50 thoughts on “Monday Message Board

  1. people are starting to remark on the fact that obama has so far not stiffened his feel-good rhetoric with any substantive plans. this may be part of his strategy, or more likely that he is only mortal, and a politician, and has no grand plan. if he can’t come up with something significant, there will be disillusionment.

    the beneficiaries of that will be clinton, or edwards, if it happens before the nomination, the republicans if it happens during the election campaign. then it could have the result of turning a ‘democrat year’ into a lively race, with a real chance of republican victory.

    there can be no real changes to american society as long as politicians rule it, but obama has tapped a deep well of contempt, both for dubya and for politics. he may yet ride it to the whitehouse.

    if he gets his bum on the throne, he will discover change is difficult and unrewarding to someone who is enjoying the rewards of supremacy in society.

    so we can expect steady as she goes whoever gets in the oval office, just as the ruddster has begun with verbal fervor, but has to be both green and support coal-fired energy. real change can only happen when a nation’s voters support a referendum, which generates a result for the nation uncolored by a politician’s need to be re-elected.

    mike gravel’s candidacy was built around his ‘initiative for democracy’ and has been completely ignored. this surprised me, as many american states have a democratic tradition. considering the grass roots guerilla campaign ron paul has generated in support of policies that pauline hanson would be glad to champion, it is doubly amazing that gravel could not at least put structural change in discussion.

    if there is any general observation to be drawn, perhaps it is this:

    the ship of state is much less agile than a giant oil-tanker at full speed, the crew is ignorant, the officers greedy, the captain a vain megalomaniac, and the approaching environmental reef unavoidable. if there is a god, get busy mate, for your children are incompetent to save themselves.

  2. Good old Al. I always feel you are half right and half wrong mate. Your perception is that a change in the leadership at the top of society can change little or nothing. I agree with you on that one. Your perception is that the ship of state is a great unwieldy vessel which changes course only with the greatest of difficulty. I agree again. Especially if you mean by ship of state not just the captain and crew but all who sail on her; the entire nation state in fact.

    The notion of direct referenda for every issue (which I think you mean) is more problematic. I’m not sure that unwieldiness could be dealt with in such a manner. Even allowing for modern technology the process could be very cumbersome, problematic to verify and open to corruption.

    There is always the need at times for executive decisions, hence democracies still tend to have executive office. (Though I am the last to support excessive executive power. Witness my rants on this blog against the US presidential system.)

    The other issue is that democracy, in practice, is always a hybrid beast. There is no getting around that. Equating practical real world democracy with the act of voting alone leaves out many factors.

    Parliamentary democracy (as it stands in Australia) is supported by many institutions and bodies of law. The ones that come to mind are the constitution, common law, the accumulated body of legislated law, the courts, the parliamentary system itself, the system of executive power and a free (though now thoroughly debased) press.

    It is the evolution of all these forms along with other factors like public education (to name one) that create the democratic body politic.

    Hence you see that an iconoclast like myself can even be a sort of evolutionary conservative liberal, LOL.

    Still, you could always give me a link to a site that explains the citizen referendum agenda. Better not expand upon it here. Opponents of the ideas could also give links to arguments against. That way we won’t clog the JQ blog with a topic which I sense has been covered before.

  3. Came back from a long trip to India. Some of my impressions are in my blog http://gaddeswarup.blogspot.com/
    in the posts ‘A micro effort’ (on a small micro-finance project), ‘Some Prosperty’,’A letter to Bimol’ (on farmers’ problems), ‘Dilip’s Question ‘(on religious conversions). I am not a seaoned observer on these matters having spent most of my life in mathematics. Any comments are welcome.

  4. Came here to see some new names,and dread here is Al Loomis,and nothing about a country changes accept by referenda.Good on you Al.,may you find a referenda subject everyday of the rest of your life.On matters coal,I surely think it remains a science policy problem as much as anything else.I have read recently what the NASA scientists are gathering about sunspot activity and a change to a cold climate within a ten year period,after an initial number of warm years.Research maybe heading in the wrong direction,including how to have effects on carbon dioxide.I am now convinced fossil fuels is a misnomer,if there was ever one,And Ron Paul is no Pauline Hanson,and a Texas based anti-discrimination group,said seeing he had known Ron Paul for twenty years these attacks are a disgrace.I am inclined to agree,even if its costing me a hefty computer Bill.DavidIcke.com has put his bit forward for Ron,and the Democrat Candidates dont get off lightly.But the Clintons attacking Obama on matters implied re drug use,is scandalous.Obama may have done a lot of things when he was young..he wasnt pretending to be a Christian Saxophone player with some unusual friends,and preacher too boot.Arkansas home of the definitely traditional God fearers!? Obama will comeback,after all there is a next time,and whatever he does he can kick fairly hard and fearlessly.Ron Paul will watch on,and have to deal with the liars in his own camp,occasionally it is obvious the camps are working together against individuals.The Race to Washington is about a sort of cleanliness,and bound to lead towards insanity.You dont have to put this up if it is outside your Monday offerings,as you know.

  5. http://www.smh.com.au/news/environment/times-up-for-petrol-cars-says-gm-chief/2008/01/14/1200159363527.html?sssdmh=dm16.297413

    Time’s up for petrol cars, says GM chief
    Joshua Dowling Motoring Editor in Detroit
    January 15, 2008
    THE world’s biggest car maker, General Motors, believes global oil supply has peaked and a switch to electric cars is inevitable.
    In a stunning announcement at the opening of the Detroit motor show, Rick Wagoner, GM’s chairman and chief executive, also said ethanol was an “important interim solution” to the world’s demand for oil, until battery technology improved to give electric cars the same driving range as petrol-powered cars.
    GM is working on an electric car, called the Volt, which is due in showrooms in 2010, but delays in suitable battery technology have slowed the project.
    Mr Wagoner cited US Department of Energy figures which show the world is consuming roughly 1000 barrels of oil every second of the day, and yet demand for oil is likely to increase by 70 per cent over the next 20 years. Some experts believe the supply of oil peaked in 2006.
    The remaining oil reserves are deeper below the Earth’s surface and therefore more costly to mine and refine.
    “There is no doubt demand for oil is outpacing supply at a rapid pace, and has been for some time now,” Mr Wagoner said. “As a business necessity and an obligation to society we need to develop alternative sources of propulsion.”
    He added: “So, are electrically driven vehicles the answer for the mid- and long-term? Yes, for sure. But … we need something else to significantly reduce our reliance on petroleum in the interim.”
    GM is so convinced about ethanol it has signed an agreement with a supplier that claims to have come up with a way of producing ethanol that is cheaper and more efficient than refining oil. The supplier claims it can produce ethanol from “almost any material” such as farm waste, municipal waste, discarded plastics – even old tyres.
    The car industry has had a love-hate relationship with ethanol, which is most commonly derived from crops such as corn, wheat and sugar cane. At first, car makers criticised ethanol-blended fuel because most vehicles weren’t compatible with it. Then car makers changed their tune and embraced ethanol-blended fuel after retuning engines to suit the new mix.
    This story was found at: http://www.smh.com.au/articles/2008/01/14/1200159363527.html

  6. Hasn’t GM come up with such grand statements quite a number of times? To little effect, it seems. I think I’ll just trust Honda and Toyota to actually provide the future technology, rather than some Detroit press releases.

  7. ikon, you can find a lot about democracy by googling “direct democracy”. you have to put in direct, because simple democracy has been newspeaked into meaninglessness.

    i’m not in the mood for a rant about democracy, but most of the posts at my site are on that subject. the most important feature of real democracy is the ability to get things done that pollies literally dare not do. well, maybe most important is stopping pollies from getting a nation into wars, nuclear power, or simple autarchy.

  8. On the culture wars front, I came across some interesting remarks about the differences in outlook between US and British economists recently. I have shortened the following quote pretty drastically, so I recommend interested readers to use this link and read the original, which is tucked away towards the end of the post.

    �A particularly lucid review of the differences of opinion among Stern and two of his principal critics — Yale’s Nordhaus and Harvard’s Weitzman, both of whom contributed thoughtful essays to the current issue of the Journal of Economic Literature – is to be found in a particularly acute “Letter from America� by Angus Deaton in the October Newsletter of the Royal Economic Society…“There is an enormous gulf,� he writes, “between the American and British economic professions in the way that they analyze the central questions of public economics.� He continued:

    ‘Both Nordhaus and Weitzman express their discomfort with Stern’s taking an explicit ethical position on what the current generation owes to those yet unborn, on the grounds that Stern has no right to impose an ethical position on others. Both Arrow and Weitzman believe that a zero rate of pure time preference, while defensible in theory, is typically only so defended by British economists and philosophers, a comment that is clearly not meant to be taken as any recognition of the superiority of British thinking. The paternalism of any such ethical judgment is certainly a concern… If zero discounting (with perhaps a touch of paternalism) is the British vice, the refusal to consider ethical questions explicitly but to leave them to the market is surely the American vice…’â€?

  9. Al Loomis writes “…maybe most important is stopping pollies from getting a nation into wars, nuclear power, or simple autarchy”. Is that last meant to contrast “direct democracy”, say, with autarchy (a word derived from the Greek meaning something like autocracy) or a typo for autarky, a similar sounding word also derived from the Greek meaning something like “economic autonomy” that would also fit discussions around here?

  10. Why does Australian Universities follow UK University culture ? For academics, American Universities have a relatively flat structure namely there are only 3 designation:Assistant Prof, Assoc Prof and Prof. Whereas UK has much more heirarchy: Lecturer, Sr. Lecturer, Reader/Assoc Prof and Prof.

    Most of the emerging world(Mexico,Chile,Brazil,China etc..) universities are adopting American structure. Why does Australia mindlessly follow British academic structure for its academics

  11. #11, I think it’s because our pay is (with a few exceptions) determined by collective bargaining and the differentials are fairly flat which suits a public system which is poorly funded. So you create more ranks in order to diffentiate between levels of achievement.

  12. PS, actually there are 5 levels – you didn’t include the Associate Lecturer which is pretty much equivalent to Assistant Prof.

  13. From what I understand, the equivalent mapping would be:

    UK system American System

    Lecturer – Assistant Professor
    Sr. Lecturer – Associate Professor
    Assoc Prof – Prof
    Prof – Prof

    Associate Lecturer’s are not equivalent to Assistant Professor.

    I would anyday prefer a system with less heirarchy.

  14. To roll back GW, two main policy choices have been presented to us. Carbon taxing or cap and trade. Now assuming that iconic emissions reduction figure of 60% of 1990 levels, we should be able to calculate the maximum possible rate per tonne of CO2 (and hence commensurate costs to respective fuel types)that a straight carbon tax would impose. This assumes we know the amount of carbon used in 1990(which we must know for cap and trade anyhow)and we certainly know the total tax take needed to fund all levels of govt expenditure. That amount divided by the total tonnes of CO2 emitted in 1990, gives us our maximum theoretical tonne rate under a pure tax regime. Can we do the calculation and assess whether that maximum price hike could achieve that 60% reduction, given what is currently known about the elasticity of demand for particular fossil fuels. The results might prove informative for cap and trade. For example it might be the case that upon assessment, the consensus is that not even that maximum theoretical rate could achieve such reductions. Perhaps only half our current tax take for govt expenditure might do the trick, etc. That seems a reasonable question to ask, in order to assess what price cap and trade policy might ultimately be aiming to achieve in a more circuitous fashion. Wouldn’t that calculation then be informative for the players to assess what sort of up front price needs to be achieved in any auction of emission licences under cap and trade. That is assuming we don’t want to hand out such future taxing power to some lucky beneficiaries now. What price emission permits folks?

  15. I think this is a reasonable question to ask ourselves, because we need to know where we are heading with such an important policy choice and at present we are all largely in the dark on this. A carbon tax has a definable upper bound, whereas cap and trade seems to be somewhat of a blue sky proposition in terms of ultimate price and I’m not aware of any hard numbers being crunched on this. Until we do that we’re largely being told to take cap and trade on blind faith, which seems somewhat unreasonable, if not downright folly.

  16. rwl, google tells me autarchy is similar to autocracy, and that was my intention. i presume the use of the word is to label a society like monarchy once was, ‘ruled by one’, in principle.

    the economic variant was new to me, and might be useful in future rants, as i’m inclined toward national self sufficiency as a goal which makes political independence possible.

  17. And while we jump off into the great unknown with the cost of cap and trade, others cut corners swamping any gain

    In particular note-
    “India and China are emerging as leaders in low-cost car manufacture and consumption. In India, forecasts a consultant firm, an additional 30 million households will be ready to buy a small car by 2010 – 20 times the present market size.

    By 2013, India’s car market will be annually growing at 14.5%, and China’s at just over 8%. By 2020, some forecasts say, more than 150 million Indians and 140 million Chinese will have cars.

    If this really happens, it will become nearly impossible to achieve major reductions in global greenhouse gas emissions. China and India account for 70% of the global increase in energy demand over the past two years.

    If the Nano trend continues, the small window of opportunity to control spiraling energy use and greenhouse emissions will slam shut.”

  18. India has 10% of the worlds coal.

    “Currently around 69% of India’s electricity is generated from coal”.

    “However India still only has an electrification rate of 44.4%”

    “The Indian government has announced plans to provide power to the entire population by 2012 – this would require an additional 68,500 MW of base capacity.”


    That will be a lot of coal going up in smoke by 2012.

    “Govt reverses uranium deal with Indiaâ€? is a ‘Ruddy bad’ decision for the environment

  19. The only rational conclusion we can draw from any sensible analysis of all this is that adaptation to GW is our only option. That said, we now need to look at some serious revision to our constitutional marketplace, in order to reach attainable environmental goals in our own backyard, rather than off on tangents chasing global rainbows.

  20. To the new global rainbow warriors, all I can say is it’s time to think big and act locally. Perhaps that’s a salutary lesson they can comprehend.

  21. And while our fearless leaders busy themselves harvesting money,
    the products of our education revolution are making themselves useful, helping turn productive land into McMansions
    I think I’ll have myself another stiff ethanol waiting for the Pol Pottyish solutions to emerge from the usual suspects. Hard to know who to pack off with hoes and scythes to the countryside first. The central bankers or the GW early adopters.

  22. I see George Bush is calling for an additional $145 billion in public debt (sorry “tax cuts”) to stimulate the US economy.

    Without doubt, the US budget deficit is going to blow out severely this year and next.

    I’d like to think that that would be end of claims about tax cuts raising government revenue (outside of very rare circumstances which don;t apply in the US or any other developed western economy currently but I know it won’t be.

    Obviously bush didn;t cut taxes ENOUGH.

  23. The last Governor General?

    Get your nominations in for the next and hopefully last GG a Labor View from Broome. Let’s have a republic by 2012. It shouldn’t be that hard to do now that the great blocker is gone.
    Please no military, clergy, judges, sportspeople or entertainers. And no drunks.

  24. And it wouldn’t be hard to drive out into the bush without enough fuel or water, either. What’s the modern way of dealing with problems? Stop the feedback about them. The problems haven’t gone away, and it’s still a damned fool idea for all that it’s become lot easier to make the mistake.

  25. Speaking of tax cuts, Kevin Rudd has announced today a plan to fight inflation, based on a target of a net government surplus of 1.5% of GDP. To me, if other election promises are to be kept, that means spending cuts or tax increases somewhere. But few details are given of where cuts might occur to achieve this. Question is, if you were Federal treasurer, where would you cut now? Or, where would you raise tax/plug tax leakage?

  26. Re 33: Socrates, setting aside questions about the wisdom of some election promises, lets try to take up your hypothetical. I would increase the tax free amount from the current approximately $7000 to a limit which would correspond approximately to the x% of aggregate tax cuts promised. (Data and models from the Treasury would be required to get a numerical value). Then I would work out how many social security (special assistants) programs would become redundant as a consequence of people on lower incomes having at least as much purchasing power as before. Potentially, some of these special assistance programs would become redundant. If so, cut the associated bureaucracies and record the ‘savings’. If there are no redundancies of programs, then one election promise is kept, and no damage is done to low and middle income earners and self-funding pensioners; the relatively rich may not notice the difference. If interest rates on consumer loans, including housing, do increase, then the impact on the purchasing power of ‘consumers’ (individuals) is mitigated.

    The idea of aiming for a government budget surplus of y% of GDP is a dubious one, IMHO. It amounts to an attempt to take ‘money’ out of the economy. But it only appears that way. The numbers have to be put somewhere. The Future Fund is one example of a repository for the numbers. The Future Fund ‘invests’ in the financial markets. These markets have serious problems which the Federal Government cannot solve alone (‘global economy’). It seems to me it would be much better to ‘invest’ a large portion of these numbers in the currently young population by means of financing their education with the promise that once they are making ‘good money’, in the future, marginal taxation rates will be higher than when they are making ‘little money’. (One cannot sensibly assign in advance a number to ‘little money’ because relative prices are relevant.) This measure would be consistent with the aim of reducing private debt; at least that component which is difficult to avoid for individuals under current circumstances. Going a little more into detail, it seems to me there is some prioritisation required regarding public vs private education. While I can’t see anything wrong with Rudd’s position that public and private schools are ‘socially desirable’ and hence deserve tax money, surely the public school system needs to be rehabilitated to the extent that ‘choice’ between one or the other becomes meaningful for individual families who are not in the very high income category. What constitutes ‘high incomes’ is another question to which the answer is not quite obvious. For example, $150,000 annual income may be considered ‘high’ for a single person without a $100,000 education debt but not for a person with a $100,000 education debt. It may not be considered ‘high’ for a single income family with 3 children in Sydney even if all children go to a public school. Furthermore, some of these (budget surplus) numbers could be ‘invested’ in health, public housing, infrastructure, pensions, and getting State Governments to stop ‘dividend stripping’ of their public utilities. (In this regard, the previous Environment Minister, Malcolm Turnbull, had a good proposal – IMHO).

    From here on my hypothetical becomes very speculative. I suspect that a lot of savings in the public and private sector could be made by getting rid of the enterprise agreement bureaucracies and the habit of hiring management consultants.

    Potential revenue sources are resource taxes, including environmental levies (program of selling time constrained pollution rights), tightening corporate tax laws and introducing a special tax on windfall gains (eg performance schemes of corporate managers that involve financial variables such as derivatives).

    I should hope the Rudd Government is not going to imitate the habit of some large corporations which plan ‘backward’, from ‘earnings per share’ to operations. That is, IMHO the preferred strategy is to budget for the election promises subject to a budget constraint rather than making the over-riding objective y% budget surplus. The latter has literally unknown consequences under changing conditions. This is difficult to get across to management consultants whose conceptual framework is the balance sheet (which assumes there is no uncertainty).

  27. 33. Some big cuts in JWH’s crazy defence procurements and senior ‘entitlements’ then a big hack at fringe benefits such as fleet purchasing.

  28. Ernestine

    Interesting your comment on the tax free threshold. When I first started working in 1985 I recollect it was around $4200pa. Many students or retirees with part time jobs paid no tax at all. I did some sums in 2004 and concluded that it needed to be about $11000pa in 2004 dollars to be equivalent. I agree this is a badly needed reform to encourage efficiency as well as equity.

  29. Socrates,

    I deliberately didn’t mention the defence budget as a possible source of expenditure cuts. The reason is that I would be totally out of my depth regarding geo-political, national interests, historical and technological factors. But, perhaps there are some people knowledgeable in these areas who feel competent to come up with an ‘in principle proposal’. As for economic principles I can only offer the general ‘trade-off’ idea of ‘butter vs guns’ – not much help here.

    What do you think of using the Future Fund for direct investment, as outlined above?

  30. Rudd will do well if he can simply keep a brake on real per capita spending (which went up massively under Howard). If inflation is the fear of the day then the “cost” of government should be kept in check. You don’t fight inflation by increasing costs.

    I would propose legislation that automatically increases the nominal tax free threshold by 30% each and every year with a pass on any given year in the unlikely event that real per capita revenue actual fell below the initial benchmark year. This would at once make the income tax system more progressive, work to abolish income tax and maintain a benchmark for spending which the government could budget to.

  31. We could cut the defence budget if we enabled greater use of civilian defence measures. Arming the population much as the Swedes and Swiss do would provide a significant defensive capability that could be turned against any potential aggressor. Such a civilian form of defence is also near impossible to use as a means of aggression against other nations (a plus or minus depending on perspective). However I would not go so far as to advocate ellimination of the standing professional army.

    Of course these days when people talk about defence forces they generally aren’t talking about defence. Their talking about foreign adventures with the UN or the USA. Frequently foreign aid by another name.

  32. “We could cut the defence budget if we enabled greater use of civilian defence measures. Arming the population much as the Swedes and Swiss do would provide a significant defensive capability that could be turned against any potential aggressor.”

    Yes and no doubt we could also afford about the same level of naval power as Switzerland possesses.

    Oh and let’s not forget that the overwhelming majority of our population lives several thousand miles away from the likely invasion points.

    But no doubt the can solve that by distributing petrol vouchers and roadmaps and telling our sturdy yeomanry to drive north.

    “Such a civilian form of defence is also near impossible to use as a means of aggression against other nations ”

    Nonsense. what you’re talking about is essentially the same as the conscript reservist armies used in World War I.

  33. Ernestine

    Regarding defence, I’m not expert but I understand that the $6 billion fighter purchase by Nelson is an obvious cut. Apparently on the Four Corners that investigated it last year show even the defence people thought it was not a good buy.

  34. Socrates, the question is though whether we should simply pocket the money or invest in a more appropriate fighter.

    I don;t think we can simply assume that the whole $6 billion is up for grabs.

  35. I wasn’t advocating conscription although it is true that both Sweden and Switzerland do also have conscription (as well as having a well armed civilian population). My point was that a well armed population makes a nation harder to invade and occupy.

  36. So we don’t have conscription, but instead we just hand out guns to everyone? I had no idea that libertarianism could be so much fun! 😀

    Meanwhile, back in reality, having the federal government run big surpluses in an effort to balance the rising public debt doesn’t really strike me as all that sensible. Isn’t this the reason why interest rates are supposed to go up? Tinkering with fiscal policy to avoid a rate rise seems like the economic equivalent of trying to fight a guy with both hands tied behind your back.

  37. So we don’t have conscription, but instead we just hand out guns to everyone? I had no idea that libertarianism could be so much fun!

    Well if it’s fun you want then bring back firecrackers.

  38. Ian 43
    If I understood the 4 Corners show, yes we can. We are committed to buying the “Joint Strike Fighters” in the long term for many billions more anyway, so there is no gain from the “Super Hornets”. They seem a crazy buy. The press recently said that the buy out cost of the contract was $300 million, but that still leaves $5.7B saved.

  39. IG, it is not necessary to have conscription in order to maintain a serious reserve. Consider what Haldane did to give Britain something like that by 1914.

    However, your implication that Libertarianism is inconsistent with conscription is mistaken. They are consistent when there is a realistic option of voting against it with one’s feet, which is precisely what the young Einstein did about German conscription by giving up German citizenship and becoming stateless, then moving to Switzerland. Technically and de facto, today, Swiss do not “have” to be conscripted; they get jailed and barred from certain civil rights if they don’t but still stay in Switzerland, but this squares with Libertarian ideas on the idea of “if you don’t want us then we don’t want you”.

    Oh, the Swiss do have serious marine defences on their two long lake frontiers, as well as on rivers and other bodies of water.

  40. Alpaca: “Meanwhile, back in reality, having the federal government run big surpluses in an effort to balance the rising public debt doesn’t really strike me as all that sensible. Isn’t this the reason why interest rates are supposed to go up?”

    Alpaca – we don’t have “rising public debt”, the Federal government has no net debt.

    We’re looking at the opposite situation – maintaining a large surplus is supposed to keep pressure off interest rates and stop the economy overheating.

    Of course the 0.75% rate cut in the US has taken away much of the rationale for higher official interest rates here.

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