163 thoughts on “Weekend reflections

  1. heh, heh, reminds of that add out a few years ago about countries paying off foreign debt, where you had all these poor third world people knocking on white people’s house’s giving them each a cheque from the third world because the third world is in debt to each of usin the Westy, by one account.
    This Laffer sounds dodgy.
    (S)he who Laffs the loudest, we fear.
    Wow, what a hide.

  2. Alice, apparently you have only a sketchy understanding of the Laffer curve. Its implication is not “lets reward the rich all the time”, but that there is a section where lowering taxes increases revenue.

    But I knew you wouldn’t like the commentary, which is why I don’t refer to it, but to the graph. It seems to contradict your many previous statements about how the rich are paying less because of “neo-liberalism” – see the changes after the 1970s?

  3. @Alice
    the laffer curve, as explained to me by somebody studying in the USA at the time was it had two parts.

    the first part was uncontroversial: taxes can have disincentive effects.

    the second was that laffer managed to convince himself that taxes were so high in the USA, despite countless evidence to the contrary, that a tax cut would increase net tax revenue.

  4. In knew Mr Laffer and his curve would get you and JR excited Jarrah. Section Jarrah? – what section does Laffer’s hypothesis run out on his curve because to me the rich have already had some substantial tax reductions over time in decades Jarrah. When does that section of his curve fail to work to increase revenue?
    It couldnt be now with the industrial nations large budget deficits could it?

  5. @Fran Barlow
    This is a continuing saga. Compare your news with the recent story out of PNG with attempts to silence the critics of mining is also interesting – ‘Goliath fights back against David in PNG mine battle’ at http://bit.ly/cnDcpM. It is even more interesting in that the Chinese government may have some involvement.

  6. @paul walter
    She who laffs loudest LOL…now Paul dont you laff at Mr Laffers curve – even JR admits mr Laffer was still banging on how high taxes were in the US despite countless evidence to the contrary!
    Well thats what I meant when I said there was no bottom end to Mr Laffers curve. Apparently taxes are always infinitely too high now matter how many times they are lowered. A bit sus I think. An eternal flame in the search for no taxes at all…maybe even negative taxes from the poor to the rich wouldnt be enough satisfy Mr Laffer.

    Is Mr Laffer what you might call a pure bred supply sider?

  7. I can see that this is no laffing matter. I note Jim Rose seems closer to your reading than Jarrah’s.
    Am actually here after having given up on “Insight”. The most sterile effort I’ve watched for years and no kudos for the once-effective Jenny Brockie on what might have been her worst effort in compering that program and that would be no laffing matter, either.

  8. @paul walter
    Seriously Paul – I started watching it too and it was just so boring…I lasted less than 5 mins. More on the blandness of this election campaign. Its a shocker. Im amazed people will actually be able to get suficient interest on poll day to vote at all… (most boring campaign in Australian history??).

  9. the second was that laffer managed to convince himself that taxes were so high in the USA, despite countless evidence to the contrary, that a tax cut would increase net tax revenue.

    Back in his day Keynes also managed to convince himself that taxes were too high. He had this to say on the folly of high tax rates:-

    Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more–and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.

    The key phrases are:-

    * taxation may be so high as to defeat its object
    * a reduction of taxation will run a better chance than an increase of balancing the budget

  10. John, if one reads McCrann’s article ‘Just right, just for now’ you would think the whole world was caving in. Nothing could be further from the truth for Australia’s Goldilocks economy will be in even better shape as government receipts grow thanks to the likes of India & Russia’s requiring our much needed commodities.

  11. TerjeP (say tay-a), generally speaking budget deficits are expansionary and vice versa. And when Labor says it plans to increase expenditure without raising taxes, then in fact it is not planning to increase tax rates. But if Labor spends more than it receives in government receipts then it must ‘finance the gap’. And manipulating tax rates to fix the ‘gap’ is but one tool at their disposal.

  12. Alice, I dont know if I found the sleaze that Abetz and co represent to me, or the sorry level of awareness in many of the comments and questions, of much comfort “moving forward”.

  13. And just underline how tragically wrongheaded those who backed the mining thugs over RSPT were:

    Australia Has Record Trade Surplus on China Coal, Iron Demand

    Australia’s trade surplus unexpectedly reached a record in June as Chinese demand spurred exports of coal and iron ore, while imports stagnated amid a slowdown in domestic spending.

    The data highlight Australia’s so-called two-speed economy, with domestic demand subdued even as the natural resources industry surges on sales by miners such as BHP Billiton Ltd. The acceleration in exports may put pressure on inflation as policy makers determine whether to extend their pause in raising rates.

  14. Fran,
    How does that “…underline how tragically wrongheaded those who backed the mining thugs over RSPT were”? A part of Australia is doing well, so you think we should stop it?

  15. @Andrew Reynolds

    It underlines that the downside exposure to risk was a furphy and that instead, windfall profits will go to the miners, be denied to the citizenry as a whole and invite Dutch Disease-style problems as well.

    In short, the government surrender to the thugs was a policy without only downsides.

  16. Andrew Reynolds, if you understood what I wrote you might have figured it out yourself.

  17. MoSH,
    Abuse and snarky comebacks aside (please re-read point 2 of the discussion policy), seriously, how do you fund deficit spending? It is important to see how you think it is funded to answer your points. How it is funded is an important point on how or whether a deficit is expansionary.
    .
    Fran,
    The surrender (I agree with the use of that term, BTW – although they had to push out the leader to do it) can only be seen as correct or incorrect in the long term. Nothing they would have done in the period you indicated would have been affected by the projected RSPT, which would have come into effect long after that and had major effects on future investment even when it had.

  18. @Alice
    The situation is a little more complicated.

    As I recall, Edward Prescott advocates replacing the retirement benefit portion of US social security with mandatory private savings accounts for those over 25 because of the favourable labour supply effects. The social security level would be abolished for those under 25.

    Private savings count as wealth so working harder increases your private wealth rather than disappearing into the social security Ponzi scheme black hole.

    Prescott considers that we need to have mandatory retirement accounts not because people are irrational, but precisely because they are perfectly rational.

    the lazy with their savings voters know exactly what they are doing.

    If somebody knows that they will be cared for in old age – even if they don’t save anything – then what is their incentive to save that nickel? Wouldn’t it be rational to spend instead?

    Prescott also considers U.S. government debt to be far to low, by several fold, and that government bonds could be issued to cover the outstanding implicit liabilities for social security, as I recall.

  19. Andrew Reynolds, a high school student studying economics could answer your question. Have to go.

  20. Fran – why is disagreeing with the government and asking others to agree with your view point a “thugish” thing to do? It seems perfectly democratic. It is what the trade unions did in 2007.

  21. @Alice
    On government bonds – why arent there more of them available for people to use as long term investment for their savings (like there used to be?). Who wants to invest in shares or other complex instruments on US ratings agencies recommendations and when we dont know which big players are taking out non transparent bets against you in the markets at the same time as selling you the investments?
    Recall the tale of the hare and the tortoise?

  22. Back in his day Keynes also managed to convince himself that taxes were too high.

    Only an idiot could believe that Keynes’ quote could be interpreted that way.

    You’ve been told that before, of course, every time you’ve dragged out that same dead horse, but for some reason you’re still trying to flog it. It still ain’t going to run.

    If you’re going to talk nonsense, why not at least come up with some new nonsense?

  23. @TerjeP

    why is disagreeing with the government and asking others to agree with your view point a “thuggish” thing to do? It seems perfectly democratic. It is what the trade unions did in 2007.

    I find it hard to explain your resort to this comparison in any way that does credit to your perspicacity and honesty. Perhaps, as a thought exercise, you might do a version of the 6 hats — pretending that you are not a naive epistemological empiricist and right-of-centre libertarian and envisaging yourself as someone who takes account of social power. How might they object to this comparison?

    Come on Terje. Let’s see if you have any processing power up there.

  24. @Andrew Reynolds

    Nothing they would have done in the period you indicated would have been affected by the projected RSPT, which would have come into effect long after that and had major effects on future investment even when it had.

    My point is fairly obvious. They claimed that the RSPT was already driving the shut dwon of the mining industry, when the trade figures suggest they were bluffing. Moreover, it is clear that this figure is merely a taste of things to come. This is the income that the enemies of the public interest want to forfeit to the mining thugs.

  25. Fran – trade unions have social power which is kind of the reason they exist. Governments have social power, quite a bit in fact. The media has social power on a huge scale. Yet the miners in your view are thuggish for defending their shareholders interests and unions, the government and the media are not thuggish when they express a view. You could criticise arguments against the resource rent tax in a number of ways but calling mining companies thuggish for putting advertisements on TV seems to me to be a rather poor use of language. I suggest you choose a more accurate and less inflammatory adjective. Let’s see if you have sufficient processing power or if you’re just another smart alec on a blog hurling abuse for cheap entertainment purposes.

  26. I wonder who said this lot of crap? I found reading “Obelix and Co” is a good way to educate them on basic economics – particularly how government interference leads to seriously imbalanced and temporary growth, leading to a crash. And now we all know. Have a good night.

  27. @TerjeP

    So that’s a no then Terje? You aren’t able to see what’s specious about your comparison? You really do insist it’s just about running some ads?

    You need more than a dogma to run for parliament, IMO. You need the ability to see the world from the perspective of others. It’s a shame you’ve not yet developed that.

  28. Fran – clearly you can’t see what is specious about your choice of words. You equate people running ads saying they don’t want to pay higher taxes with thuggish behaviour. I think it is you that is wedded to dogma. In your world disagreeing with the government is thuggish, putting up taxes is all sweetness and light.

  29. @TerjeP

    In your world disagreeing with the government is thuggish

    I disagree with the government at least once per day and twice on Sundays so that can’t be right …

  30. For those interested in the latest news ‘the federal coalition partners in Western Australia are descending into a bitter feud with Liberal backbenchers calling the Nationals “feral” and “out of control’. What a rabble.

  31. @TerjeP (say tay-a)

    Note that I’m already right as regards Queensland – the merger I predicted has taken place. Still, I admit to being surprised at how disastrously Labor has blown it since being presented with the chance of an easy double dissolution win six months ago.

  32. @jquiggin

    In fact, if they had merely presented the CPRS legislation based on Garnaut in 2009, and said take it or leave it, all indications are that the Coalition would have caved. Had they not done so, the ALP could have gone the half-senate + HoR route and smashed them.

    Simple.

  33. MoSH,
    How about you come up with your favoured method and stop trying to play a guessing game? There are many ways to fund a deficit. Just say which you think is best. In the process, you may be able to show you got past high school.
    .
    Fran,
    Perhaps Terje should have said “In your world disagreeing with a tax increase is thuggish”. To me, if you read any history of the Thuggee your claim is laughable. To compare a group of people trying to defeat a tax rise they see as hurting their interests (and possibly the country’s) to those who committed murder to steal from the innocent travellers is just (IMHO) silly.

  34. Fran,
    They could not have gone half senate before 1 July this year for constitutional reasons. They would have needed to go double dissolution if they went prior to then.

  35. It seems Andrew Reynolds you haven’t improved much since your last response so I suggest you start reading up on what economics is all about.

  36. @Andrew Reynolds

    Perhaps Terje should have said “In your world disagreeing with a tax increase is thuggish”.

    Oh I’m relaxed about anyone disagreeing with a tax increase, even if I disagree with their disagreement. The thuggishness I noted related to the way in which they sought to press their case — implying that the economy faced immediate ruin, and mass unemployment and presenting normal fluctuations in the scheduling of project steps as if they presaged capital flight.

    Here were people who are fabulously wealthy, using their market power and cultural- political connections to run a mendacious case against the public interest in the run up to an election where a 5% swing is enough to unseat a government.

    This is nothing like the campaign against workchoices, which was an honest campaign to protect the rights of millions of socially disempowered people from infringement. Those coordinating the campaign had no power to threaten economic ruin, nor did they imply they would seek to engineer it.

    In short the comparison Terje tried to make is simply a doigma-based attempt to blur the lines between the de jure and de facto power of rich corporations and the working public. What these massively wealthy corporations did was silence discussion of the privileges they wanted to keep extracting from the commons.

    The consequence of this is that on August 21, whoever wins, the mass of the public will be subjected to the rule of a coalition between Big Filth and the Mining Thugs. On the upside, this will at least be more obvious than in previous elections.

  37. Fran – you assumed I was blurring lines about who has power. I wasn’t. I was in fact just saying that your choice of words was flawed.

    The only difference with the anti-workchoices campaign is that you were against workchoices. That campaign also used emotive misinformation and it did in fact cause a change of government.

  38. John – I acknowledge that you were partially right which is why I suggested people read your original article in which your argument had some subtle qualifiers. To be fair I think most people have been surprised by the decline in Labors fortunes. Although I was for a long time very surprised by the popularity of Rudd who I always viewed as a poser.

  39. MoSH,
    A pity – that could have been a useful discussion. I will leave you once again to your inability to answer a simple question.
    .
    Fran,
    So – the campaign against WorkChoices did not imply or even state that this meant that workers’ lives were in danger, that all working families would lose pay, their conditions and probably their jobs to the capricious whims of teh evil capitalist oppressors. Of course, how silly of me. It must have been my faulty recollection.
    in any case – how can you honestly compare an advertising campaign to the brutal murder of innocent travellers?

  40. Andrew Reynolds, why don’t you read up on the different ways governments can finance a budget deficit and then I will tell you whether you are wright or wrong. I suggest you read more than Obelix and Co.

  41. @Andrew Reynolds

    So – the campaign against WorkChoices did not imply or even state that this meant that workers’ lives were in danger, that all working families would lose pay, their conditions and probably their jobs to the capricious whims of the evil capitalist oppressors.

    Relevance if true? They weren’t threatening to throw thousands out of work and reduce Australia to third world living conditions if working folk weren’t protected from unfair dismissal.

    They were merely saying “this is not just”. If the mining thugs had merely been pleading for social justice, and explaining why keeping their super profits was just, I’d not have had a problem with what they were doing.

    how can you honestly compare an advertising campaign to the brutal murder of innocent travellers?

    Now you are being silly. If you want to reach back into the sanskrit origins of the term, the original root is sthaga-s (Hindi: thag) = cunning, fraudulent from sthagayati [he] covers, conceals.

    Of course, the word “thug” now conveys the idea of a coercive character. The mining thugs were after all seeking to coerce the population into assenting to their theft through the threat of capital flight. But why take my word for the aptness of the term. Here’s someone a lot closer to your brand of politics using the term quite recently … just 107 minutes ago

    Opposition Leader Tony Abbott says Kevin Rudd’s presence on the campaign trail will only serve to remind voters of Labor’s “political thuggery”.

    Abbott likes this term because in October 2006 he used to to describe union opposition to the 457 Visa system. I don’t think he was accusing them, or Shorten, Howes and Feeney of murder of innocent travellers, but I could be mistaken.

    I would remind you that calling someone a bugger is not these days normally a reference to sodomy.

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