Simon Chapman – hide the increase

The anti-smoking lobby are much like the carbon tax crowd – they’ll say anything any time to support their cause.

Here is Simon Chapman in The Drum today:

A tobacco-loving English blogger noticed that in the 12-17 year age group (the principal target of plain packaging legislation) the percentage of daily smokers actually rose from 2.5 per cent to 3.4 per cent.

The jubilant blogger took the trouble to construct a bold graph that emphasised this massive uplift. But he failed to tell his readers that for five of 10 data cells that made up the figures, the standard error was more than 50 per cent (“too unreliable for general use”) and another two cells with lower standard errors “should be used with caution”).

Now as it turns out I have an op-ed under review on this and other related issues. While I am normally reluctant to preview stuff – I thought I should respond to that piece of silliness straight away.

Last week Becky Freeman wrote, “The number of 12- to 17-year-olds who have never smoked held steady at a near universal 95%.” That figure, 94.7% was identical to the 2010 figure, but very slightly down on 2007’s 95%. The big picture is this: basically 5% of individuals aged 12 – 17 experiment with tobacco. Notwithstanding anything the health lobby has done since 2007 that figure remains unchanged.

But it gets worse – the proportion of ex-smokers in that age group has collapsed since 2010. In that year the proportion of ex-smokers aged 12 – 17 was 1.6% – in 2013 it had fallen to 0.3%. Those young individuals who had taken up smoking had not given up. We’re told that the decline from 1.6% to 0.3% is statistically significant, but that the 0.3% is not statistically significantly different from zero. So statistically nobody who started smoking in that age group has given up.

In 2013 the proportion of occasional smokers aged 12 – 17 is also not statistically significantly different from zero. The picture that emerges is that the 5% of young smokers aged 12 – 17 who took up the habit over the 2010 – 2013 period are still smoking.

Nothing at all to be crowing about.

Posted in Hypocrisy of progressives, Take Nanny down, Uncategorized | 11 Comments


Abbottville is the logical conclusion of a disastrous policy framework first inaugurated in 1983 by Hawke and Keating. For thirty years, this policy framework has led to the marketisation and pricing of nearly all social activities. Abbott’s agenda is merely a sharp extension of policies pursued to a lesser or greater degree by both Coalition and ALP governments.

If you think that is extreme – this is piece that just keeps giving.

In contrast to weak resistance in Anglo-American countries, European and Latin American countries have witnessed an escalation of desperate forms of public resistance to austerity measures (riots, occupations, torching of luxury cars and homes of the rich, smashing expensive shops and hijacking food trucks), thus placing governments on notice that there is a limit to their toleration of austerity. Is this the future that awaits Australia?

Incitement to violence? Much?

Then there are the sell-outs.

How also to understand well-intentioned people like Tim Costello, Paris Aristotle or Robert Manne, who undermine their long moral commitment to the poor or asylum seekers by now advocating naïve and immoral policies? Does Costello think a broadened GST will restore foreign aid cuts and that a regressive tax is OK because, as he stated, poor people don’t eat much fresh food? What of Paris Aristotle and Robert Manne, who legitimised the offshore hellholes on Manus Island and Nauru, even though they oppose Scott Morrison’s harsh methods?

Wow. Just wow. What is there to say?

This was published by The Guardian – lefty to be sure, but they used to make some pretence at being mainstream.

Posted in Hypocrisy of progressives, Libertarians don't live by argument alone, Media | 19 Comments

A series of graphs

This morning the ABS released the June quarter CPI figures:

The CPI rose 3.0% through the year to the June quarter 2014, following a rise of 2.9% through the year to the March quarter 2014.

So I thought it might be interesting to track how inflation (measured by % change in CPI) and unemployment have fared since the December 2007 quarter.

Stagflation 1

The broken black lines at the 2% and 3% levels are the RBA inflation bands while the broken black line at 5% is the Treasury guesstimate for the NAIRU (non-accelerating inflation rate of unemployment).

As can be seen since mid-2012 both series have been moving in the same direction – up. The correlation between inflation and unemployment since March 2012 to the present is 0.92. The correlation over the period 1995 to the present is -0.33.

At the same time GDP growth since December 2007 has been sluggish by post-90′s recession standards. In the graph below I show annual GDP growth and compare it to average GDP growth calculated from the March 1992 quarter to the present (that’s the black broken line).

Stagflation 2

Since the GFC in 2008, Australia has experienced 3 quarters of above trend GDP growth – one of those was the March 2014 quarter and is subject to revision. In short – apart from 2 quarters in 2012, Australia has experienced below average economic growth.

Then I thought I should plot unemployment and inflation together to see what’s going on:

Stagflation 3

I have included the RBA inflation bands and the Treasury NAIRU guesstimate. The result makes intuitive sense – When unemployment has been below 5%, inflation has tended to be high – at or above the RBA 3% bound.

The red dot represents the June quarter outcome – unemployment is at 6% – well above the NAIRU and inflation is at 3% on the RBA upper bound.

So what is going on here? As I argued in 2011:

A combination of policies must be pursued to get the economy moving.

Monetary policy alone cannot solve the problem. Increasing interest rates to deal with the inflation problem will simply slow the economy even further. Yet inflation cannot be allowed to continue.

Government spending isn’t the solution either. In fact it is a huge part of the problem. Most government spending is simply not productive and doesn’t add value to the economy. Sure some government spending – the legal system and law and order – is very valuable, but diminishing returns set in very quickly.

Getting the economy moving again means less crowding out and more private sector expansion. Right now productivity is low because the government spends too much, taxes too much and regulates too much.

At the time I was being critical of Wayne Swan – but the same criticisms apply to Joe Hockey. Today it is being reported that Hockey wanted more tax increases in the budget:

“In reality, the budget was much softer than Joe would have liked,” says the biography by journalist by Madonna King.

“He wanted changes to pensions made earlier and the deficit levy to net more taxpayers.

“But Abbott, who chaired each of the expenditure review committee meetings, was taking a much more cautious approach than his treasurer, no doubt with one eye firmly on the reaction of voters.”

The economy is misfiring and has been for a long time. The problem has been masked by a few low inflation figures and a high Aussie dollar. At some point our friends in Canberra are going to have to wake up to the fact that spending and taxation are going in the wrong direction, and unemployment and inflation are going in the wrong direction too.

Posted in Economics and economy | 21 Comments

Wednesday Forum: July 23, 2014

Posted in Open Forum | 266 Comments

Missing the point perhaps

John Cochrane published an article a few weeks back on The Failure of Macroeconomics which you tend not to see much of even though its failures are manifest and undeniable. Here is the first para of his article which refers to the US but the story is hardly better anywhere else:

Output per capita fell almost 10 percentage points below trend in the 2008 recession. It has since grown at less than 1.5%, and lost more ground relative to trend. Cumulative losses are many trillions of dollars, and growing. And the latest GDP report disappoints again, declining in the first quarter.

He is down on Keynes and Keynesian theory but his analogy is sus to me. If I read him right, he is saying that climate science is all right because it is using modern evidence unlike macroeconomics. Anyway, he writes:

The climate policy establishment also wants to spend trillions of dollars, and cites scientific literature, imperfect and contentious as that literature may be. Imagine how much less persuasive they would be if they instead denied published climate science since 1975 and bemoaned climate models’ “haze of equations”; if they told us to go back to the complex writings of a weather guru from the 1930s Dustbowl, as they interpret his writings. That’s the current argument for fiscal stimulus.

I take it that the “guru from the 1930s Dustbowl” is Keynes. I suppose then that Cochrane wouldn’t like to go back to my own set of authorities which are the economists of the mid-nineteenth century, John Stuart Mill in particular. But whether he knows it or not, that is what he’s doing in pushing structural reforms while abandoning attempts to increase aggregate demand:

These views are a lot less sexy than a unicausal “demand,” fixable by simple, magic-bullet policies. They require us to do the hard work of fixing the things we all agree need fixing: our tax code, our cronyist regulatory state, our welter of anticompetitive and anti-innovative protections, education, immigration, social program disincentives, and so on. They require “structural reform,” not “stimulus,” in policy lingo.

Economists once knew this, since that was the core element of what an economist knew that had been passed down through the first century of economic thinking, starting from Adam Smith in 1776. Yet even though Cochrane can see there are problems with a stimulus, I don’t myself think he really gets it himself since it never occurs to him to suggest that cutting the level of public spending might actually do some good.

[My thanks to J.B. for sending this article along.]

Posted in Classical Economics, Economics and economy | 6 Comments

Too big to fail is not an economic problem

We hear a lot about regulating the banking system and getting away from the “Too Big to Fail” problem. In this excellent op-ed Chris Berg tells it how it is:

… no matter what the Murray Inquiry recommends – no matter what policy the Government or Reserve Bank or Australian Prudential Regulatory Authority imposes today – the decision of which firms to bail out and which to let fall will be made by the policymakers of the future, according to their own whims, and mindful of political, not economic, considerations.

Simply put, there are no ways to credibly constrain future governments from deeming an institution too big to fail.

Too big to fail is a political issue not an economic issue. Economically there is no institution too big or too important to fail. Rather in the heat of a crisis – and there will always be a crisis – politicians will make a decision to deploy taxpayer funds to various purposes to “alleviate” the extent of the crisis. One such purpose will be to bail out financial institutions.

Posted in Federal Politics, Financial Services | 44 Comments

Does her dad own a brewery?

Okay – so Palmer United Party Senator Jacqui Lambie was a bit saucy on the radio today:

Speaking on Heart 107.3’s Kim and Dave Show this morning, Ms Lambie revealed that she hasn’t been in a relationship in 11 years but is open to love.

“They must have heaps of cash and they’ve got to have a package between their legs, let’s be honest,” Ms Lambie said. “I don’t need them to speak, they don’t even need to speak.”

Then there was a bit of banter with a caller:

“Do you have plenty of cash?” Ms Lambie asked Jamie.

“I’m just a bit concerned that at 22 years of age and living in Tasmania you might not be quite there yet?”

Jamie assured her he does have plenty of cash.

She then asked, “I’m just a bit concerned because you’re so young, I’m not sure you’d be able to handle Jacqui Lambie.”

Jamie assured her he could.

And then Ms Lambie asked the really important question, “Are you well-hung?”

Jamie assured her he is … “like a donkey”.

So now Jamie and Senator Lambie are going on a date. Good luck buddy – take her somewhere nice and treat her like a lady.

Rather than treat the whole exercise as some light hearted banter and laugh it all off it seems everyone has gone into humourless prude mode. Sure if a man were to say that all he wanted was a woman with huge knockers who didn’t need to talk much we’d be taking a somewhat different perspective. But that didn’t happen and so what? Yes – I am holding men and women to somewhat different standards, and beta-males will have get over it.

Update: Jacqui Lambie apologises.

“A lot of people laughed, including the tradie I was talking to, some people may have got offended.”

“I apologise to any radio listeners who may be offended by my comments on Kim and Dave’s Show.”

Senator Lambie said she knew her “political enemies” will make a big deal out of her comments.

“The reality is I was talking with Kim and Dave on Heart FM, not Sarah Ferguson on the ABC,” she said.

I completely agree – timing and context is important.

Posted in Cultural Issues, Libertarians don't live by argument alone | 237 Comments

Q & A Forum: July 21, 2014

Posted in Open Forum | 256 Comments

If only 18c allowed us to speak as frankly in Australia …

(via JB and Kae)

Posted in International | 217 Comments

Monday Forum: July 21, 2014

Posted in Open Forum | 1,284 Comments