Catallaxy Files

Okay – a bit of fun.

(HT: Crapulous Coercion)

Clive Hamilton has an op-ed in The Age today bemoaning the Rinehart share raid on Fairfax. He says a lot of nice things about Gina and her father.

Last year Rinehart was named by Forbes magazine Australia’s richest person. She is reported to hold more than $20 billion in assets. Citigroup estimates she is on track to become the richest person in the world.
Rinehart inherited more than father Lang Hancock’s mining company; she took on his politics, too. Hancock was described by one journalist as “a swashbuckling right-winger who believed people and governments should bow to his will”. On workers’ rights, WA secession and special deals for mining, Gina is her father’s daughter. John Singleton, who has been close to both, said ”a conversation with Gina was a conversation with Lang. They both had the same fanaticism.”
Hancock was close to the authoritarian Queensland premier Joh Bjelke-Petersen, whom even Liberal Party MPs accused of running a police state. Bjelke-Petersen gave the eulogy at Hancock’s funeral. In 1975, Hancock launched John Singleton’s Workers Party, the forerunner of the new right in Australia. Gina was in attendance, soon after she had dropped out of the University of Sydney claiming the lecturers were communists.

So the worst that can be said is that they knew Joh Bjelke-Petersen?

Anyway he then launches into a bunch of people that Gina knows – the usual suspects and the usual complaints. It was this comment that really annoyed.

He [Monckton] is better known in this country for putting a swastika next to a photo of Ross Garnaut.

Monckton is known for that? He did do it but later apologised.

But I thought it might be useful to recall some of the things Hamilton has said over time. Mind you, it isn’t a complete list.

Here he glorifying (fictional) violence

When Watt, after disrupting a public lecture, followed Coghburn out of the venue haranguing, insulting and poking him in the chest, the scientist finally lost his rag and lashed out. Who hasn’t wanted to do that?

Here he is advocating the suspension of democracy

This is because the implications of 3C, let alone 4C or 5C, are so horrible that we look to any possible scenario to head it off, including the canvassing of “emergency” responses such as the suspension of democratic processes.

Here he is denying he advocated the suspension of democracy

Sometimes a lie is too good to discard even when it is known to be a falsehood. So The Australian continues to recycle the lie that I have advocated the “suspension of democracy” to tackle climate change.

Here he is comparing climate “denialists” to mass-murdering war criminals

Instead of dishonouring the deaths of six million in the past, climate deniers risk the lives of hundreds of millions in the future. Holocaust deniers are not responsible for the Holocaust, but climate deniers, if they were to succeed, would share responsibility for the enormous suffering caused by global warming.

Here he is expounding his approach to diversity of opinion

If Australia’s security services are not closely monitoring the activities of denialist activists then they are failing in their responsibilities.

As far as I’m aware Hamilton has yet to apologise for any of those statements.

I had a piece in yesterday’s AFR addressing the confluence of energy policy and the various restraints and subsidies ostensibly restraining emissions of carbon dioxide.  Actually many of the carbon-sparing policies started life as energy saving measures promoted by the Club of  Rome’s discredited scares about energy shortages. 

John Quiggin, Australia’s foremost authority on US politics, is writing in the AFR this morning noting the demise of John Huntsman, the Republican candidate he previously annointed because he alone supported suicidal policies to abandon fossil fuels.  He considers that Obama is a shoe-in in November because no Republican opponent has “sanity and some minimal level of honesty” now that none of them support carbon taxes.

An version of my own AFR piece (updated to account for some developments in the last couple of days)  is as follows:

‘Energy policy in OECD countries is underpinned by concerns that gas and oil are becoming scarcer and that carbon dioxide emissions have to be curtailed.  Carbon taxes or the EU’s cap-and-trade approach, together with their uglier sibling, renewable energy requirements, appear to address both concerns. 

‘But the myth of an impending scarcity of gas and oil is being punctured by technology that is unlocking massive new gas resources from shale and coal.  And awaiting a technology breakthrough is the world’s largest source of hydrocarbons, natural gas that is locked in ice.

‘Energy policy is yet to catch up with this new reality and remains dominated by tax and renewable regulations.  Renewable energy requirements reject the elegant simplicity of ‘putting a price on carbon’.  Instead, they mandate a share of renewables like wind and solar within total electricity supply and sometimes also stipulate that electricity suppliers must offer generous feed-in prices for household solar installations.  As the Australian Productivity Commission has demonstrated, these policies reduce emissions at a staggering cost. 

‘European countries’ regulations have brought very high shares of (non-hydro) renewable energy requirements - about 16 per cent of electricity in Germany,  7-8 per cent for the UK, and over 20 per cent for Spain.  Renewable regulations have meant high cost windfarms replacing lower cost emission reductions, which has contributed to the relatively low EU price of around $10 per tonne of carbon dioxide. 

‘In the US, though the Obama administration has no legislative approval for carbon taxes, it uses various regulatory powers to block new coal powered plant.  The President himself has issued scarcely veiled threats that any new coal based plant would be driven into bankruptcy.   The US, like other countries, also has a panoply of green subsidies.  The half a billion dollars to the failed Solyandra solar factory is the best known example of these.  In a wonderful display of middle class welfare, the US also provides a federal subsidy of $7,500 plus state subsidies ($2,500 in California) to defray the $35,000 price tag on electric cars.  Such level s of support plus direct grants of $118 million did not however stop electric car battery maker Ener1 declaring itself bankrupt last week. 

‘The Australian Government has abandoned its own green car subsidy program.  The Clean Energy Act’s carbon tax is its chosen policy instrument.  Eventually planned to rise to $131 per tonne, its $23 start rate is already more than double the EU price.  The carbon tax eliminates Australia’s comparative advantage in energy and this is compounded by extravagant feed-in tariffs and the renewable energy requirement inching towards a 20 per cent market share by 2020.  On current figures the 20 per cent renewable requirement equates to a tax on total electricity consumption of $14 per tonne of carbon.

‘But globally, the mountain of carbon taxes and regulations preventing low cost energy is crumbling. 

‘Spain, where high energy taxes contributed to catapulting the economy into the front ranks of European sick men, was among the first to fall.  The former socialist government had already commenced dismantling the web of renewable energy subsidies and the new conservative government has accelerated this.  In an ominous portent for Australian superannuation funds that have invested heavily in supposed assured returns offered by windfarms, Spanish subsidies have been cut both on new and existing facilities.  

‘Now Germany is awaking.  A recent survey showed one fifth of its companies had or were considering shifting their locations to other countries as a result of high power costs stemming from renewable obligations.  Subsidies to solar power were over $10 billion last year and the Finance Minister is calling for subsidies to be phased out, while the Environment Minister has already agreed to a scaling-back. 

‘Ostensibly, renewable energy subsidy schemes were introduced to reduce carbon dioxide emissions.  The Government claims that a carbon tax achieves these same goals more efficiently; hence the Clean Energy Act has transformed renewable energy subsidies into unnecessary imposts on the consumer, costing $3 billion a year even on the most conservative estimates.

‘The Opposition has a “Direct Action” scheme as its greenhouse policy centrepiece, which focuses on getting the best emission reductions per dollar of spending.  Optimistically, this aims to achieve the same emission reductions as the Government’s program at a foreshadowed cost of $10 billion, only a fraction of that involved with the carbon tax. 

‘Renewable energy provisions are high cost approaches to meeting their purported target of lowering carbon dioxide emissions.  Cost savings are therefore available by eliminating superfluous tiers of policy and simply relying on the carbon tax or its Coalition “Direct Action” counterpart.  This however assumes that the political parties’ plans are based on achieving their carbon reduction goals rather than being exercises in perception politics.’

Clive Hamilton in The Age

Bolt is Australia’s most obsessive climate science sceptic, and ended up in court for deriding Aboriginal people whose skin was not as dark as he thought it should be.

Gary Johns in The Australian

The nine fair-skinned Aboriginal litigants who successfully sued Andrew Bolt for racial vilification are testament to the sensitivity of those Aborigines who fear that as their physical identification becomes less obvious their prized status as first Australians is at risk.

Queensland Premier Anna Bligh has announced that the Queensland election will be held on 24 March but that she will not go to the Governor, Penny Wensley, to advise a dissolution until 19 February. This means she will have more than two weeks before the caretaker conventions apply.

This is an outrage and unprecedented.

The Queensland Constitution, however, does not state the form in which advice by the Premier to the Governor should be received. The announcement of the election date by Bligh is therefore sufficient for Wensley to act – she should treat that as advice by the Premier (which it is) and dissolve Parliament and issue the writs for election. This would bring forward the caretaker period.

This would be the responsible and ethical duty of the Governor.

There has been some commentary that the Open Forum is getting too large and takes too long to load. So as an experiment I’ll be opening up a midweek forum. We’ll see how it goes.

I see that Gillard’s desire to do as much economic damage as possible before she leaves office with the all time worse-than-Whitlam gong continues. The Australian reports:

ABOUT 150,000 social and community sector workers have won pay rises ranging from 19 to 41 per cent after a historic equal pay decision today.

But Fair Work Australia has extended the phase-in period for the pay rises by two years to eight years, following concern about their cost impact.

The tribunal’s full bench has also split, with one senior member opposing the wage increases and finding unions had not made out their case.

Today’s ruling, the beneficiaries of which are mainly women, followed an order sought by several unions, including the Australian Services Union, which was supported by the federal government.

Understanding the relationship between productivity, employment and the cost of labour is always weak under the ALP, but the economic illiteracy of this Government may have plunged to new depths. Many of those the Government believes they have helped they have actually harmed and the effect on the economy overall will be to weigh it down with more dead weight which will lower living standards in ways that will be very noticeable but quite beyond the reasoning ability of those in the union movement.

I also see that Graeme Watson has put himself out of the running to be the next President of FWA. A brave stand and I wish it were more common.

But lastly, do yourself a favour, and direct your criticisms at the Government. This is what the Government sought. Their instrument may have been FWA but the actual reason for the decision you see is government policy. I have watched on too many occasions the Commission taking the rap for an actual decision that was driven by government. I hope it doesn’t happen that way again.

I went to the National Portrait Gallery today at the Smithsonian. Didn’t see all of it but did get to the Presidential portraits. And with each of the official portraits there was a two-three paragraph story of the main elements of their presidency. This is from Grant’s where they discuss his bad luck in being President when the Great Recession of 1873 struck the American economy:

The Grant administration took the immediate stopgap measure of releasing fifty million dollars into the stricken economy.

Doesn’t sound like much to us in our days of trillion dollar deficits but I’m sure it amounted to serious money back then. So even in classical times there were measures taken by governments. But you may also be sure the $50 mil did not create levels of debt that could never be paid off.

It was also interesting to see how many presidencies were hammered by major recessions. Van Buren in the 1830s, Grant in the 1870s, Cleveland in the 1890s and Hoover in the 1930s. Every 20-30 years, it seems, unless there is a war that postpones the recession for about a decade. So put it on your calendar. The next major recession will be in the 2040s. But first we need to recover from the recession we are now in.

As everyone knows Gina Rinehart has bought a large stake in Fairfax Media. Late 2010 she picked up about 4.9 percent and yesterday tried to pick up another 9.9 percent. All up she now owns about 10 percent of the stock. The offer yesterday suggested a 10 percent ownership premium – that was probably on the low side (a 2000 study estimated the Australian control premium to be about 20 percent – albeit that was upwardly biased). She was offering 81c per share and that’s the price today.

Right now all the speculation is on what she wants. Everyone reckons she wants a seat on the Fairfax board. Despite some blockholders suggesting that they wouldn’t want her on the board I suspect it would hard to deny her a spot if she wanted one. After all she would then be the single largest shareholder.

The Fairfax financial statements set out the directors’ shareholding (note that John Fairfax sold out his stake last year).

Her shareholding already dwarfs that of the existing directors. So a board seat isn’t unreasonable.

Michael West has another theory.

But Gina Rinehart’s more likely course of action would be to march into chairman Roger Corbett’s office with a deal to swap her Fairfax shares for The Sydney Morning Herald, The Age and The Australian Financial Review.
That’s right; a share cancellation for three newspapers and their digital operations.
…
Any row over a board seat would merely be negotiating leverage for mining magnate Rinehart. Her prize is the two metro mastheads and the monopoly financial daily whose value, these days, is more strategic than financial.

The question is how much of the business those three papers comprise? I don’t know – but it might be a good deal for the other shareholders. Would it be a good deal for Rinehart? Alan Kohler thinks not.

Either CEO Greg Hywood pulls it off and Fairfax makes a profitable transition to being a digital company, or he doesn’t and the company goes back into receivership and shareholders lose everything. There isn’t any middle ground, in my view.

And even if he does pull it off, the stock is unlikely to be a short-term ten-bagger: there are far better speculative plays in the industry Gina Rinehart knows best.

The digital transition for all traditional media companies is more about survival than riches. It’s about figuring out how to go from high margins to low margins, not the other way around.

It’s hard to disagree with that analysis, but – and this is the important point – she is investing her own money and if the other shareholders reckon its a good deal for them, they should take it. After all they face the same outcomes as she does.

Let’s assume that gaining control over those newspapers is her objective and she succeeds. Already there are hysterical comments about the consequences of that outcome.
Michael West again

The Murdoch press is already favourably disposed to the Minerals Council view of the world while Rinehart’s politics are said to be strenuously ideological in the fashion of her late father Lang Hancock. Rinehart control of the Fairfax mastheads could have a dramatic influence on politics in this country.

Adele Ferguson

She has extreme views on the future of Australia and economic policy settings and like her father Lang Hancock, believes the media is the most powerful way to influence change.
While traditional media has taken a pummelling on the sharemarket, it still is the most effective way to pressure governments for change and get messages out. Rinehart is a big fan of online communication, writing for online mining publications, and Fairfax has the most powerful websites in the country.

What ‘extreme views’ might those be? Alan Kohler tells us

She was raised on mining and right-wing politics and was taught by her father that owning media was a source of influence, along with giving politicians money directly and nagging them, and everyone, endlessly about the benefits of small government and the evils of environmentalism.

That hardly seems extreme.

But everyone seems to suggest that she’d have difficulty imposing her views on the staff.
Adele Ferguson

Fairfax has prided itself on its independence and so the chances of her redirecting editorial content are slim.

Alan Kohler

Gina Rinehart is likely to find investing in Fairfax Media a deeply frustrating experience, whether she’s trying to influence the newspapers or just make money.

But Jason Wilson isn’t so sure.

The news values in Fairfax’s online offerings and the subtle changes which are already taking place at the Financial Review show that it is difficult for journalists there to put a red line around quality or balance.

All those changes at the AFR are for the better. I suspect, however, than any journalists who push back too hard will find themselves unemployed. The real issue here is whether this is a problem? Short answer, ‘No’. Rinehart is performing an entrepreneurial function. If she has a vision for the company (or even just part of it) and invests her own money in pursuing that vision, then we are seeing capitalism at work. What if she horribly wrong? Well then she would have lost some of her fortune and the Fairfax shareholders (or anyone else) could buy back the papers at a reduced price. Or not, as the case may be.

I suppose I can claim to be on the ground and at the scene here in the US but I feel as close to the Republican primary here as I did watching from home. Main difference for me is that I get the Washington Post delivered to the door so I start the day with a steady diet of anti-Republican, a-plague-on-both-your-houses stream of news about Romney and Gingrich. The tenacity you need to have not to vote for the Democrats in a place like this is incredible, although my days as a reader of the Canberra Times was a mild assist in learning how it was done.

Romney has however walked it in. In the end, it was not even close. And it is not just Gingrich’s nay-saying but the very unpleasantness of it that I think has done him in. The value of the primary is in the practice it gives a candidate in presenting his arguments. It also provides plenty of opportunity to find any flaws in the armour. Who really can stand the heat in the kitchen? And in all these areas, Romney has really shown his stuff. You never actually feel that Romney enjoys the electioneering and there is a falseness in watching him perform. But more and more are seeing that as a positive. The gauntlet a candidate needs to run is not what the tasks of office will be. But the meanness to be a candidate and get in the ring with Obama is crucial, and in dealing with Gingrich in a good-bye-Mr-Nice-Guy way has made the possibility of nominating Romney seem more plausible. If he can do to Obama what he did to Gingrich, I’ll try to get back a year from now for the inauguration.

This is from the best story I thought that captured how it looked to me. Please note how it is written as warning from one Democrat to another. This is the way of the media.

Mitt Romney’s resounding win in the Florida GOP primary is a warning shot to any Democrats who think the former Massachusetts governor will be a soft target.

Romney and his advisers showed dexterity, smarts and toughness in retooling his campaign within hours of his stinging loss in South Carolina on Jan. 21. Romney followed the revised roadmap to a tee.

He shredded Newt Gingrich in Florida’s two debates, leaving the former House speaker fuming and flailing in the campaign’s closing days. He summoned a host of prominent Republicans to denounce Gingrich. And he regained his image as the person best positioned to take on President Barack Obama this fall.

Democrats ‘like to comfort themselves with the thought that a competitive campaign will leave us divided and weak,’ a buoyant Romney told the crowd celebrating his victory Tuesday.

The media in this has been relatively neutral. They will pull all stops to re-elect Obama once the campaign is really on. I now do think Obama can lose. But wall-to-wall negatives about Romney and the failure to really discuss the in-depth failings of the current President are an advantage that only Obama’s incredible incompetence may be able to neutralise. But the election will be close.