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The violent demonstration by the thugs who support the so-called “aboriginal embassy” in Canberra should be unambiguously condemned. The site itself is unsightly, unwarranted and probably should be removed. It is not, as one of the demonstrators claimed, “sacred”. Nor were the considered and very reasonable comments by Tony Abbott regarding this site the basis for the violent act of thuggery against Abbott and PM Gillard. The ensuing threats and incitements to violence made by the demonstration’s leaders – anyone opposing our views will be attacked – did nothing to advance the cause of Australia’s indigenous people.
Afterthought 1: The slogan “quarantine racism, not welfare” used by the protesters accurately describes the despicable ethics of these awful people. Keep the money flowing to us while we burn your flag and accuse you all of racism if you dare condemn our thuggery.
Afterthought 2: Isn’t the real racism here the fact that these cowardly thugs were not arrested? Why the double standards? Stupidity and the inability to interpret accurately the remarks of Tony Abbott does not provide an out.
Sociologists and anthropologists sometimes seem to live in a parallel universe. This to me is incredible – relating what are claimed to be “racist” attitudes to flying the Australian flag on your car. Please read the link.
Are they serious and therefore just simple-minded ratbags? Or is this a joke and they have got me? Hopefully the latter.
The Labor Party’s leadership has always been close to the gambling industry and it is mainly bogan Labor Party supporters and voters who play the wretched machines designed to accommodate society’s losers. Around Australia almost all machines are concentrated in blue collar electorates and that is where the big gambling losses are concentrated. So it was not really surprising – particularly given its track record on mining taxation and other reforms – to find that the Labor Party has abandoned the Wilkie reforms. I have, however, been surprised by the vehemence of the club industry’s opposite to reforming gambling given their self-evident self-interest in feeding off the miserable lives of problem gamblers. I guess that most of the bogans who inhabit these awful clubs really do find it difficult to distinguish between a biased interest group argument and intelligent opposition to a political viewpoint. Those Labor voters who do see through the cynical dishonesty of the clubs – an ‘elite’, proper subset of the bogan masses – probably figure that selfishly they can also thrive from the misery of the ‘problem gambling subset’ through subsidised grog and food at these clubs. The sharpie Labor politicians understand the motivations of the dimwit bogan segment of their support and the selfishness of the elite aspirational segment and have knocked the prospect for meaningful pokie reform on the head. Overall it is a miserable outcome from a pretty miserable government.
Update: Karl Bitar proved crucial in thwarting the intention to introduce compulsory precommitment. I will await with interest to see the tactics the gambling lobby use to thwart the outcome of the proposed trial.
I heard this on the radio while driving through heavy traffic the other day. My younger daughter identified it for me -its “Somebody that you used to know” by an Aussi-Belgium singer called Gotye and accompanied by the georgeous New Zealand singer-songwriter Kimbra. I think they are pretty good – its certainly a catchy tune. I bounced onto my destination ignoring the congestion externalities.Which, by the way, is the reason travel time is only ever valued at a fraction of the real wage – you can gain utility from sitting in traffic.
Martin Feldstein is by no means a radical economist. He advised President Reagan and is a former President of the NBER. But even he warns of the peril implicit in the failure to distinguish structural from cyclical deficits in the European economies. Moreover, this failure seems implicit in the stance of the European Central Bank. The failure risks massive European unemployment and depression. Quote from the excellent Project Syndicate blog:
“European political leaders may be about to agree to a fiscal plan which, if implemented, could push Europe into a major depression. To understand why, it is useful to compare how European countries responded to downturns in demand before and after they adopted the euro.
Consider how France, for example, would have responded in the 1990’s to a substantial decline in demand for its exports. If there had been no government response, production and employment would have fallen. To prevent this, the Banque de France would have lowered interest rates. In addition, the fall in incomes would have automatically reduced tax revenue and increased various transfer payments. The government might have supplemented these “automatic stabilizers” with new spending or by lowering tax rates, further increasing the fiscal deficit.
In addition, the fall in export demand would have automatically caused the franc’s value to decline relative to other currencies, with lower interest rates producing a further decline. This combination of monetary, fiscal, and exchange-rate changes would have stimulated production and employment, preventing a significant rise in unemployment.
But when France adopted the euro, two of these channels of response were closed off. The franc could no longer decline relative to other eurozone currencies. The interest rate in France – and in all other eurozone countries – is now determined by the European Central Bank, based on demand conditions within the monetary union as a whole. So the only countercyclical policy available to France is fiscal: lower tax revenue and higher spending.
While that response implies a higher budget deficit, automatic fiscal stabilizers are particularly important now that the eurozone countries cannot use monetary policy to stabilize demand. Their lack of monetary tools, together with the absence of exchange-rate adjustment, might also justify some discretionary cyclical tax cuts and spending increases. Continue reading Depression-creating macroeconomics
The European Court of Justice has ruled that the European decision to include in the European ETS carbon emissions generated by non-European aircraft flying to or from Europe is legal. This type of levy is a border “tax” adjustment of the type I have often discussed on this blog. It isn’t a discriminatory levy at all since it merely prevents carbon leakages and competitive disadvantage to European carriers who are subject to the tax. This decision is a very good outcome and effectively rebuts the disgraceful hypocrisy of both China and the United States in seeking to escape this levy. If the levy comes into play then the incentives are for China, the US and other country carriers which fly to China to impose the levy themselves since then they get the revenue not the Europeans. It is precisely this latter effect that makes me such a strong supporter of border tax adjustments – they provide a mechanism for unilateral measures to become more global and that’s what is needed.
I was interested in reports of a research study suggesting that nicotine replacement therapies (NRTs) were no more effective in helping smokers to quit their habits than simply going ‘cold turkey’. People had the same probabilities of relapsing into nicotine addiction even were they using NRTs even if they were receiving counseling to help break their addiction. Earlier studies have shown that most (2/3-3/4) of smokers quit without the aid of NRTs and that positive findings on NRTs tend to arise in studies funded by industry groups supporting the sale of such products.
Some claim that, while rates of smoking are continuing to decrease, that this decrease is itself tapering off. One reason could be that, although NRTs are becoming more readily available, are not working in the sense of yielding higher smoking quit rates. There are plenty of other explanations too.
As I have posted in the past one reason for the ineffectiveness of NRTs could be that there are non-nicotinic addicting compounds in cigarette smoke. In particular MAO inhibitors that are known to vary with the type of tobacco smoked – they are strongest in roll-your-own-tobaccos – may provide an additional addictive compound in cigarette smoke.
There is some way to go in this debate but, for sure, smoking control efforts should not rely entirely on NRTs. It is better to consume nicotine supplied as a pure drug that that arising as a toxic mix of tars and other poisons in cigarettes but it is obviously best to give nicotine a miss altogether. .
BTW drug companies selling NRTs have rushed in to discredit the results of the studies suggesting low NRT effectiveness.
This is important news. China to implement a rather low (10 yuan=$1-55A/tonne) carbon tax. Officials say it will be “increased gradually”. The tax is tiny but that it is being planned is most important (and welcome) news. For the most part China is employing quantitative restrictions and direct interventions to limit its rapidly growing emissions. Its switch to include economic instruments shows it has a better understanding of market efficiencies than many Western market economies. Certainly a better understanding than Tony Abbott.
Here’s the official message in China – a bit softer than the Western media report since it suggests “plans to” rather than “will introduce” a carbon tax.
Update: An even morecautious response from a key official - no decision on whether to introduce a carbon tax has yet been taken.
Joe Stiglitz nicely summarises the current US macroeconomic dilemma. (HT BR). Modern events confirm that monetary policy failings could not have caused the Great Depression. Policies seeking to avoid such failings – policies to expand the money supply to induce private investment did not work then and have evidently not worked now. Enhanced massive fiscal expansions engineered by the need to finance WW2 ultimately lead to recovery from the Great Depression and analogous policies – targeting infrastructure and a restructuring towards an even more predominantly service-based economy – are what is needed now. Particularly in the US but also in Europe where financial austerity arguments are dominating common sense.
There is no short path to economic recovery - it will take a decade or more to address underlying problems of global over-indebtedness – but things will be worse still if current fiscal austerity policies are pursued. The main reform necessary in relation to financial policy is to get the banks back to doing what they do best – simple banking. The emphasis however must be on not engaging in fiscal contractions on the basis of a fallacy of composition argument on getting balance sheets in order. Yes, there do need to be longer-term moves to get public finances into better shape but high unemployment should be the target now.
Similar remarks from Paul Krugman - who repeats well-known views – and our own John Quiggin. I generally agree with Quiggin’s argument for abandoning inflation targeting – abandoning such targeting as a temporary measure will inflate away some of the outstanding global debt issues – but more importantly endorse his view that banks should be goaded to perform their key boring role of accepting deposits and making loans.
Right -wing fanatics in Australia are promoting restrictive macroeconomic policies within Australia which will make a bad situation worse here.
I am heading north for a couple of weeks and can recycle an old post to describe this move - except that last year I was the proverbial brass monkey in freezing cold Beijing. Blogging will be intermittent for two weeks unless it rains a lot. Readers please enjoy your summer vacation. If you are not vacating to enjoy you are making a serious mistake.
Update: On this holiday I have been reading Christopher Hitchen’s Arguably. Saddened yesterday to learn of his death. A top athiest thinker with a passion for life. I would have enjoyed sharing a decent bottle of wine with him.
Update: The weather has not been great on NSW’s South Coast but swimming almost every day at Mollymook and Narrawallee. Also playing plenty of golf – a highlight was a game at Mollymook’s excellent Hilltop course – ranked among Australia’s top 100 – the event saddened slightly by the fact that my son out drove me on a couple of holes for the first time – this is youthful ascention versus aging and no real point in getting too worried about the inevitable! Also a fun evening watching a local drama group at Milton perform the Australian drama Cosi.
Update: A short excursion to Sydney started with an excellent day’s birdwatching at Longneck Lagoon on Cattai Road – Cicarda bird, Eastern whipbird, White-bellied cuckoo shrike among many others. A superb night’s entertainment at Sydney’s Wharf Theatre with Cate Blanchett providing an inspired (and physically demanding) performance in Gross und Klein.
The Borowitz report here.
Huddles with Advisors About Possible Affair
 CONCORD, NH ( The Borowitz Report)– Troubled by his fading poll numbers, former Massachusetts Governor Mitt Romney is considering a bold strategy to reboot his Presidential campaign: engaging in a high-profile extramarital affair.At a press conference in Concord, New Hampshire today Mr. Romney confirmed that he was consulting with senior advisors about the best way to proceed with an inappropriate relationship.
“Republican voters have sent the message that they want to vote for an adulterer and I have heard them loud and clear,” he said. “I promise that I will engage in a world-class extramarital affair that will make all of us proud again.”
According to one senior advisor, the Romney campaign was already holding focus groups and conducting special polling to determine the best person with whom Mr. Romney should conduct his extracurricular dalliance.
And in a sign that Mr. Romney is taking precipitous action to find an object for his adulterous intentions, today his campaign launched a new dating site, SexyTimeWithMitt.com.
But according to one female visitor to the site, Mr. Romney’s nascent career as a would-be lothario is still very much a work in progress: “When I first went on the site and he listed ‘tougher border control’ as one of his turn-offs, and five minutes later it was a turn-on.”
Still, an aide to Mr. Romney maintains that the former Massachusetts governor has “the right stuff” to be a world-class adulterer: “In the focus groups, the two words we kept hearing over and over again were ‘wooden’ and ‘stiff.’”
Richard Green points out that I am classified as a left-winger in this survey of Australian political blogs. The terms “left-wing” and “right-wing” are notoriously difficult to define so I am not unduly concerned about this. I hope that I am not regarded as “left-wing” simply because I support strong action on climate change – I would prefer that I be categorised as “non-deluded” at least on that account. Malcolm Turnbull a Liberal Party politician I respect also supports decisive action on climate change. Nor can I be regarded as “left-wing” because I regard those advocating fiscal contraction as a way of addressing the world’s current macroeconomic problems as both deluded and as economic illiterates.
I think my political views lie somewhere near the centre i.e at C. I support free markets most of the time but also support the role of the state in addressing inequality, in providing essential public goods and in actively addressing macroeconomic problems. These views do not make me “left-wing” but one of 20 million Australians. But the survey puts me to the left of Club Troppo which it classifies as C! Was Ted Hill a conservative?
Nearly 1 American in 100 is in prison – the exact figure is 0.8% of the population. This is astonishingly high and 4-5 times the level of other developed countries. The Australian rate is 0.17% for example. At the Becker and Posner blog these statistics are discussed. Becker argues that imprisonment is effective in reducing crime and that crime often does cause real harm. However he still sees imprisonment rates in the US as far too high. He argues that imprisonment is the wrong punishment for all victimless crimes. An important example he claims is imprisonment for drug offences – eliminating this would cut US imprisonment rates by 30%.
Posner is puzzled by the fact that high crime rates coexist with high rates of imprisonment and offers several explanations. If blacks has the same rate of imprisonment as whites then the rate falls to 0.6% which is still quite high. He makes the astute observation that Americans have a high aversion to crime and criminals and the direct cost of the US prisons at $40b is a tiny part of GDP. Hence there are no strong pressures to reform the system – sticking miscreants in prison might be one of the luxuries a wealthy society can afford to indulge itself in. There are of course indirect costs of high imprisonment rates that stem from the fact that young potential workers are excluded from the US economy – the US prison population is generally young.
In 1945 72 per cent of Australian men aged 16 and above and 26 per cent of women smoked. By 1976 male smoking had dropped to 43 per cent of malesbut female smoking had increased to 33 per cent of females. Male smoking has declined ever since and in 2007 (the latest year for which data is available) only 21 per cent of Australian men smoked. Female smoking has fallen to 18 per cent. This latter data is for adults over 18 years of age but an Australian Bureau of Statistics survey in 1977 found that 43 per cent of men aged 16 and above smoked while 29% of women smoked (here) so the slight inconsistency in categorization does not make a significant difference.
Using the ABS historical population statistics one can estimate the population of males and females over 18 in 1945 as 2.481m and 2.504m respectively whilst figures for 1976 are 4.448m and 4.537m and figures for 2007 are 7.616m and 7.885m (here).
Combining these two sets of data we have the number of male/female smokers in 1945 as 1.786m males and 0.651m females or 2.437m persons, in 1976 as 1.913m males and 1.497m females or 3.410m persons and in 2007 1.599m males and 1.419m females or 3.108m persons.
Smoking rates fell dramatically over the 31 years from 1945 to 1976 but absolute numbers of smokers increased due to population growth by about 40 per cent. Over the 31 years 1976-2007 smoking rates continued to fall but now absolute numbers of smokers fell by about 9 per cent despite continuing population growth.
There are various estimates of cigarette consumption per head of the overall population and per head of the smoking population (here). Our interest is mainly in the latter. The data is imperfect and the various ways of estimating consumption give different measures of it. To summarise what is known from the various approaches:
- Total consumption in 1976 was 30,431m cigarettes while in 2000 it was 23,850m.
- Total kilograms of tobacco consumption on which duty was paid (this should be most tobacco consumed) was 10.4m in 1945, 32.56 in 1976, and 18.56m in 2006.
- Total cigarettes consumed per adult smoker increased from about 17 per day in 1964 to about 27 per day in 1992 suggesting significant increase.
- Total cigarettes consumed annually per smoker varied from 2,117 in 1998 to 1,398 in 2006.
- Estimated cigarettes consumed per week by those 14 years and over increased from 140 in 1998-99 to 124 in 2001-02 to 134 in 2004-05.
- Self reported cigarettes smoked per smoker per day fell from 15.4 to 13.0 over the period 1997-2006.
Other measures are possible and discussed here. But there are interesting features of the measures already presented. Using measures 1. and 2. the prevalence of smoking fell less quickly than did cigarettes smoked per smoker fell from 1976 to 2006 – this trend is even clearer for the latter part of this period from estimates 4. This contrasts with the earlier (partly overlapping) period 1964-1992 when 3. suggests smoking per remaining smoker increased
The self reported results 6. and estimates 5. show a much smaller decline per capita consumption among smokers and, indeed, estimates 5. show an inexplicable non-monotonicity. Estimates 5. and 6. show much smaller effects than these.
It would be worthwhile knowing what is going on here and suggestions are welcome. Consumption per head rose at first during the post-war period – perhaps partly because of the introduction of low tar, low-nicotine cigarettes so total numbers smoked went up even though even though the prevalence of smoking dropped markedly. This reflects what tobacco researchers call the ‘compensation’ phenomenon – smokers smoke more when nicotine levels in cigarettes decrease. After about 1976, prevalence decreased but so too, according to estimates 1., 2., 4. did consumption per remaining smoker which fell dramatically.
This would suggest that the measures taken in recent years to reduce smoking (tax hikes, abolition of cigarette advertising, negative advertising) have reduced the numbers of smokers but have also reduced consumption among those who continue to smoke. That is interesting if you take the view that smoking is an addictive activity that eventually leads to an equilibrium level of dependence that is largely independent of price. According to this view the only way people can offset the effects of such things as tax hikes is to quit smoking. It is impossible to ‘scale back’ the level of smoking for a nicotine-addicted smoker. The data presented suggests this view is incorrect since people do seem to be able to also reduce the daily amount they smoke.
One way to revive the equilibrium addiction viewpoint is to suppose that, in response to higher taxes, smokers smoke more intensively – they puff harder and smoke right down to the filter tip. This of course delivers a higher load of nicotine that satisfies the addiction (and of carcinogenic tars). But given that the changes in per capita consumption are strikingly large and, in the absence of any evidence one can only guess, that this explanation seems far-fetched.
Another resolution might be that it is the heaviest smokers who either have quit smoking in recent years or who have died. This gloomy implication of the health consequences of smoking is again nothing more than a plausible guess but is presumably at least part of the story. but given the abruptness of the change it can only be part of the story.
BlueScope Steel seems to have some questions to answer. It recently announced a 4 for 5 issue of shares at 40 cents. As the ex rights shares have traded over the last few days for less than 40 cents the value of these rights is zero at present. As Bryan Frith points out in The Australiian it would also be interesting to know what the share price fell so markedly before this huge capital raising:
“The timing of the issue was a surprise, coming only three business days after BlueScope held its annual meeting. At the meeting the company reiterated its profit outlook for 2012, but there was no mention of the group’s debt position, and in particular the $478m blowout since June. If, as seems probable, BlueScope already knew that it was planning a capital raising, the AGM would appear to have been the appropriate time to make such an announcement. That it was not is no doubt one reason why the announcement took the market by surprise.
However, it may be that not everyone was surprised, because in the week before the announcement BlueScope’s share price slumped from 78c to 61c under much heavier trading than normal, and there was also heavy shorting of the stock. ASIC should take a look to consider whether any insider trading was involved”. (my bold).
Of course there will be an “explanation” – there always is – but the long-suffering shareholders in BlueScope deserve a better deal than this. Many have seen almost the entire value of their investment vanish over recent years while this year, when the firm made $1b in losses, executives slurped at the trough and awarded themselves $3m in bonuses for work well done. Problems in our modern economy can often be traced to public sector waste but the greedy clowns in the private sector whose main skill seems to lie in enriching themselves as the firms they manage collapse around their ears, seem to be a significant source of private sector inefficiencies. Yes the exchange rate has appreciated and yes the Australian market for steel products is weak but don’t shareholders pay huge salaries to executives to deal with such problems.
13 of last 15 years warmest on record
From: AFP November 29, 2011 8:36PM
THIRTEEN of the warmest years recorded have occurred within the last decade and a half, the UN’s World Meteorological Organisation said today.
The year 2011 caps a decade that ties the record as the hottest ever measured, the WMO said in its annual report on climate trends and extreme weather events, unveiled at UN climate talks in Durban, South Africa.
“Our science is solid and it proves unequivocally that the world is warming and that this warming is due to human activities,” WMO Secretary-General Michel Jarraud said in a statement, adding that policymakers should take note of the findings.
“Concentrations of greenhouse gases in the atmosphere have reached new highs and are very rapidly approaching levels consistent with a 2 to 2.4 Celsius rise in average global temperatures.”
Scientists believe that any rise above the 2.0 threshold could trigger far-reaching and irreversible changes on Earth over land and in the seas.
The 2002-2011 period equals 2001-2010 as the warmest decade since 1850, the report said.
2011 ranks as the 10th warmest year since 1850, when accurate measurements began.
This was true despite a La Nina event – one of the strongest in 60 years – that developed in the tropical Pacific in the second half of 2010 and continued until May 2011.
The report noted that the cyclical climate phenomenon, which strikes every three to seven years, helped drive extreme weather events including drought in east Africa, islands in the central equatorial Pacific and the southern United States.
It also aggravated flooding in southern Africa, eastern Australia and southern Asia.
While La Nina, and its meteorological cousin El Nino, are not caused by climate change, rising ocean temperatures caused by global warming may affect their intensity and frequency, scientists say.
Here’s the original report. Worth reading.
The MDB Draft plan was released today. It is complicated and long – I have done little more than glance through it. The length and complexity has not stopped irrigators and conservationists from attacking it from different perspectives. Extra water diverted to the environment to flush out the system and provide therapeutic flooding is set at 2750GL whereas many in the conservation movement (and the CSIRO) sought a minimum of 4000GL. It is difficult to judge how much of the hysterics about these numbers is posturing for a better position on both sides. The Commission have put huge effort into getting the environmental science right in the face of valuation uncertainties by setting up about 100 monitoring sites in the system and adopting a philosophy of adaptive planning. Those who ask for neat definite scientific precision in relation to the environment/economy tradeoffs are asking for the impossible. On the irrigator side my guess is that most irrigators will be better-off as a result of the buybacks. Those who sell will do so on the basis of individual economic optimisations while those who don’t sell will have a more sustainable and dependable source of water. Some communities with low water valuations will disappear but that is the least-cost solution to this intractable problem. I’ll update this post with commentaries as they come in – there was an excellent pre-plan-release article by Mike Young in the AFR today but it is behind a firewall.
The link is now correct – thanks Al Watson.
Climate sensitivity measures the sensitivity of mean global surface temperatures to a doubling of atmospheric CO2.
The work of Andreas Schmittner and colleagues uses paleoclimatic data and temperature reconstructions from the Last Glacial Maximum (19-23,000 years ago) with climate model simulations to recompute climate sensitivities. Their preferred estimated climate sensitivity is 2.3 degrees C which is significantly lower than earlier estimates of 3 degrees C. Moreover the wide confidence limits around earlier estimates are replaced by tighter confidence limits around the Schmittner et al. estimate. This has the welcome interpretation that the probability of extreme warming – to 10 degrees C and even beyond – is lower than previously thought.
The authors emphasis that their work remains incomplete since it does not account for variations in ice sheet and vegetation cover between the LGM and now, It is however, conditionally, some good news from climate science. The Economist has a cautious short review. The following remarks are worth keeping in mind:
“….it is worth bearing in mind that this is only one study, and, like all such, it has its flaws. The computer model used is of only middling sophistication, Dr Schmittner admits. That may be one reason for the narrow range of his team’s results. And although the study’s geographical coverage is the most comprehensive so far for work of this type, there are still blank areas—notably in Australia, Central Asia, South America and the northern Pacific Ocean. Moreover, some sceptics complain about the way ancient data of this type were used to construct a different but related piece of climate science: the so-called hockey-stick model, which suggests that temperatures have risen suddenly since the beginning of the industrial revolution. It will be interesting to see if such sceptics are willing to be equally sceptical about ancient data when they support their point of view”. (my bold)
It is important to be clear that Schmittner et al. are not saying there will not be serious climate change. Within the limitations of a fairly low scale model – they are saying the probability of extreme events is reduced. The anti-science right have already left on the study and inaccurately suggested in supports climate science scepticism. It does not.
Update: Steve from Brisbane draws attention to this careful critical review of these claims on Real Climate.David Friedman (in comments) draws attention to the defensiveness of climate scientists to these sort of claims. That is not my perception of the Real Climate critique. Worth a read.
Update: A furious response from the productive Joe Romm.
Update: An unexpectedly reasonable review at the libertarian Reason. Not rabid.
Don’t go to Walmart unarmed.
Signs of a US economic recovery?
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