Monthly Archives: May 2014

Politically a very nice piece of work

Posted on by
Reply

Economically the budget is hastening slowly. The trend is right and really is a matter of taste. I wouldn’t expect any serious revival before 2015 but this has hardly been the savaging everyone was talking about. After 2015 it sets us up for a quite good recovery. As with everything in economics, there are so many unknowns of the known and unknown variety that nothing can be certain. But it puts us in a good position to catch any passing wind.

Politically, however, it looks even better. I teach of a Tuesday night so don’t get home till late and had to catch up by watching ABC News 24. And what struck me was the extent to which the critics were pretty subdued. No real heavyweight venom and anger, just the usual negativity about trying to repair what everyone knows needs repairing. We are the lucky country in the sense that the harder we work the luckier we get. Just as in 1931 the Lyon Government cut deeply into public spending allowing Australia to be the first economy in the world to emerge from the Great Depression, so the cuts and crafting of expenditure this time round will allow us to put ourselves on a very solid foundation for growth.

Even the supposed nasties, listening to some woman worrying whether she might be able to find the $7 to get to the doctor came across as a pretty weak and whiny complaint. The co-payment is designed to make you think twice in a way that a freebie doesn’t. For 98% of the country, if your illness isn’t worth paying $7 for the medical advice you get, you either have your priorities wrong or you have been wasting a lot of our precious medical resources because you’ve treating them as a free good. Well, it might have been free to you but not to the rest of us.

Same with cutting Newstart for the under-30s. Luckily again we are a community that doesn’t look benignly on living off the earnings of others although there are many still trying to expand this constituency. But what is more important is that it will mightily discourage many from a wastrel style of life. Falling into a welfare trap young and early is a disaster. Maybe it will save a bit of money but more importantly it may save a few lives from being lost and wasted.

We’ll see over the next few days and months how the politics plays out in the real world. In the meantime I think it is a job well done.

Scandal, what scandal?

Posted on by
Reply

Paul Caron, who has been following the dead cat IRS scandal, has an article in USA Today on The media ignore IRS scandal. He therefore writes:

Today’s news media are largely ignoring the IRS scandal, and it is impossible to have confidence in the current investigations by the FBI, Justice Department, and House committee. I am not suggesting that the current scandal in the end will rise to the level of Watergate. But the allegations are serious, and fair-minded Americans of both parties should agree that a thorough investigation needs to be undertaken to either debunk them or confirm them.

Step one should be to give Lois Lerner full immunity from prosecution in exchange for her testimony. And then let the chips fall where they may.

Rise to the level of Watergate! This is so far beyond Watergate that even to suggest a comparison is to downgrade the significance of what went on. Whatever else Nixon did or did not do, at no stage was it ever suggested that he had even been aware of what was being done never mind having been involved.

With Lerner and the IRS it is completely different. The probability is not small that this is an Obama operation and originated in the White House. Lerner knows the truth but will never speak, and even if she did the media would never report what she said. Caron’s work is for the historians, not for political comment by anyone with a sentimental attachment to the left. The fact that it even showed up in USA Today is all the evidence you need that no one on the left thinks it will ever come to anything at all.

The world’s most articulate conservative philosopher

Posted on by
Reply

Roger Scruton was in Australia this week discussing the nature of politics from a conservative position. Here he is with Andrew Bolt. What I found interesting was his discussion of the nature of the left and its perennial opposition which fills its carriers with an emotional overload that prevents rational thought on their behalf and therefore rational discussion. As the left defines itself by what it hates and not, other than in the vaguest terms, by what it is for, it must work to shut out debate since past the invective, there is nothing concrete it seeks or has to say. I only wish Roger had been given more time.

Repeat a lie often enough . . .

Posted on by
Reply

michael mann gw hoax

Since facts don’t matter in the global warming debate, this won’t matter either. But this is from a post at Powerline titled, MICHAEL MANN IS A LIAR AND A CHEAT. HERE’S WHY. See the diagram? This is the text that goes with it:

The figure on the left is a blow-up of the far-right portion of the dramatic hockey stick diagram as it was featured in the IPCC’s Third Assessment Report. It purports to show steeply rising temperatures in the latter portion of the 20th century. The green line represents Keith Briffa’s tree ring data. Note how it discreetly disappears behind the other lines. The graphic on the right shows Briffa’s data as it actually existed. The later decades of Briffa’s data, showing a sharp decline in temperature after 1960, were simply cut out in the diagram as published by the IPCC.

There is clearly no fighting it any more. I’ll just have to go and see if I can get a grant.

The politics of economics

Posted on by
Reply

A budget is a political document dealing with economic issues. But it is politics first. I also read Henry’s post and now the comment by Sinclair and thought I might buy in as well.

The economics of this budget we shall see for ourselves tomorrow night. From everything we so far know, it’s not the budget I would have brought down but I am in sympathy with its aims. The problem will, however, be the politics. So far, and especially on economic matters, this government does politics very badly.

I understood why they decided to run a silent operation on border protection. But on other matters, what has drawn most of my attention is how on just about every issue I can think of, little has been done to shape the narrative. Labor was a catastrophe, enough for three Liberal terms in office. But the way the politics and the engagement with the community has gone, they will be lucky to survive in 2016.

The horrors of the Labor economic mismanagement ought to have been a constant theme from the day the election ended. The horrors at what was found in the books should have been drummed time and again by the government. These are genuine horrors, so why we didn’t continuously hear about NBN and company, or the unfunded nature of the NDIS, or the additions caused by Gonski, or the bank of unfunded promises that will sink us, or the carbon tax and its destructive capabilities, or any of the rest I do not know. They will therefore bring in a pain-for-everyone budget that may appeal to some but will alienate a good many others.

No one will understand the economics of this budget without instruction. The instruction should have begun months ago. Whether in regard to its economics it is a good budget or a bad one, the reality is that professional politicians though they may be, the politics has been dreadful.

Very clever and impressive

Posted on by
Reply

I find this such an interesting story on game theory, from an article by the authors of Freakonomics in The Wall Street Journal:

By the early 1980s, Van Halen had become one of the biggest rock bands in history. Their touring contract carried a 53-page rider that laid out technical and security specs as well as food and beverage requirements. The “Munchies” section demanded potato chips, nuts, pretzels and “M&M’s (WARNING: ABSOLUTELY NO BROWN ONES).”

When the M&M clause found its way into the press, it seemed like a typical case of rock-star excess, of the band “being abusive of others simply because we could,” Mr. Roth said. But, he explained, “the reality is quite different.”

Van Halen’s live show boasted a colossal stage, booming audio and spectacular lighting. All this required a great deal of structural support, electrical power and the like. Thus the 53-page rider, which gave point-by-point instructions to ensure that no one got killed by a collapsing stage or a short-circuiting light tower. But how could Van Halen be sure that the local promoter in each city had read the whole thing and done everything properly?

Cue the brown M&M’s. As Roth tells it, he would immediately go backstage to check out the bowl of M&M’s. If he saw brown ones, he knew the promoter hadn’t read the rider carefully—and that “we had to do a serious line check” to make sure that the more important details hadn’t been botched either.

I seldom think game theory tells us much more than the obvious, and this is another case in point. The example is not really theory in any sense – what can anyone else learn from this other than that there are often really innovative solutions to problems and in a free market people will work things like this out. Very impressive and clever.

You must control debt before it controls you

Posted on by
Reply

If a country goes into debt, no one gets sent to debtors’ prison, no one is declared bankrupt, the furniture is not sold off to recover the money. It’s more subtle, but in the end the country is forced to draw down on its capital and over time living standards fall. If you have debts you want to pay off you divert income into repayment and cut expenditure. One way or the other, those are the choices.

The picture below is not Australia’s debt, it is the timeline for American debt stretched out to 2024. It’s the same kind of picture we have here but in Australia we have a government that is intending to do something. And the picture comes with a story about Janet Yellen, the new Chair of the Fed in the United States.

yellin us federal debt

The only bit that is ridiculous in the story is that the timeframe is projected into the future, Fed Chair: ‘Deficits Will Rise to Unsustainable Levels’. What do they think happens when the government diverts output down various plug holes, that the entire country disappears into thin air? What happens is that over so slowly real incomes begin to fall and the communal environment begins to crumble. There will certainly still be many wealthy people, but the average will move in only one direction. Detroit becomes the national future.

In the US they pretend that time is on their side but it isn’t. Things are long past being just line ball. There will be a fall in living standards, in fact, it is already happening. The only question is whether there will be a recovery and if so when. Personally I do not see the slightest evidence of a will to change things around in the US.

But at least here we do have just that chance. We are dealing with a junior version of just this debt problem ourselves. The ALP talks about what geniuses they had been since debt-to-GDP was only about 37% when they left office. They never dwell on the figure when they came into office – ZERO – nor where debt levels are likely to go if nothing is done about the legacy they left.

This stuff is hard and generally uninteresting for most people. Just gimmee the loot or I’ll bring in the other mob who will. We here may not quite be at that stage but perhaps we are. What Janet really would like to say is what Joe Hockey’s been saying: THE HOUSE IS ON FIRE! THE HOUSE IS ON FIRE! but she can’t because she does not wish to bite the hand that fed her. But she knows. Keynesian though she is, she knows perfectly well that debt is a problem, and it is pure sophistry to argue that it’s not a problem because we owe it to ourselves. And when it comes to Australia, I can only hope that enough of us here know it as well. And looking at our own debt projections, it is certainly not an argument to say that that fire’s not all that big at the moment so why worry?

The IRS Scandal, Day 365

Posted on by
Reply

Instapundit has had a running theme for exactly a year today. Paul Caron, a law professor in the US, began assembling each day the latest news on the use of the IRS to harass any organisation on the right-side of the political divide. From the first moment I could not see how Obama could avoid being impeached even with the media virtually all in one corner. But on this, alas, I could not have been more wrong. So a full year has gone by, and this is where we are now on Day 365:

  • American Thinker: IRS Audits 10% of Tea Party Donors
  • The Blaze: IRS Agrees to Turn Over All Lois Lerner Emails
  • Bloomberg: House Holds Lois Lerner in Contempt for IRS Probe Silence
  • Catholic Online: Former IRS Official Lois Lerner Held in Contempt
  • Christian Science Monitor: House Holds Lois Lerner in Contempt in IRS Scandal: What Does That Mean?
  • Daily Caller: IRS Agrees To Give House Committee All Lois Lerner Emails
  • Daily Mail: IRS Finally Agrees to Turn Over ALL Lois Lerner Emails to House Republicans – A Day After She’s Found in Criminal Contempt
  • The Foundry: Why 26 Democrats Think IRS Scandal ‘Doesn’t Smell Right’
  • The Guardian: IRS Official Held in Contempt of Congress Over Tea Party Targeting
  • Human Events: Lois Lerner Held in Contempt by the House
  • Legal Insurrection: IRS to Turn Over All Lois Lerner Emails to House Committee
  • National Review: IRS to Turn Over All Lerner E-Mails
  • NBC News: GOP Focus on Benghazi and IRS Could Be Risky Business
  • News Busters: NY Times Reporter Suggests ‘Defensive’ GOP Playing Politics on Lois Lerner
  • News Max: Critic Slams Networks for Ignoring Contempt Vote on IRS’ Lerner
  • News Max: Rep. Cummings: Lerner Contempt Vote Recalls McCarthy Era
  • Newsweek: House Votes to Hold IRS’s Lois Lerner in Contempt Over Conservative Targeting
  • Roll Call: In Showdown With Lerner, House Imprisonment Not Out of the Question
  • Slate: Lois Lerner Is Held in Contempt of Congress, in Massive Consolation Prize
  • Town Hall: Guess Who Bailed on Lerner’s Contempt Vote?
  • Town Hall: Priorities: Pelosi Skips Lerner Vote, Attends Fundraiser in CA
  • USA Today: Congress Could Put Lois Lerner in Jail All by Itself — But Probably Won’t
  • Wall Street Journal: Four Ways the House Can Go After Lois Lerner
  • Wall Street Journal: Lois Lerner’s Contempt for Congress
  • Wall Street Journal: Some Democrats Target the IRS: The White House Can’t Call It a Partisan “Phony Scandal.”
  • Wall Street Journal: What’s Next for Lerner and the IRS Scandal
  • Washington Examiner: IRS’ Lois Lerner Held in Contempt by U.S. House
  • Washington Free Beacon: Meet the Democrats Who Want to Investigate the IRS
  • Washington Post: The Five Stages of GOP Scandal-Mongering: A Reader’s Guide
  • Washington Post: House Votes to Hold Lois Lerner in Contempt of Congress
  • Washington Post: Lois Lerner Is About to Join the Contempt Club. Who Else Has Been There?
  • The Weekly Standard: Six Dems Join House Republicans on Lerner Contempt Vote

Aside from media bias, the terrorist abilities of the IRS is keeping protest to an invisible low. You don’t need the army in the streets, just the Tax Department. Quite instructive but depressing.The United States is no longer a free country nor will it be a prosperous country for very long either. Its infrastructure is falling to bits which I was reminded of on another Instapundit post today which began:

Last night, I got back to California after my behind the scenes work on the Duranty Awards in New York, after a delayed flight from JFK to San Francisco that began with an hour and a half on the tarmac, proceeded by six hours in flight, inside an aging Boeing 767 with one bathroom out of service, no Wi-Fi, and plenty of turbulence.

Falling to bits in so many ways but the only issue that seems to engage their media and political class are racist comments made in private by the owner of a basketball team.

Self-interested economic advice for Japan from the US

Posted on by
Reply

I went to a seminar with an American trade negotiator today and what got to me was this incessant effort to get the Japanese to open their borders to American exports. I am not up on whatever passes for modern trade theory but even so it did seem a little self-serving. I therefore asked what was on my mind: since the point of comparative advantage is to show that both sides can benefit from free trade, who then is the loser if one of the parties doesn’t want to bother? Japan says it doesn’t want to lower its protection for its agricultural produce. OK, too bad for Japan. But what’s the difference to the US or Australia if they don’t want to buy food exports from us. Your bad luck. You’re the one missing out. We’ll go and trade around you ought to be the answer but somehow it isn’t. Given that everyone has a reasonable idea of their own self-interest, and given that self-interest is much more than just being able to buy more this year than last year, if the Japanese aren’t interested in cutting protection but the Americans (and Australians) really do want them to, just from this I can see there is something wrong with trade theory, or at least at that superficial level.

At the very minimum, the Japanese see no value in disrupting its rural sector. They manage to eat, no one is starving, they’re content with how things are, so why should we make a fuss? But of course we do because we want to sell because we think that’s good for us. From the nature of the conversation, and the persistence with which this is pursued, the Japanese would be doing us a favour in cutting tariffs and would be doing themselves harm. I’m very suspicious of arguments that are premised on this is for your own good.

While no one says it, I also think the Japanese are all too aware of – but much too polite to mention – the last time they took economic advice from the Americans. That was in 1993 just after Bill Clinton took over the White House. At the time, we were all coming out of the 1991-93 recessions. Clinton, because he wanted the Japanese to help the Americans with their own dull levels of activity, virtually demanded that the Japanese provided a stimulus to their economy. And so began the twenty year lost decade. Not that these sort of things happened to me often, but I happened to be sitting next to the Japanese Minister of Finance or something, when he was in Australia and being the economist was given the seat next to him. So I said to him that I thought it would be a mistake to try a Keynesian policy, and he said, “Don’t you care about the unemployed?” An exact quote which I have never forgotten. So off they went and did what they did but their economy has never recovered.

If you ask me, self-interested advice like that is something we can all do without.