Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
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John Quiggin 
My first topic is: I’ve never quite got my head around the dividing line between what can go in here, and what should go to the Sandpit. Am I alone?
My second topic: what makes Queensland voters so fickle and changeable? According to Lenore on Insiders yesterday, Fairfax polling (with small sample) is showing Federal Labor way down in Queensland, and I think other polling recently showed the Labor State government has lost popularity, too.
Given that I think there is nothing especially attractive about the State Coalition team, and that I would have thought the failure of the Clive Palmer refinery in Townsville would reflect poorly more on the Right than on Labor, (and given that Turnbull has splashed no defence build cash in Queensland), why is Labor looking shaky in this strange State?
@steve from brisbane
re: Qld.
1. The equitorial theory. The closer you live to the equator the madder you are?
2. Qld is full of f*ckknuckles from Victoria.
3. All of the above.
Well, I suppose a case could be made for Victoria to have become quite fickle at the State level, in recent years, too.
“We do things different in QLD”
Cant count the number of times I’ve heard that one. Away from brissie it really is the red neck state.
I hadn’t read an economics book for many years until recently when I Read JQ’s book zombie economics. I have read around the subject of course, but not a pure economics book since the student days when Richard Lipsey, John Galbraith and Paul Samuelson were the stndard fayre.
The other day I came across a paper which given its content, I was surprised to see was penned by an economist James Montier who is a director of a global investment firm. The paper was a GMO White Paper entitled “Market Macro Myths: Debts Deficits and Delusions”
The paper is aimed at the economic illiterate ( ie most of the politicians) and attempts debunk in rather basic terms the following popular myths
Myth 1 : Governments are like households
Myth 2: Printing money to finance budget deficits is inflationary
Myth 3: Budget deficits/high debt lead to high interest rates
Myth 4: Budget deficits are unsustainable
Myth 5: Debt is a burden on future generations
I think it would be a good short read for LNP supporters.
WTF!
No comment
@steve from brisbane
Nowadays an election is like a multiple choice exam question with only two wrong answers. People keep oscillating between the two choices given because neither one works. Neither Party A nor Party B intend to change anything essential about the Neo-liberal consensus which governs our society.
Last nights 4 Corners identified key weaknesses in election funding for political parties and explored some of the consequences of playing favourites with cashed up lobbyists.
One could draw a similar conclusion from todays revelation that Scott Morrison was to use a document drawn up by Greg Paramor MD of Folkestone (ASX listed property and funds management group) to attack the ALP policy on negative gearing.
You could wonder why an elected govt would apparently ignore the advice from the David Murray financial inquiry and Henry tax review (among many others) that negative gearing is expensive, distorting, and a risk to financial stability.
Being a Territorian and all, what is missing entirely from this federal election campaign is anything substantive on Indigenous issues, very disappointing. Yes the ABC Vote Compass has a single question on Constitutional recognition and the vast majority favour it, good oh for dogs on that one, but nothing on the intervention, incarceration rates, health, suicide, nothing at all………..
BTW see this for an interesting idea https://voteflux.org
@MartinW. (Xevram)
Its in the ‘too hard basket’ for politicians and for most of the general public. Everyone is just pushing ahead with forced integration .People are just tired of waiting for Aborigines to start behaving themselves. Unfortunately like refugee policy and the defence budget it is bi-partisan .As one of the forgotten said -‘they think that if you squeeze a blackfella hard enough a whitefella will pop out’. I’m starting to think its beyond us ,like asking a saw to hammer in a nail. The solutions are outside ,and not accessible from, the world of Neo-Liberal logic. For mine, white Australia must first understand how the hunter gatherer world differs from the selfish bast##d one we live in.
Here is one of my favourite indicators of the structural crisis of capitalism – debt.
You can easily sustain capitalist profits if you sell goods for high prices where the sale is effected by debt.
The problem here is that such debt accumulates to breaking point. Australia’s household debt has now blown out to over 100% of GDP. So how can this trend be reversed, and how can households ever pay-off 100% of GDP while they are still accumulating more debt.
Data is here: Household Debt 102%
@rog
Yes, negative gearing is;
But why not attack negative gearing for borrowing to purchase shares, or for company takeovers?
Why is this also not “expensive, distorting, and a risk to financial stability”?
@Ivor
I guess the difference is that NG regarding property is contributing to the unaffordability of housing. Investors are competing against wannabe home owners especially and they have an edge. Regarding all other types of investment, they’re competing against other investors and it’s often a more productive use of the capital eg. shares. I do agree with one of your central points that it does encourage debt and banks love it. It facilitates bubbles, it’s suited to higher marginal tax rates, promotes speculative investing and is a cost to general revenue.
There have been a couple of NBN-related articles recently that seem to regard it as fact that big multi-billion dollar infrastructure projects and operation are definitely better off in the hands of the private sector than the govt or even govt-owned enterprises, e.g.:
(paywalled)
http://www.afr.com/opinion/editorials/labors-hypocrisy-on-nbn-costs-20160523-gp1dpy
and
http://ipa.org.au/news/3479/federal-election-2016:-the-folly-of-the-nbn-continues
Is there any evidence that such projects are best off with the private sector?
@Troy Prideaux
If negative gearing was reduced for borrowing for shares and for funding takeovers, presumably some Capital will exit and this could increase housing investment.
As negative gearing for housing applies to both home owners and investors, removing it will not have as dramatic effect as some make out. Removing negative gearing for first home buyers will reduce their purchasing power as well as investors. While there will be some variation at the margin, the proportion of investors and home-seekers will be little affected – they both feel the brunt of the changes. Investors probably have higher deposit capacity and lower need for finance relative to home seekers who move into the market as soon as they have a minimal deposit.
So I think it is more complex and all this just demonstrates that you cannot regulate capitalism to counter its adverse natural tendencies to reduce the share of wealth going to workers.
The only solution is to set-up housing cooperatives and public housing on a strict cost recovery basis.
@Ivor
My understanding is that a person’s own home mortgage cannot be negative geared. Negative gearing only applies to investment properties. First Home Owner Grants (if they still exist) go to first home buyers intending to live in that home.
Negative gearing for all investments should be removed. FHOGs should also be removed. These distort the economy in ways which are not useful to equality or national economic health. Housing cooperatives and public housing would indeed make more sense. Even with these measures, the devil is in the detail and they need to be well designed. Of course, over all this hangs the issue of the ownership systems of our society. Without changing this system completely, all measures for equality involve fighting against the standard tendencies of the current system.
Worth reading:
Click to access public.pdf
@Ikonoclast
Yes, that’s also my understanding. NG can only be utilised for investments which includes investment properties. So, investors not only have an edge over 1st home buyers with greater collateral (generally), they also get to claim their full marginal tax rate off their interest repayments which allows cheaper finance (no mortgage insurance generally) and larger finance as they’re effectively paying less repayments. The catch is, of course, they need to make a profit from the sale for the whole exercise to be worthwhile. They do get a special John Howard concession on the capital gain which as JQ mentioned previously is the reason NG advocates claims of just tax offsetting aren’t quite correct.
@Troy Prideaux
If you cannot negative gear your own home – then I agree, you cannot let investors have this advantage over home buyers.
I should have said tax deferring instead of offsetting.
Here’s AGL finally waking up and about to grab the bull by the horns, so to speak.
http://www.brisbanetimes.com.au/business/energy/agl-energys-andy-vesey-sees-batteries-changing-the-world-20160523-gp26pi.html?google_editors_picks=true
Ivor,
Landlords are the leeches of society. Expecting others (usually the less well off) to work to pay off their assets or to keep them in the lifestyle they’ve become accustomed to. It has become a national sport in Australia to appropriate someone else’s income as your own (an unearned income).
It surprises me how some people will announce that a relative or acquaintance is living off the income generated by five or so properties they bought during the boom, as if this is something that we should all aspire to. Do they not see how this could infuriate many people who are struggling to make ends meet.
These are the “leaners” in our society, they’re not the “lifters”. They did not pay for these assets through their own endeavors, (their tenants did) and they’re doing nothing for the income that the properties are generating.
The tax system should be setup to not only discourage this, but make it financially unviable.
It is not just the tax we forgo that is causing the problem. Our tax dollars are being spent on inflated rents, through things like rent assistance. This is working not so much to provide assistance to the less well off, but to keep rents and therefore property prices high. I’m not saying rent assistance should not be provided, but that it is being milked by the property investment industry.
High property prices and rents are devastating our economy. Sucking all of the productive industries dry, increasing government deficits, and enslaving many people with exorbitant debt.
@David
Yes, as clear as it is in the case of housing – you must remember that the same “leechers” and “leaners” exist within all types of capitalist investment.
It is capitalism generally that is devastating our economy and enslaving many people with exorbitant debt – not just high property prices and rents.
Under socialism, landlords will still exist, but they will not be capitalist landlords. They will have to compete with co-operative and public supply which should reduce their prices down to whatever is the “socially necessary” level of the day.
s
Professor Quiggin, I previously posted the following post to “Trump and Tribalism” in error. Could you please remove that post?
Video debate: Greek debt bailout by IMF? or is the IMF forcing Greece to allow foreign corporations to plunder its wealth?
In this 23 minute debate with Jack Rasmus, Paul Craig Roberts, former Assistant Secretary of the United States’ Treasury, and former editor of the Wall Street Journal, shows that the so-called IMF bailout of Greece’s debt to the IMF is not a bailout at all. A bailout is supposed to reduce the debt to a level where the loan can be paid off. The conditions attached to the bailout will force the Greeks to sell off to foreign corporations much of Greece’s publicly owned wealth-generating assets. Without those assets, the Greek economy can only be made less able to pay off debt in future. The supposed bailout is no more than an attempt to use the indebtedness from money, which should never, in the first place, have been lent by the IMF to previous corrupt Greek governments, as a pretext to allow corporations to loot Greece’s wealth in 2016.
Residents’ Bill of Rights (RBR) – Support this brilliant initiative
At the Planning Backlash and Boroondara Residents Action Group “Mad as Hell event” in Camberwell on Sunday 29th May, 2016, BRAG introduced the following draft Resident’s Rights Bill. Among other things it calls for the setting of population growth targets within OECD averages. It thus nails a continuing problem of the moving target in previous population policy claims. Australia lacks a civil rights code, unlike Europe. Our civil rights used to be implicit in our publicly owned resources and services, like water, Telecom, and power. This draft Residents’ Bill of Rights is truly impressive in its ability to identify gaps in Australian residents’ rights.
Residents’ Bill of Rights
We, the current residents of Melbourne, country and coastal areas of Victoria, call on the government and opposition at all levels to act to protect our homes, communities and cities from over-development.
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I was going to post the comment below toElection open thread but I found that the comments were closed.
Policies that should be put to voters at the Australian Federal elections of 2 July
In the Australian Federal elections to be held on 2 July 2015, voters who support each of the policies listed below, are entitled to know whether each candidate asking for his/her vote will, if elected, try to implement that policy. We intend to ask each candidate, including the sitting member, his/her intentions should he/she be successful. Each response, or lack of response, will be posted here, to candobetter.net. Please feel encouraged to express your views about these proposals as comments or, when we make that feature available, to vote on them.
There are 56 policies in all. They are divided into the sections: Effective government participation in the economy, Sustainability, Basic needs: Full employment in secure and fulfilling occupations, Education, Basic needs: other, Democracy, Transparency and Accountability, ForeignPolicy: Syria, Foreign policy – Palestine/Israel, Foreign policy – Other Middle East, Foreign policy: Ukraine and Russia and Human rights: Protection of human rights, civil liberties, freedom of speech and proper legal conduct by the authorities.
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