215 thoughts on “Midweek Message Board”

  1. how ungrateful can you get?

    WASHINGTON — The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether….

    …“There are sensitivities there,” said Scott Talbot, a lobbyist for the industry’s Financial Services Roundtable. Political contributions “can make a donor a target,” Mr. Talbot said. Many involved, though, say the low attendance from those Wall Street giants also reflected a broader disenchantment with Mr. Obama over the angry language emanating from the White House over the million-dollar bonuses and anti-regulatory lobbying….

    ….Dr. Daniel E. Fass, another chairman of the event who lives surrounded by financiers in Greenwich, Conn., said: “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.” Dr. Fass added, “How much that will be reflected in their support for the president remains to be seen.”

  2. @gerard
    Any disenchantment of the Wall Street Giants with Obama is a step in the right direction, as is their absence from the corridors of power.

  3. Another fantastic piece from Michael Pettis:
    China’s September data suggest that the long-term overcapacity problem is only intensifying

    According to my model of China’s overcapacity problem, the source of the imbalance is a set of industrial policies that systematically shift income from households to producers, and as long as these policies continue there is little chance of resolving the problem of excess production.

    …

    Although China is still a very poor country, there is no question that Chinese household income has grown substantially over the past few decades, but it has not grown nearly as quickly as GDP. While China’s GDP grew at 11-12% over the 2002-2007 period, for example, MIT economist Yasheng Huang estimates that household income grew at a much lower 9%.

    I wish the RBA board would read Pettis, but unfortunately they appear to be true believers in China Boom 2.0.

  4. I was reading through the Wentworth Group report on agreiculture and the CPRS the other day and it got me thinking more broadly of other models for implementing effective carbon rationing. Perhaps this is a little whimsical, but bear with me …

    Imagine all households being issued with stored value carbon credit cards. Everyone would have to buy their initial household emissions credits — perhaps online. The first 100 kilos per household member per year would be at $20 per tonne and from that moment on there would be a sliding scale peaking at $100 per tonne when you reached 2 tonnes each. At 5 tonnes each new kg would escalate at 1% more than the last one. You could of course anticipate this by buying carbon credits on eBay at whatever the going rate was. So business would be charged nothing, and consumers everything.

    When you paid your electricity bill or your petrol or bought stuff at the supermarket, you’d have to run your card over the swipe and if you were short, you’d have the relevant charge added. The total amount of carbon credits in the economy each year would be derived from the cap and from any produced by anyone engaging in properly audited sequestering activities.

    Low income households would be assisted in kind by being supplied with whatever goods they needed to stay under the cap — budgeting advise, smart cut-off devices, passive solar water heaters, insulation, water tanks, a concessional public transport card etc and of course expanded income assistance. In a market like that, you might think that producing goods with low net CO2e would be a selling point aside from price.

    Food could be a special case. Suppose we zero rated food staples (apart from CO2e) and raw food that met some minimum nutrition standards and then as the level of food processing increased or the net nutritional value declined or its sweetness began to exceeded the non-additive sweetness of the the dominent nutrient bearing components taxes rose. This would take care of alcohol and alcopops.

    Moneys raised could be hypothecates to running programs of the following kind:

    a) Community centre based eateries. Here, good basic foods would be supplied to people on low incomes who could, with guidance from staff, to prepare nutritious meals. Others on not so low incomes could pay a progressively escalating fee for each meal. The same centre would have laundry and washing facilities and perhaps a GP service, community nurse and creche, recreational facilities.

    Advantages: Equitable. There’s a tax on low quality food but people who would buy lots of it because it was cheap can now eat quality food for the cost of their labour. Encourages community solidarity. Supports good parenting practice amongst single parents. Time efficient. Funded subsrtantially by better off people. Combats child and adult obesity directly and through promotion of rec activities.

    b) A before and after school child care service extending to high school in which food and homework supervision and assisatnce and perhaps extra-curricular rec activities are supplied on school premises. Scaled contributions

    Advantages: Ensures kids get a proper breakfast and dinner; cuts truancy and anti-social behaviour opportunities; reduces child neglect and other forms of potential abuse; underpins school success

    c) Enlargement of DOCS staffing so as to case manage children for two years at 3 month intervals with yearly follow up for non-serious cases until the age of five. Check developmental benchmarks, support good parenting practice, ensure early intervention of support services where necessary.

    Advantages: An ounce of prevention is worth a pound of cure. Break generational disadvantage; ensure learning difficulties are identified early and appropriate support is given in a timely way. Foreclose longterm costs of contact with mental health and justice systems.

    Now plainly, taxes on low quality food aren’t going to pay for all this. Possibly some places would get sponsorship and there would be contributions from people who didn’t meet the low income standard but still in the long run, I believe the program would go very close to break even. Out at Minto, where I used to teach, the businesses in the Minto Mall would have loved to support such a program if they could have been sure of 80% attendance before and after school.

  5. I thought you might be interested Fran, since you did respond to one of comments, not agreeing, but disagreement stimulates further thought. Sometimes ideas and notions cannot be saved. You will have to give me more time on your ideas, and perhaps others are better able to comment anyway.

    Here is a an e=mc[squared] moment: citizenship is social action. The power and effect of citizenship is common property. The primary source of this power is not technology or intelligence but compassion. Person power is constrained by our common humanity reflecting our biological capacity (and rights), apprehended as mind (the capacity to develop and understand systems) since we are human beings, and not for example butterflies.

    Do you have a better formula?

  8. @Fran Barlow
    Fran – why is consumers pay all and businesses pay nothing equitable?? So woolies and coles pay nothing. This sounds like yet another way to let large corporations off with as little contribution as possible, as if they, and they alone are soley responsible for employment and innovation (cant burden the poor things…).

    Thats INEQUITABLE. Let them pay more and the consumer pay less and put some more disposable income in consumers pockets and maybe they will leave their boring as batcave job and start a business because they have more to invest. This whole notion of protecting firms and penalising consumers to an ever higher extent just gets my hackles up. They have had more than enough concessions since 1980s. Thats half the dam problem. Why should people have so little disposable income (mortgage, ever rising cost of living) that they are scared to leave their wage slave jobs. Hardly conducive to innovation and hardly conducive to growing anything more competitive to tackle the incumbent and comfortable large oligopolies currently running a lot of business in Australia.

    I dont see that plan as equitable And It rests once again on the notion of trickle down (ie businesses pay nothing and consumer pays all because business needs protection because its such a valuable provider of jobs….that is the trickle down assumption by any other name).

  9. DFran

    Whats equitable about letting National Foods off paying for the carbon when those bastards just cut milk to dairy Farmers ion Tasmania by damn near one half and are going to to do the same across Australia. Why? because they, as a monopoly, can.

    When are we going to wake up and realise that the herd stock is half or one third what it was in 1925 or that dairy farming is a dead industry in Australia and insteads we are importing milk at 3 times the price and its now long life milk. From who? National foods. Why? Because they are in the business of destroying our industry so they can preside over a mon0opoly importation game.

    Why shouldnt they pay for carbon Fran? They can afford to bankrupt farmers. We can afford to bankrupt them. In fact why are they here and why do they have so much destructive power?

    We will wake up one day.

  11. It is an interesting idea Fran Barlow, of passing some kind of carbon credit card to consumers, who then use it as they see fit. Still digesting it though, so might leave extended commentary to later…

    Alice, I agree that equity needs to be thought about; however, consumers at the supermarket may use the knowledge of what carbon cost is attached to various food items, and to use that as a means of altering consumer behaviour. If supermarkets find that the higher carbon cost items in a given category aren’t selling well, they will eventually drop that item – which puts pressure on manufacturers and producers to find ways of reducing the carbon cost component of their price (all other things being equal etc etc).

  12. @Donald Oats
    Donald – I can see your logic – and according to demand and supply theory suppliers shouldnt supply what consumers dont want to buy but I think things have gotten a little more complicated than that in our markets. Lets have a hypothethical and consider the impact if say National Foods realises it has a hold on the farm gate prices BUT due to globalisation it can purchase and import milk (albeit semi dehydrated and semi processed like some form of long life substance) AT AN EVEN LOWER PRICE. Does National Foods have incentives to drive down farm gate prices further??? (mediu term incentives??) OF course it does. So farmers go out of business, the milk price with lower farm gate prices is scarcer so it starts ti rise, making long life look attractive to consumers……

    So ultimately the Australian fresh milk market is deemed “uncompetitive”, half the dairy producers have left or amalgamated,

    I guess what I am trying to say here is that basically dairy de-regulation, IMHO, is basically problematical unless the consumer ends up happy with an inferior product (or is it just because the now inferior roduct is the same price as the superior product used to be).

    What I am saying is that …is it fair to even consider that consumer demand drives supply or can supply drive a demand for inferior products?? (at no lesser price).

    Im not certain I believe in consumer sovereignity any more.

  13. Its a bit like rice growing in Thailand Don – the rice growers are amongst the poorest people in the country (so poor some sell their daughters to the sex tourism industry) yet there are 64 million people in Thailand most of whom eat rice every day.
    How does this happen?? The only explanation is a cheaper imported rice. Damn it – put the tariff barriers up. That cheaper rice is likely US rice who of course dont receive agricultural subsidies…they get “marketing” subsidies (thats not protection is it??). You probably find more US rice on Thai food market shelves than Thai rice I wouldnt mind betting.

  15. On the subject of “National” Foods… quite a misnomer! I was surprised to learn that since about one year ago it has been a fully-owned subsidiary of the Japanese corporation Kirin Holdings, one of the largest companies in the Mitsubishi keiretsu.

    A lot more people would be surprised if they realized. Berri juice, Pura, Hahn, Dairy Farmers, even Brisbane’s own XXXX beer – now all 100% Japanese owned! And we kick up such a stink about the Chinese buying some mines.

  17. @TerjeP (say tay-a)
    The other day he might have been whistling – or was just intellectually lazy – in his response to the asylum seeker stuff (I assume that’s what you are referring to, Terje). Cringeworthy, but eventually Prime Minister Rudd found a more temperate rhetoric concerning the current policy. Evans did come out the other day on AM Agenda IIRC, stating fairly cogently the government’s policy. I am surprised at how much fuss the opposition has made over the fairness or otherwise of coming here by boat rather than plane, when so little fuss was made by the previous government ministers concerning indefinite detention of minors.

  18. Nobody can beat Wilson Tuckey in the dog whistling stakes. What I would like Mr Rudd to do is to put a lot more pressure on Sri Lanka to let at least the women and children out of the detention camps which remind me of concentration camps in World War 2. It is surprising that Kevin Rudd holds a people smuggler in that war as one of his heroes and yet fails to see the parallels with Sri Lanka today. What is outrageous is what is causing the numbers of refugees in boats to rise and that no-one in the international community is crying “Shame”.

  19. Carbonsink: only 9% (compounding) per annum growth in household incomes?

    The horror! The horror!

  22. John, there is one sad story coming out of Iraq which the world should be made aware and that is the number of deformed babies being born in Fallujah. If the report is true, during ‘September 2009, Fallujah General Hospital had 170 babies born, 24% of which died within their first week of life. Worse yet, fully 75% of the babies born that month were deformed. This compares to August 2002, six months before the US invasion, when 530 live births were reported with only six dying in the first week, and only one deformity. Clearly something terrible is happening in Fallujah, and many doctors suspect it’s the depleted uranium dust that is permeating the city’.

  23. Thats OK Sean – Obama is cutting exec pay by 90% for tarp recipients and after the string of shareholder disgust articles this week ocver executive pay in Australia – Im waiting to see Rudd’s moves. Where are they? It will happen.

  24. @Ian Gould
    Ian – I did not say that Thailand was a net rice importer at any point anywhere. Just because Thailand exports its own rice, doesnt preclude Thailand from importing a cheaper rice from somewhere else (whilst exporting the majority of its own rice). Either way – Thai rice growers are impoverished, perhaps because they do export their own rice. Why is fish so expensive in Australia now Ian Gould? Because we export so much of it.

  26. Gouldy, mate, here’s some more on the China ‘miracle’

    But there were a couple of eye-popping numbers in yesterday’s third quarter statistical report from China.

    Over the first nine months of 2009, China’s infrastructure investment grew by 53 per cent. Of the three-quarter GDP growth of 7.7 per cent, 7.3 per cent was accounted for by investment (consumption was 4 per cent and falling net exports subtracted 3.6 per cent).

    As a result there is now tremendous over-capacity being created in China. When the government stops spending so much on infrastructure, the slack is unlikely to be taken up by domestic consumption or exports.

    And the other eye-popper was money supply. M2 growth was 29.3 per cent, year on year. Total outstanding loans have grown 28 per cent since the start of the year (in Australia they have fallen).

    Over-investment and galloping debt can be a nasty combination, but normal rules seem to have been put on hold in China, at least for a while.

    Oh, and here’s a picture of an economy gone mad. No speculation here, move along, move along…

  27. BTW, 9% p.a. of bugger all is bugger all, compounding or otherwise. The Chinese consumer ain’t gonna replace the US consumer overnight, especially when most of the growth is (mal)investment, not household income and consumption. It will happen, but it will take decades.

  29. @Alice

    Fran – why [… is… should?] consumers pay all and businesses pay nothing equitable?? So woolies and coles pay nothing. This sounds like yet another way to let large corporations off with as little contribution as possible …

    By definition, it can’t be. It adds to the costs they have to pass on to consumers, and prejudices their market position directly. Now, corporations can compete not merely on cost — which includes the clever ‘savings’ corporation make using the biosphere as a tip and using cheap subsidised chemical ingredients and flavourings instead of real food — but on nutrition and environmental footprint. In that market, a business that incurs extra costs producing quality food and avoiding wasteful carbon usage gets an advantage over the embezzler in marketing its products.

    And of course, as I pointed out, the socially disadvantaged consumer is given other options and even not so socially disadvantaged ones would have cheap alternatives. The people who lose out are ignorant people with plenty of money and they fund the benefits going to non-ignorant people who are worse off. Transferring income from privileged, stupid and anti-social people to those not in those categories sounds fair to me and good policy.

  30. @Alice

    Fran – why [… is… should?] consumers pay all and businesses pay nothing equitable?? So woolies and coles pay nothing. This sounds like yet another way to let large corporations off with as little contribution as possible …

    By definition, it can’t be. It adds to the costs they have to pass on to consumers, and prejudices their market position directly. Now, corporations can compete not merely on cost — which includes the clever ’savings’ corporation make using the biosphere as a tip and using cheap subsidised chemical ingredients and flavourings instead of real food — but on nutrition and environmental footprint. In that market, a business that incurs extra costs producing quality food and avoiding wasteful carbon usage gets an advantage over the embezzler in marketing its products.

    And of course, as I pointed out, the socially disadvantaged consumer is given other options and even not so socially disadvantaged ones would have cheap alternatives. The people who lose out are ignorant people with plenty of money and they fund the benefits going to non-ignorant people who are worse off. Transferring income from privileged, stupid and anti-social people to those not in those categories sounds fair to me and good policy.

    {PRQ delete last as I forgot to close blockquote … ta }

  31. @Fran Barlow
    Fran

    you say (and I cant do block quotes unless someone tells me how)

    “By definition, it can’t be. It adds to the costs they have to pass on to consumers, and prejudices their market position directly.
    ”

    BUT you said in original post..

    “So business would be charged nothing, and consumers everything.”

    ?????

  32. Why should Businesses be charged nothing Fran?? They are often the largest emitters and you are soley relying on the consumer to put price pressure on the firm and I dont think, in many concentrated markets the consumer actually has the power to put price pressure on the firm because there is no damn choice (except to go without) and thats not choice enough. The less choice the consumer has the less they can exert price pressure. Its nice to have these wonderful theories of the consumer voting with their feet but if there is no where to go in your bare feet then thats no argument for lumping it all (carbon costs) on the consumer.

    I find this idea dangerously naive (along with the idea thatc consumers can actually exert price pressure in many markets these days).

    There are often only three prices – the usual price and the “special discounted price” or zero because the consumer wants it but walks away from the uncompetitive price.

    Did you know you can clean your teeth with some form of coal dust or ash?. My Mum did in the immediate aftermath of great depression as a child. Cheaper than toothpaste if you cant afford it.

  34. @Alice

    You do blockquotes by enclosing the string “blockquote” in these “” and you close the quote with the standard “/” preceding the string “blockquote” in the above tags.

  35. I just noticed they don’t show up even when enclosed with the standard string argument declaration. So replace the colon here “:” with the character adjacent to the “m” and to its right and then the character following that on the standard keyboard. ie. ASCII 011100 and 0111110 …

  41. Don, Dr Clive Hamilton running as a Greens candidate is a very pleasing outcome for me. I have not read any of his books (nor have I read any others in the last 10 years) but have read much about his work and strongly identify with his philosophy, especially ‘Growth Fetish’.

    It would be tremendous for the Greens if he should win, and tremendous for all Australians though many would never appreciate it.

  42. @Alice

    The string goes: character to the right of m, string::blockquote, character to the right of the character to the right of m, quoted text,character to the right of m, forward slash, string::blockquote,character to the right of the character to the right of m.

  43. Anyhow … on the substantive point …

    @Alice

    You quote me

    So business would be charged nothing, and consumers everything …

    apparently contrasting it with

    By definition, it can’t be. It adds to the costs they have to pass on to consumers, and prejudices their market position directly

    There’s no conflict. Businesses are charged nothing but the carbon costs still have to be borne by consumers since they have a ration that they have to to up with money if they want to exceed it. That imposes buyer discipline and acts as a price signal. Woolies and Coles can reduce this signal by reducing their carbon footprint.

    You can also clean your teeth with bicarb soda … I did that for a time as a child.

  45. Yes but – Woolies and Coles have such market power they can afford to ignore price signals up to the point consumers walk away…..

    <"is that not how monopoly suppliers operate??"

    I followed it precisely Fran but I dont think its going to work.

  48. Ok do it almost like this:

    [blockquote]quoted text[/blockquote]

    But instead of the first bracket, use the relational operator sign for less than and for the second, greater than

  49. This is a blockquote, done by using Fran’s description with &ltblockquote&gt quoted text and then the closing &lt/blockquote&gt

    Goody. BTW, if you are wondering how to get the lessthan and greater than signs, use ampersand symbol immediately followed by “lt” or ampersand followed by “gt” (without the “” quotes, of course). Preview feature should show if it is working or not, hopefully.

  50. Ahh, the preview feature substitutes the &lt and &gt but the raw text is used by the “Submit Comment” feature. Oh well.

    Anyway, following on from the Clive Hamilton running for the seat of Higgins, I have read a couple of books by him. While I can appreciate his perspective on a number of social issues, If I could vote in Higgins I would vote for Clive, if only to see how Andrew Bolt would react if Hamilton won 🙂
    He’s not too happy about it even now which is fine by me…

Leave a comment