Taxing times

John Quiggin6 Comments

In the Thursday comments thread “Factory” writes,

One thing I didn’t get about the GST was that it was generally seen as a issue that was owned by the right, but similar tax regimes seem to be the norm in Europe.. hmm..

As I explained here, the reason for this, and for the unpopularity of the GST was that

the Australian advocates of a GST/VAT have tied this change to logically unrelated proposals for a change in the tax mix to give more weight to indirect taxation and for the removal of existing exemptions, notably for food. It is rather as if the advocates of metrication had suggested that the metric system was not worth having unless we also made French the national language and introduced the guillotine.

With the exemption of food, and the associated introduction of the Australian Business Number, the GST has improved the effectiveness of the tax system. The associated income tax cuts made the package as a whole regressive, but not nearly as much so as the previous proposals for a GST (Fightback! and Option C)>

Science and magic

John Quiggin10 Comments

Jason Soon links to this piece by Nicholas Thompson making the point the Republicans are losing the support of scientists, essentially because they ignore expert scientific opinion whenever it doesn’t give them the answers they want (Jack Strocchi also alerted me to this). This blog is running a few months ahead of the Zeitgeist on this one. Back in March, I observed

it’s striking that there is now almost no academic discipline whose conclusions can be considered acceptable to orthodox Republicans. The other social sciences (sociology, anthropology, political science) are even more suspect than economics. The natural sciences are all implicated in support for evolution against creationism, and for their conclusions about global warming, CFCs and other environmental threats. Even the physicists have mostly been sceptical about Star Wars and its offspring. And of course the humanities are beyond the pale.

Of course the same is true in Australia, most notably with respect to the global warming ‘sceptics’ (more accurately described as credulous believers in the handful of scientific Pollyannas who tell them wha they want to hear) of the Lavoisier Group. And even creationism is now finding a home among the Quadrant group, though people like McGuinness would no doubt take some sort of Straussian line on this that it’s good for ordinary folk to believe in the literal truth of the Bible, even though sophisticates like Paddy are above such nonsense.

Thought for Thursday

John Quiggin6 Comments

Jason Soon linked to Alan Woods’ review of Shiller’s The New Financial Order a little while ago, so I thought I’d post mine, published a couple of weeks ago in the Fin. I can’t resist bragging that Shiller said it was the best review of the book he had read. It’s much longer than my usual so I’ve put it in the extended entry below.

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Word for Wednesday: Reform

John Quiggin18 Comments

As Raymond Williams points out in his excellent little book Keywords, from which I got the idea for this series, reform originally meant ‘restore the original form’ of something. In particular the Reformation was supposed to sweep away the abuses of the Papacy and restore the church to its original purity. As this example indicates, the worldview associated with this usage was one of decline rather than progress. The best one could hope for was to get back to things as they were in the good old days. This view was dominant in Western thinking from Plato to the 17th century.

From the 18th century onwards, reform underwent something of a reversal, since it now typically implied forming something new. But since the associated worldview was now one of progress, the assumption remained that reform entailed change for the better.

From the 18th century to the 1970s, the term reform was typically used to describe policies favored by the moderate left, in opposition to advocates of revolutionary change on one side and of conservatism and reaction on the other. From the 1970s to the end of the 20th century, though, the direction of policy change was reversed, with the rise of neoliberalism. However, the term reform continued to be used, even when the policies it described consisted of the dismantling of earlier reforms.

As a result, critics of neoliberal policies have frequently resorted to the use of “scare quotes”, as in my recent reference to ‘workplace reform’, or to similar alerts like “so-called”. While the automatic assumption prevails that the term reform applies only to desirable changes, such devices are necessary.

Where it’s feasible though, the best approach is to define reform as “any program of systematic change in policies or institutions” and make it clear that there is no implication of approval or disapproval.

A snippet on foreign debt

John Quiggin4 Comments

Following financial deregulation and the floating of the dollar, both the current account deficit and net foreign obligations (debt and equity) grew rapidly, reaching about 5 per cent of GDP and 50 per cent of GDP respectively by 1990. Since then the current account deficit has fluctuated and net foreign obligations have risen slowly to around 54 per cent of GDP, the great majority of which is debt. By contrast, in 1980, two-thirds of foreign obligations were equity (Parliamentary Library Research Paper No. 3, 2002รถ03, Australia’s Foreign Debt).

It is straightforward to compute that if nominal GDP is growing at 6 per cent per year and if nominal foreign debt grows by an amount equal to the current account deficit, debt will remain stable at 50 per cent of GDP if the current account deficit is equal to 3 per cent (=0.50*0.06) of GDP. Since Australia’s current account deficit has generally been greater than this, it seems likely that debt will grow over time.

Coffee and literature (reposted)

John Quiggin4 Comments

The Harry Potter debate reminded my of Jonathan Franzen’s refusal to have his book The Corrections listed on Oprah’s Book Club. I thought I’d posted on this before and dug out this one from just before I left Canberra, which turned out to be mainly about coffee.

The house is all packed up except for the items we absolutely need for tonight and tomorrow – beds, a toaster and the Krups espresso machine. With a long trip ahead, a good cup of coffee will be even more vital than usual.

So I was fascinated to read this piece on a new image for “Mr. Coffee”, one of those 1970-vintage automatic coffee machines. In a nod to my favorite computer, they suggest calling it iCoffee, although there is no planned connection to the Internet.

This raises a couple of points. First, the problem is not the name but the mechanism. Given America’s status as the world’s leading consumer society, it’s startling that so few people there understand something as vital to civilisation as good coffee.

Second, as with anything about coffee in the US, the article can’t avoid mentioning Starbucks. The question I have is about the appropriate metaphor. Is Starbucks to coffee as Oprah Winfrey is to literature, a potential bridge from instant to the real thing. Or is Starbucks to coffee as Microsoft is to software, a ‘good enough’ monopolist that kills the competition and closes off the chance of anthing better?

Moves

John Quiggin2 Comments

Gianna has joined the move to MT, but has bypassed mentalspace in favour of rival blog empire ubersportingpundit (when Alston gets his reforms through the Senate will we have to merge?). Still no photo, though.

Meanwhile, a couple of blogs/plogs I’ve somehow missed are Mortigi Tempo and dolebludger.

I’ll fix my blogroll soon. Meanwhile this is a good time to remind everyone who hasn’t already done so to update their bookmarks and links to point to my new site.

Potshots at Potter

John Quiggin13 Comments

Jason Soon links to killjoy Jenny Bristow who says

For all the original artificial hype of Potter’s literary qualities, it is self-evident that their readability, not their quality, is what made them popular with children. Yet while Enid Blyton was actively resisted by school libraries in the past, on the grounds that it might distract from the better quality stuff, Rowling’s equivalent has all but formed the basis of English exams.

Even when I was a kid I thought the librarian jihad against Enid Blyton was pretty stupid. I read heaps of her trashy Famous Five books when I was in primary school (she wasn’t banned in our library). It didn’t do me any harm or distract me from better stuff – as I recall I read the Penguin translation of the Odyssey in the same years, for example. (Jason’s account of his own reading habits suggests a similar range, from absolute trash like Agatha Christie to the classics).

But at least the librarians of my youth had the excuse that a censorious attitude was part of the culture. In fact, such were the many grounds of censorship, I was never quite clear whether the ban on Noddy was because
(a) Blyton wrote trash;
(b) The portrayal of the golliwogs was considered racist; or
(c) The relationship between Noddy and Big Ears was considered ambiguous
I thought we’d grown out of that kind of thing these days. But apparently, according to Bristow, the demise of the Blyton ban shows that ‘Our expectations of children have plummeted’. I’ll bet she reads romance novels on the sly.

Enemy combatants

John Quiggin3 Comments

Via Brad de Long I recently saw this post from Jim Henley on the failure of Appeal Courts to impose significant constraints on the US government’s policy of secret detention of terrorist suspects. Henley says

For those of you reading these words I have one request:

COULD I GET A LITTLE ALARMISM HERE, PLEASE?????

What has the appeals court authorized?

Secret detentions.

Please say those words aloud. “Secret detentions.” Now use them in a sentence:

The US government engages in the practice of secret detentions.

The US government has broadly asserted its right to engage in the practice of secret detentions.

A federal appeals court has affirmed that the US government may engage in secret detentions.

The biggest single step in this regard is the creation of the category of “enemy combatants” applied both to people taken prisoner in Afghanistan and elsewhere (for example Pakistan), allegedly in the course of the war aagainst terror. More significantly the category has been applied to Jose Padilla, a US citizen arrested in the United States allegedly after returning from a meeting with Al Qaeda.

Until recently, I haven’t been too alarmed about all this. It seemed likely that as with most wartime excesses, the Administration would moderate its claimed powers, and, if not, that the courts would constrain them. In particular, I thought that the actions in the Padilla case would ultimately be declared illegal and that the Administration would be happy enough having had a couple of years to operate outside the normal limits.

But this optimistic view looks increasingly untenable.
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FTA vs Kyoto

John Quiggin6 Comments

I’m planning on putting the following argument in a piece on the proposed Free Trade Agreement with the United States. Can anyone confirm or refute my understanding of the implications of the FTA?

Under the Bush Administration the United States has, to an ever-increasing extent, rejected the whole idea of multilateralism on the basis that it fails to recognise the special position of the United States. In place of multilateral negotiations in which the United States is, at most, first among equals, the Administration has pursued bilateral agreements on a wide range of issues. The most notable case is that of the International Criminal Court, where the United States has pursued bilateral agreeements exempting Americans from prosecution.

Inevitably these agreements involve an element of ?pattern bargaining?. The United States proposes the same set of terms to each of its negotiating partners, generally on a ?take it or leave it? basis. While adjustments may be made in particular cases, the end result is inevitably that the terms of such agreements are those set by the more powerful party.

The most important multilateral agreement to be boycotted by the United States is the Kyoto protocol on climate change. It is noteworthy that the most prominent advocate of the FTA, Alan Oxley of AUSTA, is also a leading critic of Kyoto, and bases his arguments against Australian participation primarily on the argumentthat Australian industries will lose competitiveness against non-signatory countries such as the United States.

It is easy to foresee the possibility of the Kyoto agreement coming into conflict with an FTA. For example, an effective emission credit trading system will require some form of taxation of carbon dioxide emissions embodied in imports from nonsignatory countries. Applied by Australia to imports from the United States, this would, on the face of it, conflict with the requirements of the FTA.