Stop renewable subsidies to allow lower electricity prices and competitive industry

The RET Review brought the usual howls of anguish from the rent seekers concerned that regulatory measures will cease and that they will need to sell their wind and solar products on the open market.  That means they would need to persuade people to pay three times the price they are already paying. 

Support for the rent seekers is coming strong from the usual green left anti-capitalists, including THEIR ABC.  This piece on the Drum explains the issues then goes full pelt in support of the continuation of the rort.  It includes a clip by Sarah Ferguson who, along with her husband Tony Jones and the dozens of other far leftists, is a major shareholder in the tax financed propaganda agency.  In the clip the ACCI’s Burchell Wilson stoutly defends the consumer’s right to avoid exploitation by the politically correct.

The RET scheme with the feed-in tariffs for roof-top solar already adds 7 per cent to the cost of electricity to households, a cost that will more than double on present policies.  By 2020 the scheme, if unchanged, will add over 40 per cent to the wholesale cost of electricity and largely negate the benefits from the demise of the carbon tax (should that occur). It is little wonder that major energy intensive industries are departing Australia – our prices have risen to be among the highest in the world from among the lowest less than a decade ago. 

The RET review does not have the usual clutch of green left or docile functionaries that have previously characterised such reviews.  Led by a highly successful businessman, Dick Warburton, there is no likelihood of a repeat of the previous pattern of reviews that ramped up the scheme.  In the past we had:

  • Howard announcing a scheme in 2001 which would subsidise an innocuous “two per cent of additional energy”; that was trebled to 9,500 GWh by a hand-picked team established to interpret this.
  • A proposal in 2003 by the hapless Grant Tambling for an increase to 20,000 GWh, which John Howard, having come to his senses, rejected. 
  • And as a “compromise”, Rudd and Turnbull agreeing to the present 20 per cent of electricity to be provided by subsidised exotics, mainly wind, defined as 45,000 GWh by 2020. 

The rent seekers know the game is up and there is no prospect of an economy-busting increase in their feed.  They know they cannot even expect Gillard’s  Climate Change Authority placepeople’s solution of retaining the scheme as is and are falling back on one that which would reduce it to comprise the currently expected 20 per cent of electricity.  The presently expected 20 per cent by 2020 shaves off at least a quarter of the existing RET’s 45,000 GWh because regulatory and tax boosts have caused energy demand to drop.

Alternative approaches would range from cancelling the scheme’s subsidies for any new proposals to doing something akin to the Spanish Government’s approach and ceasing to pay any subsidies, even on windmills in the ground.

The review is to report later this year and is taking submissions until May 15.

Posted in Uncategorized | 3 Comments

Statistically speaking, Keynesian economics is in steep descent

gross output

It’s the subtitle that matters, Gross output will correct the fallacy fostered by GDP that consumer spending drives the economy. The actual title is “At Last, a Better Economic Measure”, it’s from The Wall Street Journal and written by Mark Skousen who has been agitating the statistical agencies in the US for around twenty years to provide just such a measure. And so now they have.

Starting April 25, the Bureau of Economic Analysis will release a new way to measure the economy each quarter. It’s called gross output, and it’s the first significant macroeconomic tool to come into regular use since gross domestic product was developed in the 1940s.

GDP is a formless mess of a statistic that was devised in the 1940s as a measure that went along with the Keynesian notion that higher spending would lead to higher employment. By embedding consumer and government spending into GDP, its put a poisoned apple into the middle of this stat so that now a shift in GDP driven by higher public spending is as misleading an indicator as it is possible to have. GDP does not measure value added although it’s supposed to and therefore does not provide much of an indication about the growth in employment-generating production. So now there is to be a new measure, Gross Output, an economic indicator that will actually provide an indication of what we are interested in knowing. As Skousen writes:

In many ways, gross output is a supply-side statistic, a measure of the production side of the economy. GDP, on the other hand, measures the “use” economy, the value of all “final” or finished goods and services used by consumers, business and government. It reached $17 trillion last year.

The measure of the economy’s gross output has been around since the 1930s. It was developed by the economist Wassily Leontieff, but he focused on individual industries, not the aggregate data as a measure of total economic activity. Gross output has largely been ignored by the media and Wall Street because the government issued the number annually, and it was two or three years out of date. That should change now that it will be released along with GDP every quarter. Analysts and the media will be able to compare the two.

Why pay attention to gross output? For starters, research I published in 1990 shows it does a better job of measuring total economic activity. GDP is a useful measure of a country’s standard of living and economic growth. But its focus on final output omits intermediate production and as a result creates much mischief in our understanding of how the economy works.

In particular, it has led to the misguided Keynesian notion that consumer and government spending drive the economy rather than saving, business investment, technology and entrepreneurship..

Misguided isn’t saying the half of it. For the first time we will have a quarterly stat that focuses on the production side of the economy and ignores the Keynesian idiocies of saying that consumer demand and government spending actually drive an economy forward. Outside the textbooks, Keynesian economics is becoming deader by the day.

Posted in Economics and economy | 3 Comments

Wednesday Forum: April 23, 2014

Posted in Open Forum | 365 Comments

All you need to know about economics

From a graduation speech delivered by Nobel Prize winner, Professor Thomas Sargent.

The Greatest Graduation Speech Ever Given Is Bullet-Point List Of 12 Economic Concepts

I remember how happy I felt when I graduated from Berkeley many years ago. But I thought the graduation speeches were long. I will economize on words.

Economics is organised common sense. Here is a short list of valuable lessons that our beautiful subject teaches.

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts, and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

Posted in Uncategorized | 19 Comments

The shrinking US middle class

Here’s a story from The New York Times via Instapundit that should surprise no one if they’ve been paying attention, The American Middle Class Is No Longer the World’s Richest. Because it is The New York Times, it is unable to understand the problem, since it puts it down to rising income inequality as the cause, but then there is hardly any major social issue it is willing any longer to discuss honestly, assuming the kinds of people who write for The New York Times any longer even have a clue what causes what. They do, however, take note of this, in a country with the largest expenditure on education per student in the world:

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

But it’s not just the middle class who are being nailed:

The poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

But as pointed out here, the plundering of the middle class from both below and above is now standard in the US. This is not from The New York Times:

Much of America’s moneyed elite has already shifted its allegiance to the Left, especially in cities. Wealthy, educated urbanites hold generally liberal social values and can afford the higher taxes “blue” cities like Chicago impose—especially when those taxes help pay for the upscale amenities they desire. Even when the mayoral administration is less friendly, the urban elite tends to get its needs met. At the same time, the urban poor have remained loyal to the Democrats, no matter how little tangible improvement liberal policies make in their lives. And the various unions, community organizers, and activist groups that advocate for the poor profit handsomely from the moneys directed toward liberal antipoverty programs.

The US is a nation living on its capital and not its income. It will not end well.

Posted in International | 39 Comments

Rape and pillage: the facts

In response to my column on Anzac denial in The Australian today, I received an email from Mr H R Thomas in Queensland drawing my attention to the work of Dr Lindy Edwards.

I have since become the 42nd person to view Dr Edward’s November 2013 youtube hit, Creating a Progressive Economics. I do not recommend it.

Dr Lindy Edwards

In happier times:
Dr Lindy Edwards

It was Dr Edward’s views on soldiering, however, rather than her perplexing approach to economics, to which Mr Thomas drew my attention.  In June 2013, Dr Edwards wrote in The Age and The Sydney Morning Herald  (where else?):

There is a long tradition of firing up fighting men by invoking their shared ability to sexually degrade women. They tap into an ideal of male sexual power to create a cocktail of ego, aggression and sexual energy that they channel into battle.

Mr Thomas was intrigued. He  wrote to Dr Edwards:

I served with the RAAF in Vietnam while my father served with the RAAF in the Pacific in WWII.  Neither of us encountered the phenomenon you referenced.   

Since leaving the RAAF I have further developed my interest in military history but, I cannot find any reference to your claim.  Consequently, I would be grateful if you would provide me with examples where commanders have fired up their men using the technique you described.

Sincerely,

H R Thomas

Dr Edwards replied:

I teach at ADFA and I see it all the time.

Mr Thomas found her answer unsatisfactory, and replied in the following terms:

Dear Doctor Edwards,

I can tell you do not lecture in manners.

Here is what you wrote in The Age:

”They tap into an ideal of male sexual power to create a cocktail of ego, aggression and sexual energy that they channel into battle”.

I repeat my request:  “I would be grateful if you would provide me with examples where commanders have fired up their men using the technique you described”.

“I teach at ADFA and I see it all the time” was not an answer.  It was an evasion and in no way responded to my request.

Would you kindly provide me with examples which substantiate your claim.

Sincerely,

H R Thomas

At the time of going to press, no reply had been received from Dr Edwards.

Posted in Uncategorized | 144 Comments

Mark Steyn discussing Brendan O’Neill interviewing George Brandis

A bit convoluted, but here goes. Mark Steyn has an article, Medieval Moralists, in which he quotes from an interview with George Brandis conducted by Brendan O’Neill which may be found in a posting with the heading, Free Speech Now. This is the passage Steyn has taken from that Brandis interview with O’Neill:

Brandis says he’s been a fan of free speech for ages. He reminds me that in his maiden speech to the Senate, given 14 years ago when he was first elected as senator for Queensland, he let everyone know that ‘one of my most fundamental objectives would be to protect freedom of thought and expression’. He tells me he has long been agitated by ‘the cultural tyranny of political correctness’. But there were two recent, specific things that made him realise just what a mortal threat freedom of speech faces in the modern era and that he would have to dust down his Mill, reread his Voltaire, and up the ante in his war of words against, as he puts it, the transformation of the state into ‘the arbiter of what might be thought’. The first thing was the climate-change debate; and the second is what is known down here as The Andrew Bolt Case.

He describes the climate-change debate – or non-debate, or anti-debate, to be really pedantic but also accurate – as one of the ‘great catalysing moments’ in his views about the importance of free speech. He isn’t a climate-change denier; he says he was ‘on the side of those who believed in anthropogenic global warming and who believed something ought to be done about it’. But he has nonetheless found himself ‘really shocked by the sheer authoritarianism of those who would have excluded from the debate the point of view of people who were climate-change deniers’. He describes as ‘deplorable’ the way climate change has become a gospel truth that you deny or mock at your peril, ‘where one side [has] the orthodoxy on its side and delegitimises the views of those who disagree, rather than engaging with them intellectually and showing them why they are wrong’.

He describes how Penny Wong, the Labor Party senator for South Australia and minister for climate change in the Julia Gillard government, would ‘stand up in the Senate and say “The science is settled”. In other words, “I am not even going to engage in a debate with you”. It was ignorant, it was medieval, the approach of these true believers in climate change…’

The great irony to this new ‘habit of mind’, he says, is that the eco-correct think of themselves as enlightened and their critics as ‘throwbacks’, when actually ‘they themselves are the throwbacks, because they adopt this almost theological view, this cosmology that eliminates from consideration the possibility of an alternative opinion’. The moral straitjacketing of anyone who raises a critical peep about eco-orthodoxies is part of a growing ‘new secular public morality’, he says, ‘which seeks to impose its views on others, even at the cost of political censorship’.

And as for free speech being free, if you go to the article you can find a bit of first-person experience shared by Steyn in replying to some Canadian nong, Adam Stirling, who finds it a bit tedious to hear Steyn go on about free speech:

The only reason Master Stirling can read me in a Canadian national newspaper is because Maclean’s and I fought a long, hard public battle and won it! And we’ve got seven-figure legal bills to prove it! How funny is that?

And therein lies a tale, which Steyn’s article also discusses.

UPDATE: Here is Mark Steyn again discussing the slow death of free speech. It all needs to be read but here is a bit from the middle:

I’m opposed to the notion of official ideology — not just fascism, Communism and Baathism, but the fluffier ones, too, like ‘multiculturalism’ and ‘climate change’ and ‘marriage equality’. Because the more topics you rule out of discussion — immigration, Islam, ‘gender fluidity’ — the more you delegitimise the political system. As your cynical political consultant sees it, a commitment to abolish Section 18C is more trouble than it’s worth: you’ll just spends weeks getting damned as cobwebbed racists seeking to impose a bigots’ charter when you could be moving the meter with swing voters by announcing a federal programmne of transgendered bathroom construction. But, beyond the shrunken horizons of spinmeisters, the inability to roll back something like 18C says something profound about where we’re headed: a world where real, primal, universal rights — like freedom of expression — come a distant second to the new tribalism of identity-group rights.

Posted in Freedom of speech | 21 Comments

“A lot of these guys are basically shysters and crooks”

James Delingpole has a new book out The Little Green Book of Eco-Fascism: The Left’s Plan to Frighten Your Kids, Drive Up Energy Costs, and Hike Your Taxes!. He is being interviewed here by Ed Driscoll.

“I’m not a scientist and actually given what I’ve seen of scientists in my experiences following the global warming scam, I’m glad I’m not a scientist because a lot of these guys are basically shysters and crooks. They’re not some kind of white-coated elite with a special hotline to the truth. In fact, they’re just ordinary guys and girls trying to earn a living like the rest of us but slightly more dodgily than the rest of us in the one or two egregious cases.”

The left seems to have a system for achieving power by finding some element in every issue that is a giant step too far and then harping on it. No one is uninterested in “the environment” and everyone wants to preserve the planet whatever that might mean. But global warming is so inane and so lacking in evidence that it separates those who have common sense from some kind of herd of conformity. But it also absorbs almost all of the attention so that people who are not interested in seeing the Great Barrier Reef, let us say, ruined if it is in danger from some commercial proposal are still seen as outsiders to these crusaders for a green environment. Their extremism is the problem and their leaders are to an incredible extent in it for the money and political power it gives.

Posted in Global warming and climate change policy | 68 Comments

100-year collection of 85,000 historic films now on youtube

This is quite extraordinary if you are the sort of person for whom history is of interest. The above video of the Rolling Stones arriving in Sydney in 1965 is one example out of 85,000 newsreels that have now been made available on Youtube. This is the full story found in Variety under the heading, British Pathé Uploads Entire 85,000-Film Archive to YouTube in HD:

British Pathé, the U.K. newsreel archive company, has uploaded its entire 100-year collection of 85,000 historic films in high resolution to YouTube.

The collection, which spans 1896 to 1976, comprises some 3,500 hours of historical footage of major events, notable figures, fashion, travel, sports and culture. It includes extensive film from both World War I and World War II.

“Our hope is that everyone, everywhere who has a computer will see these films and enjoy them,” British Pathé GM Alastair White said in a statement. “This archive is a treasure trove unrivaled in historical and cultural significance that should never be forgotten. Uploading the films to YouTube seemed like the best way to make sure of that.”

Personalities captured in the newsreels include Princess Diana, Arnold Schwarzenegger, Elizabeth Taylor, Marilyn Monroe, Fidel Castro, John Lennon, Salvador Dali, Mother Teresa, Muhammad Ali and Charlie Chaplin. British Pathé already makes numerous clips available on its website free for personal use, and it licenses the archive to TV and film producers and other companies and organizations.

This is the link to the entire collection.

Posted in Cultural Issues, History | 21 Comments

Q&A Forum: April 21, 2014

Posted in Open Forum | 267 Comments