Life Imitating Life

One of my favorite quotes is from Benjamin Franklin who once said:

They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.

I was minded of this when I read the following homage to the European Union in the Economist which wrote:

For Europhiles the Treaty of Rome marks the moment when Europeans understood that the preservation of peace and prosperity on the continent required a sacrifice of national sovereignty and a commitment to common institutions, and that economic integration would precede the political sort.

Posted in Uncategorized | 31 Comments

Suppose you wanted to understand Donald Trump’s supply-side economic reforms where would you go?

There was this story on the front page of the Financial Review yesterday morning with the heading: Trump reforms ‘not understood’. It begins:

The United States economy is poised to enter a period of sustained higher economic growth on the back of President Donald Trump’s supply side economic reforms, according to two leading US economists who have been tipped to join the US Federal Reserve board.

Should you wish to have some idea of what Trump is trying to do, you might therefore find of interest the endorsement by Professor Art Laffer – the Art Laffer of the Laffer Curve – that he has provided for the third edition of my Free Market Economics.

“This book presents the very embodiment of supply-side economics. At its very core is the entrepreneur trying to work out what to do in a world of deep uncertainty in which the future cannot be known. Crucially, the book is entirely un-Keynesian, restoring Say’s Law to the centre of economic theory, with its focus on value-adding production as the source of demand. If you would like to understand how an economy actually works, this is one of the few places I know of where you can find out.”

Art Laffer is the original supply-side economist. Free Market Economics is indeed one of the few places you can go to find out what supply-side economic theory means in practice and in detail.

ADDITIONAL COMMENT ON THE COMMENTS: Supply-side economics as an approach to understanding how an economy works is different from the how these principles might be applied in any given circumstance. It is not a theory of tax, although, as in Reagan’s time, these principles were part of the effort to get taxes down, where the real point was to transfer spending from the public sector to the private. If all you know about supply-side economics is the Laffer Curve, I’m afraid you actually know very little about the base principles. The central issue is Say’s Law. Unless you understand what the classics meant by Say’s Law, I’m afraid the underlying principles are unknown to you. Art Laffer, however, made Say’s Law the touchstone of his own understanding of supply-side theory. If you are truly interested in understanding these principles, you can either read Mill, or Clay or my own Free Market Economics. If you have another you would like to add to the list, by all means let me know. They hardly exist although there are others, but that is what you need to know.

[My thanks to TMc for directing me to the AFR article.]

Posted in American politics, Classical Economics, Economics and economy | 22 Comments

Glenn Gould on Bach

The most erudite exposition of JS Bach and the age of reason. A true genius. That is both JS Bach and Glenn Gould were geniuses. And if you want to read about Bach, please try Gödel, Escher, Bach: An Eternal Golden Braid by Douglas Hofstadter. It took me quite a while to get through the book, but it is one of the most thought provoking and stimulating books ever written.

Posted in Uncategorized | 7 Comments

CIS Policy has hit the street. Metaphorically

Policy on line.

Posted in Australian Story, Economics and economy | Leave a comment

Alarming synergies generating massive destructive power on the left

The radical left is on a roll in the US. If something works, do more of it. Where are the kind of people of the social democratic left who stood strongly with conservatives in the Cold War|?

Two factors account for the fact that the same means that have been used for years to repress pro-Israel voices on campuses are now being used against non-leftists who speak on subjects unrelated to Israel.

First, the tactics are being used more broadly because they have been successful. Pro-Israel voices have been largely silenced on campus. Indeed, Jews themselves now join those who repress them.

For instance, last year SFSU’s Hillel and its Jewish Studies Department condemned the Horowitz Center’s campaign to highlight the antisemitism and support for terrorism endemic on their campus.

The second reason that the Left has expanded its assault on freedom of speech and inquiry beyond Israel and the Jews is that the Left today is no longer a collection of issue specific organizations and causes. Today the Left is a network of interlinked organizations, largely funded from the same sources and run by the same people.

It might have been hoped that once antisemites merged into a larger network, their voices and power would be diminished. But the opposite has happened. The antisemites who pioneered the intimidation tactics now being employed against non-leftists who speak on issues unrelated to Israel, are now the leaders of the leftist network. The network includes African-Americans, Latinos, LGBTQs, feminists and Communists.

The move by antisemitic organizers into the center of the newly networked Left was first exposed with the rise of the Black Lives Matter group. Although BLM arose to protest what its members claim is excessive police violence against African-Americans, from the outset, antisemitic groups pounced on the movement as a means to take over the rising network of leftist groups. In cities across the US, BLM protesters’ signs opposing law enforcement authorities were accompanied by signs calling for Israel to be destroyed.

Posted in Freedom of speech | 16 Comments

How governments have destroyed the world’s most efficient energy market

The nation’s energy policy is in the hands of ideological tyros.

At the federal level Malcolm Turnbull is running the show with the equally green evangelist, his Departmental Secretary Martin Parkinson.

At the state level, we have a Victorian Government desperately promoting wind, to match Greens policies in the hope of retaining threatened inner city seats, while also killing coal, conspiring with the Liberals to close down gas supplies and otherwise using the electricity supply system to provide favours to key support groups.  And in South Australia we have a Premier who has drunk deeply from the well of Commonwealth subsidies, declared his jurisdiction at the cutting edge of the global renewable movement and, in denial of the evidence, is desperately trying to demonstrate the wisdom of this.

Electricity supply.
In a statement plumbing the depths of credibility, the electricity market manager, AEMO, maintains that  the closure of Hazelwood will not compromise the security of the Victoria electricity system nor the broader National Electricity Market (NEM) next summer.  Looking around it says that there are adequate supply sources available to cover the loss of Hazelwood’s 1600 MW of reliable baseload power.

Hazelwood’s closure takes out 11 per cent of the Victorian-South Australian capacity of fossil and hydro availability, 19 per cent of the total if the now short supplies of gas are excluded.  Hazelwood’s closure, having already triggered a doubling of the average wholesale price, places supply on a knife edge, especially when the 2900 MW of wind is not available.

In its final analysis of the events leading to the September 2016 South Australian black-out, AEMO re-affirms that the failure of the wind generators was the cause.  It argues that there are measures that can be taken to mitigate this.  Among these are payments to consumers to lower demand at crucial times and re-engineering the grid to accommodate the policy-induced reduction in fossil fuel energy.

One such proposed grid re-engineering is the South Australian plan to spend $150 million on short term battery storage.  But this would provide a buffer of just 4 seconds; fully supplying itself with wind energy buttressed by battery storage would according to Miskelly and Quirk cost $180 billion – about twice South Australia’s Gross State Product!

South Australia deliberately chose to close off its options of retaining a back-up supply of coal when it prevented the Northern power station from remaining open.  It now says it will build a new gas plant at a cost of $350 million to be used as a reserve unit only.  Good luck with getting the gas for this and in getting a return for the state citizen owners!

South Australia also intends to over-ride the AEMO allocation of electricity between different jurisdictions to ensure that power is delivered from Victoria in time of need.  Victorian Energy Minister Lily D’Ambrosia may be clueless in the economics of electricity supply but she understands the political penalty of Victoria facing black-outs due to electricity being exported to another jurisdiction.  And so the national market would quickly unravel into state autarkies, at least until the Commonwealth invokes Freedom of Trade provisions of the Constitution (s 92) and takes over the market management.

Malcolm Turnbull’s “nation-building” proposals to create a pump storage scheme for the Snowy is an alternative to batteries smoothing the supply but, by losing 20 per cent of available energy in the pumping process, actually reduces the available resource.  Snowy Hydro already has pumped storage and has the option of increasing this but has never done so simply because it makes no commercial sense.  Turnbull’s costing of his proposal at $2 billion is ridiculous and the five year time frame would outlive his tenure of office.

Energy retailing: a smoke screen for policy incompetence
Perhaps under orders, Energy Minister Frydenberg has given the ACCC, under Rod Sims an institution marked by hostility to normal market operations, a task of finding out if the retailers are price gouging.  Frydenberg has cited an analysis from the government’s political adversaries at the Grattan Institute in support of this, saying there could be savings of $250 million a year for Victoria alone if the market was working properly.

With more retailers than in any other electricity market in the world, and with easy entry and smaller retailers going out of business, monopolistic price gouging possibilities defy rational analysis.

The Grattan analysis has this chart

The cause of retail margin increase are solidly down to government regulations which involve costs that must be passed on.  Among these for Victoria are:

  • “Customer protection” requirements and hardship provisions
  • Disallowance of exit fees
  • Requirement to pay above market rates for solar buy-back
  • Support for the compulsory roll-out of “smart” metering
  • Various regulatory requirements to offer long life lighting and other virtue-signalling favours to customers

The fact is that government policy forcing the replacement of reliable coal plant by unreliable wind at three times the cost is at the heart of the energy crisis we face and Commonwealth measures along these lines are exacerbated by those of the states.

(Unashamed self promotion: my latest book CLIMATE CHANGE: Treaties and Policies in theTrump Era, is now published and if not in your local book shop available on Amazon et al and direct from the publishers Connor Court)

Posted in Uncategorized | 40 Comments

Guest Post: Paul Farmer Scrap the GST formula

The Commonwealth Grants Commission should scrap the current formula of redistribution for the GST as it destructive to a long term successful Federal system. It is not only perverse that WA isn’t getting its per capita share but it is destructive to the national economy in the long run. With this current approach of income equalisation among States arguably there is a strong probability that we end up with a human resource allocation across the nation that is far from optimal. We also continue to push Australia down a path of having 2 mega cities with everything else a regional outpost of some sort and we don’t end up with a vibrant diversified national economy that actually grows right across the length and breadth of the nation. If the Treasury in this country was even half on the ball they should be recognizing this and screaming it from the rooftop. The formula for GST should be based on where final consumption sales are made (geographical neutrality) and should reflect the level of consumption expenditure in each state and if that means WA gets more than its per capita share so what ? That’s a healthy thing if it encourages mobility of labour to where it is required. If we can’t do that then let’s just scrap the Commonwealth GST and substitute it for a system of State based GST with each State keeping its own tax receipts from activity occurring within its own jurisdiction.

A Commonwealth is a collection of States each with differing endowments of resources, people skills and other natural advantages. How a State sets its own taxation, royalty and exploration incentives is also a source of these advantages. However for federal system to be fiscally sustainable in the long run requires effective and healthy competition between States which in turn encourages each to exploit these natural advantages they possess. Each state then should be free to enjoy the benefits of that development by reinvesting those dividends of growth as they see fit to encourage future development and to further diversify their local economies, not have effectively those funds redistributed away by loss of other federal monies such as in this case with WA’s share of GST revenue being obliterated. The current formula of GST redistribution is based on “zero sum economics” and encourages cross subsidization across states and by implication can only encourage non development of a state’s resources.

As WA is resource rich, you would expect it to grow and in natural consequence its tax base to grow as royalty incomes grow. This allows the state to invest in more services which all things being equal will encourage more people to move to that State. This can become a virtuous cycle and leads to the building of a strong localized economy through further diversification and more specialisation of labour and more competition as more people continue moving to a growing state. This is basic market forces at work. By each State keeping its own tax receipts which are a function of its own activities and tax policies you encourage those government receipts to be invested where they are most needed to give the maximum chance of that State developing through it’s own behaviour and incentives a strong local economy over time . The national economy then becomes a network of independently viable states each utilising their different comparative advantages.

If one state is doing a better job than another in developing its resources such that its per capita tax share is running ahead of others with that State government then using that position to provide better services that’s a good thing and a healthy signal within the national economy to encourage labour mobility to that State. From a national perspective with this approach we are encouraging the allocation of human resources to where they are most demanded and this labour mobility unlocks productivity within the national economy as a whole. Given the importance of productivity growth to long run economic growth, it is vital we encourage national labour mobility not impede it. This is not a difficult concept to grasp but clearly it isn’t understood in the GST Grants Commission where the current formula completely ignores this basic premise of economics .

The current formula in its approach is basically an extension of simple Keynesian economics that is ignorant of how an economy actually grows. That is through private investment built off efficient resource allocation and productivity improvements that is supported by underlying population growth. Rather the current approach assumes government spending decisions that invoke arbitrary allocations to poor performing jurisdictions can influence growth more than market principles. Hayek thesis in the Road to Serfdom is arguably an entire treatise that this idea is deeply flawed and moreover from an empirical point of view is there a shred of evidence this approach of taxation equalisation between State jurisdictions even works ? Schumpeter’s idea of creative destruction should be allowed just as much to work with State governments as it does with business in the private sector. A state that cannot perform and is lazy and inefficient shouldn’t be encouraged to remain set in its recalcitrant ways such as we have with South Australia and Tasmania currently and expect others to continue to pay their way. Any federal system should actively encourage such States to change or die………..that is the healthy way to not only build a market sector but also a government sector and moreover build a strong national economy through time that unlocks true localized sources of comparative advantage. The current formula is also ignoring at our national detriment a fundamental idea that that has been proved over and over again over the last 250 odd years of industrial development and what Niall Ferguson argues is the first true killer app of Western civilisation …………..Competition. Encouraging competition works and makes everybody in the long run better off. State’s finances in a Federal system certainly should not be exempted from this principle.

Posted in State Politics, Taxation | 41 Comments

Trump’s winning streak continues

Before I get to the rest, I have had two lovely emails from Catallaxians who have received their copies of The Art of the Impossible, which is more than I can say myself. Now that the books have actually been printed and are being distributed, we are preparing to have the book properly launched into the universe, which will take place in Sydney and Melbourne and perhaps elsewhere. Until then, you can order books from Connor Court here in Australia or from anywhere at all at Amazon and for those who have asked, I will happily sign the books when we meet up next. As a reminder, this was my own take on the nature of the book.

As for the perils of being president, let me begin with something I wrote on Friday about what ought to be the greatest political scandal of our times, the bugging of Trump and his associates by the Obama administration during the election campaign and in the period leading up to the inauguration:

So we shall see if it is still news come Monday, whether the don’t-want-to-know crowd will get their wish and end up not knowing.

Well Monday has come and Monday has gone and so too has the story. It has almost completely vanished, demonstrating as nothing else could, that Trump was almost certainly right about everything he said. If the media and the democrats have backed off and dropped the story, it is only because there is absolutely nothing in it for them.

And also, strangely, mention of the pulling of the anti-Obamacare bill has nearly itself completely disappeared, again because it may not work out all that well for the Democrats. See below:

As Trump says, Obamacare is once again fully owned by the Democrats. He also says he has learned a lot by the process, including, no doubt, whose judgement he can rely on and whose he cannot. As for Obamacare, when the rotting has gone to the fullest extent, there will be another attempt to fix things up. Meanwhile onwards to other issues, of which there are no end. The best thing about Trump may yet be his temperament.

Posted in American politics | 19 Comments

Extreme Cyclone Carbon Theory Refuses to Die

Given the rarity of cyclones these days, a Category 4 system was all it took for Climate Church Junior Wizard, Adam Bandt, to come rushing out with this hyperbolic untruth:

“Building a new coal fired power station now is like knowing cigarettes cause cancer but starting your kids on a pack a day, or knowing asbestos kills but building your family home with it anyway,” Mr. Bandt said.

“If Malcolm Turnbull uses scarce public money to build a new coal-fired power station he’ll have blood on his hands. The more coal we burn, the more intense extreme weather events like Cyclone Debbie will be. People will suffer.”

(PS: here’s The Sydney Morning Herald refusing to include the ‘blood on his hands bit’. And they wonder why we don’t trust them anymore?!).

(PPS: Dear SMH, I’ve taken a screen shot of your article with a word search showing zero hits for the word ‘blood’ – so please resist any urge you may have to engage in some funny stuff and say that it was all my imagination).

The theory that burning coal leads to more cyclones was quickly dubunked when the cyclones declined their invitation to the Earth Hour party. The theory was then altered to state that there would be more ‘extreme’ cyclones.

Of course, facts have a funny habit of playing their own game and the Climate Church’s unified theory of extreme carbon cyclontivity was also debunked some time ago:


(NB: notice how BOM is too ashamed to provide an updated graph beyond 2011?).






How about landfall cyclones? After all, it’s us wicked human beings that are supposed to to pay for all this sinful carbon dioxidism:



Again, notice how all these graphs aren’t current to 2016 – and how it’s nigh on impossible to find one? Now why would that be?

Extreme cyclone carbon theory became a complete farce when Cyclone Winston hit Fiji last year – with the Climate Vatican attempting to decree that it was the worst cyclone ever!  …to hit the Southern Hemisphere.

Thankfully, that serving of dog’s droppings was sensibly disposed of by TMR: 

Why would large chunks of the media want to recklessly mislead us about Cyclone Winston’s ranking in the pantheon of cyclones?

It all started when I read the headline ‘worst storm on record’ on (at 15:08 on Saturday, 20 February 2016 – before Cyclone Winston had even hit Fiji)…

‘Wow’, I exclaimed to myself, it’s not every day that you come across the WORST STORM ON RECORD.

Within seconds of my socks having been knocked off, they quickly found themselves back on my feet as I clicked on the story and saw that Cyclone Winston had immediately become downgraded to a cyclone ‘being described as the strongest on record in the southern hemisphere’

When it comes to air pressure (the lower the air pressure, the more ‘intense’ the cyclone), Cyclone Winston doesn’t even make the top 10 in the south pacific region, let alone the southern hemisphere…

If ranking by peak 10-minute sustained wind speed (the measure used by most international weather agencies), Cyclone Winston comes screaming all the way up to joint 4th in the south pacific region – but still well short of strongest ever in the southern hemisphere.

Despite having made complete and utter fools of themselves, climate catastrophists like Adam Bandt continue to double down.

Guys. Please. The tide went out a long, long time ago. It’s high time you put your pants back on and found something more productive to do.

(NB: the cyclone statistics in this article first appeared on TMR on 12 February 2017 – in response to a Sky News article reporting on the release of The Climate Council’s report titled ‘Cranking up the horseshit intensity: Climate change and extreme weather events’.

Posted in Global warming and climate change policy | Tagged , , | 63 Comments

Mary Lou Carter speaking for those who cannot speak for themselves

To Anita Joseph, the executive assistant to Alistair McEwin, Disability Discrimination Commissioner at the Australian Human Rights Commission.

Good morning Anita

Will the Disability Discrimination Commissioner Alastair McEwin be making a public statement in relation to the Four Corners program on violence, abuse and neglect in residential settings?

Last night Linton Besser reported in a Four Corners program – Fighting the System – with some of the most graphic abuses of people with disabilities in group homes, including 5 deaths in the last few years. But I guess because there were no spithoods involved and didn’t draw comparisons to Abu Grahib just to Bedlam there are no headlines today.

A Senate Inquiry released a report on 25 November, 2015 — and finally in the last couple of weeks the government finally responded with NO there will be no Royal Commission.

What will the Australian Human Rights Commission do about this in the face of the overwhelming evidence which have been accumulated?; not only from the witnesses, hearings and submissions to the recent Senate Inquiry whose primary recommendation was for a Royal Commission, but from the Inquiries in every state which have been undertaken over the last couple of years as well as egregious iniquity towards people with severe disabilities in the findings of the Australian Law Reform Commission into Equality, Capacity and Disability in Commonwealth Laws.

I sent this email to the ABC journalist Linton Besser after the show, last night.

Good evening Linton

Tonight’s programme is the stuff of nightmares – the images and the stories are reminiscent of the Bedlam of old. It is just appalling.

Where is the swift action for the powerless in our communities who are the subject of dreadful abuse?

Where are the protectors of people who are so terribly disabled and
who are powerless to change their circumstances unless it is through the agency of exposure and advocacy.

Thank you for this powerful program, please thank your producers and editors. The media and those who are in a place of power can chance these circumstances of abuse, neglect, injury and exploitation.

But apparently those in power are craven in the face of these atrocities.

I am absolutely crushed that the government has not swiftly responded with the Royal Commission so urgently needed into Violence, abuse and neglect against people in disability in institutional and residential settings.

I am part of a group of people who gave evidence to that Senate Inquiry in Sydney in August 2015.

We documented only nine cases (that’s all we were allowed to present) of terrible abuse and neglect with dreadful injuries to people who cannot speak. We called for a Royal Commission as did many others who made submissions and who gave evidence.

That the government has refused to establish such a Royal Commission given the disclosures in that Inquiry is an abrogation of its responsibility to people with severe disabilities. What is more worrying still is that that the NDIS is rolling right over the top of foundations which are rotten to the core. That the federal government cannot see the need for a Royal Commission is beyond belief and given that there are inadequate and barely-there safeguards which have only recently been implemented, in fact last year the NDIA agency was giving evidence about safeguards to the Royal Commission into the sexual abuse of children and to the utter atonishment of the Commissioners when asked if the conduce and safeguards were in place, the Agency advised that No, they had still not be finalised.

The Federal government knows of this violence, abuse and neglect and yet why no Royal Commission.

I have been checking regularly as to whether the federal government had even responded to the Senate Inquiry Report, I heard tonight that they have responded with a resounding NO to a Royal Commission. Aren’t we all supposed to be equal before the law? – well I guess not, it seems the federal government does not respect, value or give due regard to people with disabilities who cannot speak, perhaps the absence of a spithood is the missing link to draw a Royal Commission.

Indeed Linton they say society is judged by how it treats its most vulnerable — actually Australian society is judged by how it MISTREATS its most vulnerable. How absolutely perverse.

What a disgraceful government. You are very aware that your program has only examined a shard of ice from the iceberg. What is going to happen in NSW to all the people living in government operated group homes adds to the disgrace; where people with disabilities will be treated like sacks of funding and not human beings and will be ‘traded’ to the private sector by a venal NSW government as it schemes and plots to get the best value for the ‘jewels in the crown’ services as it abandons our most vulnerable citizens to a system for which there is no protection and no capacity for those vulnerable citizens to attest to what they are being subjected.

Yours in irate incandescence.

Mary Lou Carter

We need a Royal Commission NOW!! Will Alistair McEwin champion this cause? I look forward to your response with respect to what Alistair will do regarding this disgrace.


Mary Lou Carter

Posted in Australian Story, Guest Post | 32 Comments