103 thoughts on “Sandpit

  1. Negative gearing, as a tax deduction, seems to be too complex for politicians to do anything that would even approach a Pareto optimum position. The entwined issues of rental accomodation and first home buy in thresholds seems to generate inertia. The two issues need to be treated separately if a simple and fair reform of negative gearing tax concessions is to be possible. Rental accomodation can be promoted without sending housing values into hyperinflation. But this means eliminating holiday properties and multiple properties from the negative gearing tax shelter. A limit, to the number of properties one taxpayer can negatively gear, must be set. The twin objectives of equity and fairness must be applied.

  2. @Greg McKenzie I agree it is too complicated. Using taxation as a means of achieving other social objectives – such as encouraging investment is always going to be very expensive to administer both for the taxpayer and for the taxation office. Taxation reform will only come when we make taxation “stand alone” and used to pay for government services. Instead of using taxation as a means of redistributing income let us work out ways to redistribute capital so that we can all live off a combination of returns on capital and payments for services we render. One of the services we render is to “obey the law”, and we should get paid a minimum income while we remain law abiding. Instead of selling off “the commons” let us distribute the Commons so that we can all have our share of the income generated from the Commons.

    This would create a true capitalist society where everyone gets a share in the income from social and physical capital. It is easy to do, but we have to overcome entrenched interests. http://evonomics.com/takes-village-media-business-policy-academic-experts-maintain-dangerous-financial-system/

    Taxation reform can work towards paying a fixed percentage of any money received by any entity for any transaction with no deductions and no exceptions. We could start with something simple like online purchases of electronic services. If Google wants to sell online ads to an Australian entity, then the Australian entity pays the tax directly to the Tax office. It is easy to do and easy to enforce because Google can change their billing operations for Australian entities. It is pretty easy for Google to know if an Australian entity pretends to be an overseas entity to evade the tax and besides the taxation office fines both Google and the Australian entity if they break the law.

  3. Just in case people are not bored to tears with such stuff.

    There is no point dealing with derivatives if you have not defined your terms.

    de/dx = dg/dx +dt/dx + dr/dx is reasonable
    de/dx = dg/dx + dt/dy + dr/dz is unreasonable.
    You should write

    de/dx = dg/dx + dt/dy X dy/dx + dr/dz X dz/dx

    But, no matter what, you have to define your units.

  4. Interesting, I agree.

    Who will fix my plugged toilet?

    Only someone who is paid well to, and given ample health and old age security to do so, and who is allowed the majority of their waking hours to so something otherwise. And moreover, someone who gets called “Sir” or “Ma’am” while they’re fixing your toilet, and who you (we) treat with dignity, even homage.</blockquote)

  5. It aint that hard to clear plugged toilets and sewer lines but I now draw the line at digging up pipes or buying my own Roto-Rooter machine.

    In my student days, our share house had a sewerage blockage. The landlord brought around a hand-turned roto-rooter set and expected us to help him dig up and assist at the pipe blockage. I was up to my wrists in you-know-what clearing that pipe. I was pleased that the landlord did not notice the cannabis sativa seedlings coming up in our tomato patch. This was inadvertent. Someone had tipped out a baggie with nothing but seeds left. No THC content in the seeds you know.

    For the record, we did not eat tomatoes out of that patch ever again (and the CS seedlings were emoved post-haste when the landlord left. Cheap, capitalist, rentier bast**d that he was.

  6. Correction to my comment on the climate good news post.
    Perhaps it should be:
    e = g – t – (1 – t) r.
    The second term is the rate of decrease in energy per unit output, converted to emissions per unit output on the assumption of no change in energy supply.

  7. Damn, the mobile posted before I’d finished.

    Expanding, you get
    e = g – t – r + (r*t)
    The last term is negligible for plausible values of r and t like 3%, so it reduces to JQ’s formula.

  8. @James Wimberley

    I just did the same calculations. As you say, the final term is negligible, and in the limit (which is what you get when you take the derivative) it’s zero.

    @Ivor

    Ivor, the obvious interpretation of the terms I used makes the equation work, units and all. I assumed that any reader who cared could work this out for themselves, and that anyone incapable of doing so would ask politely. My mistake. I’ve spelt it all out in the post now. I await your thanks and apology for rudeness (only joking!).

  9. Ikonoklast

    There is a kind of courage where people fight, and fight hardest, when they strongly suspect they might be doomed. You seem to be saying most humans don’t have this kind of courage (or desperation) if put to it. I am saying they do.

    That summarises the position, at least for the specific case of climate change. Now, how about the evidence ? My evidence is cited in the OP. As it’s become clear that the problem can be addressed at moderate cost, the world has got serious about solving it.

    As regards evidence for your position, it would be great if you could show me evidence of generally conservative politicians and commentators saying something like “while I find the kinds of policies needed to combat climate change unpalatable, the evidence of impending catastrophe has led me to support an emergency program”. I haven’t noticed many (actually, any) instances of this kind, but maybe I’m looking in the wrong places.

  10. @John Quiggin

    Yes, I take your point. The scientific evidence has no effect on conservative politicians and deniers. They have the numbers or at least the power (power being with money and capitalist ownership) to obstruct almost all necessary action. This a fault of the organization of our political economy. The power currently is not with the people. Democracy currently is relative ineffective and nearly inoperative because of the autocratic power of money and ownership, of the oligarchs.

    What could change that is what I call a “salutary catastrophe directly attributable to climate change”. This would probably have to hit the developed world in some region. This catastrophe (unfortunately) will have to be large enough and undeniable enough that conservative politicians and capitalists will have to change, or be changed by the masses. This enforced change of the status and even of the continued existence of said politicians and capitalists I will leave to imagination.

    So I am saying or predicting, in effect, that there will be too little change and it will be too late under the current system. Then the “salutary catastrophes” will commence. Then the revolutions will commence. It won’t be pretty of course. These are the conclusions my kind of hard-nosed realism lead me to. Of course, my predictions could be wrong. But channeling John Mearsheimer (who used this percentage in another context), I maintain that my predictions for this course of events now have about a 75% chance of being proven substantially correct.

  11. @John Quiggin

    UNfortunately you have only made matters worse.

    I quote:

    r is the reduction in emissions per unit of energy

    This is “mass / energy”.

    IN your rework you have used:

    R (for reduction) = W/E (watt/tonne CO2)

    This is “energy / mass”

    Not only this but watts are not a measurement of energy.

    There is no sense in taking logs if the original equation is gibberish.

    Your:

    “log (E) = log (G) – log (T) – log (R)” is only correct IF

    E = G / (T*R)

    But you have not balanced the equation as required.

    This is a strict, no nonsense requirement well before any trickery such as converting to indexes, using %, differentiating or taking logs etc.

    Energy is joules or “watts by seconds”.

    All you need to do is refer to basic dimension standards here:

    SI units

    and use them.

    It is a cardinal rule that you cannot subtract metres from kilograms or square metres from cube metres.

    If you do not define your terms – how will you be able to insert data into your equation.

  12. James Wimberley :
    Damn, the mobile posted before I’d finished.
    Expanding, you get
    e = g – t – r + (r*t)
    The last term is negligible for plausible values of r and t like 3%, so it reduces to JQ’s formula.

    What are your units?

    When I do a SI dimensions analysis (MKS system) it does not balance.

    It cannot be correct.

  13. @Greg McKenzie
    IMHO Labor got the policy right on NGing. Encourage new dwelling construction and general investment (which is critical) and discourage speculative investment in driving up existing housing. Maybe also wind back Howard’s capital gains concessions.

  14. “1 Joule (J) is the MKS unit of energy, equal to the force of one Newton acting through one meter. 1 Watt is the power of a Joule of energy per second ” – Energy Units and Conversions by Dennis Silverman U. C. Irvine, Physics and Astronomy.

    Now, correct me please if I get anything wrong below

    Therefore, from the second definition above;

    1 W = 1 J / 1 second
    1 J = 1 W x 1 second.

    Ivor is correct in this on its own. Whether this has any bearing on the overall argument, I have not “thunk” out.

  15. @Ikonoclast
    What is your evidence that ostrich thinking is a particular feature of capitalism? Jared Diamond’s book “Collapse” on failed societies suggests that it’s widespread across a range if cultures and economic systems. An additional example is the response of the rulers of Tibet (Buddhist monks) to the Younghusband military expedition of the British Raj. They refused to negotiate, tried an obviously ineffective military resistance, and spun up the prayer wheels.

    Capitalist greed encourages clear thinking of a narrow sort. It does have a strong bias to short-termism, especially in its financialised form – less so in the patrimonial. (Think of the patience shown by patrimonial IKEA and Auchan in building retail operations in Russia.) Failure to recognise and price externalities is common across types of economic organisation, see the environmental disasters of the Soviet Union like the drying up of the Aral Sea from irrigated cotton growing.

  16. ‘What is your evidence that ostrich thinking is a particular feature of capitalism?’

    Evidence? Cato the Elder didn’t need evidence for Delenda Carthago.

  17. @Ikonoclast

    Ok I will do your “thunking” at least so you can check;

    E = G / (T*R)

    It is complex so there could be an error, however…

    E is given as “rate of growth of emissions”.

    Emissions is tonnes per year. Growth is some smaller proportion of tonnes per year per year.

    UNits are kg sec[-2] {zero is permissible]

    *******

    G is given as “rate of growth of output,”

    Output is $ per year. Growth is some smaller proportion of $ per year per year.

    Units are $ sec[-2] {zero is permissible]

    *******

    T is given as “the ratio of energy use to output”.

    A ratio is vague and energy is an output. So just assume the thought is that technology makes things cheaper, so ratio is joules per $.

    UNits are J $[-1] {Note Joules are m[2] kg sec[-2]}

    ********

    R is given as “reduction in emissions per unit of energy” Simply kg per Joule

    Units are kg J[-1].

    ********

    So when you determine the LHS you get:

    kg sec[-2]

    When you determine the RHS you get:

    $ sec[-1] / (j sec[-1] * kg j[-1])

    This equals

    $ sec[-1] sec[1] kg[-1] {note joules cancel out]

    or

    $ kg[-1]

    So LHS (kg per sec per sec) cannot equal RHS ($ per kg).

  18. @Ivor

    Check and you’ll see that
    (a) $ cancel out also.
    (b) You have R the wrong way around

    There are some more errors, I think, but I’m tired of dealing with you

  19. Changing the minds of “conservative” politicians about the science is irrelevant.

    Serious policy action requires serious pressure from enough citizens. Complacency (which will be fostered by ‘it’s all going to be OK’ narratives) kills that pressure.

    Nixon was considered very conservative and is reported to have despised environmentalists but his legislative record includes:

    National Environmental Policy Act of 1969
    Created the EPA in 1970
    Clean Air Act Extension of 1970
    Marine Mammal Protection Act of 1972
    Safe Drinking Water Act of 1974
    Endangered Species Act of 1973

    His administration did those things because they were forced to by mass popular concern.

    We are – still – very much in extremely dangerous territory regarding climate change. The type of very serious action required will need enormous non-partisan/bi-partisan political pressure on all politicians.

  20. Maybe also wind back Howard’s capital gains concessions.

    We actually have the paperwork/record-keeping capacity distributed widely-enough through the community that allowing people to shuffle their income for tax purposes over multiple years is reasonably achievable: you could use this to get appropriate tax treatment of superannuation and capital-gain income. Also covers farmers and people working on huge-but-infrequent payoffs such as certain sportspeople/artists/brokers.

    But capital gains discounts are preferable to many because they’re, mumble, “more narrowly targetted”.

  21. @J-D
    Cato wasn’t an ostrich but a vengeful superhawk. Destroying defeated Carthage was a crime, but it wasn’t against the interests of Rome.

  22. @John Quiggin

    Yes there was a glitch.

    In T the unit is $[-1]

    In G the unit is $

    In the equation the partial term is G/T so $ terms do not cancel out. They form $[2].

    R is not the wrong way around if R is defined as “emissions per unit of energy” ie kg/J.

    I have used kg/J.

    Whether my quick working had any error is not the point. I indicated this could have been so. The point is that the equation as defined does not balance and cannot be correct.

    No-one can balance this equation.

  23. @James Wimberley
    Sorry, my point wasn’t clear.

    I have observed previously that Ikonoclast has a tedious tendency to make substantially the same response to a wide range of issues: ‘There is no hope of any improvement until the capitalist system can be got rid of.’ (Tedious? Well, it is to me.) It is for this reason that I suggest that there is about as much point in asking for evidence as there would have been in asking Cato the Elder for evidence to support his Delenda Carthago.

  24. here we go again, poor old icono,the old one, two (or more) personal nips and jabs instead of addressing the subject.

    he must be doing something right.

    maybe the same thing being said is because it keeps applying?

    note that the commenters agreement in what he says is not always a given.

  25. I have heard that Paul Frijters who has quit UQ is going to LSE. The episode surrounding his resignation from UQ seems worthy of comment – I probably missed earlier discussions As one of the best younger economists in the country (and one of the most research-productive) he seems to me to have done nothing more than to analyse important questions of public interest in a way that made a lot of sense. If he is going to LSE it is a loss to economics in Australia.

    There seem to be serious failures here on the part of UQ.

    It is now not so much an argument for supporting Paul – I definitely do support him but that issue now seems somewhat settled given that he has quit – but it remains worth thinking about what Australian universities are coming to stand for. Can we learn lessons from this episode?

    There was this old-fashioned idea of “academic freedom” that I believe academics and university bureaucrats used to adhere to. It is pointless adhering to the principle in abstract if it is not supported on the particular occasions where it seems to have been violated.

    .

  26. @J-D

    I am sorry you find grown up issues tedious. I suppose they exceed your attention span.

    When children winge like this I usually put them to bed.

  27. @Ivor

    I’m sick of wasting time on you in general, and your last comment is a clear violation of the comments policy. You’re permanently banned.

  28. @John Quiggin
    We do not know what Henry V said to his badly outnumbered and exhausted army before Agincourt. We can be pretty sure it was not written by soulmates of Ivor and Ikonoklast. It must have been much closer to the spirit of Shakespeare’s great pep talk. There was probably more God in it than in the Bard’s version. John Keegan observes, in his fascinating attempt in The Face of Battle to evoke Agincourt, Waterloo and the Somme as experienced by the common soldiers who fought them, that these men were pretty religious in the first and last, but not those at Waterloo.

  29. @hc

    “in a way that made a lot of sense.”

    From my point of view I’d say he does what he does in a way that creates antipathy and a reluctance to consider any of his opinions as those of a rational person.

  30. In reply to a couple of criticisms of me and the points I have made.

    Yes, a dissenting view can become tedious. Dissent always has to flag itself and it always has to restate the basis for dissent. Assenting to a standard point of view by contrast is easier. Underlying assumptions, beliefs and ideologies can all be passed over in silence. Thus the task of someone who argues within a given paradigm without questioning it is much easier. A whole set of assumptions are taken as unquestioned givens and can be passed over in silence.

    There is little point in my trying to say more on my current machine and keyboard. This is my wife’s iPad. It has taken me 20 minutes to type this. What an infuriating and useless machine it is… IMO only. Keboard works in a really strange way. Ugh!

  31. @IKonoclast
    Indeed, I can totally see an IPad would not be the ideal device for your typical web interaction 🙂
    Fantastic for browsing, games, reading and lots of other stuff that doesn’t require much typing though.

  32. @Julie Thomas

    I consider Paul’s opinions and I consider myself a rational person. Some of Paul’s views – for example on climate – I disagree with. Some of his empirical work on interest groups I agree with. The universities have many people with strong personalities. The advantage of having people like Paul is that he is an intellectual livewire who is, at the same time, very productive. Maybe I missed something but UQ’s actions seem to me disgraceful.

  33. @IKonoclast
    iPads don’t provide great input facilities for most people (though my 40wpm touch typing on one shows it’s possible, at least for strange people). But should you find yourself having to type on one again, here’s a couple of tips:

    (1) Foreswear the keyboard: hit the little microphone icon to the left of the space bar and dictate. It works pretty well.

    (2) Then go back and edit, for which purpose it’s useful to know you can manipulate the cursor quickly by dragging two fingers directly on the onscreen keyboard (using it like a touchpad).

  34. @hc

    Maybe I missed something but UQ’s actions seem to me disgraceful.

    That would be quite characteristic. My experience with UQ was the nastiest I have had with any organisation or person, essentially losing 3 years of my life and ending up with a large HECS debt for nothing, on the whim of a superstitious Dean. It put me off having anything to do with large rigid hierarchies, and I never have since.

  35. I would like to note a historic moment when one very important economist admited what MMT tried for so long to show. This is from S. Wren-Lewis:

    “The situation is completely different for governments that can create the currency that the debt they sell is denominated in. They will never be forced to default, because they can always pay back debt due with created money. That in turn means that lenders do not need to worry about forced defaults, or what other lenders may think, so this kind of self fulfilling default will not happen.”

    “If a government —-cannot create the currency that it borrows in, —–then the risk of default is very real. Typically a large amount of debt will periodically be rolled over (new debt sold to replace debt that is due to be paid back). If that debt cannot be rolled over, then the government will probably be forced to default. Knowing that, potential lenders will worry that other potential lenders will not lend, allowing self fulfilling beliefs to cause default even if the public finances are pretty sound.”

    https://mainlymacro.blogspot.hr/2016/11/whatever-happened-to-government-debt.html#comment-form

  36. @IKonoclast

    Yes, a dissenting view can become tedious. Dissent always has to flag itself and it always has to restate the basis for dissent.

    If your dissenting conclusion is ‘There is no hope of any improvement until the capitalist system can be got rid of’, then you’ve never demonstrated an adequate basis for it. Repetition of an assertion does not constitute evidence for it. The argumentum ad nauseam is tedious, but I acknowledge that it seems to have worked for Cato the Elder.

  37. @hc

    “The universities have many people with strong personalities.”

    The ones I have had some contact with have also have a lack of respect for fellow humans and an unrealistic assessment of their own abilities and value to the community and are very unhappy in their personal lives. Hence the interest in love and economics.

    Insight therapy could help but these people so often have the type of cognitive and emotional dysfunction that is diagnosed as a personality disorder and is not amenable to any therapy.

    I suspect that you Harry still believe in the myth of the tortured genius. And perhaps you value quantity over quality?

    I have only a passing interest in the issues and am happy to agree that UQ has behaved badly in this case and many others. Hierarchies, as Crispin has pointed out are not good things.

  38. @J-D
    Your #43

    Well said again, J-D (and no frivolity this time).

    As to Cato, surely Carthage’s tendency to keep starting Punic Wars despite being repeatedly beaten, and occasionally inflicting serious insults (eg Cannae) amounts to more than sufficient justification for Carthago delenda est (with or without Latin future passive feminine gerundives).

  39. There are economies of scope and scale in Australia Post (in sorting mail, in collection and distribution) that make it a natural monopoly. Hence I would ordinarily not see it as a candidate for complete privatization. But the way it is being managed – particularly with worker compensation payments averaging $3832 for 38% of its 36,743 employees – suggests a real problem. These are the claims of a whistleblower but CEO Fahour has a case to answer. Without these payments AP would be making a handsome profit and not need moan about ts diminishing snail mail market.

    http://www.afr.com/news/policy/industrial-relations/australia-post-workers-comp-is-giant-rort-says-whistleblower-20161128-gsyyt9

  40. oz post has an outlet in every town in the country flogging all sorts of el cheapo “stuff”and can’t cover costs but we have a “Postmaster General” driving a maserati.

    can’t understand it.

  41. @J-D

    J-D, you may find this post entertaining if you haven’t seen it already:

    Site: Understanding Society
    Post: DeLanda on historical ontology
    Wednesday, November 30, 2016

  42. @GrueBleen

    I am not sure that calling “complex systems” “assembleges” advances analysis in any way. This is unless “assemblage” has a clear technical definition which defines an “assemblage” as a clear type or subset of complex systems; and this definition must be logically and empirically supportable.

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