Friday, January 29, 2010
Thursday, January 28, 2010
More Ramirez 5:58 AM
Does green = red? (Roy Rodgers) 4:34 AM
Have those sneaky red little bastards crawled back under the bed?
When Fukuyama predecticted that we had just witnessed the end of history in 1992 what he was refering to was the death of socialism and the triumph of the classical liberal system. He was brave enough (or silly enough) to theorise that the battle of the great 'isms was over.
Fukuyama thought that the overthrow of communism meant that classical liberal democracy combined with technologically driven capitalism were end points for the collective evolution of society and of the politic. In other words they were in themselves final forms of government and economic organisation.... thus end points in history.
I'm going to go out on a bit of a limb here and suggest that while it's bleedingly obvious to everybody that socialism lost the battle last century, all those skivvy wearing , beret donned old red raggers (I swear to god they wear berets, I've only been to one Fabian presentation down at trades hall, but the beret count was at least 70%) and the dreadlocked, no shoe, no soap brigade of new stinky red raggers didn't just pack up their misguided 'ism and become accountants. NO NO NO ... they went out and found themselves a whole new cause... a whole new 'ism.
What Fukuyama didn't forsee was the rise of the next great 'ism ... environmentalism.
On the face of it, environmentalism would appear to be apolitical. Anyone can want to save the planet, you don't have to be a closet Marxist, a leafy suburbs labourite, you don't have to be a democrat, you can be a free marketeer, you can be a clasical liberal, you could even be an anarco- capitalist. After all, Abbot is a commited environmentalist ... he's going around talking about raising a green army no less (obviously an approach that would leave all his truly liberal supporters scratching their heads thinking '..what the hell is going on?').
The thing is ... any analysis of the proposals, policies and positions of the green movement and the broader environmental agenda leads to the obvious observation that it has no appreciation of the power of markets, no grasp of the ineffectiveness of centeralised planning and an apparent abject hatred of property rights. Environmentalism is fixated with the idea of market failure, greenies see externalities everywhere. And their answer is fairly straight forward ... socialise environmental assets (whatever the hell 'environmental assets' are) and directly control people's behaviour through regulation.
All the trappings of the socialist system appear to be dutifuly reproduced in the environmental movement. Don't get me wrong, I'm not saying there are reds under the bed and that we need to invade Vietnam. What I am saying is that there appears to be an incredibly strong relationship between the policies of groups such as WWF, GreenPeace, guys like Al Gore and Oxfam (although these guys appear to have the conflicting objectives of being green and promoting economic growth? work that out ... nut jobs) and the policy approaches previously adopted by just about any failed socialist state you wish to name.
And at the heart of this approach is an apparent faith in the power of centeralised control.
Just as an aside ... it's quite ironic that the environment fared much worse under socialism and communism than it did under the capitalist liberal democracies. How's that for an inconvenient truth.
Why we need to drag the reds out from under the bed.
While being more or less the child of socialism, environmentalism is much more ambitious than its predecessor. It lays claim to not just saving humaniy but saving the very planet we live on.
The grandioseness of its ambition is matched only by the inevitability of its failure. And the reason its doomed to fail is quite simply that it has chosen to ignore the lessons from the demise of socialism and has centred itself yet again on the idea that burecrates in cubicles can, through the powers of coercion vested in them, produce effective outcomes. This is an absolute crock of an idea, always has been an absolute crock of an idea and always will be an absolute crock.
So who cares? ... the reason it matters is that, while history has shown us that liberal societies are very robust and can over time reject such destructive ideology ... the process shouldn't be considered inevitable and if it does occur, it takes time. It took a good 30 years for Australia to shake off its social democratic chains and become a liberal democracy. It took the prime ministerships of Hawke, Keating and Howard to get Australia to the point where it's at now. Despite the dribble of big kev and the seemingly endless burden of the nanny-state we are still much more liberal than we were under prime ministers such as Fraser.
The added danger is that once embedded you may never be able to roll it back. Only the abrasive bullheaded strength of Margret Thatcher was capable of dragging the UK out of its socialist funk. And it took the gun-swinging cockiness of Ronnie Regan to halt the seemingly inevitable slide of the US into social democracy. People like this don't come along every day and it's not advisable to pin your hopes on one of them magically appearing at just the right moment to ensure that the bad 'isms are all swept away. France never got its Thatcher and subsequently is still unable to raise its head above the stink of its own socially democratic system.
Yes Australia was lucky enough that it got its silver headed little bodgy, but I think its fair to say that if he actually knew what he was doing he may not have done it.
Once entrenched, 'isms are very hard to get rid of (...if they can be gotten rid of). And the longer it takes us to get rid of the bad 'isms the more costs we will accumulate. In the case of environmentalism, those costs will be a suppressed economic growth (meaning incomes will be lower than otherwise) and ironically it probably means were not going to be able to deliver the strong environmental outcomes that liberal capitalist economies have to date.
One saving grace may be that unlike previous manifestations, environmentalism is associated with a set of objectives that are at lest in theory measurable. This gives its opponents ample ammunition to hold the ism to account. If you want to go and save lovely tree frogs, we should be able see just how effective you are by simply counting frogs. No matter how much you believe in global warming, unless the temperature actually goes up the thesis is doomed.
We need to deal with environmentalism. And one of the very first things we need to do is to stop treating it as the 'holy of holies' and subject it to some cold hard critical analysis, much as we do everything else. Environmentalists need to defend their arguments, justify their policy .... greens need to come clean and face the public in an open and transparent manner.
One way in which to do this is to examine the fundamental assumptions underlying their aruguments.
Tuesday, January 19, 2010
Here we go (Roy Rodgers) 12:04 AM
Big kev is back and he is back in a big way.
Yesterday’s declaration of kev's next election winning platform is guaranteed to bring on the laughs. 100%
Here is, the next self declared saviour of social democracy, announcing that Australia needs to return to the productivity levels of the 90s. That we need to pull our socks up and work that bit extra.
Big kev has said its all up to us, only we the workers can save the economy. We need to achieve the 2% annual productivity gains that were delivered under the Hawke, Keating and Howard tripartite.
Well smack me over the back of the head, am I missing something or isn’t it true that these productivity gains were the result of one of the most liberalising eras in Australian history? These productivity gains were the direct result of microeconomic reform, of privatisation and corporatisation, of tax reform of labour market reform ... reform as in liberalisation ... reform as in the freeing up of markets. It was the 80s and 90s that saw Australia transform itself from a social democracy into a liberal democracy, and it was this transformation that gave us the wealth we have now.
Obviously this simple observation is totally lost on big kev. Or is big kev now going to change colours ... is he no longer going to be the pinkly tinged social democrat of his dreams? I doubt it, I’d say he just hasn’t twigged that the 90s productivity growth is solely attributable to stuff that he doesn’t want to and is not ever prepared to do.
Let's have a look at his run on microecomic reform to date;
- Removal of work choices ... the very first roll back of a liberal reform in the last 30 years
- Re-union-ification (I know there’s no such a word) of the workforce. This year, for the first time in a decade or so we were subject to the labour phenomenon of Christmas strikes ... thank you santa
- Promotion of protectionist policies ... see recent decision in relation to Australian publishing and anti dumping laws
- Selective handouts to industry ... here go and make me a green car, oh you were already making one ... well you might as well take the cash anyway!
- Reintroduction of progressive taxation and payments ... see the robin hood delusion wayne swan is currently suffering under
- Reintroduction of the welfare orientated approach ... see response to housing affordability crisis ... ie more public housing
The list just goes on and on. While I have to admit big kev is very hard to pin down on anything the one thing we can say with any certainty is that he is NOT a microeconomic reformer.
Do you think for a second that big kev may seek to address our current issues in the provision of health services by decentralising health planning, privatising assets, empowering consumers to make their own choice ... I DOUBT IT
Do you think for a second that big kev may want to reform the tax base by removing exemptions from GST, moving the focus away from income based taxation or instituting flat rate income taxes, abolishing distortions such as negative gearing, abolishing company tax, distributing mineral royalties through positive tax returns, getting rid of absurdities such as payroll tax and stamp duties.... I DOUBT IT
Do you think for a second big kev will want to reform the labour market by abolishing the minimum wage, promoting individual workplace agreements, abolishing unfair dismissal ... I DOUBT IT
Do you think big kev has the stomach to tackle issues associated with the provision of basic services such as water and sewerage (can you honestly see any privatisation in these areas). Do you honestly think big kev has an agenda of reducing government service provision. If we need money lets sell the ABC, that would free up approximately a billion a year in budgetary funds and would also provide government with some ready cash to retire the mountain of debt it now has.... I DOUBT IT.
Do you think for a second that big kev will want to address housing affordability by removing constraints on land supply, abolishing hidden taxes such as developer charges, abolishing stamp duties, removing heritage overlays ... I DOUBT IT
That’s not to say that Mr Abbot has the necessary where-with-all either.
Undoubtedly big kev's form of reform is going to be regulate ... interfere ... coerce ... spend money. None of which is going to have a positive impact on productivity.
The hilarious thing is that he is going to ask us to deliver productivity growth similar to that associated with the advent of market based reforms by .... wait for it ... wait for it .... wait for it .... doing exactly the type of things those original reforms were aimed at addressing.
Monday, January 18, 2010
More Haiti (Roy) 6:01 PM
Five days after the earthquake, scores of untouched corpses, now bloated and stinking, remain on streets. Red Cross officials have repeatedly said no one should fear disease from dead bodies after the earthquake that is believed to have killed up to 200,000 people.
"I don't understand why everyone is worried about a disease risk," Haitian Red Cross President Michaelle Amedee Gedeon told Reuters. "Do we have cholera in Haiti? No. Do we have the plague in Haiti? No. Rodents, water will not get contaminated. The only bad effect from the corpses is the smell."
On Sunday, more bodies appeared overnight, with locals saying they were thieves burned and shot by lynch-mobs, gangs and police. They said about 20 people were killed like that.
Saturday, January 9, 2010
That said, I now find myself on a job in regional Australia suffering through one of those sleepless (slightly itchy) nights in a lovely regional motor inn. The brown brick and crap Win TV programming are miles away from the comforts of home. The rattly air conditioner and the moldy $5 mars bar in the mini fridge are dismal compensation.
I must admit that the sheets are crisp, if not exactly pearly white, but the pillows cases were rather crumpled and I’m not convinced they were crumpled in the not ironed but washed sort of way. And can someone please explain why there is a spa big enough to accommodate 5 truck drivers sitting in the bathroom.
Enough whinging ... this blog is about the environment and man made global warming.
Where I currently stand
Rather than start preaching about the pros and cons of the global warming debate, I thought there may be value in declaring exactly where I stand on the issue straight up, just so that we clear that there is no hidden agenda or undeclared philosophical position behind the rest of the blog.
I am not a climatologist, I have no idea how the environment works in a physical sense, and I admit that I remain to date uncommitted one way or the other. By uncommitted I mean I am still open to the idea were it to be presented in a convincing manner. I am probably best characterised as an agnostic global warmist.
Our policy response
On the other hand I am quite clear about what I think our policy response should be. Regardless of the accuracy or validity of the underlying science Australia needs to adopt some form of emissions policy. The reasoning has absolutely nothing to do with the environment but quite alot to do with trade.
We are a small, incredibly open economy, our welfare is wholly dependent on our ability to trade openly and without restrain with the rest of the world. If we were not to implement some form of policy we would inevitably see a backlash from our trading partners in the form of foreign carbon taxes and quotas placed on our exports. A new form of protectionism dressed up as carbon neutralisation. The thing is that it doesn’t matter so much whether it's true or not but rather whether the rest of the world believes it, and if it does we need to make sure our windows are dressed accordingly.
It follows from this pragmatic view that we would be best served by pursuing policy that can be removed once it is recognised not to be of any further use. For example, were the world to continue to cool rather than warm we may at some point come to the conclusion that global warming as a hypothesis is invalid, in which case we would wish to discard those policy instruments we implemented to combat warming. Instruments like a carbon tax would be relatively easy to discard. All one has to do is simply cease collecting the tax. Regulation would also be relatively easy to discard ... we just abolish it or to use the right wording to reduce the regulatory burden.
The trick is to avoid implementing policy that can’t be readily discarded. For example, it won’t matter if we no longer believe in climate change, if we have implemented an emissions trading scheme you can bet your bottom dollar that we will never get rid of it. History shows that once you have granted people rights to property (in this case the right to emit) and those people have made significant investments in these rights, it is incredibly difficult for democratic government to roll back these rights or to abolish them.
To borrow a phrase from the environmental lobby ... we should take a precautionary approach to policy.
Economics and the warming sceptic?
One of the most confusing and to be honest, confronting things about global warming is the manner in which very well educated people approach the theory of man made global warming as if it were a matter of faith (faith defined as belief not based on evidence). The reason that this is so surprising is that most of the people I know are economists and are by definition sceptical of just about everything.
Climatology and economics may seem to be a world apart, but both disciplines share a number of similar traits. Neither science is a lab coat science. Both attempt to model complex systems (granted the climate is much more complex than the economy). Both base future expectations on a collection of a wide range of historical data which is inevitably cobbled together from a variety of sources.
While there are alot of similarities we should also note that Economics has been around longer, has better data and has developed its own advanced from of statistical analysis. So while economics may be somewhat less ambitious as climatology, it's reasonable to assume it's more mature as a science in what it does.
If you presented most economists (such as my mates) with 100 year forecasts generated by an extremely complex economic models , they would immediately assume the results were at best totally unreliable and at worst absolutely totally unreliable. The thing is that economists are incredibly sceptical about their own science and its ability to generate long term reliable forecasts, and especially so in the macroeconomic field. There are even quite well established branches of economics (such as the Austrians) that hold such modelling in complete disregard. We know intuitively just how fragile forecasts can be.
By way of example, its worth considering the forecasts of Paul Samuelson (a celebrated Nobel prize winning Keynesian Economist) who in the 1961 edition of his famous textbook of economic principles, wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster. As a result, Samuelson contended that one could comfortably forecast that Soviet GNP would exceed that of the United States by as early as 1984 or perhaps by as late as 1997 and in any event Soviet GNP would greatly catch-up to U.S. GNP. The following graph is lifted from the textbook.
As your probably aware ... to call this a poor forecast is like calling Bob Ellis an intellect --but it gets worse because in subsequent editions Samuelson presented the same analysis again and again except the overtaking time was always pushed further into the future so by 1980 the dates were 2002 to 2012. How wrong we he ... and he was one of the smart ones (thanks Marginal Revolution).
The confronting bit is that if you present these very same sceptical economists who don't trust their own analysis with a 100 year forecast from a climate model that predict significant and material change (no less than the end of life as we know it), they will all drop their calculators in a state of abject panic and start hoarding tins of baked beans for the forthcoming Armageddon. This seeming unquestioning acceptance is despite the fact that climate models are by definition trying to model something infinitely more complex than any single economy, and that the data the models are being fed is nowhere near as clean as economic data.
Ask yourself this simple question, as an economist, what would you say to your friend if he she came to you one day and said ...
Friend: ....hey Roy, I've developed a model of the global economy that can predict macroeconomic outcomes over the next 100 years... and guess what, my model says were all going to die. Say why don’t we start implementing massive policy change based on the outcomes of my model.
Roy: on your bike buddy
Granted economics as a science has been around allot longer than climatology. It has more runs on the board and more embarrassments to contend with (hopefully this translates into lessons learnt). Maybe that is why we are much more modest about the reliability of our models than our fellow scientists the climatologists. We know from bitter experience that 9 times out of 10 you will inevitably be wrong. ... just like the joke says ... Economists have successfully predicted 9 of the last 3 recessions.
Maybe it's time climatologists learned a little bit about intellectual humility.
Maybe the joke will go something like ... Climatologists have successfully forecast the warming associated with the last ice age (or something equally as lame) ... the inconvenient joke?
I'm not saying climate change is wrong ... I simply don't know ... all I am saying is next time someone comes knocking on your door telling tales of doom PLEASE PLEASE be a little bit sceptical.
Thursday, January 7, 2010
Regulation gone crazy 6:17 PM
Well Christmas has come and gone and now its sale time.
Awhile ago we posted a blog regarding the absurdity of predatory pricing. While the content of the blog was 100% accurate, the blog itself was very much tongue in cheek. After all how stupid would a regulator need to be to go down that road … surely no one would … not given the ready availability of so much good economics.
Well they have, and as anticipated the outcome is nothing short of absolute lunacy.
Where did they do it? Where else, but that bastion of anti capitalism, social democracy and good cheese. France!
Sales in France are governed by specific legislation. Laws supposedly designed to stop unfair competition and protect small shopkeepers from those "all year" sales by large stores who can afford to sell some items at a loss. In France out of the sales period, it is an offence to knowingly sell goods at a loss, again a measure designed to protect small shopkeepers from large retail groups
Trading laws stipulate that there are two periods for sales in France. Winter sales from January to February and summer sales from June to July. In each case, the sales last for five weeks. All goods on sale must have been in the shop for a minimum of thirty days prior to the sale date. No buying in cheap stock and selling it as a sale item. Reductions’ must be visibly displayed in percentage terms. labels must also show the old pre sale price and the new sale price. Retailers are allowed to reduce their prices three times in the sales - after the first fortnight, and again in the final week.
Outside the official sale periods, retailers are allowed two weeks in the year, to use at their discretion, for extra sales such as pre-Christmas sales or spring sales. Shops are allowed to run "special offers" on certain items of stock throughout the year i.e. - a rack of cheap "end of line" clothing. Shops that are closing down, or refitting are allowed to hold sales - "everything must go" with written permission from local authorities.
Yesterday morning many shops (with permission from their local trading authorities) were open at 7am. Needless to say that the starting date is a national one decreed by the government. (thanks to fabfrog.com for these nuggets of info).
It never ceases to amaze me how blatant anti competition laws are often dressed up as pro competition rather than what they truly are …. Articles for Government sponsored cartel governance arrangements.
Aside from mad Frenchmen, its also worth noting that the American fiscal stimulus bail out framework has just started to produce some dodgy results
More follies 6:28 AM
I've recently discovered the spring follies that American business schools seem to love producing. Youtube is fantastic.