is better off having debated his arguments in an open environment.

  12. The trouble with the talking agenda is that ratbags set it. They want to create the kerfuffle, because it appeals to peoples’ secret thoughts; we reply and – hey presto – it is on the national agenda.

    If we don’t they run riot anyway. There’s an obvious campaign now about (un)intelligent design, where articles in the biological domain are followed by some dingbat writing to the paper putting a fundamentalist position. See this weekend’s Australian magazine for a case in point.

    There is an argument for declining to publish, and it about the press not giving space to garbage, particularly when they then refuse a right of reply.

    This stuff is very dangerous. It creates debates when they don’t exist, about evolution, or climate, or race and intelligence, or the number of dead in Iraq.

    In some ways, the debate about censorship here is the same as the blogosphere. We each own our blogs. We put a huge amount of work into it, at least by virtue of persistence if not in any one day.

    Do we want our resources to be used putting an argument which is destructive, hurtful and dangerous? Does a learned society or a university want its resources co-opted for the same reason?

    Ironically, the people who protest when we refuse to support their mendacious rubbish are the very people who valorise the idea of private property.

    If they want to flog their ugly beliefs, at least let them pay for the printing or go to the trouble of running a website. Censorship is what the government does. What we, and Deakin does, is protect the value of our assets. Not the same, and the Right often elides the position.

    We have a right to boot the cuckoo out of the nest.

  13. David,
    The problem is who gets to choose what is “…destructive, hurtful and dangerous?” How do you define “…ugly beliefs…”? You say that “we” reply and that “we” can “…boot the cuckoo out of the nest” – who are “we”? Do you get to appoint yourself? What happens if something you regard as “…destructive, hurtful and dangerous…” is in fact of vital importance and you just feel it is wrong?
    Sorry, but you will have to do better than that as an argument in favour of restricting freedom of speech.

  14. In the “Lurker Week” topic the following got a mention:-

    Iain: A very grumpy lurker, who wishes that more economists would support the Terra Trade Reference Currency.

    Response: Thankyou Iain for raising the topic. I think wishing for more economists to “support” the TTRC is a bit premature. First we should wish for more economists to know about and understand the TTRC.

    The TTRC is not so different to Keynes Bancor. It is not so different to the function of gold in a gold standard.

    In essence it is a global common currency (not a global single currency) that has the following merits:-

    1. Value is stable relative to commodities.
    2. Some element of demurrage.

    Demurrage is essentially a storage cost that encourages the holders of the currency not to hoard. In private currencies such as e-gold (a private currency 100% backed by gold) the demurrage is 1% per annum.

    I like a lot of things about the TTRC. However I think a gold standard is less complex and more transparent. However both attempt to address many of the same issues.


    There are good arguments against a golds standard, however the most frustrating non-argument that I hear is that “floating exchange rates is pro-market whilst fixed exchange rates is government interference.” This is so untrue. Floating exchange rates still involve interference on a massive scale. Fixing interest rates is no less a form of interference than fixing exchange rates. And at the end of the day national currency is mandated by governments and produced in a factory owned, operated and controlled by governments. Fiat currency is government controlled by denfinition. The only issue is how that control is best exercised.

    There are some similar parallels in the logic that tries to says that tariffs imped free trade but other taxes don’t.

  15. John,
    Your homepage, despite its proclamations, is not valid XHTML (easily checked by following the link to the validator.) I’d get rid of the link altogether as it’s pretty irrelevant to your audience and you run the risk of getting into arguments over obscure distinctions between the various versions of XHTML.
    Alternatively your website boffins need to do some repair work.

  16. The Brookings Institute Iraq Index http://www.brookings.edu/fp/saban/iraq/index.pdf provides a month-by-month reprot on progress in Iraq.

    Results from the last couple of months could be described as moderately encouraging – oil production is edging up and so is electricity production.

    Perhaps more importantly, the amount of foreign aid dispensed (as opposed to merely promised) is also increasing.

    Allied troop numbers are down from a maximum of 180,000 to around 160,000.

    Much of this seems to merely reflect a recovery from the truly disastrous position in the country around the time of the elctions and the second Battle of Fallujah but it’s still envouraging to see some progress.

  17. I have heard much of Kim Beasley on the issue of terrorism.
    He is taking the labor party further to the right ,in my opinion, than Howard. He has goaded the liberals to go bigger on search powers, that many of us might regret in the long term. Have not heard him speak of the importance of our civil rights.
    Is he overshadowing?

  18. econwit (et al), could you use this service for long urls? http://www.tinyurl.com


    Talk about the benefits of taxing capital and not labour is all very well (makes sense to me (though how this change would possibly be made when we’ve still got payroll taxes in nearly all states and zero chance of a carbon tax anytime soon)), but what would it mean for global companies considering setting up shop in Australia or somehwere else?

  19. Elizabeth, reports have moved on from your most reliable sources (Greg Sheridan and reports by Smh) on the Scott Parkin case. A possible leak from an arm of our security police to a reporter for a major daily newspaper and then a report about that by another paper.
    From my hearing ,on the radio and more than one interviews, Scott Parkin denies any connection to violence or encouraging it. When we arrest a visitor to our country ,wouldn’t it be nice to tell them why they are a threat to national security, rather through a leak? Even make them pay for a possible crime through our legal system.
    We are more and more buried with bullshit and treated like mushrooms by both major parties.

  20. Who would have thought about using marbles against police horses? Innocent Australians need to be protected against this sort of knowledge.

    When is the Federal Government go to stop shillshallying about the continued legality of the sale amd supply of Marbles of Mass Destruction?

    Scott Parkin has done for marbles what Mohammed Atta did for stanley knives (box cutters).

    Scott Parkin, give us back our childhoods!

  21. Elizabeth did you hear Burnside’s spin on this.

    “It’s interesting to speculate whether this would have played out the same way if Scott Parkin, instead of being an American activist, had been a devout Muslim from Iran, or somewhere like that. I wonder if there would have been the same level of community concern, or whether we would have been prepared to assume that that person was involved in bad business and therefore should be kicked out? It’s a dangerous climate that’s developing in Australia, that anything that is anti-Muslim is fairly readily accepted, and of course that in turn is built on the false assumption that all Muslims are either terrorists or possible terrorists. ”

    As RWDBs haven’t been objecting to Parkin’s deportation, it must be the human rights activists that Burnside is having a go at.

    How he got from Parkin to anti-Muslim I find a bit of a mystery actually and though I enjoy being able to claim consistency at least, as a RWDB, I find his approach less than reasonable.

    The same Law report interviewed Ruddock and Damien Carrick asked

    “But surely there’d be ways of exploring the accuracy and the substance of any adverse security assessment without compromising any of those legitimate security mechanisms or devices?”

    A reasonable request but based surely on the assumption that the accuracy and substance of assessments is, as a matter of course inadequate and not so because of legitimate security needs. And the evidence for the accuracy and substance of this view is?

  22. Trained to kick in unison, police horses, when backed toward the unwashed, are a very effective anti-disorder tool.

    Anyone who would harm an animal DESERVES to have the “s” kicked out of them by a police horse, preferably shod.

  23. wilful, econwit (et al) if you use “a href” tags in your comments you do not need to have the full url appear at all. In this example, replace % and ^ with . This is a bit tortured, but if I do it properly it besomes a link.
    Do this in your comment:
    %a href=http://example.url.com/page/^ Example Text %/a^.
    That stops the page getting distorted as it does not matter how long the url is, it does not get displayed.

  24. Katz,while amusing, you miss the point like, Elizabeth.

    In more than one interviews , Scott Parkin has denied a leaked report from unknown sources, by Greg Sheridan of “The Australian” , as to marbles and possible horse damage.
    From my reading , as one who wonders about secrecy by government, and does not even know the bloke (promise,asio) , he has dressed up as a cashcow , outside Halliburton headquarters, in Houston, with somebody dressed up as Dick Cheney,milking him.
    Sick stuff that!

  25. Andrew – the “we” are the owners of blogs. On my blog, I get to decide who the ratbags are.

    I don’t decide for Deakin University, of course. I would suggest it has the right to tell a magazine using its name that it should apply the basic rules of intellectual integrity. Saying controversial things is fine; saying controversial things in an area the writer knows nothing about could be considered unacceptable by Deakin, I reckon.

    If you were reading a weekly publication in which, say, every achievement of capitalism was attacked by several writers who are clearly hard line marxists who you couldn’t refute because the reply is old news, I suggest you would think the mag is being suckered into giving a platform to a concerted campaign.

    It’s the campaign bit I am suggesting is off. I would be surprised if a decent letters editor would say that is acceptable.

  26. “wilful, econwit (et al) if you use “a hrefâ€? tags in your comments you do not need to have the full url appear at all. In this example, replace % and ^ with . This is a bit tortured, but if I do it properly it besomes a link.
    Do this in your comment:
    %a href=http://example.url.com/page/ Example Text %/a.
    That stops the page getting distorted as it does not matter how long the url is, it does not get displayed.”

    I noticed this “weekend reflection” thread is distorted when displayed on my PC. I thought it was only happening to me. If my posting the link has caused trouble I apologise.

    I just copied and pasted the TAX reform paper from Malcolm Turnbulls web page http://www.malcolmturnbull.com.au/default.asp

    As readers of this blog would be aware econwit has many attributes of an intellectual pigmy and unfortunately when it comes to computers the situation is worse, as econwits computer literacy skills are close to zero.

    So regretfully J.A. I don’t know how to:

    “Do this in your comment:
    %a href=http://example.url.com/page/ Example Text %/a.
    That stops the page getting distorted as it does not matter how long the url is, it does not get displayed.”.


  27. Hey, how come this software interprets ampersandLT; and ampersandGT; as ‘less than’ and ‘greater then’? That’s not right.

  28. abb1- I think it is WordPress trying to be smart.

    econwit – you need to enclose the relevant bits in greater than and less than signs. As wordpress seems determined to thwart us, you need to replace the bits in italics below with something else. The relevant bits are:
    (less than sign)a href=(insert your url here, including the full http:// bits)(greater than sign)(Some text that, when clicked will open the url)(less than sign)/a(greater than sign)

  29. Bloody annoying isn’t it? And takes a while to get used to, but once it’s familiar it’s easy.

    google “xhtml tags” for the whole shebang. But once more with the linking, it’s (a href=”http:yourlink.org”)your description(/a), where the brackets are replaced by the greater than and less than symbols (immediately to the right of the M key on this keyboard).

  30. ender

    I typed

    substituting for () and end up with ender.

    It works to convert the href to a label, but it won’t go the full way and make it a link. It is easy, but I think my computer is stuffed full of viruses from my kids downloading games like runscape etc. Lter on I will try from a different PC.

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