Showing posts with label journalism. Show all posts
Showing posts with label journalism. Show all posts

Tuesday, April 23, 2013

The Grattan Report: Good News, Bad News.

The bad news? The Grattan Institute report is long and deadly boring: 86 pages and some 50 charts.

The good news? Its Overview (page 2) is superbly written and tells everything you really need to know about its content.

Thus, the problem.

The basic conclusion of the report is this: "To be sustainable, current budgets need to be in surplus".

Why must budgets be in surplus?

Because:
"Over the economic cycle of boom and bust, balanced budgets are much better than the alternative. Persistent government deficits incur interest payments, and limit future borrowings. As a result they can unfairly shift costs between generations, and reduce flexibility in a crisis. Yet in good times it is hard for governments to run a surplus. They are invariably tempted to spend money. Many voters prefer outcomes with no obvious losers" (page 2, repeated verbatim in page 10)
So, budgets must be in surplus as a rule to avoid the temptation, full stop: ("lead us not into temptation but deliver us from evil").

So, laid bare and in few words, that's the wisdom behind the Grattan report: deficits are evil, surplus are "much better".

Whatever appearances to the contrary (50 charts!), the Grattan report is not an applied economics work, but a morality tale. How can you tell? Check the usual buzzwords. That's the tale: "courageous leaders" take the "tough policy choices", against the wishes of "many voters [who] prefer outcomes with no obvious losers". It's the "responsible" thing to do.

In fact, unmentioned in that tale there is a propitiatory sacrifice: the "losers", to be scapegoated (this time, they may be looking at you). And there is a reward in the hereafter: all is done on behalf of the future generations.

How can I be so sure that this "study" is worthless? For at least two reasons.

More qualified people than me have explained this at length and you would do well checking with them. But I'll give a quick explanation: a government that issues its own currency doesn't need to borrow money, as the report claims. It doesn't need to collect money as taxes in order to spend, either. It creates its own currency. Monetary policy is, at best, an accessory.

But there is a simpler reason. The "erudite" report offers 8 pages of References. Among the authors cited, there are many luminaries, like Reinhart and Rogoff: 
"Some argue that high debt reduces economic growth... Their successors and financial institutions can then find it difficult to borrow at reasonable costs, and economic growth is often slow for a long time". (page 8)
Their epic and widely publicized debunking at the hands of Thomas Herndon, Michael Ash, and Robert Pollin last week deserves only a footnote. I mean, you wouldn't expect Grattan to revise their "work" in one week, just because its theoretical base was shown to be bunk, right? Besides, Herndon et al at least were included in a footnote, other serious criticism didn't even deserve a footnote.

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I don't wish to be rude. But there is no other way to say this: this report is among the stupidest things I've read in a long time.

When dealing with other people's lives, stupidity is a dangerous thing.

Update:
24-04-2013. The Grattan Institute's record for stupidity surprisingly didn't last long. Standard & Poor's broke it last night:
"Standard & Poor’s has warned that Australia’s AAA rating could be vulnerable in five years if the credit ratings agency doubts the government’s commitment to restoring the surplus, national debt keeps rising and the economy fails to self-correct".
The Moon is 96% full, according to this site, which may have something to do with the S&P announcement.

Farewell to Reason, Something's Gotta Give.


A year and 24 days ago, Australia arguably was in a stronger economic position than it is now: there was no end in sight to the mining boom, mining investment was pouring by the hundred of billions, terms of trade were the best ever.

Although the labour market was sluggish, federal treasurer Wayne Swan (Labor) was promising a dramatic fiscal turnaround. Austerity was all the rage among the local cognoscenti.

At the time, Tim Colebatch (The Age's economic editor) lambasted, in my views quite correctly, Swan's "foolish economic fetish":
"Wayne Swan's determination to deliver a budget surplus, regardless of the state of the economy, is seriously reckless. Labor has chosen to risk sending most of Australia into recession in order to keep a promise it should never have made".
Fast forward one year and 24 days to the present.

The Australian economic position has not strengthened a single bit since last year, quite to the contrary. The mining boom seems to be over, huge mining projects were cancelled, terms of trade worsened; further, by all accounts China is set to change its economic policy to one of slower growth. Colebatch mentions each and every one of these things.

More: just last week we witnessed the collapse of half the empirical evidence for the austerian case: the Reinhart and Rogoff soap opera.

And, according to Colebatch, even the still shadow treasurer, Joe Hockey (Liberal/National Coalition), seems to be - allelujah! - wisening up to the fact that the austerity hysteria will backfire.

And what is it Tim Colebatch advises the government to do?
"Both tax rises and spending cuts will be needed to get our budgets back in balance.
"The tax rises are easy: you don't need to raise tax rates
(...)
"Second, the sense of entitlement needs to give way to restraint, almost across the board. In competition policy, the cosy deals done in easy times need to be unwound as they enter hard times. Fiscal policy needs to be tightened as monetary policy is eased
(...)
"Wage growth must be restrained, and productivity growth, in all areas, become the priority. Environmental policies should be made 'economically efficient', while 'productivity-enhancing infrastructure' is the one area of spending that should grow."

----------

That goes to show that you can't praise journalists, as I praised Colebatch one year and 24 days ago: a 180 degrees flip-flop in one year and 24 days. And a flip-flop in the worst possible opportunity.

The only thing that didn't change is this: austerity is still all the rage among local cognoscenti.

Man, we're so totally screwed it's not funny.

Friday, February 22, 2013

No More Mr. No-Guy.

Or The Strange Case of Dr. Abbott and Mr. Tony.

We all make New Year resolutions: to eliminate negative habits (like smoking) or to acquire positive ones (to exercise more); that kind of things.

Federal opposition leader Tony Abbott (National/Liberal Coalition, conservative), like most of us, apparently also made his own. Being a high-profile man, famous for his physical fitness, however, Abbott's resolution couldn't be as trivial as adopting a healthier lifestyle. Nope, Abbott decided to change how voters perceive him.

Understandably, Abbott's resolution has the political commentariat and voters scratching their heads. Peter Hartcher, SMH's political and international editor, among them.

You see, overseas readers, after making a political career as a "brawler" (as political journalist Glenn Milne described him in 2010), a "Neanderthal" (in Labor MP Rob Mitchell's words, quoted by Hartcher), or as "a polarising right-winger" with a "propensity for insensitivity and controversy" (in the diplomatic views of former US Ambassador Robert McCallum, also quoted by Hartcher) Abbott decided to follow the advice people like columnist Terry Barnes have been giving him since at least 2010: "If two-toned Tony can keep his wild side in check, he would make a good PM".

So, farewell to Tony of the Tea Party; no more Dr. No. Meet Dr. Yes, the thoughtful, reasonable, civil, Tony.

And, lo and behold, lots of personal accounts of this more positive Abbott come to the surface, too. Hartcher's op-ed tells:
"A senior official of the federal Employment Department, who has since retired, recalls (...) 'I've worked closely with a lot of ministers and senior politicians. There are very few as humble and ordinary outside their working lives'.
"Not only that, he found Abbott to be an impressive minister who carried a real concern for the human consequences of policy. As employment minister, Abbott dismantled the old Commonwealth Employment Service, put its functions out to tender and created the Jobs Network. 'Once the decision was taken, Abbott turned his attention to the 10,000 people who [no longer] worked in the CES. He said, 'We can't just junk them and move on.' So the tenderers for the slices of the business were encouraged to recruit these people. He looked closely at their redundancy terms'."
Although perhaps Hartcher missed the irony in the previous story (ominous, too, if you are a commonwealth public servant), he asks: "Who is the real Tony?"

Hartcher risks an answer, too: "He's both. Abbott transmuted from responsible, caring minister to angry, barnstorming demolition man as opposition leader, and now he's moving to change back again".

----------

Perhaps. I've never met Abbott, so I couldn't tell. He seemed quite spontaneous when he admitted to Kerry O'Brien, back in 2010, that not everything he said was "gospel truth":


But, if I had to guess, I'd say that Abbott's true personality, whatever it might be, is largely irrelevant. The fact that can be ascertained is that Abbott's former ministerial colleagues have not ceased campaigning for a return to Work Choices (as readers can verify by checking Peter Reith's public op-eds at The Drum), Joe Hockey's commitment to end the already near inexistent "social net" (aka entitlements society) and Abbott's own intention to further benefit the long-suffering miners.

I hate surprises, particularly the unpleasant and predictable ones. How about you?

Wednesday, February 20, 2013

Her and Her Shadow.

A quick note today.

Kate McClymont, SMH's senior reporter covering "the [NSW] state's largest ever corruption inquiry", wrote yesterday:
"A barrister appearing for an allegedly corrupt player in the current ICAC inquiry asked me this week if I had seen House of Cards, an English political thriller in which conservative politician Francis Urquhart deploys blackmail and other nefarious methods to achieve his political ambitions.
"There were two things I recalled about the program, and one of them was that the journalist met with a sticky end, still clutching her tape recorder as she fell to her death.
"It was therefore with some disquiet that I learnt one of the central figures who has appeared at the recent Independent Commission Against Corruption inquiry approached a private detective to have me followed." (See here)
The inquiry, involving the Obeid family and Ian Macdonald, former NSW Labor powerbrokers, today resulted in:
"A proposed open cut coal mine central to the state's largest ever corruption inquiry is set to be blocked by the NSW government after the Premier, Barry O'Farrell, announced that evidence heard during public hearings would be considered in deciding whether it should go ahead.
"Cascade Coal lodged a development application for the mine, at Mount Penny in the state's north west, in December 2010.
"The exploration licence for the Mount Penny area, approved by the former Labor minister Ian Macdonald, has become the subject of sensational allegations at the Independent Commission Against Corruption." (See here)

----------

McClymont shows that there still may be some courage and decency around.

Monday, February 18, 2013

Those Dumb, Whingeing, Conservative Aussies.

One of those deep questions keeping Australian pundits and politicians awake at night is why the populace seems unhappy and is particularly critical of the incumbent federal government, led by Labor's Julia Gillard. After all, all the data says that Australia is a world example of good economic management.

Ross Gittins, SMH's Economics Editor, has been consistently perplexed by this. Just a couple of weeks ago, Gittins summarized the Government's predicament thus:
"It's long been clear from polling that the electorate doesn't regard the government as good at managing the economy.
"Why this should be so is a puzzle. As Gillard rightly claimed last week: 'As the global economy still splutters, unlike the rest of the world we have managed our economy so we have low inflation, low interest rates, low unemployment, solid growth, strong public finances and a triple-A rating with a stable outlook from all three of the major ratings agencies'."
(See here)
An opinion often heard in the streets is that, well, Aussies are whingers.

Gittins himself offers a subtler, wordier and more sophisticated version:
"I've said elsewhere that part of the reason (...) is that many people's perception (...) proceeds not from independent observation but from their political alignment. Once I know who I'm voting for I then know whether or not the economy's travelling well.
"But there's another part of the explanation: the public's inability to distinguish between cyclical and structural factors.
(...) But such analysis is too subtle for most punters. To them, all news is cyclical: good news means the economy's on the up and up; bad news means it's going down and downer". (See here)
Let's not mince words, what Gittins is saying can be said in fewer and more direct words: critics of the Labor government are both Coalition voters and dumb. For them, according to Gittins, the economy sucks because Labor is in charge.

----------

Maybe Gittins doesn't need to ask them their reasons; I mean, a learned man like him can probably read ordinary people's minds.

And I sure can't speak for all those dissatisfied with the Labor government. Besides, I wasn't asked,

Still, I will explain why I, myself, am personally dissatisfied with the Labor government.

And, for the record, I might be dumb as a door knob, but God knows I am no Coalition voter. Never been one and never will be one.

I am dissatisfied because there is very little difference between a Labor government and a Coalition government. In no particular order and without claiming to be exhaustive: asylum seekers are still incarcerated having committed no crime; the unemployed, the disabled, the single parents are still systematically humiliated, harassed and impoverished so that the Government can claim they are "tough", exactly like the last Coalition government did; employment is precarious and getting more precarious; inequality keeps growing; Australian citizens, like Julian Assange and now Prisoner X, are abandoned by the Labor government, just like David Hicks and Mamdouh Habib were forsaken by the Coalition government.

The rich still do and undo as they see fit and laugh at everybody's faces; the corrupt go unpunished; Labor politicians stab each other's back, just like Coalition politicians do; the environment is still left to fend for itself.

And, let's remember something: the Coalition government boasted about the same wonderful statistics the Labor government does.

So, again, why should I vote Labor?

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With all due respect, you guys can worry about what to do with your wonderful statistics (I have a suggestion, though).

I have to worry about seeing a terrible Labor government replaced by a probably even worse Coalition one.

Friday, January 18, 2013

Sydney: 45.85 Degrees Celsius.

Bushfire in NSW.[A]

I'll de honest with the readers: I don't know much about weather. Actually, I know nothing about weather. That's why I abstain from writing about it.

Yes, I know, lots of scientists say the weather is changing and it's due to human action.

Yes, I am aware that some disagree with that. It's the sun, or something, they say.

While I see no a priori reason to doubt the human-induced climate change scientists (what do they have to gain by lying? nothing that I can see), I notice that among those in disagreement there's a number of "opinion whores": people who "firmly believe" in whatever they are paid to believe firmly.

But, other than that, there is little else I can feel personally confident to say.

However, while a total ignoramus on all matters weather, I know something: I know how to read a thermometer and my thermometer told me yesterday was fucking hot in Sydney, hotter than ever in my experience. In fact, between about 6:00 am, when I first saw the thermometer, and about 3:00 pm, the temperature rose to near 46 degrees Celsius, some 25 degrees higher than early in the morning.

I don't care how one might spin that. That's not normal: too many "abnormalities" in a row, for my taste.

I don't know about the reader, but if I have to believe someone as a matter of faith, I would never chose an "opinion whore".


Further Reading:
Heat records fall as Sydney sizzles. ABC News. 18-01-2013
City sizzles in record heat. Fairfax Media. 18-01-2013
2012–13 Australian bushfire season. Wikipedia. Accessed 19-01-2013

Image Credit:
[A] "Oura grass fire, viewed from Willans Hill in Wagga Wagga", 07-01-2013, by Bidgee. File licensed under the Creative Commons Attribution-Share Alike 2.0 Generic licence. Wikipedia. My use of the file does not in any way suggests its author endorses me or my use of the work.


Wednesday, November 7, 2012

The Lagarde List Affair.

After Greek journalist Kostas Vaxevanis published (October 28) a list containing the names of 2,059 alleged high-profile tax evaders, the Troika occupation Greek government ordered his arrest and trial. The BBC covered the whole affair, day by day. Here is a timeline of the affair, in headlines:

Sunday, October 28 (last updated at 16:28 GMT)
Greece arrests journalist over 'Lagarde List' banks leak
Monday, October 29 (last updated at 23:23 GMT)
Greece bank leak reporter Costas Vaxevanis sent to trial
"The prosecutor issued a warrant for Vaxevanis's arrest because he published a list of names without special permission and violated the law on personal data".
Thursday, November 1 (last updated at 16:39 GMT)
Greek journalist Costas Vaxevanis on trial over bank list
"French authorities gave the names to their Greek counterparts two years ago, but documents were never investigated".
Thursday, November 1 (last updated at 20:15 GMT)
Greek bank list editor Costas Vaxevanis acquitted
"Lawyers for Mr Vaxevanis, 46, (...) said no-one on the list had actually complained of a breach of privacy.
"After a one-day trial, a court in Athens found Mr Vaxevanis innocent.
(...)
"The BBC's Mark Lowen in Athens says the swift ruling will be an embarrassment to the Greek government".
If you ask me, to call this an embarrassment is an understatement.

----------

Consider prominent PASOK politician George Papaconstantinou:
"Then Greek Finance minister, George Papaconstantinou, said precisely last Wednesday in the Greek Parliament that he did not know what happened to the [then French Finance minister Christine] Lagarde list's original version". (See here, in Spanish, my translation)
Aussie readers might remember Papaconstantinou's words when he spoke last May 12, in SBS TV Insight show:
"So nobody is outside this, nobody is innocent to the crime. Of course politicians bear the biggest burden, and of course they will be punished for this, as they are being punished (...)."
For a man so ready to re-distribute responsibilities for the Greek fiasco, Papaconstantinou seems strangely uninterested on determining who should "bear the biggest burden".

Just like the current Greek government, that appears more interested in harassing (very clumsily and ineffectively, at that) the whistle-blower than in punishing those who should "bear the biggest burden":


That's a bit more than an "embarrassment".

Friday, September 28, 2012

The Truth, Finally!

Have you noticed how our overlords' discourse is becoming more candid lately?

First, it was mega-rich Gina Rinehart quoted as describing her fellow Australians as a bunch of lazy, drunk, envious whingers.

Then American right-wing presidential hopeful Mitt Romney with his 47% remark: "My job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."

More recently it was British former banker and conservative MP and Government Whip Andrew Mitchell's turn. According to the official logs of police officers in Downing Street, after asking Mitchell to dismount his bike and use the pedestrian gate, instead of the vehicles-only one, this is what happened:
"There were several members of public present as is the norm opposite the pedestrian gate and as we neared it, Mr Mitchell said: 'Best you learn your fucking place ... you don't run this fucking government ... You're fucking plebs.'
"The members of public looked visibly shocked and I was somewhat taken aback by the language used and the view expressed by a senior government official. I cannot say if this statement was aimed at me individually, or the officers present or the police service as a whole.
"I warned Mr Mitchell that he should not swear, and if he continued to do so I would have no option but to arrest him under the Public Order Act, saying 'Please don't swear at me Sir. If you continue to I will have no option but to arrest you under the public order act'.
"Mr Mitchell was then silent and left saying 'you haven't heard the last of this' as he cycled off."
Unfortunately for PM David Cameron, who is trying to improve the Tories' chronically bad image, the incident received wide publicity: "After a dressing-down from Mr Cameron, Mr Mitchell apologised."

----------

A few years ago, all of this would have been pretty much unthinkable. Nowadays, it's becoming commonplace.

Commenting on the Mitchell affair, The Daily Telegraph (UK) columnist Janet Daley (who "moved to Britain (and to the Right) in 1965 where she spent nearly twenty years in academic life before becoming a political commentator") says:
"Time to tell the truth about the 'nasty' party: as someone who has defended the Conservatives (or at least defended their arguments) for so many years, it is time to come clean. (...) The Andrew Mitchell Debacle is not an uncharacteristic, deranged and inexplicable lapse. It is just an extreme example of the kind of attitude with which many people who circulate in this world are familiar".
Apparently, Daley thinks Tories should try changing their ways.

Australian arch-conservative columnist Gerard Henderson, at the other hand, argues that incidents like these are being deliberately magnified by the sinister and manipulative "left-liberal" contemporary Western media, suggesting that a more ideologically adequate media would treat things in a more favourable way.

And referring specifically to Romney's remark, Henderson says:
"Sure, Romney's message was expressed in a clumsy manner. Moreover, he forgot the modern rule of politics that no event can ever be regarded as truly confidential. Yet Romney's essential problem is that he said what should not be said. According to, that is, the left-liberal consensus that prevails in much of the contemporary Western media".
I can't speak for the Western media, of course, but I for one thank Rinehart, Romney and Mitchell for expressing their true views with honesty.

No need to apologize (as Mitchell was forced to do), to act nice (as Daley seems to ask), or to mince words and be discreet (as Henderson apparently recommends). Speak your "inconvenient truths" freely.

Wednesday, September 26, 2012

The Exorcism of Adam Bandt.

Or Red-Baiting Down Under

Medieval book illustration of Christ
exorcising the Gerasenes demon. [A]

OMG! Thank God for The Herald Sun rediscovering (Sunday, September 23, 2012) what The Australian had already discovered in 2010 (August 28) and what the other Murdoch "journalists/newspapers" will surely keep periodically rediscovering in the future.

Brace yourselves, dear readers, for this earth-shattering revelation:
"The former teenage Marxist [Green MP Adam Bandt], who confesses he once described the Greens as 'bourgeois', has revealed the stunning conclusion to his 300-page epic is that Marxism did not offer 'a proper explanation for what was happening in 21st century society'.
"He completed the thesis four years ago in 2008, but requested university officials impose a three-year ban on anyone reading it."
And that proves that Bandt, is... a cripto-Marxist!

Don't believe me? Check this out:
"Amazing! The very fact that these believers actually close their eyes to the very fact of how the general population lives [sic] in Russia, not to mention all the other countries they have occupied and destroyed their economys! [sic] Sprout your wisdom after you lived under them, not for long, just 3-5 years or so! [sic]". (Eva Balogh of Melbourne, posted at 11:59 AM September 23, 2012. Comment 15 of 16. Comment thread to The Herald Sun's "exposé")
Call an elite team of exorcists!

----------

I am sure this has nothing to do with another recent revelation involving punches against a wall, a lost election and other youthful indiscretions.

For another related Murdoch media chilling revelation, see here.


Image Credit:
[A] Healing of the demon-possessed. Wikipedia.

Friday, September 7, 2012

Our Daily Madness.

"Madhouse", by Francisco de Goya (1812-1819) [A]
 
There was a time when people taking a personal risk would be called courageous. Not anymore.

Nowadays, people are considered courageous based on their eagerness to inflict misery on others. On this criterion, the Queensland state government today gave proof of enormous courage:
"Queensland Health Minister Lawrence Springborg says more than 2,700 jobs will be axed from Queensland Health as part of the State Government's cost-cutting campaign" (See here)
And, if the misery is gratuitous, unnecessary and motivated by ideological obsession only, we could speak of heroism.

Yes, heroism is a better word, because, in this case, the need for the cuts is being challenged by at least two reputable sources: "Queensland's Peter Costello 'audit' trashed by experts". (See here)

But QLD premier Campbell Newman is not fighting alone in his heroic quest to sack between 15K to 20K state public servants. Federal shadow treasurer Joe Hockey (Coalition) joined the fray immediately:
"Campbell Newman, all strength to his right arm, he's showing incredible courage to try and fix up a state government that has been in complete chaos, an absolute mess during the term of Labor and Campbell is showing the sort of courage and doing the right thing by the people of Queensland that hopefully gets Queensland back on the rails." (See here)
After the wannabe federal treasurer's statement, it was Wayne Swan's turn. Full of concern for those sacked, the real federal treasurer (Labor) said:
"These comments from Mr Hockey should send shivers down the spine of Australian workers across the country who are already worried about what Mr Abbott's reckless negativity might mean for the economy and for jobs". (See here)
Swan certainly has a point there. But the recent sackings of Commonwealth public servants and his stubborn negative to increase the dole to the unemployed (which I've chronicled before: here, for instance) does not speak well of his moral authority.

----------

Meanwhile, the NSW state government also has its own plans to sack public servants (according to rumours, up to 10K). But this is not what I want to touch here.

The local topic of the day for me is this:
"The NSW government is considering a bold plan that would lead to hundreds of coal seam gas wells being drilled across Sydney's drinking water catchment, supplying a fifth of the city's gas". (See here)
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This is a bizarre, grotesque world. Decent working class people are mere statistics, collateral damage and pawns in the power games of our fearless "leaders".

And yet, the same working class people, the real victims, do not deserve more than a passing mention in the news. No faces, no names, no statements; only figures. The victimizers hoard all the attention: and, on top, they are courageous and bold.

Keep listening to these people and taking orders from them.

I guess it takes a communist to perceive this madness.

Image Credits:
[A] "Manicomio", by Francisco de Goya (1812-1819. Wikipedia.

Wednesday, September 5, 2012

Who is "Us", Exactly?

I've always wondered why economic pundits have such a, to me, alien outlook on reality.

However, thanks to one of Tim Colebatch's latest pieces, I think I had a kind of an epiphany: it's a matter of pronouns!

Commenting on Victorian Treasurer Kim Wells' presentation on the economic perspectives for Victoria, Colebatch says:
"But Asia's growth also brings opportunities. Wells noted that Victorian firms also gain from the mining boom, and was one of many to highlight the potential for our agricultural, manufacturing, tourism and knowledge industries to service the growing demand from Asia's middle class, for quality food, goods and services.
"The problem is that to reap that benefit, we must regain the competitiveness the high dollar took away. If we can't change the dollar, we will have to make dramatic changes to workplace productivity and relative labour costs." (See here)
Observe carefully what Colebatch says: "Victorian firms also gain from the mining boom". Notice the pronoun: "they". They also gain from the mining boom.

But note, now: "We must regain competitiveness". The pronoun changed; it's no longer "they", now it's "we".

A second case: "We will have to make dramatic changes to workplace productivity".

So, it is the firms who gain, but it is us who pay the price for the adjustments required.

----------

The reader may be objecting right now: "Okay, I think I get your point. But firms are only abstract entities. They are formed by people, by us. When Colebatch/Wells say 'firms also gain from the mining boom', they're really saying 'the people who work for them also gain from the mining boom'. So, there is indeed a cost to be paid by us, but the gain comes back to us, too."

----------

I don't think that's quite right but, for the sake of the argument, let's assume it for now: people lose with the changes in the economy, but people also gain from those changes. One thing compensates for the other: tit-for-tat. There may be even a net gain, to be measured somehow.

So, who are the "people who work for" the firms, who are "also gaining from the mining boom"?

Let's answer with Colebatch's own example: "Victoria used to be Australia's manufacturing capital; that's gone, as hundreds of textile, clothing and other factories shut their doors". The people who used to work for these industries aren't winning anything; they're net losers.

According to Colebatch, this is where the net winners are: "Our construction workforce has doubled, as has the workforce in cafes, hotels and restaurants".

So, those who lost (say, manufacturing workers) do not necessarily wind up compensated (say, become construction workers). Losses and gains are not equally distributed.

But, there's more: in reality, what these "winners" gained doesn't necessarily compensate what the losers lost. The winners won largely casual, temp, part-time, minimum wage jobs: shitty jobs; the losers lost permanent, full-time, relatively well paid jobs. Not much of a gain for the "winners". It's unlikely there was a net gain, while a net loss seems likely.

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But I said that the objection wasn't quite right. One cannot think of firms as simply shorthand for "the people who work for them". A firm also belongs to concrete people.

When "firms gain from the mining boom", the firms' owners benefit. So, to those who lost big time, and those "winners" who won a crappy prize, we need to add a third group: the firms' owners. And they won without paying anything for it.

So, within Victoria, there's a group of people "gaining from the mining boom". The others paid the costs for those gains and got at most a partial and unequally distributed compensation.

It is this reality that those pronouns hide.

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During the last 6 years, we see that story, writ large for Australia, reflected in this colourful chart coming from the latest Statistical Bulletin produced by the Library of the Parliament of Australia:


The Bulletin says this: "The wages share [seasonally adjusted] peaked at around 63 per cent in 1974 while the profit share bottomed at just over 15 per cent at the same time". (See here)

Observe a peculiarity with that chart: when profits decrease, wages increase and viceversa, when wages decrease, profits increase. If there were no other reason, simple arithmetic means that what bosses get comes at the expenses of workers (and viceversa). But here I provided a simple mechanism, beyond simple arithmetic, that explains how this transfer takes place. [*]

Similar wage data, starting now in 1962-62 is in the much less attractive chart produced by the ABS (5204.0 - Australian System of National Accounts, 2010-11 - Analysis of Results, here):

Compensation of employees (COE) as share of GDP (government excluded)


Notes:
[*] Paragraph added, at the suggestion of a reader, after the post was published. Thanks PK.

Saturday, August 11, 2012

The Narco and the Prez.

Last Friday (August, 10th) as a result of a joint operation with the FBI, the Spanish National Police announced in Madrid the arrest of 4 men, allegedly connected to the feared Sinaloa drug cartel. (See here in Spanish, here in English).

The men, suspected of being connected with a 373 Kg cocaine shipment confiscated by the police last July, were identified as Jesús Gutiérrez Guzmán, Rafael Humberto Celaya Valenzuela, Samuel Zazueta Valenzuela and Jesús Gonzalo Palazuelos Soto and are also wanted in the US for drug trafficking and money laundering.

The news initially attracted attention because Jesús Gutiérrez Guzmán is said to be a cousin of Sinaloa cartel big boss' Joaquín "Chapo"/"Shorty" Guzmán, attempting to expand family business into Europe.

However, the interest shifted to Celaya Valenzuela, after Mexican sources reported that:
"Rafael Humberto Celaya Valenzuela was appointed by [then centrist PRI presidential candidate, now president elect Enrique] Peña Nieto as PRI coordinator of federal candidates for San Luis Río Colorado municipality. He was a PRI pre-candidate for Congress for District One of Sonora state.
"He is a cousin of Víctor Hugo Celaya, an influential Sonora politician for San Luis Río Colorado, a municipality with strong organized crime presence"
. (See here, my translation from Spanish)
Below are two photographs from Celaya Valenzuela's Facebook, showing Celaya Valenzuela and then PRI candidate Enrique Peña Nieto attending electoral campaign events:

Peña Nieto (left), Celaya Valenzuela (Right),
in Mexico DF. [A]
Celaya Valenzuela [left, centre], Peña Nieto
[right, with hat] during the election campaign
launch in Sonora. [B]

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PRI has denied any links to Celaya Valenzuela, who, it's claimed, was never officially appointed coordinator. (See here, Spanish)

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Enrique Peña Nieto, who appears to enjoy the support of considerable business interests, was considered by The Economist as preferable to Left-winger Andrés Manuel López Obrador ("whose messianic character and disgraceful behaviour, after he narrowly lost in 2006 and declared war on the country's democratic institutions", for challenging the election results) and centre-right Josefina Vázquez Mota (who "has run a shambolic campaign").

Peña Nieto at the World Economic
Forum on Latin America (2010). [C]

According to The Guardian:
"Young, telegenic and impeccably smooth, Enrique Peña Nieto has helped the [PRI] party gloss over a reputation for corruption and periodic authoritarianism accrued over 71 uninterrupted years in power that ended in 2000 when it lost the presidency to the [centre-right] National Action party (PAN)." (See here)

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Although no direct links have been alleged to exist between Peña Nieto and the Sinaloa cartel, Latin American prominent politicians have been directly involved in drug trafficking. Manuel Noriega, de facto Panamanian head of state and government, comes to mind.

Image Credits:
[A] and [B] both Facebook images, hosted by El País.
[C] Peña Nieto at the World Economic Forum on Latin America (2010). Wikipedia. Image licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license. Author World Economic Forum. My use of the image doesn't suggest the author's endorsement of said use.

Wednesday, August 8, 2012

Australian Exceptionalism: Home Loans Edition.

Australia, it is well-known, escaped the GFC relatively untouched (we won't go into the "relatively") pretty much alone among developed countries. Therefore, Australia is exceptional.

But, why?

For many reasons, experts and talking heads say. Here's part of Gerard Henderson's take:
"Australia, on the other hand, has one of the strongest economies in the Western world with relatively low unemployment, primarily due to the economic reforms undertaken between 1983 and 2007 by the Hawke, Keating and Howard governments. Also, the Australian financial system was well-regulated. Here the reforms initiated by Peter Costello, to ensure the independence of the Reserve Bank and to establish the Australian Prudential Regulation Authority, had a most beneficial effect when the global financial crisis occurred in 2008." (My emphasis. See here)
Mind you, Henderson was not alone in this evaluation. Here's from former Treasury Secretary Ken Henry's own pen:
"Australia's banking industry has emerged from the GFC in a comparatively strong position. Its reputation globally has been enhanced". (See here)
I could go on, but you get the idea: we're so fucking good. Actually, it's not us, but those in power who are so fucking good.

Well, perhaps. But before we throw them a well-deserved party, read "Australia's sub-prime lending", by Leith van Onselen:
"Back in April, The Australian reported how Australia's largest banks are being forced to forgive mortgage debts of borrowers granted loans based on falsified or fraudulent information supplied by mortgage brokers." (See here)
I'll be honest: I was caught with my pants down. In other words, this is news to me. And it taught me a lesson: although I deeply, viscerally despise the Murdoch press, I'll have to take a deep breath and have a look at it... occasionally. My other usual news sources never mentioned this or, if they did, I completely missed it.

In any case, Van Onselen's post links to two news items, so with the readers' forbearance:

"The Mortgage Sting" by Anthony Klan. The Australian, June 5, 2012.

"Hope for Mortgage 'Victims' with Homeowners Winning Battle Against Banks" by Anthony Klan. The Australian, June 4, 2012.

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Does this mean that the end is nigh? I don't know. I haven't seen this mentioned anywhere else, and if it was really important I suppose it would have been noticed. But, then again, who knows?

In any case, there, this is my atonement: I'll have to keep a reluctant eye on the Oz version of the Voelkischer Beobachter. Because, however exceptionally good our fearless leaders might be, in the quality of its newspapers Australia certainly is not exceptional.

Saturday, August 4, 2012

Swan, Springsteen and Oz.

I was going to finish today my series on the "job snob"/"technological change" myth, when acting PM and Treasurer Wayne Swan (Labor), by coming out of the closet as a devout Bruce Springsteen fan, forced me to change plans.

Now, as excuses go, that's a really crappy one, readers might say.

Perhaps; but, believe it or not, this was one of the big topics in Australia this week, as this Google Trends screen capture (taken Sunday, August 5, at 07:08 am EST) shows, comparing with the industrial relations legislation recently reviewed:

Screen capture from Google Trends. Right-click for a larger image in a separate tab.

As I see it, whether one believes him or not, Swan is claiming to share working class feelings and fears.

He is also reiterating a point he's made before: Australian plutocrats are becoming a danger to democracy (see here and here).

That Phillip Coorey (Fairfax Media) seems to share my views gives me some confidence my reading isn't entirely off the mark (see here).

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But if that was pretty clear to some, it wasn't so clear to most.

For one, it wasn't clear to Australia's Very Serious People. For them, to invoke a singer and songwriter for his emotional appeal to working class people is nothing short of ridiculous. VSP leave emotions to lower classes, as we know; they are rational intellectuals, well above such things, in the best randian/misesian tradition.

For shadow treasurer Joe Hockey (see here), for instance, inspiration comes from much higher sources, as Adam Smith, John Stuart Mill or their Australian "equivalent" Robert Menzies!

Which goes to show that Hockey's interests have changed fast, over a few years:


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It seems a considerable segment of our middle class (or petit bourgeoisie, as Marx used to call them) can't really wrap their minds around the idea that Springsteen may have something to say to Australians, mainly poor Australians.

Take for instance Fairfax Media's columnist Paul Daley, an apparently progressive or at least centrist bloke. For Daley, the problem with Swan's musical choices is a generational one: Generation X would be more partial to Aussie bands like The Triffids, the Go Betweens, Midnight Oil, or singer/songwriter Paul Kelly.

Don't get me wrong: they are terrific bands. Paul Kelly clearly appeals to working class audiences (I'm a fan, to be honest). I have no problem with the idea that they appeal to Daley and many others like him, either.

The point Daley misses is that, with Midnight Oil's exception, these bands and singers don't deal with political issues, as Springsteen often does; they deal with personal issues. And Swan's central message, sincerely felt or not, is about politics.

The Triffids' "Wide Open Roads", which Daley nominated "as Australia's brooding anthemic equivalent for my generation", for example, is about a large, depopulated country and its vast landscape; about loneliness and isolation on the road. Or, at least, that's my reading.

I'm speculating here, but Daley's inability to see this difference could be explained because for him (and he claims his generation) political issues are irrelevant or at least secondary, perhaps due to his presumably mid/upper middle class circumstances afford him that.

The video below, where Springsteen, his band and Tom Morello perform "The Ghost of Tom Joad" (inspired by the character from John Steinbeck's "The Grapes of Wrath"), should speak to a modern working class Australian audience, even if it doesn't speak to Very Serious People or middle class Australians.

Above all, it should speak, and loudly, to would-be migrants:


Prospective migrants should place themselves in the shoes of the Joad family: Australia could be their very own new California. Read the book, it's a terrific reading. Enjoy the music.

Thanks Boss, Tom and all.

Update:
05-08-2012. I've just read Springsteen's brilliant biographical/musical profile, by David Remnick, from The New Yorker (July 30, 2012):

We Are Alive - Bruce Springsteen at sixty-two.