Oz out by a factor of 20

John Quiggin16 Comments

Today’s Oz runs the headline, “Carbon tax pushes Brisbane City Council rates up 40pc“, which, as a Brisbane ratepayer, I would have found alarming, if it had been printed in a newspaper, rather than a Murdoch rag. The story, bylined by Rosanne Barrett, reveals that the true number, according to Liberal Lord Mayor Graham Quirk, is 1.8 per cent[1], out of a total increase of 4.5 per cent. Blame for the ludicrous error must be shared between Barrett, who tried a beatup in her opening line, saying “AUSTRALIA’S biggest council has blamed the carbon tax for almost 40 per cent of its rates increase next financial year” and the Oz subeditor, who, not surprisingly, translated that into a 40 per cent increase in rates, not 40 per cent of a 4.5 per cent increase.

Update The headline has been (silently) corrected to read “Carbon tax helps push Brisbane City Council rates up $55”. Good to see the Oz reads me, though not, as a rule, vice versa. I picked the story up from the Making Environmental News digest service, to which you can subscribe here.

fn1. The numbers are disputed by the Labor Opposition.

Fundraiser update

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Thanks to some generous donations, we reached the $500 target over the weekend, though the display is not updating (at least for me). As promised, I’ve put in $500, and Flavio has done the same. With some additional donations we’re now over $1600. It would be great if we could make the $4000 target before the end of the financial year.

In front of the world?

John Quiggin35 Comments

Coincidentally, Australia’s carbon price will come into effect on the same day, 1 July, as the new feed-in tariffs for solar PV, wind and other renewable adopted in Japan as part of the response to the Fukushima disaster[1]. The tariffs are incredibly generous (around 50c/kwh on a net feed-in basis) and supposedly guaranteed for 20 years. I can’t see it lasting that long, but it will certainly make Japan one of the world’s biggest markets for renewables, having installed almost none until now. China has also adopted feed-in tariffs, but at more realistic prices around 20c/Kwh. These policies will ensure continuation of the spectacular growth in installations of renewable energy and the associated reductions in costs.

What does this make of the claim that Australia is moving ahead the rest of the world with the carbon price policy. There’s a sense in which it’s true – our experience with MRET and various state-level policies have shown that these are second-best options compared to a comprehensive carbon price. The Europeans can teach the same lesson, but it seems as if everyone has to learn it for themselves.

But the belief among economic doomsayers that we are the only country doing anything about this is just nonsense. Even in the US, where nothing can be done through legislation thanks to Republican delusionists, a combination of regulation and low gas prices is leading coal-fired power plants to shut down at a rapid rate.

At this point, the global choice is not between doing nothing and doing something. It’s between sensible market-based policies and costly second-best options, of which the worst is the “direct action” in which Tony Abbott claims to believe.

fn1. Two nuclear plants are also to be restarted, and presumably most of the rest will follow eventually. The government still wants to build more,

The doomsayers

John Quiggin68 Comments

With two weeks to go before the carbon price takes effect, I thought it might be fun to collect a few of the predictions of economic disaster that have been made about this very modest reform. And these people call climate scientists “doomsayers”

Piers Akerman
Tony Abbott
Christian Kerr
Andrew Robb
David Murray
Barry O’Farrell
John Howard
The coal lobby
The entire Liberal party, in unison

Feel free to add any I’ve missed. And, if anyone would like to reaffirm the predictions of disaster, preferably using real names rather than pseudonyms, this is a great opportunity.

Update

Here’s Terry McCrann claiming a doubling of electricity prices, a claim originated by Alan Moran and picked up by Tony Abbott. My response
Andrew Bolt, claiming a carbon tax will be ‘ruinous’
Alan Jones, going too far even for the toothless ACMA tiger
George Brandis, blaming carbon taxes for the woes of Fairfax

Keep me ahead of the zombies

John Quiggin1 Comment

The counter on my fundraiser widget is not updating properly, but I’m happy to say we’ve already raised $380 for HeartKids. Thanks to everyone who has given so far – I’ll be sending individual thankyous soon. There’s still plenty of time to get your donation in before the end of the financial year, but the sooner you do, the sooner I’ll be able to show the undead hordes a clean pair of heels.

To give everyone an incentive, if I get $500 in donations by Monday*, I’ll match it.

*You can also donate to Flavio’s part of the effort, which is tallied separately

Prebuttals, part 2

John Quiggin15 Comments

The facts about inequality in the US, and increasingly in other developed countries, are now so clear-cut that the defenders of the status quo have little solid ground left on which to stand. So, they are mostly confined to arguments that have already been effectively rebutted. As new talking points emerge, it’s become increasingly easy to pick them out before they are fully formed and have a prebuttal ready.

That’s the case with data showing that income inequality arises mainly from differences in current incomes rather than from inheritance. As I pointed out a couple of months ago, the absence of large inherited inequalities is a logical consequence of the fact that the distribution of income in the postwar generation was relatively equal.

Sure enough, here’s the prebutted talking point, stated by John Cochrane[1], who asserts

There are a lot of facts: the widening distribution comes from a skill premium, not inherited wealth.

He goes on with some older points, long rebutted

It’s new people getting rich, not the old rich keeping more money. It’s pretax income, not the rich keeping more money.  Consumption inequality is much less than income inequality. And so on.

In reality, income mobility is falling not rising, and the tax system has become less progressive not more. And I’ve dealt with the consumption inequality point here and here.

fn1. This is a bit disappointing to me. In his technical work in finance theory, which overlaps with mine, I’ve found Cochrane to be admirably precise in his analysis and sensible in his comments on the critical issue of the equity premium. But his contributions to the broader public debate over the past few years have been very poor (of course, there are plenty who say the same about me).

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HeartKids fundraiser

John Quiggin7 Comments

Just in time for the end of the financial year, another fundraiser! I’m planning to run in the Noosa Triathlon in November. My friend Flavio Menezes and I have set up a charity fundraising team, with the hopeful title “Faster Than Zombies #2”, and you can give money through the Everyday Hero widget on the sidebar. We’re aiming to raise $4000 between us. A few points which I hope will help to get the credit cards out:

* We’ll be supporting HeartKids Queensland which helps children born with heart disease and their families. I know it’s always hard to choose which charities to support, but this one does a lot of good and scores really well on the “warm inner glow” scale

* Last time around, some commenters expressed concern about the cost charged by Everyday Hero. I raised this with HeartKids and got the advice that, for a small charity like theirs, going through Everyday Hero is more cost-effective than handling donations directly

* This blog is free and always will be. The only financial return I ask for is support in efforts like this one.

* For those in paid work, donations are tax deductible. That means you can give more!

I know not everyone can afford to give much to charity, and many of you will have made your own choices already. But for those with a bit of spare cash, here’s a chance to put it to good use.

How Gillard can win for Labor

John Quiggin73 Comments

By resigning gracefully. If I were advising Gillard on how best to secure her place in history, I’d suggest waiting until the 1st of July and then making a speech along the following lines

The carbon price, legislated by my government is now in place. It will soon become obvious that the scare campaign run by Mr Abbott and the Opposition has no basis in reality and that our plan will achieve cost-effective reductions in carbon emissions, while making most Australian households better off. I am proud of my government’s achievements in this and other areas. Nevertheless, I recognise with sadness that I am not the best person to take this message to the Australian public. I have therefore decided to resign the office of Prime Minister and advise my Labor colleagues to support the return of Mr Kevin Rudd to this position. Mr Rudd and I have had substantial disagreements over matters of managerial style, but we are agreed on the need for a Labor government with Labor values, and on the need for action in key areas including the carbon price, the mineral resource rent tax and the successful management of the Australian economy. I will give the new PM my enthusiastic support, and work for the re-election of a Labor government.

Would this work? I’m not really sure. But given Abbott’s failure to achieve any popular support at a time when Labor has plumbed unheard of depths of popular support, it would have to be worth a shot. At a minimum, it would help avoid the Queensland-style wipeout that is currently on the cards. And if it worked, history would certainly look kindly upon a PM willing to give up the job for the sake of her party and, more importantly, in the best interests of the country.