348 thoughts on “Monday Message Board”

  1. Alice, you’ve got to check out my hatchet job on Andy. It can’t last too much longer. This is painful to watch, even for me.

  3. John, I find the news somewhat bemusing this morning for it is claimed Godwin Grech admits to faking the email & of cooperating with the Opposition. This suggests Turnbull is a fraud. But my nose tells me otherwise for there seems to be a big stench in the air.

  4. A new Galaxy Poll shows 75% of Australians want the CPRS toughened up. Huge payouts of up to 11.7 billion dollars will go to overseas companies under the new ETS with no guarantee the money will be spent here.
    The details here. http://greens.org.au/node/5017

  5. Apparently this is all about ‘an error of judgement’. This is an interesting way of looking at things. Not that what was done had some moral dimension, that it was something you knew was wrong, but that it was simply a mistake like buying a suit (without trying it) that you thought you could fit into, and found to your regret that you couldn’t. I like the sociopathic thinking involved in calling it an error of judgement.

  6. The AFP and other law enforcement agencies executed search warrants at 19 locations in Victoria, at 04:30 today.
    The Australian News Paper knew a week ago that the police were at a critical point of the investigation of a suicide terrorist attack on military bases, and had been told to delay printing of the story until given the go-ahead, which was expected to be sometime today.
    The Australian News Paper published its print edition today and had it available on the street at 01:30 today. Presumably the story also made the online edition at or before that time.
    The commissioner of the Victorian Police, Simon Overland, is particularly tetchy about the release of the story 3 hours before the execution of search warrants.

    I have a few simple and direct questions for staff of other non-Murdoch news papers to ask:
    1) What were the exact instructions conveyed to the Oz staff concerning when to publish?
    2) Why did the Oz staff knowingly risk both the security of the Law Enforcement Officers and the public?
    3) Why did the Oz staff knowingly risk providing a tip-off to the alleged terrorists by printing the story before the suspects had been taken into custody?
    4) Have the Law Enforcement Officers found any indication of attempts by the suspects to destroy evidence in the time between the publication of the story and the execution of the search warrants?
    5) Have the LEO found any indication that the suspects had been informed of the raid by way of the print edition or the online edition of the Oz?
    6) Did the official release of the report into the “Utegate Email Affair” today play any part in the Oz bringing forward the printing of the story concerning the raids on suspected terrorists? In other words, are the staff of the Oz playing politics to minimise damage to the Liberal opposition pary?

    On the issue of how the alleged terrorists came to be residing in Australia:
    7) How many of the suspects are Australian by way of birth?
    8) How many are immigrants on 457 visas?
    9) How many are on student visas?
    10) How many have been granted Australian citizenship?
    11) How many are refugees, and how many spent time in Australian refugee facilities, and how much time was spent in detention?
    12) When did the various suspects form the view that terrorism against Australia was necessary, and what led them to form that view?

    I’d ask (some) of these questions via a letter to the editor, but I’m doubtful it would be published.

  7. As most will be aware, in the US the word “tax” is as close to a swear word in rightwing circles as you can get without using one of the offical ones. That and “liberal”. Unsurprisingly, opponents of mitigation policy have tried both to cast Waxman-Markey as “a tax” and here and there have proposed a carbon tax as a simpler device for acheiving reductions. The Machiavellean logic is clear.

    I think it’s worth discussing the ethical dimension of an ETS and how it is different from a tax.

    A tax is a levy on a community designed to raise funds for state purposes. The amount and methods reflect the perceived financial needs of the state and of course the perceived capacity of the community to finance the levy.

    In so far as a cap and trade imposes costs on end users of products and services the delivery of which cause emissions of CO2, a cap and trade system is a fee for resort to an externality or service – in this case the right to dump an industrial waste product — CO2 — into the biosphere — which is a common asset of all humanity. As with any valuable commodity, underpricing it causes wasteful use and skews the market and insofar as this wasteful use imposes other costs on those
    not purchasing goods and services causing CO2 emissions (or causing them less than the average) now and in the future, the failure to recover a suitable cost amounts to a licence to embezzle assets from the public, or put in terms you might better understand, it amounts both to a public subsidy and an income and assets transfer that is unaccounted for by policy.

    Worse yet, since the bulk of CO2 emitting activity brings with it contamination of the biosphere with seriously toxic substances (mercury, CO, actinides, SO2, ozone, PM, other heavy metals, PCBs etc) the public subsidy from the commons to the emitters and their clients amounts to skewing the market in ways that poison the public without compensation. All of the costs of this illness then fall upon the
    health system as a whole or show up in lost working days.

    Perhaps worst of all the principal burden of losses falls upon those of least means. Wealthy people (who are typically the heaviest emitters) have the means to evade the worst consequences of emitting activity. They can move to areas with clean air,pay for high quality health care and so forth. Not so the poor, who tend to live in areas that are heavily polluted, and who in many cases will be most at risk from sea-level rises, will suffer greatly from drought, crop failures
    or malaria, may not have access to air conditioning during heat waves and so forth.

    In so far as the biosphere, with its bounty of clean water and clean air is the common property of all humanity and of greatest marginal value to those of least means, the most equitable measures are those that increase the value of these commons, and deny small groups the opportunity to diminish it without fair exchange. For that, one needs a suitable charge, which funds can then be used to compensate those harmed in proportion to their harm or abate the harm by removing the pernicious subsidy and encouraging less harmful activities to crowd out the more harmful ones. Far from being ‘a tax on those who can least afford it’ as some opponents argue, a suitable charge for using the biosphere as a waste dump represents a restitutional value transfer to those who lack the resources to protect their access to a life-giving asset from those seeking to appropriate it to themselves.

    Moreover, the cap and trade charge is efficient for while it removes the advantage those structuring their business in ways that convert the commons to their private advantage have over those who do not, it also ensures that those who cannot conduct a viable and necessary enterprise without such resort pay the very minimum consistent with meeting the need to protect the commons. As progress is made in
    reducing the rate at which the biosphere is converted into a waste product of lesser value to most people, the general cost of using the biosphere in this way falls. So providing the cap is an apt one at any moment in time and the measurement methods sound, then the cost of emissions closely matches the transfer from the commons. This is another way in which it is superior to a tax.

    Comments?

  8. Fran, you should investigate Pigouvian taxes. Jim Hansen is on record advocating a carbon tax instead of an ETS. If you don’t believe me google it and you will easily find the story and his clear explanation of his preference.

    The problem with cap and trade is rent seeking, as you have no doubt noticed with the local debate. The US proposal looks even worse in this respect. I’m happy to agree that, in theory, cap and trade should work well. In practice it is run by politicians and they are world champions of finding special exceptions to general rules.

    The biggest problem with a carbon tax is that you can’t identify a level of reduction that will flow from a particular level of tax. On the positive side you know that if you raise the price of good A by a substantial amount then alternatives B, C and D become more attractive and so you can use that to set you tax level. The tax would best be used to lower income taxes and raise benefits to provide some compensation to consumers.

  9. How does The Australian Newspaper in legal terms get away with it!?This is totally unfair on other newspapers an media outlets,who may have played by the rules,both stated law and implied!?On matters terrorism,unless The Australian was acting under agreement with the Law Enforcement bodies.Which means,that THE AUSTRALIAN newspaper has enough legal qualities to be entrusted as a partner in engaging a minor psyops operation within a targeted group.A target group that Police and THE AUSTRALIAN jointly consider as terrorist likelihoods.Tuesday as it is.

  10. Pedro :Fran, you should investigate Pigouvian taxes. Jim Hansen is on record advocating a carbon tax instead of an ETS. If you don’t believe me google it and you will easily find the story and his clear explanation of his preference.

    I’m aware of Hansen’s position. I don’t share it, for reasons I’ve outline here before.

    The problem with cap and trade is rent seeking, as you have no doubt noticed with the local debate. The US proposal looks even worse in this respect. I’m happy to agree that, in theory, cap and trade should work well. In practice it is run by politicians and they are world champions of finding special exceptions to general rules.

    Well yes … so the problem involves getting a robust ubiquitous non-arbitrary and goal-determined cap and a unifrm system of permit auctions with no exceptions

    The biggest problem with a carbon tax is that you can’t identify a level of reduction that will flow from a particular level of tax. On the positive side you know that if you raise the price of good A by a substantial amount then alternatives B, C and D become more attractive and so you can use that to set you tax level. The tax would best be used to lower income taxes and raise benefits to provide some compensation to consumers.

    @Pedro

    The problem here is that because indutry has arrogated to itself all sorts of discounts for business inputs the tax won’t flow uniformly through the system por-rata to emissions. A suitable ETS can.

    Fran

  11. Fran I don’t think that the tax deduction system is as complicated and rorted as the special deals and compensation for the proposed ETS. Anyway the deductibility can be factored into the amount of the tax. The effect of a tax deduction is to reduce taxes, not costs before tax.

  12. If the ETS (CPRS Australia, Waxman-Markey US) turns out to be unworkable in practice the fault will be with politicians for lack of resolve. I think the decarbonisation process is more urgent than ever because of looming problems. They say 2010 could be an El Nino horror year and liquid fuel supplies will be parlous within five years. Therefore we need an incentive mechanism to go green well before the problems are intractable. The advantage of both cap-and-trade and carbon tax is that they are a form of forced saving. The argument is similar to that for compulsory superannuation. Pay now, be grateful later.

    I think we should start the ball rolling with a CO2 ‘fee’ of $20 a tonne for large enterprises. No exceptions or deductions. If a plea for special treatment has merit the industry could get back some of the $10 bn total revenue in the form of a highly visible cash subsidy. Those subsidies can be compared to spending on schools and hospitals. The idea would be to change both the complexity and psychology of carbon pricing.

  13. @Hermit

    Here in Australia, as a compromise, I’d be willing to put a carbon tax along the lines you suggest preparatory to an ETS, though I think the indicative price should be more like $50 per tonne for transport-related emissions and $100 for stationary energy. We use that to fund revegetation, land acquisition in rural areas, renewables etc. Funds to be administered and disbursed according to explicit program lines and independent of the state.

    The ETS, redesigned to impose a cap of 25-40% depending on COP15 across the board comes in in 2013. All permits auctioned. Anyone caught short pays the going rate in tax + interest at the mean credit card level. Cap to be adjusted incrementally year on year to reach the target. If we run ahead of 2020 target, the cap gets adjusted in the next year period to meet the new projected target.

  14. Are there any Big Government apologists who want to refute this piece by George Selgin?

    The Fed’s apologists suggest otherwise, of course. They note that the US spent nearly half the years between 1854 to 1913 in recession, as opposed to just 21 percent of the time since the Fed’s establishment in 1913. Who would want to go back to those bad old days?

    But consider: the US economy has actually grown less rapidly since 1914 than it did before. And inflation has been much worse, despite both the Civil War, which featured the nation’s worst inflation, and the Great Depression, which featured its severest deflation!

  15. Fran – in so far as the wealthy can avoid dirty air with strategies such as paying for a home in a cleaner the wealthy are paying to avoid the cost of dirty air. Paying the cost is not the same as avoiding the cost. In essence all you are saying is that dirty air is bad and it is better to be rich rather than poor. Neither of which is a revelation of any particular magnitude. In fact given the fact that rich people are better positioned to deal with all manner of problem, not just dirty air, it is of some imperative that we all get richer as soon as possible. And of course it is also of some imperative that we avoid making air dirty.

  16. TerjeP (say tay-a), you should read up on ie the aluminium sector to see whether the major polluters are doing their bit in reducing energy consumption and greenhous gases. Who is subsidising who?

  17. Sukrit – there was also a civil war in the US during the period 1854 to 1913 and as part of that a major monetary upset when the gold standard was first abandoned (with highly inflationary consequences) followed by a period in which the gold standard was re-established at an ill considered pre-war price (with highly deflationary consequences). So of both epochs we can say messing with the currency messes up the economy. It’s just that the messing about was of a different nature.

    IMHO what we ought to do now is restablish a fix between our currencies and gold at a well considered price point and then desist from messing with it further. Shutting down central banks would somewhat solidify the desisting process but is not altogether technically essential. Some form of Bretton Woods mark II would do. The more utopian solution would be a constitutional amendment prohibiting the government from creating any form of currency or bearer bond, prohibiting any legal tender laws and insisting that tax liabilities be denominated in gold weight. Any messing with the numerair would then require the full consent of the people. Those that drafted the Australian and US constitutions envisaged that they were in fact putting such protections in place but they underestimated the undemocratic cunning of future governments or the smoke and mirrors that would be deployed to bamboozle.

  18. MoSH, You won’t find TerjeP lobbying for subsidies for the aluminium refiners (sorry to put words in your mouth TP). I think you’ll find politicians behind that stupidity.

  19. Pedro, there comes a stage when enough is enough is enough and I’ll be blowed if the aluminium industry should get another taxpayers nickle in subsidies so as to do more harm to the environment. Insane. Have to go.

  20. Sukrit#14. I don’t want to go back to those old days despite the fantastic economic opportunities because of the horse poo didn’t look good on roads. But convincing me that differing growth rates in vastly different conditions, in different centuries, comes down to a single factor like the Fed would require a lot more than that short narrative. I’ll be sticking with my horse poo hypothesis hypothesis for now.

  21. Terje, you wrote “there was also a civil war in the US during the period 1854 to 1913”. What civil war are you referring to? The only one I can find is the one from 1861-1865.

    You’re right, what we ought to do is consider alternative monetary arrangements. Many have been offered – Hayek wanted competing currencies, Larry Sechrest has written on free banking, Rothbard wants a 100% reserve classical gold standard. We could set interest rates through the market, not through the central bank. Unfortunately, mainstream economists aren’t quite smart enough to think creatively: all they can offer us is more of the same – fiat money whose value is manipulated for political reasons, at the expense of the average person.

  22. @Jim Birch
    I take it you believe that economic principles don’t apply between centuries then? Interesting. Perhaps we can repeal the law of gravity next century then.

  23. Sukrit, if you are looking for apologists for a monetary-policy only approach to macro policy, you are looking in absolutely the wrong place here. Try Catallaxy instead.

  24. While I doubt your claim is right, Sukrit, even if it were I’d still prefer the latter period. Volatility is undesirable.

  25. Sukrit

    that’s an interesting incidental point because there is some recent evidence that suggests the physical constants like gravitational constant might not actually be constant, but that’s on scale of billions of years. The question isn’t resolved though.

    The drivers of economic growth, on the other hand, are absolutely constant throughout space and time (and it all relates back to the Fed) just sounds a bit dreamy to me. I don’t pretend to know what they are but I’d be looking to things like natural resources, technology, political and social stability, population, literacy and numeracy, etc, to build a theory of growth. It’s been noted that economic conditions in medieval Europe were much closer to an IMF prescription than virtually anywhere today – and AFAIK there was no Fed – but growth was virtually non-existent.

  27. @TerjeP (say tay-a)

    Terje – if one of your friends is giving a talk on “the old should pay for themselves” at the Festival for Dangerous Ideas…I cant say Ill be joining the audience with enthusiasm (Id rather do something mildly dangerous – like go to the nearest pub and attempt to analyse why anyone would even suggest such a thing!)

    But you should definitely go Terje.. You cant miss your friend talking (they may take him to the madhouse first though).

  28. @ABOM
    Im going home to look up your hatchet job on Andy ABOM (LOL – poor Andy gets clobbered again and again BUT ABOM, he doesnt stay down! He jumps up smiling! He is the original rubber banker zombie – thats rubber not robber!)

  30. @jquiggin

    Oh I think you’ve got it wrong. How about a micro policy only approach to macro policy?

    Actually John is right to an extent. Better monetary policy is not a panacea. I’m not entirely happy with it, it has been a learning process but it is a big reason why we’ve had mostly good times since 1983.

    The credit induced boom talked about my Mises and popularised by Alexander Shand makes a lot of sense and can fit in with most of the standard macroeconomics discourse.

    What we shouldn’t do is reject mathematisation (kudos to Sechrest) nor should we follow the short sighted approach of “liberal” reformers like Rothbard who effectively wanted to shut down banking as we know it.

  32. Alice,
    Seriously, I’ve tried everything to get to him. Humour, rudeness, anger, logic, legal argument, economic argument, references…. Nothing’s stopped him. He is the very definition of financial insanity. Please try to give it a go…. You seem to have more energy than me….

  33. @rog

    Nope … the reference is too subtle. You’ll have to develop that thought if you expect a substantive response

  35. John, today it has been revealed that Godwin Grech took it upon himself to fake a Treasury document (email) for reasons unknown to others at the time and must now pay the price for his stupidity. As for what Turnbull said or didn’t say about the fake document after it was created is of little relevance for Godwin Grech’s intent was to mislead and deceive practically everyone.

  36. Terje, you wrote “there was also a civil war in the US during the period 1854 to 1913?. What civil war are you referring to? The only one I can find is the one from 1861-1865.

    Yes that civil war. The consequences of the associated monetary manipulation endured well after the war ended.

    Looking at a chart of the gold price you can see the disruption of the gold standard during the civil war.

    Whilst the pre-war gold price was re-established by 1880 the assocated deflation would have been working it’s way through the economy for much of the next decade. So I think it fair to say that from 1861 – 1890 monetary influences would have been disruptive to the general economy.

    A notably disruption is that anybody who borrowed dollars or contracted goods or services (eg salaries) when the dollar was worth only 1/55 of an ounce would have had a hard time paying back the principle or honouring the contract when those dollars were subsequently worth 1/21 of an ounce (2.6 times as much).

  37. Well – isnt it amazing ? Did I or did I not predict (without any model) that the nest we would hear is that Godwin Grech would pop up in an insane asylum and he would be made to bear the brunt of “concocting” the fake email. The fall guy. Godwin Grech…..
    and yet he hints he was “under immense pressure”

    Under immense pressure to deliver a concocted email into the hands of Turnbull.

    A set up in other words.

    This sucks. I read the paper …and what can we expect? A column two inches long by two inches wide saying Grech is in a psychiatric institution and has “admitted concocting the email.”

    BS. The newspapers are biased. This would make front page news if it was the Rudd Govt that concocted a fake email. It would make a two page spread.

    Even my conservative hubby says – yeah I wondered about that….it seemed such a small piece after all the fuss.

    Whereupon I hit him over the head with the facts as usual (and he fell asleep).

  40. BS. The newspapers are biased. This would make front page news if it was the Rudd Govt that concocted a fake email. It would make a two page spread.

    Funny thing being in government. Good or bad everything you do gets noticed more. I would not necessarily call this bias.

  42. @TerjeP (say tay-a)
    A two inch by two inch announcement that Godwin faked the email Teje? Ha. Its a joke – the newspapers are biased and when your own conservative other half thinks its weird (the lack of media play)…Its weird Terje and its biased. The newspapers are trying to sink the stink so to speak (around the liberals).

  43. Kudos to Alice for predicting the next step in the Godwin Gresch affair. Given the calls by Malcom Turnbull for the prime minister to resign (about as serious a demand as could be made of a prime minister, I would have thought), and the way in which this unfolded, I reckon it is perfectly proper to further investigate the roles of Turnbull and others who met with or communicated with Gresch in the lead up to the senate inquiry.

    Given that the opposition saw fit to chase the current government over the use of the ute, and demand resignation of the PM and treasurer, perhaps it is time to stop letting bygones by bygones, and for the government to properly investigate the AWB funding of the enemy, whom our troops later fought. Alia might be the place to start.

  44. Alice :@TerjeP (say tay-a) Terje – it might be the sole thing we agree on. A return to money backed by gold or some other real asset. This free global market in fiat money is a mistake.

    Sorry to blow your bubble with a technicality but I never suggested that currency should be backed by gold. I suggested that currency should be denominated by gold. It is not the same thing. For instance given the relavant directive the RBA could realign it’s open market operations tomorrow to fix the Australian dollar at a value of say 25 milligrams of gold. It could do this quite readily whilst also electing to own no gold at all. Assuming they retained the 25 milligram target we would be on a gold standard and the value of the dollar would be denominated by gold but there may be no gold in the vault and the currency would not be backed by gold.

    Personally I don’t overly care what the currency is backed by so long as it is backed by some prudently chosen asset. Government bonds would do. Just give me an appropriately priced gold standard.

  45. This free global market in fiat money is a mistake.

    Whilst I’m splitting hairs I’ll also mention that we don’t have a free market in currency. There are numereous legal barriers to entry for private currencies and what is generally traded on global currency markets are the monopolistic public currencies imposed by governments. Pre 1910 Australia had something more akin to a free market in currencies.

    http://terjepetersen.wordpress.com/2007/04/12/the-bank-notes-act-of-1910/

  47. @Fran Barlow

    There is plenty of evidence, just google it

    Tax avoidance has become one of the social “cancers” of China. Though a group of well-known enterprises, including the Legend Computer Group and the Bank of China, were recently cited as examples of upfront taxpayers, there were at least 200,000 enterprises in Beijing whose employees paid no individual income tax last year, an official from the municipal taxation department has disclosed.

  49. Fran Barlow,

    Any environmental trading scheme for carbon pollution (Cap and Trade) suffers fatally from the following faults;

    (a) Rent Seeking (including corporate lobbying and political patronage);
    (b) Complex conditional legislation which intentionally obfuscates the fact that the cap is illusory (the cap can float up as much as the governments and corporations wish it to); and
    (c} The impossibility of ensuring compliance because (i) ensuring genuine measurement and compliance is an enormous, complex and well-nigh implossible task, (ii) the governments are not serious about ensuring compliance in any case and (iii) the corporations will fake compliance in covert collusion with weak government compliance measures.

    One of the few things our very imperfect democratic governments are serious about is taxation. This is because taxation pays for police, courts, army, welfare (as a tool to purchase re-election) and the general retention and exercise of political power. Therefore, a carbon tax is the only answer for the above and the following reasons;

    1. Tax compliance and tax collection is something that governments are relatively good at;

    2. Taxing carbon fuels is simplicity itself. Each fuel has a known carbon weight compared to its total weight. Each fuel is sold or consumed in known quantities by each business. The apparatus of the GST is already available for accounting purposes.
    Carbon pollution by other businesses (agribusiness for example) is more complex but not impossible to treat in this carbon tax manner.)

    3. A carbon tax can replace all other excises on fuel. A surcharge over the existing excises can be added as the new carbon tax and this can be calibrated with regard to the removal of all fossil fuel subsidies to set the overall effective new tax.

    4. Whilst any “cap” is illusory (as proven above), a strong carbon tax will give real reductions albeit (initially) of unknown size.

    With respect to point 4, we can see that the simple choice is between an illusory “fixed cap” and a real but initially unknown reduction. However, the real system will give us the empirical feedback on a year by year basis. The carbon tax can then be adjusted by mathematical goal-seeking modelling to reduce us to zero net carbon pollution by 2050. That should be our goal if we are serious about saving the planet.

    What I am saying is this. Remove the overall command decision (which is about saving the climate for all) from the market by using taxes and tariffs. This means putting the command decision where it belongs, with democratically elected government. However, allow the market to do the rest. That is, allow the market to price energy sources (fossils and renewables) according to the pressures applied by the taxation reduction model. Tariffs equal to carbon taxes would be applied to nations which refused to implement like and sufficient carbon taxes.

    The cap and trade system will fail us and is failing right now as it stumbles nowhere good. It will be totally subverted by dishonest governments and dishonest corporates. The only solution is a democratic demand from the people that the democratic governments exercise their power for all the people (not just the corporates) and implement the only solution that will actually work.

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