Balanced budgets should be Canberra’s priority

A story on how balanced budgets have been the keystone of the Canadian recovery, an upturn in sharp contrast to the circumstances in the US to the south. The article is by Brian Lee Crowley, the head of the McDonald-Laurier Institute, and published in the Globe and Mail. From which this:

We have a lot of cases available to us to test the proposition that we will increasingly be hearing that balancing the books is over-rated. If the all-stimulus-all-the-time Keynesians are correct, for example, France should be the strong man of Europe, for its Socialist president came to power rejecting “austerity” and preaching the virtues of stimulus. Britain, which pursued a course of fiscal discipline under the coalition government of David Cameron, should be in steep decline.

Instead the head of the International Monetary Fund, Christine Lagarde, recently had to apologise to Britain’s Chancellor of the Exchequer for having wrongly warned that his austerity policies would provoke disaster, as Britain turns in one of the strongest economic performances in the EU. Overtaxed and tapped out France, by contrast, continues to be the sick man of Europe. Interviewed on British television Ms Lagarde acknowledged that Britain’s growth seems “pretty sustainable” because it depends on private sector investment and consumer spending.

Economic theory of the Y=C+I+G variety has a lot to answer for. The evidence keeps mounting that balanced budgets accompanied by limited growth in public spending are the key to prosperity even while the opposite evidence, that budget deficits and large increases in public spending drag an economy down is everywhere to be found (see the US for exhibit A on the harm debt and deficits cause). Canada and the UK have become prime examples of how private sector growth, fostered by what others choose to call “austerity”, actually does create the foundations for economic growth.

Posted in Budget, Classical Economics, Economics and economy | 2 Comments

Here is a proud man

Shamefaced

That’s Daniel Andrews – the Victorian ALP leader.

I’ve only seen him in action twice. The first time as a talking head on election night in 2010 when the Brumby government unexpectedly lost the state election and then recently when it looked like the Napthine government might fall on the floor of the Parliament.

On both occasions he was very impressive. The last couple of days, however, he has been underwhelming. He must know it too – look at the body language and the shamed face.

The Baillieu and Napthine governments have been particularly underwhelming and, until the weekend, it looked like Andrews was going to be the next Premier. But now even The Age are editorialising about his competence:

Labor leader Daniel Andrews and some of his party officials must believe Victorians are dupes, because the explanation they have offered about what happened to a journalist’s tape recorder after it came into the custody of Labor operatives is manifestly implausible and patently disingenuous.

Labor’s response has been fundamentally dishonest. Why didn’t Mr Samaras return the recorder when he saw the Fairfax Media sticker on the back? Why didn’t Mr Carroll or Mr McLindon direct their colleague to return it? Why did they even discuss distributing it? How many other memory sticks were there with copies? Who passed a copy of the Baillieu conversation to Liberal operatives? When exactly was the recorder destroyed? We could go on.

Andrew Bolt does go on:

How strange. How convenient.

His chief of staff did not tell Daniel Andrews about the tape.

His press secretary did not tell Daniel Andrews about the tape.

His party’s secretary did not tell Daniel Andrews about the tape.

His party’s assistant secretary did not tell Daniel Andrews about the tape.

His party’s lawyers did not tell Daniel Andrews about the tape.

Is Daniel Andrews telling the truth, or does he really not have a clue what his team does when he’s not in the room?

Over on Twitter the luvvies are trying to hang this on the journalist. Well that’s not going to work and will only serve to further annoy The Age and make the ALP look bad.

Posted in State Politics | 74 Comments

The nine stages of the Picketty bubble

The nine stages, by Robert Shrimsley. h/t Michael James.

Everybody has been talking about this important book because they feel they have to

Concern is growing that much of the western world is heading into a “Piketty bubble” – a social and economic phenomenon that arises when everyone who considers themselves to be anybody feels the need to talk about a new book by French economist Thomas Piketty.

Capital in the Twenty-First Century, which argues that modern capitalism is entrenching inequality, was written a year ago in an obscure European dialect. But it is now being hailed as a masterpiece after it was discovered by a US publisher and translated into American.

Unlike the five phases in Hyman Minsky’s classic bubble theory, a Piketty bubble boasts nine stages.

The page is gated, so this is an abbreviated account.

Stage one – buy-in. Anyone who believes they are part of the “big conversation” has to talk about Prof Piketty’s views.

Stage two – escape velocity. A critical mass of enthusiasm sees stock in Piketty rise faster than Bitcoin… Bluffers’ guides spring up on the internet, including information on how to pronounce his name.

Stage three – backlash. It is revealed that he is François Hollande’s favourite economist.

Stage four – counter-offensive. Prof Piketty’s supporters fight back pointing out that most of his critics have not read his book.

Stage five – rearguard. Citics reply that most supporters haven’t read it either

Stage six – boredom.

Stage seven – disassociation. Even supporters begin to be embarrassed to refer to him.

Stage eight – denial. Members of the thinking classes now feel it is chic to admit that they never read the book and Picketty’s is picked up by Russell Brand, a pop star who likes to make fatuous comments on public affairs.

Stage nine – relocation. People move Prof Piketty’s book from the living room to the lavatory, where it sits on a shelf between Stephen Hawking’s A Brief History of Time and Francis Fukuyama’s The End of History.

Prof Piketty, meanwhile, faces complaints that as wealth accrues disproportionately to star writers, his triumph is increasing inequality among economic authors. This view is boosted by the success of his next book, a jaunty work of behavioural economics called “peut-etre”.

There is a possible much later stage 10 – rediscovery. A new crisis promotes a revival in which people return to the book and note that Prof Piketty “had some interesting things to say on this subject”.

Posted in Economics and economy | 17 Comments

Q&A Forum: July 28, 2014

Posted in Open Forum | 199 Comments

George Brandis is a hypocrite

George Brandis wants to strengthen Australia’s Intellectual Property laws:

It involves three main proposals, but the big one is overturning the important iiNet decision that highlighted that ISPs are protected from liability for users infringing, because they’re not the proactive party. In other words, under that ruling, ISPs can’t be forced to be copyright cops. Brandis’ plan would wipe that out, requiring ISPs to spy on user activity and try to block any “bad stuff” from happening, or they would face liability …

The second part of the proposal is basically Australia’s version of SOPA. It would allow for website blocking of “infringing overseas sites.” And it would be like the original SOPA, with a “private right of action,” allowing entire websites to be blocked on the say so of the copyright holder. …

The final piece of the plan appears to be an attempt to buy off internet companies that are likely to oppose this plan, in that it extends safe harbor protections to more of them. Basically, this is a cynical ploy to try to split the obvious opposition of this plan.

(HT: Old Misery Guts)

Did you hear what Brandis said?

There is a very strong public interest in the protection of private property and that includes intellectual property …

Not that I disagree – but what evidence exists to support that Brandis actually believes that notion? What evidence exists to support the idea that the protection of private property is supported by Australian law? Let’s look no further than the plain packaging laws:

But the six judges who ruled against the challenge said while the government had imposed rules and regulations on the tobacco companies, it was not using their property for its own benefit and so was not violating the constitution.

”Although the (Tobacco Plain Packaging) act regulated the plaintiffs’ intellectual property rights and imposed controls on the packaging and presentation of tobacco products it did not confer a proprietary benefit or interest on the Commonwealth,” a summary of the judgement said.

So property rights confer certain rights:

  • the right to use the property,
  • the right to earn income from the property,
  • the right to dispose of the property.

Yet the previous government – with the full support of the then opposition – legislated to deprive tobacco firms of, at least, two of those three rights.

Now online piracy, arguably, does not deprive intellectual property owners of any of their rights – it does reduce their profits but they are still in possession of all of their rights.

So Brandis needs to explain why and how Australian pirates are any different from him. Why does he think that online piracy is theft when private individuals engage in that activity, but government expropriation of intellectual property is acceptable?

Looking forward to his guest post on the issue.

Posted in Economics and economy, Hypocrisy of progressives, Politics, Take Nanny down | 48 Comments

Monday Forum: July 28, 2014

Posted in Open Forum | 706 Comments

Breaking news: Slipper guilty!

Former federal parliamentary speaker Peter Slipper has been found guilty in the ACT Magistrates Court on three counts of dishonesty over the misuse of his parliamentary Cabcharge allowance.

Slipper is facing up to one year in prison or fines of up to $10,000.

He will be sentenced on September 22.

Source.

Posted in Tough on Crime, tough on criminals | 42 Comments

Is this wrong?

Is this wrong

I suspect this job offer is below the minimum wage and invites tax avoidance. Okay – so what? At a time when youth unemployment is obscenely high and the government is introducing work-for-the-dole for people up to the age of 49 should we care that some casual work will pay $15 an hour in cash?

Just wondering.

I’m not a big fan of the work-for-the-dole scheme. Its only merit is that it keeps people in the habit of getting up and getting out in the mornings. The CIS’ Peter Saunders was quite correct on that point. The problem, however, is that it becomes a ‘gophers for bureaucrats’ scheme, where bureaucrats get to sit around and think up make work for job-seekers. But if bureaucrats were any good at devising employment opportunities they’d be entrepreneurs and not bureaucrats. I’m not saying this to diss bureaucrats, that is just the way the world is.

So why not a scheme like what the Sexpo is offering? Let job-seekers do odd jobs for private enterprise at any wage for any period of time and let people get work skills and experiences that way. Or it could be formalised: Allow firms to apply for a quota of job-sekers for a fixed period of time where the firm could pay (or not) any sum of money to the job-seekers and let the firm find make-work for the job-seekers. That way they get to do ‘real’ work and the potential employer gets to have a look at the job-seeker.

Just a thought.

Posted in Economics and economy | 99 Comments

Scandal blows up in State ALP faces

Okay – until Friday this was a non-story: the media were talking about themselves in a minor state politics scandal. Here is the timeline:

■ MAY 17: A dictaphone is misplaced by Sunday Age reporter Farrah Tomazin during the ALP state conference at Moonee Valley racecourse. It ends up in a lost property box and is later discovered by Labor officials.

■ JUNE 6: After getting legal advice, senior ALP figures decide not to release the tape.

■ JUNE 24: The recording, which contains audio of former Premier Ted Baillieu slamming some of his colleagues, is sent to hundreds of Liberal Party members. Labor leader Daniel Andrews and deputy James Merlino deny Labor had anything to do with the contents of the tape being made public.

■ JULY 25: Following revelations that Victoria Police had studied CCTV footage from the ALP state conference, Mr Andrews says: “This is 100 per cent an internal Liberal Party matter. The distribution of that material was conducted by the Liberal Party to the Liberal Party, and it’s them that should answer to that, not anyone else.”

■ JULY 26: The Herald Sun reveals John McLindon, chief of staff to Mr Andrews, heard the recordings in early June.

■ JULY 27: Mr Baillieu breaks his silence on the scandal and calls for Mr Andrews to come clean about his office’s involvement in the affair.

So a journalists dictaphone get lost/forgotten/misplaced at an ALP conference, gets sent to the lost and found, and then some embarrassing off-the-record comments get a public airing.

Yawn.

On Friday The Age had a front page story accusing the ALP of having leaked the contents of the dictaphone. Okay, you might ask, is this worthy of being a front page story? I was still not interested in the story.

But then the state ALP leader – very likely to the be the next Victorian Premier – went into overdrive.

Mr Andrews said allegations made against his staff were “wrong and defamatory”.

“The distribution of this recording always has been and always will be an internal matter for the Liberal Party,” he said.

“These allegations have been referred to our lawyers.”

Really?

This morning it suddenly got very bad for Andrews – what was an embarrassment for the Liberals is now a scandal for the ALP.

From The Age:

As The Age can reveal, the dictaphone was handed in to lost property by security at Labor’s state conference in May, before being taken back to ALP headquarters and listened to by Mr Samaras.
The private conversation between Tomazin and Mr Baillieu was then copied, and listened to by a small group of senior party operatives, including state secretary Noah Carroll and Mr Andrews’ chief of staff, John McLindon.
A decision was made by Mr Samaras not to release it after legal advice was provided by Slater and Gordon lawyer James Higgins.
Despite the advice, and against the wishes of Mr Samaras, the recording was forwarded to a third party, before being emailed to hundreds of Liberal Party members.

Raises interesting questions: You come into possession of lost property – having been handed into the lost property booth at a conference – the dictaphone is clearly marked as to ownership, so you decide to listen to the dictaphone messages, and not actually just simply return it? Senior party officials riffle through lost property boxes after conferences?

It gets worse:

Mr Samaras said: ‘‘After some consideration, I decided that given the device contained unauthorized private conversations, it was not appropriate to retain, return or disseminate the device. I destroyed it,’’ he said.

‘‘In hindsight this was the wrong thing to do. I should have returned the device and sought an explanation for why I was being recorded. I apologize to Ms Tomazin and The Age for not having returned the device.’’

Mr Samaras said the device was copied ‘‘for the purposes of listening to it’’ at some point prior to being destroyed.

Because it was the device that was wrong, not the actual contents that were copied, the device was destroyed.

As James Campbell of the Herald Sun explains:

Mr Andrews must now know that no one now believes this is 100 per cent Liberal Party affair. He must also know that unless he acts decisively and comes clean on who knew what and when in Labor, it will end up damaging his chances of becoming premier later this year.

The Victorian State Liberal government have been quite useless and were well on their way to being a one-term government – they still might be. Yet this business with the dictaphone reflects very poorly on Daniel Andrews team – if not him – the propensity to play silly buggers and not actually get on with their jobs suggests they won’t be any better than the current mob.

Posted in State Politics | 47 Comments

Income inequality in Australia: are you listening, Joe?

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Thank God that Joe Stiglitz has left our fair shores: all that ill-informed, gratuitous advice was really getting out of hand.  And all complete tosh: Stiglitz has never come across a problem which is not solved by more government spending or regulation.

But maybe we should send him this story:

The share of national income going to Australia’s top 1 per cent of earners has levelled out for the best part of a decade – and in some cases fallen – to erode claims that inequality is worsening.

The stability in the share of Australia’s highest income earners could continue, as the Abbott government jacks up the top marginal tax rate to 49 per cent by introducing the controversial debt levy.

An analysis of tax data by the University of Melbourne, which is being fed into a global database maintained by French economist Thomas Piketty, shows the top 1 per cent took home 7.7 per cent of total income in 2011.

That ratio has remained virtually unchanged since 2006 and is only fractionally higher than at the turn of the century when it came in at 7.5 per cent. Continue reading

Posted in Economics and economy | 19 Comments