Misrepresentations

John Quiggin21 Comments

In an interesting tribute to the impact of blogs, the latest issue Centre for Independent Studies magazine Policy includes a lengthy article by Sinclair Davidson, entitled Taxation with Misrepresentation (PDF), which appears to be a response to this blog post, criticising an earlier article in the same journal. If only all the posts here attracted a similar response.

At this stage, it doesn’t appear that the article adds much to the discussion that took place at the time. For example, Davidson has a lengthy defence of the morality of tax avoidance and of Garfield Barwick’s excellence as a judge, but doesn’t respond at all to the substantive point that his figures on taxable incomes are distorted by the effects of tax avoidance/minimisation/effective planning. Call it what you will, the game is about making your taxable income less than your actual income.

One interesting claim is that 60 per cent of households get more in welfare benefits (including family payments) than they pay in tax. Davidson refers to his own unpublished calculations as the basis for this claim. I’ll wait until I’ve seen a bit more detail before responding.

Anyway, as I say, it’s good to see that blogs are having an impact, at least to the point of provoking a reaction.

EMH&SS

John Quiggin11 Comments

Matthew Yglesias had a well-argued piece a couple of days ago on Social Security and the Efficient Markets Hypothesis (EMH), in which he quoted me on the (generally left-wing) implications of rejecting the EMH. This spurred me to start on a post (or maybe a series) on the EMH, the equity premium and the implications for US Social Security reform. Most of what I have to say is consistent with what Matt and others have said previously, but perhaps there will be a bit of a new perspective.
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Profits are 150 per cent of GDP ??

John Quiggin43 Comments

Yesterday’s Fin had a piece by Louise McBride arguing for cuts in personal income tax rate, and including the claim that, according to Tax Office stats, Australian companies had a total taxable income of $1.1 trillion, far more than individuals (about $300 billion), even though individuals pay far more in income tax.

One thing I recommend to my students is to keep in their minds round number estimates of as many key economic magnitudes as possible, so they can be alerted by implausible claims, and can cross check. My first example is that Australia has a population of roughly 20 million, GDP of roughly $800 billion and therefore per capita GDP of $40 000 (the population number is close enough to do for quite a few years, GDP needs updating every couple of years to be within 10 per cent).

Alert readers will already have noticed that McBride’s stats imply that company profits are approximately 150 per cent of GDP. I know capitalism has been doing well, lately, but this seems unlikely. Unfortunately, I won’t have time to chase down the actual source for a while, so if anyone does have some free time to look at the tax stats and give me a hint as to what is going on, that would be great.

Kyoto comes into effect

John Quiggin80 Comments

This is a good day for the planet, which has had mostly bad days lately. Still, even with US (and FWIW, Australian) participation, Kyoto would only have been a first step towards tackling global warming. As it is, we have a first step towards a first step.

Habib’s day in court

John Quiggin61 Comments

Having seen Mamdouh Habib’s 60 Minutes interview the other night, I’m keener than ever that he should have his day in court. I think it’s clear enough that Habib’s allegations that he was tortured in detention are true in general (why else would he have been shipped to Egypt?) and that the Australian government either knew or, in its Children Overboard mode, chose not to know about it – most likely some mixture of the two.

That said, Habib said nothing[1] to refute the government’s allegation that he’s a terrorist, claiming that he would give his answers in court. I certainly hope that this takes place. Both Habib and the government have a lot of explaining to do, in my view.

At this distance in time, I find it hard to believe that there’s much in the mooted excuse that producing the government’s evidence would compromise intelligence sources. Habib’s alleged crimes took place in 2001, when the Taliban was still in power, and Al Qaeda was operating more or less openly. The failure to detect the S11 attacks [on the government’s own account, a matter of common gossip for Habib] suggests that there can’t have been much in the way of intelligence penetration of AQ at the time and the destruction of the Taliban government must have rendered most such sources obsolete.

fn1. To be clear, he denied the allegation, but did not respond any questions about the details.

The Garbage Gene

John Quiggin58 Comments

This piece by Nicholas Kristof encapsulates everything I don’t like about ‘evolutionary psychology’, particularly in its pop mode. Kristof makes the argument that the success of the religious right is due to a predisposition to religious belief grounded in supposed evolutionary advantages, supposedly reflected in a particular gene, referred to by its putative discoverer as ‘The God Gene’. This is pretty much a standard example of EP in action. Take a local, but vigorously contested, social norm, invent a ‘just so’ story and assert that you have discovered a genetically determined universal. Kristof doesn’t quite get to the point of asserting that there exists a gene for voting Republican, but it follows logically from his argument (Dawkins defends the idea of a gene for tying shoelaces, for example).

Where to begin on the problems of all this?
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