Going through my settings in an attempt to block sockpuppet posts from a banned commenter (you know who you are, Mel!), I discovered that the WordPress setup now offers the option of threaded comments. Given the frequency of long debates between a handful of commenters, I think it’s an appealing choice, but I thought I would throw it open for discussion first.
The Murdoch press is touting a report from Price Waterhouse Coopers, predicting all manner of disaster for Australia if we do not mend our debt ridden ways. A typical example is a projection of $1 trillion in debt by (IIRC) 2037. There’s no link in the stories I’ve read, and nothing obvious on the PwC website, so I’ll make some more general observations.
* It’s startling to read this kind of sermonizing from an outfit like PwC, recently described by the British Parliamentary Public Accounts Committee as ‘promoting tax avoidance on an industrial scale’. If we are facing a fiscal crisis, shutting down firms like PwC seems like an obvious prerequisite to achieving a solution
* Even on the hypothesis that this was in fact a serious effort at assessing our fiscal condition, why would anyone give any credence to one of the accounting firms that gave us the Global Financial Crisis
* The projections are highly implausible, though without access to the report I can’t point to the specific dodgy assumptions used to derive them.
* The same issues are regularly examined by the Commonwealth Treasury in its Intergenerational Report. The 2015 report was legally required to be published on 3 February but has not appeared. Now instead of the IGR, the government’s media arm comes out with this piece of tripe. Was the IGR not alarmist enough for Hockey?
Update My point about the IGR was pure conjecture when I wrote it. But on TV last night I saw Hockey pushing the PwC “report” (still vaporware, AFAICT), even though he is supposedly too busy to fulfil his legal obligation to release the IGR.
Further update Commenters Megan and Liam have dug up a link to a two-page paper from a talk given a few days ago. This in turn links to publications from 2013 and 2014, drawing on estimates published in 2012 which (I imagine) rely on data going back even earlier. The same alarming projections appear, but still without any basis for the calculations. To sum up, this is a total beat-up.
In the early years of this blog, I spent a lot of time trying to find a sensible way of handling the word “reform”. But now I think it’s been corrupted beyond any hope of redemption. My conclusion is that we should never use the word, and be instantly suspicious of anyone who does. Most Australian voters have already reached this position, I think (see also, “productivity“).
Some recent statements by Chris Christie and Rand Paul[^1] have raised the prospect that vaccination, or, more precisely, policies that impose costs on parents who don’t vaccinate their kids, may become a partisan issue, with Republicans on the anti-vax (or, if you prefer, pro-freedom) side and Democrats pushing a pro-vaccine, pro-science line. Christie and Paul took a lot of flak from other Republicans and even Fox News, and tried to walk their statements back, so it seems as if it won’t happen just yet.
But there are some obvious reasons to think that such a divide might emerge in the future, and that Christie and Paul just jumped the gun. The outline of the debate can be seen in the ferocious response to Reason magazine’s endorsement of mandatory vaccination. And, while Reason was on the right side this time, they’ve continually cherrypicked the evidence on climate change and other issues to try to bring reality in line with libertarian wishes.
The logic of the issue is pretty much identical to that of climate change, gun control, and other policies disliked by the Republican/schmibertarian base. People want to be free to do as they please, even when there’s an obvious risk to others and don’t want to hear experts pointing out those risks.[^2] So, they find bogus experts who will tell them what they want to hear, or announce that they are “skeptics” who will make up their own minds. An obvious illustration of the parallels is this anti-vax piece in the Huffington Post by Lawrence Solomon, rightwing author of The Deniers, a supportive account of climate denial[^3].
As long as libertarians and Republicans continue to embrace conspiracy theories on issues like climate science, taking a pro-science viewpoint on vaccination just makes them “cafeteria crazy”. The consistent anti-science position of people like Solomon is, at least intellectually, more attractive.
Note Another issue that fits the same frame is speeding. Anti-science ibertarians in Australia and the UK are strongly pro-speeding, but I get the impression that this isn’t such a partisan issue in the US, the reverse of the usual pattern where tribalist patterns are strongest in the US.
[^1]: Christie was just pandering clumsily, but Paul’s statement reflects the dominance of anti-vax views among his base and that of his father (take a look at dailypaul.com).
[^2]: Of course, the situation is totally different in cases like Ebola and (non-rightwing) terrorism, where it’s the “others” who pose the risk.
[^3]: The Huffington Post used to be full of leftish anti-vaxers. But the criticisms of Seth Mnookin and others produced a big shift – Solomon’s was the only recent example I could find. Similarly, having given equivocal statements back in 2008, Obama and Clinton are now firmly on the pro-vaccine side.
A new sandpit for long side discussions, idees fixes and so on. Unless directly responding to the OP, all discussions of nuclear power, MMT and conspiracy theories should be directed to sandpits (or, if none is open, message boards).
At the minute of writing (1404 Sunday), it looks as if Malcolm Turnbull will replace Tony Abbott as PM tomorrow. Among his many challenges will be climate change policy, the issue that brought him undone last time around. The word appears to be that he will adhere to the platform from the 2013 election, which rules out a carbon price (tax or ETS) but gives him room to move in various directions.The assumption is that this compromise will buy both Turnbull and the climate deniers in the LNP enough time to work out some kind of solution.
What no one seems to have mentioned is that the Abbott government, in defiance of the 2013 platform, has been doing its best to make drastic cuts in the Renewable Energy Target. To the extent that the processes of government are going on during the current mess, negotations with Labor and the minor parties are still under way. Turnbull will have to decide, more or less immediately, whether to keep pushing for deep cuts.
There’s a further problem. Turnbull can’t simply drop the issue and leave things as they are. Abbott’s obvious intention to destroy the scheme has had a chilling effect on investment, particularly in the wind sector. Under the current rules, fossil fuel generators need to offset their generation with certificates from renewable generators. But it now seems unlikely that there will be enough certificates by 2020, which would result in the triggering of penalty clauses. So, the scheme needs some kind of change.
The Climate Change Authority, of which I’m a member put out a report just before Christmas last year, suggesting that the target date of 2020 be shifted out, and that the duration of the scheme be extended past 2030. That’s one possible solution, though not the only one.
The problem for Turnbull is that any realistic solution will instantly enrage the climate deniers, while continuing on the current path will put him in the position of owning Abbott’s broken promises.
One of the most politically effective arguments made for selling publicly owned assets, such as government owned corporations is that, by reducing debt, it will reduce the interest rate on government bonds. This is plausible enough, and not by itself a conclusive argument. The interest saving (including the benefit of lower rates on remaining debt) needs to be set against the loss of earnings. But it would be nice to know how large this saving might be.
The Queensland state election, just passed, provides something of a natural experiment. The LNP government proposed to sell $37 billion in public assets and repay $25 billion in debt ($18 billion associated with the enterprises to be sold, and $7 billion in general government debt). Going in with 73 of 89 seats, the LNP was almost universally expected to be returned. Instead, they lost their majority and will probably lose office. Although the result is not yet final, everyone is now agreed that asset sales are off the table.
So, we should be able to look at the secondary market for QTC bonds to see how much this surprise changed the interest rate demanded by bondholders (this is what’s called an “event study” in the jargon of academic finance). You can get the data from https://www.qtc.qld.gov.au/qtc/public/web/individual-investors/rates/interactive%20rate%20finder/!ut/p/a0/04_Sj9CPykssy0xPLMnMz0vMAfGjzOLdnX2DLZwMHQ383QwtDDy9DUIsPTwDDA2NTPULsh0VAVfZvz4!/
and I’ve included it over the fold (a bit of a mess as I can’t do HTML tables)
The data shows that interest rates have generally been tending downwards, as you would expect given the Reserve Bank’s much-anticipated cut. On the trading day after the election, rates on longer term bonds rose by between 0.05 and 0.1 percentage points (or, in the market jargon 5 and 10 basis) points. But all of that increase, and more, was wiped out the next day when the RBA confirmed its cut. Overall rates on QTC debt have fallen by around 0.25 percentage points since Newman called, and then lost, his snap election.
To sum up, the surprise abandonment of one of the largest proposed asset sales in Australian history caused only a momentary blip in interest rates on Queensland government debt, immediately wiped out by a modest adjustment in monetary policy at the national level.
When I posted on the Liberal leadership, I assumed that the right wing of the Liberal party was organized enough to persuade Abbott to go quietly and to install Bishop rather than Turnbull to replace him. Neither assumption looks safe now, and my overestimation of LNP organizational capacities has been shown up by the fiasco in Queensland. So, I’ll sit back and enjoy the fun, leaving you to offer whatever thoughts you have on the topic, or on related issues.
We just had an election in my home state of Queensland, and the outcomes will be of some broader interest, I hope. The governing Liberal National (= conservative) Party has (almost certainly) gone down to a surprise defeat, going from 78 of 89 seats at the last election to a probable 40 or 41 this time. The key issues were broken promises (particularly regarding job cuts) and government proposals for privatisation.
This can be seen either as a reversal or a repeat of the last election when the governing Labor Party went from 51 seats to 7. That election was also fought on broken promises and privatisation, but with the roles of the parties reversed (Labor had won an election opposing privatisation, then immediately announced it would go ahead).
Among the actual or potential ramifications
* The first instance of a woman Opposition Leader defeating an incumbent government at state or national level in Australia (there have been examples in the much smaller territory governments, but I think this is the first case at State level. The more common pattern has been for a woman to get a “hospital pass” when it is clear that the government is on the way out.
* At the national level, the replacement of the current conservative prime minister Tony Abbott
* The abandonment of the biggest coal mine project in Australia
Looking internationally, the outcome can be seen as a defeat for the politics of austerity and maybe as an example to suggest that Pasokification can be reversed, under the right circumstances.
Finally, I’ll link to my analysis of the asset sales, which got a reasonably prominent run during the campaign. It probably didn’t change many minds, but it helped to counter the barrage of pro-privatisation propaganda.