The debate about mining on agricultural land has long frustrated me. While one side argues to help the “farmers” and the other side wants to help the “miners” it seems everybody has abandoned the most obvious solution — clear allocation of private property rights. As nobel prize winner Ronald Coase explained, conflicts over resources can be solved by allocating private property rights and then allowing trade so that the resources end up going where they are most valuable.
So my suggested approach to the mining/farming debate has been to strengthen the private property rights of farmers so that they have the “right to say no” regarding access to their land. Miners can then deal directly with farm-owners to come to mutually beneficial deals regarding access. Unfortunately, this approach has been ignored by both sides of politics. Until now.
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My carbon tax article in “the drum” in June sparked a lot of debate, with many people angry at my article and a few people saying some nice things. Most of the negative responses were quite dumb and don’t deserve a response, and it seemed that many didn’t read (or at least, didn’t understand) the article before they declared it wrong. But there was a response by “James512″ (20 June 2011, 12:39pm) which deserve a response. I’m going to go back to an old-style blogging technique and “fisk” his comment:
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I’ve just finished Graham Hancock‘s 1989 classic “Lords of Poverty” and recommend it to anybody interested in the working of the international aid bureaucracy. Hancock is scathing in his assessment of international aid agencies such as the United Nations, bilateral aid agencies (eg US AID), development banks (eg World Bank), and the IMF, and concludes that they haven’t just made a few unfortunate mistakes but they are irredeemably broken and need to be abandoned.
I found a few of his examples to be overly harsh, but found his thesis to be generally persuasive. Instead of trying to review his themes, I think it best to provide some extended quotes, and then encourage you to read the rest…
“This is how the game works: public money levied in taxes from the poor of the rich countries is transferred in the form of ‘foreign aid’ to the rich in the poor countries; the rich in the poor countries then hand it back for safe-keeping to the rich in the rich countries. The real trick, throughout this cycle of expropriation, is to maintain the pretence that it is the poor in poor countries who are being helped all along. The winner is the player who manages to keep a straight face while building up a billion-dollar bank account”
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The most surprising thing about the economic troubles around the world is that they are considered surprising. The economic story is actually quite simple — western governments around the world have been consistently spending more than they have, and just hoping that continued economic growth would save them. The very obvious problem with this approach is that when debt gets too high while you have an economic slowdown, then the government faces a budget crisis. Then you have Greece getting bailed out and America extending their government credit card from $14.3 to $17.7 trillion.
But that’s only the start. Bailing out the Greek government does not solve the underlying problem of excessive European debt. And going into more debt does not solve the underlying problem of excessive American debt. These problems are currently being delayed, but not solved.
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The first half of this year was mostly taken up with University coursework. The School of Economics at UQ has been upgrading their profile by hiring a number of well published economists from around the world and making the PhD requirements a bit tougher… one of those requirements is to get a 5.7 GPA in three advanced subjects (Adv Microeconomics, Adv Macroeconomics, Adv Applied Econometrics). So 12 years since I was last a full-time student, I was back at my books discovering the joys of quasi-concave utility representations of continuous preference relations, non-parametric kernel density functions, and five different types of endogenous growth models. It’s not as much fun as it sounds.
But the coursework is now finished, so I can concentrate on my project (Human Capital Project) and my PhD research. To kick-start my project & research work, I arranged to head back to Cambodia in late July to catch up with my co-workers and make some contacts in the Cambodian bureaucracy who might be able to help with my research.
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The government has announced their plans for a new carbon tax, and the related compensation payments and tax cuts. The good news is that the government is increasing the tax-free threshold and winding down the confusing and misleading “low-income tax offset” (LITO). Next year the tax-free threshold will increase to $18,839.
Unfortunately, the government continues to hide the actual marginal tax rates by reporting the LITO and medicare levy separately from the “headline” marginal tax rates. The actual marginal tax rates for 2011, 2012 and 2015 are at the bottom of this post. As you can see, they are as confusing as ever. Some points to note…
- The government is claiming to increase the tax-free threshold from $6000 to $18,200 and have an effective tax-free threshold of $20,542. This is misleading for a number of reasons. First, the current TFT is actually $16,000 and so the increase is not as large as they say. Second, while normal income tax may not kick in until $20,542 the medicare levy kicks in at 10% for people earning over $18,839. This was a great opportunity for the government to scrap the mis-named medicare levy, or at least get rid of the regressive 10% bracket ($18,839 to $22,163). So the actual change in the TFT is from $16,000 up to $18,839. That’s the first bit of good news.
America is more than a year away from their 2012 Presidential election, but things are already heating up. The “Grand Old Party” (GOP) of the Republicans are starting their process of picking their Presidential candidate to take on Obama, and as yet it is still a very open race. One interesting element of this nomination race is that there is growing strength among the non-establishment “outsider” candidates. It is still more likely that a “mainstream” candidate (Romney, Pawlenty, Huntsman, Perry) will win, but the “outsiders” (Bachmann, Paul, Cain, Palin) are all within striking distance.
So with only a little bit of poetic licence, I will run through the candidates in pairs… matching an “insider” and an “outsider” together for each category.
Frontrunners — Mitt Romney (establishment) v Michele Bachmann (outsider). Romney has been leading in all major polls since the start of the race, but many consider him to be a soft leader who is in front mostly on name-recognition. He was a contender in the 2008 nomination race before losing out to John McCain. Bachmann has been the outsider who has caught the most momentum in recent weeks, leading the polls in some states (all important Iowa) and second in others (New Hampshire). The problem with Romney is his history of supporting a health mandate and seemingly changing his opinions to suit the circumstances. Bachmann is considered more of a conviction and “tea party” politician, but lacks the experience and as a “mini-Palin” has occasionally suffered from “foot-in-mouth” disease. She’s free-market and socially conservative.
Just behind — Rick Perry (establishment) v Ron Paul (outsider). Rick Perry hasn’t entered the race yet, but if/when he does he will automatically be in the mix as he is already polling at or above 10%. In some ways he is a cross between Romney & Bachmann… with the experience and credibility of Romney but with some of the conservative convictions of Bachmann. He has previously voiced sympathy with the “independent Texas” movement, but some question whether America is ready for another Texan governor (following Dubya). On the other side is libertarian favourite Ron Paul who has consistently been coming in near the top of the polls (around 10%) and came in second in fund-raising so far. The principled doctor now has a more professional campaign, but he is still being over-looked by many in the media.
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People do stupid things. I have done stupid things. And you, dear reader, have done stupid things. If we have no tolerance for mistakes, then we have no tolerance for humans. And if we use mistakes as a justification for hatred, then we will end up hate-filled and intolerant people, in a sad and hate-filled world.
Once upon a time, we were able to keep most of our stupidity restricted to a few unfortunate souls in our friend/family/work network, and those people were able to put our mistakes into context and often forgive us and move forward. But in the internet-age, mistakes can travel at the speed of light to millions of strangers. This is a new paradigm for making moral judgements, and sadly it seems the most common response has been to shower condemnation on people who make mistakes. Because these online mistakes are made by strangers (or worse, politicians), we feel free to be as cruel and hateful as we like. And so the “internet” seems to judge like a self-righteous prude that is without sin.
But we have all made mistakes. And the stupid people we see online are normal people just like us who are often deserving of forgiveness and a second chance.
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I accept what I see as the mainstream science on climate change. The world has had a warming trend in recent decades, this is partly caused by humans, and I expect it to continue into the future. I am comfortable with the IPCC range of estimates of warming, which has a mid-point estimate of 2.8 degrees over pre-industrial temperatures (ie 2.1 degrees above today). I hope the skeptical scientists are right and that warming will be lower, but I find the IPCC estimates plausible and an appropriate starting point for analysis.
But before I accept a climate policy, such as a price on carbon, I want to see that the policy has more benefits than costs.
It’s great to have good intentions. We all want to do good. But poor people can’t eat good intentions, and good intentions will not cool down the globe. If we really do care about good public policy and making the world a better place, we must not introduce policies that fail a benefit-cost analysis. And the simple truth is that a carbon tax fails under any reasonable set of assumptions.
To do an analysis of a carbon price we need five inputs to the model. We need (1) an estimate for the costs of climate change; (2) an estimate for how much of those costs will be prevented with a global binding deal; (3) an estimate for how much Australia will impact the likelihood of a global binding deal; (4) the costs of the carbon price; and (5) the discount rate. For all of these issues, if we use the most dramatic and pro-tax assumptions we can find, the policy still fails. Even the Garnaut Report admitted that “the accrued benefits [from a carbon price] were almost as large as the costs”. Almost. Amazingly, this didn’t make it into the papers. Of course, Garnaut goes on to say that if you keeping adding in extra benefits (while not adding in extra costs) then eventually you can make the policy pass, but with that approach you could make anything pass.
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The recent report by Four Corners about the live cattle trade to Indonesia has got people talking. The report showed that some Indonesian abattoirs are acting “inhumanely” towards the cattle, where some cows take over three minutes to die (instead of the industry standard 30 seconds) and other cows are beaten and abused. Many scenes from the report were gruesome to watch, and it has stirred a popular backlash against the live animal trade. In response, GetUp started a campaign against live animal exports, and the government has responded.
This debate is framed as being about “animal rights”. But it isn’t. If anybody was honestly determining the rights of animals, surely the first right would be the right not to be killed just so that people could eat their flesh. No honest person would say that “the right to not be punched in the face” comes before “the right to live”. If I told you that there was a guy called Brian… and that one person wanted to beat him up, and another person wanted to kill him and eat him, are you honestly going to say that you think the first guy is doing the greater crime?
What if I told you there was a cow called Brian? This is from the GetUp campaign:
Brian (a cow) did nothing to deserve being hit in the face, whipped, or kicked. Each time this occurred he called out in a way which was heart-wrenching. I swear I could hear him call out ‘why’
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