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Left, Right, Keynesian and role of government in economy

Comments on Janet Albrechtsen “Beware socialist snake-oil vendors”, 30/09/2009, http://blogs.theaustralian.news.com.au/janetalbrechtsen/index.php/theaustralian/comments/beware_socialist_snake_oil_vendors/

While there is a danger that some of the Left people may swing too much to the left in the wake of the crisis, there should be a proper role for government in the economy. That role may vary by conditions of the economy, though. So, some of the swing to the left is justified although one should guard against an excessive swing.

The argument in the article that “the danger of replicating neo-Keynesian spending policies of the early 70s is we may end up with the disastrous stagflation - economic stagnation, high unemployment and inflation - that defined the middle to late 70s” has some merits. But it may miss a serious point, that is, the economic problems in the 1970s was caused in the first place by supply side shocks, that is, the first oil shock and the ensuing stagflation reflected the inadequacy of macroeconomic policies of demand side management, such as the Keynesian.

This time the cause of the problem may or may not be the same as at that time, that is, from supply side

Having said that, I think it is important to analyse the cause and nature of the current economic problems and adopt or develop the most suitable policies not necessarily confined to existing policy tools.

Only in that way we can restore world economic growth and efficiency as quickly as possible without repeating past mistakes.

The debate of the Left versus the Right is interesting but sometimes unhelpful. Extremism on either the Left or the Right is generally not the best for the world.

We need vision, common sense and pragmatism.

G20 governing issues

Comments on Paul Kelly “G20 the world's best hope”, 30/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26143439-7583,00.html

The argument that "the risk is that the G20 will be too large and ineffective" has some practical implications and should not be ignored and must be addressed.

One way is to design an effective governing structure within the G20. A similar style to standing members of a much smaller core, say 5 among them, should have a permanent office during the off summit seasons/times. This office can coordinate and implement policies more effectively and mare efficiently and more timely.

The second point is that rather than having consensus of all members, it should adopt a substantially majority, say, two thirds or 4/5 to agree.

Thirdly, it may adopt a combination of voting mechanism of the UN assembly and the IMF, so to reflect both demographic representation and real economic impact.

Fourthly, the memberships should be updated periodically, say every 5 years based on clear criteria agreed by the members.

One possible criterion is a top economy in each broad continent.

The rest can be selected by the size of a country's economy. This should be based on a combination of measures based on both market exchange rate and purchasing power parity (PPP) done by UN.

The current members should last for 5 years and then the new criteria should be used to determine the membership of the next G20.

In the way it combines pragmatism, rationality and common sense.


Swan shoots at his foot by relying on what G20 says generally

Comments on Michael Stutchbury “Will Wayne plan pass the IMF test?”, 28/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26133477-5017771,00.html

It will be interesting to see how much those countries will adhere to their pledges to let the IMF to prescribe economic policies for those individual countries. But I doubt that will ever work for any of the large countries in the group.

Swan and Rudd may backfire if they rely too much on what the G20 is prescribing now as a matter of principle for the group as a whole but not necessarily applicable to every individual country.

Australia is very different from all other developed countries in the group. As a result, the policy positions should naturally be different too. But the government does not admit this on political grounds.

It appears that both are choosing what is good for them at the moment, but there will be a day of reckoning ahead when they will have to contradict what is prescribed as the medicine for a general situation.

I personally don’t place too much trust on Swan’s reliance on what the G20 is saying now, although I stand ready for correction if I am proven to be wrong.

What should be ahead for G20?

Comments on Paul Kelly, “Shift to G20 was matter of time”, 28/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26133473-7583,00.html

Australia deserves a seat at the top table, because of its dominant position in the Pacific region.

However, as Kelly acknowledged that "the sceptics are right to warn of the risks: that the G20 will be too big, too divided and unable to deliver genuine outcomes by consensus."

So there should be a consolidation of the G economic grouping to make it both representative and workable. It should be smaller in size and also has a workable and efficient and effective governance structure.

In this regard, an article "Deciding who decides at the G20 summit" on http://www.eastasiaforum.org/ has shed some light and is worth reading. I have provided some comments that further complement that article’s ideas.

Salute Bob Hawke

Comments on Bob Hawke “Looking back on China’s relations with Australia”, 27/09/2009, http://www.eastasiaforum.org/2009/09/27/looking-back-on-chinas-relations-with-australia/

Prime Minister Hawke is a great Australian statesman and is loved in both Australians and the Chinese.

Yes, to lift poor people from poverty is one of the greatest of human rights issues and the world should recognise it.

Although there are natural bonds in the relationship between Australia and China, it is the successive outstanding leaderships of the two countries, including Hawke, who have greatly strengthened those bonds.

There is a saying in Chinese that never forget those who dug the well when one drinks the water from it. Those who have contributed to Sino-Australia relations will always be remembered.

Look forward, stronger Sino-Australia relations will benefit the two nations and the region as well as the world even more.

Let’s all try to make a contribution to it.


Krugman's free lunch in cap and trade?

Comments on Paul Krugman “Pigou, Glenn Beck, and the false case against cap-and-trade”, 25/09/2009, http://krugman.blogs.nytimes.com/2009/09/25/pigou-glenn-beck-and-the-false-case-against-cap-and-trade/

While Krugman is arguing that others have either got the economics wrong or were deliberately misleading the readers, I also find that his use of economics may have some problems. For example, he says:

"And the burden on households from cap and trade depends on what’s done with the rents. In the original Obama plan, the rents would be used to pay for middle-class tax cuts; in Waxman-Markey, many of the permits are initially granted to utilities — but since these utilities’ profits are regulated, many of the rents would end up being passed on to consumers through lower prices."

Krugman's argument of lower prices to be passed on to consumers is unlikely to be true. The price is unlikely to be any lower than it is now due the permits granted to utilities. To the most it may not be higher, if and only if utilities got all the permits they need as business as usual. If they get less permits than they need their costs will increase and as a result their price will rise.

It is only natural that when some costs (as shown as the negative externality Krugman talks about) that are not accounted for will be accounted for under the cap and trade, there will be a fall in the welfare of the nation and the world. Otherwise there would be free lunch available.

While Krugman somehow created an illusion that the price of utilities will be lower, whether it was attempting to mislead or something else is unclear.

G grouping of world economic affairs

Comment on Nina Hachigian “Deciding who decides at the G20 summit”, 26/09/2009, http://www.eastasiaforum.org/2009/09/26/deciding-who-decides-at-the-g-20-summit/

This is an important issue that is evolving and should be decided by a core of the current G20 members, the sooner the better.

While there are merits in each of the proposals mentioned in the article, it seems that economic weight should be the key criterion.

Even using the size of the economy as the key criterion, then there is still a tough question: how to determine or calculate the size of a economy?

There is obvious a calculation based on market exchange rate. But it is well understood that the market exchange rate has some significant shortcomings. For example, it may vary substantially within a short period. Also it generally underestimates the real size of most developing economies due to their lack of international trade and especially export power.

So whether you use a market based or a purchasing-power-parity (PPP) based exchange rate to calculate a country’s economic size? Alternatively is it better to use a combination of the two with an equal weight to reflect both the real economy and its trade impact?

In order to enhance its regional representation, then the top economy in a continent could be included.

So I would propose that the group should comprise the top one economy in each continent, and then the next 15 world largest economy, with the size of the economy based on a combination of both PPP and current exchange rate to be calculated by the United Nations. This group should be updated every 5 years to reflect the new world economic reality to be representative.

There should also be a governing structure of the G grouping. The top 5 of the G group should be the standing members during the off meeting period. Again, they should be decided using the same criteria.

This G economic group should be a new branch of the United Nations, to enhance the multilateral nature of the group and the legitimacy of the United Nations.

There is a role for securitisation

Securitisation, if used properly, can improve market efficiency. As a result, there will still be a role for it in the future once the storm of the financial and economic crises is over and settled.

The following report may be a reference:

Jonathan Shapiro: The return of securitisation, 26/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/The-return-of-securitisation-pd20090925-W8A96?OpenDocument&src=sph also Insto.com.au

The first two paragraphs read as:

The process of securitisation was once praised as being a brilliant innovation of finance that helped many turn the dream of home ownership into reality. However, for the past two years it’s been a dirty word. A description of pulling assets together and packaging them into securities became the standard opening in explaining why the world was falling apart.

But after two years in intensive care, frequent regulator-administered electrical jolts, and plenty of soul searching, securitisation has been discharged and is ready to serve the public once again.

Important progresses of world peace

Comments on “Breaking the Iran stalemate”, Stratfor.com 26/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Breaking-the-Iran-stalemate-pd20090925-W84JT?OpenDocument&src=sph

The world needs a sensible compromise and real progress in nuclear non-proliferation.

Both the Americans and the Russians have made some sensible steps recently, starting with the Americans’ decisions not to build missile defence system in East Europe and Russia’s decision not to deploy missiles in its western territory.

It is an important start. The world is expecting more solid development to consolidate the progress on world peace in general and the Iran nuclear issue in particular.

Once there is progress in that front, we need to make similar progress on the North Korea nuclear issue. Both the US and China, the two most important key players, need to make the right and courageous decisions to ensure the denuclearisation of the Korea peninsular.

Let’s hope we are moving to a more peaceful world from now on.

A useful reading about Keynes and Keynesian

This is a very useful article to read: Andrew Leonard "Don't call it a comeback", 26/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Salon-pd20090924-W76RH?OpenDocument&src=sph See also: Salon.com

It is about the resurgent Keynesian in the wake of the crisis and the great recession. It mentioned a book, as the following paragraph says:

Few people are better situated to comment or explain Keynes' current fashionableness than Lord Robert Skidelsky, author of the newly published Keynes: The Return of the Master – which comes complete with the possibly overdone sub-headline: "Why, Sixty Years After His Death, John Maynard Keynes is the Most Important Economic Thinker for America".

It touches on the other side of Keynes that has rarely been seen by many, as the article's concluding paragraph says:

If Keynes were alive today, these would be questions he would be asking. And after reading Keynes: The Return of the Master, one can only conclude that we would be well-served to have him out and about, confounding the status quo with his impertinence.

Why should Aussie banks funding costs be high?

Comments on Bill Evens “WEEKEND ECONOMIST: Clean bill of health?”, 26/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/WEEKEND-ECONOMIST-Clean-bill-of-health-pd20090925-W8AWY?OpenDocument

One point that I find it hard to understand is that why the wide funding spreads in the global markets should have such a strong hold on Australian banks, given the government guarantee and the ability of Australian banks to raise capital fairly easily.

Bill, can you shed some light on that?

On official interest rate, it may be prudent for RBA to raise it symbolically once fairly early to send a signal to prevent unnecessary bubbles in some areas.

However, ultimately, it is preferable to have low interest rates and reducing the government fiscal stimulus to have the economy more efficient. The government has an unfair advantage in competing with the private sector by forcing the interest rate up or force the hand of the RBA in keeping the rate low for a longer time.


A important historical step in the right direction

Media report that the G20 summit meeting has taken an important step in addressing global economic governance. See: “G20 sets course to avoid another global financial crisis”, 26/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26127690-601,00.html

It is reported that the meeting has reached some KEY AGREEMENTS:

“The summit of the Group of 20 leading economies have agreed to empower developing nations in global governance and to encourage a sustainable recovery. At thea two-day summit in the eastern US city of Pittsburgh, the Group of 20 agreed that:
The Group of 20, which brings together developed and developing nations accounting for 90 per cent of the global economy, will replace the Group of Eight club of rich nations as the world's pre-eminent forum.
Developing nations will assume at least five per cent of voting rights at the International Monetary Fund.
The G20 will co-ordinate to find the right time to ease stimulative measures as part of an effort to "return the world to high, sustainable and balanced growth". Finance ministers to meet in November.
"Excessive" compensation for executives in the banking sector should end as it encourages risk. The G20 opposed guaranteed multi-year bonuses, urged greater transparency and called on the G20's Financial Stability Board to propose new measures by March 2010.
The G20 will phase in new rules to improve both the quantity and quality of bank capital, seen as a key deficiency during the global economic crisis. The G20 set a goal of developing rules by the end of 2010 and implementing them by the end of 2012.
International accounting authorities should come up global standards by June 2011 to ease variations among major economies.
Governments should eliminate tax havens by March 2010 or face consequences.
The G20 will initiate a system of peer review where economists in each member nation can advise on policies in others. They agreed to set up modalities in November with an aim of initiating their in February 2010.
The G20 involved leaders of 19 nations - Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the United States. Also taking part in the G20 was the European Union, represented by current president Sweden. The prime ministers of Spain and Thailand, which is the current chair of the Association of Southeast Asian Nations, took part as observers as did the finance minister of Singapore, which now heads the Asia-Pacific Economic Co-operation forum. AFP”

G20 is more representative of the world economy by bringing some big developing economies into the table of decision making. Some of the developing economies are larger than some of the G8 members.

It makes sense to include them in the table.

More fundamental factors in play in history

Comments on Robert Manne “Past another turning point in history”, 26/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26124842-7583,00.html

While your view of the left and the right in the west may have some truth, your have ignored some important points of their evolutions. You only noticed the bad aspects of the former USSR and ignored its any merits, even though you are a professor in history.

I am not a historian as you are. But it appears to me that there have been some more fundamental factors in play than what you have relied on for your argument.

I think one has got to look at the history more objectively, in the context of both longer history and wider social and international perspectives.

Did the rise of Keynesian have anything to do with the creation of the Soviet Russia and the USSR as a competing social system?

Did the re-emergence of the right or neo-liberalism have anything to do with the inability of government intervention based on the Keynesian aggregate demand management, or the failure of the both Keynesians and monetarists to come up with more effective macroeconomic tools to deal with the supply side macroeconomic problems as a result of the first oil shock?

Will the current crisis and the success of some developing economies in the east generate other new economic and social thinking beyond the confines of the left and the right in the west?


G20 - helpful or unhelpful?

Comments on Uri Dadush “Four challenges in Pittsburgh for the G20”, 24/09/2009 http://www.eastasiaforum.org/2009/09/24/four-challenges-in-pittsburgh-for-the-g20/

Among the three important examples which go beyond the current crisis, the third one is likely to be the most difficult one. It is not a significant issue for quite a number of countries in the group that means there may not be enough incentive to have that on the agenda.

In a post crisis environment, it may be easier to achieve the second and the first ones.

There is enough momentum for the first one out of the UN summit meeting this week.

In terms of withdrawal of stimulus, the group is now more unhelpful than being helpful, because it should send a clear signal that while in many countries it is still too early to withdraw measures, the condition in some countries are such that their government should decide when and how to withdraw from stimulus, otherwise there will be a serious chance that they may do it too late that will accelerate inflation.

The group already has an adverse effect on some countries, say Australia. The Australian government is using the group to play domestic politics and delay withdrawal.

In terms of how to prevent future similar crisis, it is important not to over regulate the banking and finance industry to achieve financing efficiency and lower costs of capital. There may be some minimum international regulations / guidelines, and leave the rest to each country to make sure their banks are safe and efficient.

The worst thing is to have a group of unaccountable international bureaucrats to impose a set of excessive regulations in the wake of the crisis in the name of preventing another crisis that will significantly increase the costs of finance everywhere.

Banks in Australia have done through the crisis with little problems. In such a case, is there a need to tighten the regulations? The answer is definitely no. But the danger is that the Rudd government will do it nevertheless to fight the so called “neo-liberalism”, or “market fundamentalism”.

That will be a tragedy for Australia with higher interest rates than necessary.

An interesting view on China's one-child-policy by an Australian

An interesting and rare article by an Australian on China's one-child-policy. See: Dan Ryan, One-child policy aborting our growth, 25/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26120527-7583,00.html

Although the point was on the impact on Australia growth, it is thought provoking even for Chinese.

I have argued that the West argument on China's human rights issues misses important relevance and target. The household registration system and the one-child-policy are much important and affect many more people in China than the so called Tibet issue promoted by the West.

The West is either completely ignorant or totally biased. Or absolutely hypocritical!

Four corners - an interesting view of teh world current affairs

An interesting view on the "latest jamborees at the United Nations and the Group of 20". See: "Four corners of the new world", 25/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Four-corners-of-the-new-world-pd20090925-W7UUA?OpenDocument&src=sph

Original source: Financial Times: ft.com

Overhaul the policy of foreign investment

Comments on David Llewellyn-Smith “THE DISTILLERY: China silence”, 25/09/2009, http://www.businessspectator.com.au//bs.nsf/Article/THE-DISTILLERY-Wheres-China-pd20090925-W7VG4?OpenDocument

I agree with the second paragraph completely.

The federal government needs to have a strategic review of its policy on foreign investments in general and its approach to Chinese investments in particular.

There needs to be transparency in this area to contribute to national interest.

The obscure ways and approach by the foreign investment review board is incomprehensive and incomprehensible. And there is a legitimate question on its competency to do a proper job.

There should be an urgent overhaul of the nation’s foreign investment policy that dated back to the cold war era.

Improve Australian government governance

Comments on Henry Ergas “Conroy wins, taxpayers lose”, 25/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26120526-7583,00.html

I agree absolutely that the federal government is using taxpayers’ money to gamble for its own will and narrow and outdated left-wing labour interest.

That is unfortunately for Australians. It is a pity that there is enough checks and balance to constrain the politicians for their irresponsible behaviour at the expense of taxpayers.

There should be a law to prosecute politicians and government ministers for wasting taxpayers’ money, just as criminal prosecutions against private executives and businesses.

The federal government’s NBN has been extraordinary in that it does not have a business case study with $43 billion of taxpayers’ money potentially involved. How can such a stupid government policy come up in the first instance?

We are in urgent need of improving the governance of government.

Politicians should not act so recklessly. It must be stopped.

Australia needs bright minds in politics

Comments on Dennis Shanahan “PM yearns to lead world on climate”, 25/-09/2009, http://www.theaustralian.news.com.au/story/0,25197,26120525-7583,00.html

It appears that both sides of politics are silly over the ETS bill.

For the government, as the article argues, there is no need to pass it for business certainty. As long as the government are reasonable and sensible and firm on ETS, it will send an unequivocal signal to businesses. So indeed there is no need for passing the bill early for certainty.

For the opposition, there is no need to wait until others have decided. If everyone is doing what the opposition is doing, how will the world move in terms of climate change? It is a silly proposition. The key is to have a sensible and flexible bill that has the ability to accommodate what other will do.

Even under the government’s new round pressure, the coalition can still make reasonable progress by making amendments that incorporate enough flexibility to make the bill more workable and acceptable to it.

So both sides of politics are just silly and stubborn and stuck in dirty politics.

They just reflect the deep problems with Australian federal politics - there are not enough bright minds in it. That is a pity for the nation.


Difficulties for Taiwan's DDP under new environment

Comments on Peter Yuan Cai “Taiwan: The Democratic Progress Party’s ‘China Syndrome’”, 23/09/2009, http://www.eastasiaforum.org/2009/09/23/taiwan-the-democratic-progress-partys-china-syndrome/

The new approach by mainland China, if it is maintained for the foreseeable future, is likely to have profound implications for the politics in Taiwan.

In this new environment, the Democratic Progressive Party (DPP) in Taiwan will find it difficult to be relevant unless it makes relevant policy changes.

When China and Taiwan are further integrated practically day by day, the future of the two sides is likely to have a looser union than the model for both Hong Kong and Macau, possibly using the model of a federation, with much higher autonomy for Taiwan, including all its own affairs including internal security and many external presentation within the framework of a new federation.

What will be role in that framework for DDP? It is unclear, because its basis has been for independence.

International public goods for poor countries' growth?

Comments on Andrew Elek “The G20 and enhancing the availability of international public goods”, 24/09/2009, http://www.eastasiaforum.org/2009/09/22/enhancing-the-availability-of-international-public-goods/

The development process is very complex and there are so many factors that can contribute to both the failures and successes of a country's development.

The statement "In a series of papers, Raghuram Rajan, former chief economist of the IMF, and I were unable to find any positive effects of aid on long-run growth but did find evidence consistent with some of the negative effects of aid in depressing manufacturing exports and worsening domestic institutions,’ does not necessarily prove that the proposed alternatives will be able to achieve better outcomes than what the world bank has done in the past.

Firstly, there is no surety that the findings of that study are correct, given the so many factors in play.

Secondly, if specifically targeted aids cannot achieve positive long run growth, how can one reasonably think that the proposed by increasing the provisions of public goods by international financial organisations will do a better job to promote long run growth? Weren't public goods available in the past? Why will new public goods be different?

The proposal will make the link between inputs and outputs/outcomes much more weak and less transparent. It is unbelievable that will work.

It is like to treat a particular disease, the specifically developed medicine is only effective to some patients but not all patients. Now let's try something different. How about using a medicine that is for general health to cure that particular disease?

Will that approach work? Few would agree, probably. At least conventional logic suggests it will not.

A proper role for RMBS with transparency

Comments on Alan Wood “We need securitisation”, 24/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26116016-7583,00.html

There will be a role for residential mortgage backed securities (RMBS) when the storm of the round financial crisis has subsided and the financial market return to some normality.

The question for the relevant industries involved is what disclosures they have to make in terms of the underlying quality or risks of any such securities. Only in that way potential investors can be well informed and make the most proper decisions.

For the government, the question is if it has to buy some or all of such securities at bad times with the taxpayers bearing the risks, what should it do in good times to protect taxpayers who bailed out those security holders?

There should be some symmetry between risks to taxpayers and benefits to them. How the taxpayers can recoup enough benefits from good times to prepare for bad times? Or would the government commit itself not to bail out again in the future?

Another point is from regulation point of view, what the government should do to reduce the risks of any RMBS to potential investors, or at least to make the risks very transparent?

Power from a larger population too marginal for Australia

Comments on Arthur Sinodinos “The more of us the merrier”, 24/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26116017-5013479,00.html

Arthur, it does not sound like a particularly attractive idea and unlikely to be a good one.

No matter it is 7 million more in population or more than that, it does not make Australia a bit different as compared to so many huge sized countries in our neighbourhood.

That has only a very small marginal effect to the most, if anything at all!

So better forget it as a strategy.

But it does not mean there are no other benefits to Australia from a larger population.

Interesting picture of future workplaces

Comments on Bernard Salt "Action stations: employees now in state of workplace arousal", 24/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26116029-5016345,00.html

An interesting article into the futue of workplace, although the future may not play out as it paints it to be!

On Tim Wilson's “Pass the climate parcel”

Comments on Tim Wilson “Pass the climate parcel”, 24/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26116014-7583,00.html

I couldn't help laughing when reading your article. It is amusing and an interesting read.

Nevertheless, I can't whole heartedly agree with or share your view that "INTERNATIONAL negotiations are like a game of political pass the parcel and every government is desperate to ensure they're not holding up negotiations when the music stops."

I acknowledge there is enough truth in it, but it is not and can't be true all the time.

China has made encouraging promises and India is also catching up, whether it is due to the pressure you argue or not. And that is a good thing to see on this important issue of climate change.

We should encourage the players to make more progress, as compared to just holding a stick!

Interesting but contradictary reports on the same thing

Comments on Lenore Taylor "Hu's UN statement falls short", 24/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26116643-5017906,00.html

It is interesting to see that the title of your article is in so strong contrast to other reports also on this website:
EMISSIONS: Praise for China and Japan
HU: Steals Obama's climate thunder

So, which is correct? You or the others?

What do and how could you expect more from China, given the offers on the table from other countries, including the US and Australia?

Are you objective and realistic enough as a journalist, or just wanting to grab more attention?


Questions for Harry Clarke on his "India & China to get tough on emissions?"

comments on Harry Clarke "India & China to get tough on emissions?" 22/09/2009, http://www.harryrclarke.com/2009/09/22/india-china-to-get-tough-on-emissions/#comments

hc, your guess seems to be wrong. I am afraid to say.You argue that "India and China will suffer far more serious costs as a consequence of global heating than will the US or Europe."

What is your basis of that argument? Why will they suffer more? Do you assume that a life in India and China is more precious than that in the US and Europe?

Do you really believe that they are terrified by the possible defeat of the US bill? Can you believe yourself, honoestly?

Do you think they are after charity or compensations? It is now that developing countries have been giving charity and free compensations to the developed countries, because the latter emit more than their rightful "permits" to do so on the per capita basis.

Why do you call it charity or compensations for developing countries? Is that the best logic you can come up?

You argue that their voluntary cuts not convincing. What do you expect them to do? Have the developed countries reduced their emissions to the levels in either India or China on the per capita basis?

I simply fail to understand your logic.

Is lord Stern correct?

Comments on Nicholas Stern "Lord Stern suggests new way out of Copenhagen deadlock", 22/09/2009, http://www.telegraph.co.uk/earth/earthcomment/6215391/Lord-Stern-suggests-new-way-out-of-Copenhagen-deadlock.html

I seem to have been confused by the lord's figures. On the one hand, he is saying that "we need to reduce annual worldwide emissions from the present level of about 50 gigatonnes of carbon-dioxide-equivalent to no more than 20 gigatonnes by 2050."

On the other, he is saying "If we only reach the upper end of this range, much bigger annual reductions in emissions would be required in subsequent years, and cuts of more than 50 per cent by 2050 compared with 1990 to prevent a rise of more than 2˚C."

So isn't it from 50 to 20 more than 50% already? Or the present level of emissions are below that of 1990? Or have I got my understanding wrong?

If the lord is wrong on these figures, then couldn't he be wrong on his argument on climate change altogether?

Secondly, the lord says that "Developing countries, including China and India, also need to limit and decrease their emissions, but in ways that are consistent with their ambitions for continued economic growth and the reduction of poverty." Does that mean the current level of emissions in developing countries already exceeds the proposed level per capita by 2050? I doubt it be correct.

Security Council member for Australia - both privilege and obligation

Comments on Michael Fullilove “Rudd right to press for UN seat”, 23/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26111671-7583,00.html

Australia should seek to join and make a contribution to the UN Security Council.

It is not a privilege but an obligation.

Now that nearly three quarters support the government's initiative, the government needs to take concrete steps to do so.

An excellent chance for the ETS in Australia

Comments on Dennis Shanahan “Turnbull offered a helping hand”, 23/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26113065-17301,00.html

The change of tactics by the Minister for Climate Change and the Prime Minister is indeed in the national interest and the Coalition should seize it whole heartedly.

At the meeting in New York, both Japan and China have pledged to do more for the climate. There is a new momentum from both developed and developing countries. Australia should also move in tandem with the new momentum.

The Rudd government should be congratulated on its new initiative.

It is now the Coalition's turn to show leadership and put politics aside for the national interest and its own interest, because if it doesn't, it will lose the public completely.


Real autonomy for Xinjiang and how?

Comments on Mike West “Xinjiang riots: A jaundiced hack’s-eye-view of China’s restless Western frontier”, 17/09/2009, http://www.eastasiaforum.org/2009/09/17/xinjiang-riots-a-jaundiced-hacks-eye-view/

It is an interesting to see what real autonomy means and who it can be implemented in Xinjiang without real changes in the country's whole political system.

I don't have information on the ethnic compositions in Xinjiang. But let's consider two scenarios:

1. The Han people are the majority in Xinjiang. Under this scenario, what is likely to be the power composition? Would it satisfy the Uyghur if the Han people have majority in the autonomous government?

2. The Uyghur people are the majority. Under this scenario, the Uyghur people are likely to be in majority in government. Does it want to share power with other minorities, mainly the Hans?

3. What would be the policy in terms of immigration to the region? Should it be restrictive to some ethnic groups, or be open to all Chinese irrespective to their ethnic groups? If restrictive, is that still part of China and why don’t others have the rights to live there?

Another look at the so called intermational imbalances

Comments on Michael Stutchbury “Success story riding on China’s back”, 22/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/success_story_riding_on_chinas_back/

Michael, you are spot on. The economic situation in Australia is so different to that in the US and the Europe Union.

It is a result of a number of reasons, including the impact of the Chinese economy, and Australia’s solid and sound pre-crisis economic situation which in turn includes sound banking system, no government net debt, and low interest rates and low unemployment.

Another point you made is about the likely external imbalances as a result of a booming Australian economy that will be sustainable. That will be strengthened if considering foreign direct investments if Australia allows as a result of the boom.

In fact, the current account imbalances between the US and the rest of the world can also be sustainable for a long time if the US allows foreign direct investment into its asset markets.

It is like a older person living on his/her saved assets as opposed to his/her current employed earnings. It is another version of the “life cycle” income theory.

So far few economists have considered this issue through this way.

But economists should broaden their thinking in era of globalisation and unprecedented international adjustments.

Electrical Trades Union hypocritical to oppose free trade agreement with China

Comments on Malcolm Colless “Hansonite protest out of left field”, 22/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26105680-7583,00.html

The secretary of the Electrical Trades Union (ETU) is hypocritical and seeks to scare people.

The campaign against Australia signing a free trade agreement with China by the ETU is an attempt to lower the living standard of all Australians and slow the progress of Australia economy to move to an internationally more competitive one.

It is an attempt by a handful special interest group for their own short term interest at the expense of all other Australians. They want to protect the so called employment of theirs in the current form without realising that the world is changing very rapidly and the structure of employment in the economy has to keep pace with it.

This is old trade protectionism in a different disguise.

The report says that the ETU campaign argues against concluding the FTA and savagely attacks China's employment standards and its record on human rights.

China is different from Australia in many aspects including employment standards. But it reflects mainly the different living standards between the two countries other than otherthing else. Many Chinese still live in very poor conditions and the very survival of prople is a question.

Why doesn’t the secretary of the ETU care about the living standards of those people when talking about their employment standards?

This shows how shallow, hypocritical and double standards the secretary is!


Rudd government has become a special interest group for its flawed NBN

Comments on Glenn Milne “Heavy-handed threat is spooking investors”, 21/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26100895-7583,00.html

Conroy's or the government's offer reflects the government is desperate to kill off any potential competition to its flawed and costly NBN.

That is an anti-competition policy or behaviour by the Rudd government. That is an abuse of government power.

Just imagine what would be the case if that was done by a private company.

Of course, the ACCC does not have the power nor the inclination to challenge the government on this because it dislikes Telstra and wishes it to be crushed.

It is a pity for the nation when the government is acting like a special interest group itself.

It will cost the nation dearly. No question about it.

On Gilalrd's "left" approach to education

Comments on Julia Gillard “Driven by indignation at injustice”, 21/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26100893-7583,00.html

With all respect, I am afraid that it seems that the problems with education in Australia has been overstated. This creates an excuse for government to do too much or too inefficiently in the education field.

Yes, if there is a problem that is beyond the capacity of individuals, then there is a case for government to step in.

But what is the case in Australia's education?

There is free and compulsory education to 15 year old. There is also free education for the rest of secondary education. For tertiary education, there are HECS or HECS like scheme, there are youth allowances.

So what is lack in terms of equal opportunities to education in Australia, apart from personal and family aspirations?

The recent government spending on building school revolution just shows how taxpayers' money can be wasted by government. The same money could achieve much more if spent efficiently and more effectively.

That is a lesson that everyone including left politicians need to pay attention to.




Conroy needs to learn how to live with and regulate a natural monopoly

Comments on Michael Stutchbury "Telstra break-up may stifle innovation", 19/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26093486-5017771,00.html

Michael Stutchbury's article touches the problems with Rudd/Conroy's poor approach to NBN and Telstra.

Australia is too small to break up a telco monopoly in some field of the industry. It is not just the competition but also the costs and innovation, investment etc that a government has to consider.

It is all too easy to break a natural monopoly. But that is not necessarily the best public and economic policy.

Government has to learn to balance competition and other economics. It has to learn how to live with and regulate a natural monopoly such as Telstra.

What Conroy announced continues the Rudd government's economic incompetency.

That is unfortunate for Australia and Australians. It will not only disguise the poor economics of the government's proposed $43 billion NBN, but also make the telco industry in Australia less competitive and more costly to consumers.

Chinese government should uphold the law and eliminate discrimination

Comments on Peter Yuan Cai “Between Scylla and Charybdis: the CCP’s minority policy dilemma”, 18/09/2009, http://www.eastasiaforum.org/2009/09/18/between-scylla-and-charybdis-the-ccps-minority-policy-dilemma/

While it is difficult enough for the Chinese government to maintain appropriate balance between pleasing both domestic and international audiences, at stake is whether there is justice in China.

Many of China’s policies are discriminative, such as the family planning, religions, and household registration system, etc. The discriminations generally fall on Han people and people living in rural areas.

Chinese government can make its life easier by eliminating discriminations in its system.

Chinese government should improve its skills in dealing with both domestic and international people. There is nothing wrong in upholding justice and against violence, irrespective who are against the law and what ethnic groups they are from.


Henry Ergas on NBN and the government proposed bill

An article in the Australian, "Legislated blackmail for NBN monopoly", by Henry Ergas, 18/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26088078-5013479,00.html

Henry Ergas has provided advice to Telstra and other international telcos. These are his own views.
Argas is critical of Conroy's bill and approach to NBN.


Rudd made excellent appointments of ambassadors

Comments on news report “Beazley named as new US ambassador”, 17/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Beazley-named-as-new-ambassador-to-US-VY4L4?OpenDocument

The report says:

"Former federal opposition leader Kim Beazley has been named Australia's next ambassador to the United States.

The announcement was made by Prime Minister Kevin Rudd, who replaced Mr Beazley as Labor leader in 2006, in Canberra on Thursday."

"Mr Rudd also announced the appointment of former Liberal leader Brendan Nelson as Australia's next ambassador to the European Community.

Dr Nelson will also serve as Australia's representative to the North Atlantic Treaty Organisation (NATO), as special representative to the World Health Organisation and as ambassador to Belgium and Luxemburg."

Rudd has made very good appointments and should be congratulated for such non-partisan choices.

As the news report says: "Both Mr Beazley and Dr Nelson had served as defence ministers, both had led their parties and both had earned the trust and respect of the Australian people, Mr Rudd said."

Rudd is good at using the best talents of all political sides.

“Funds” are a special group

Comments on Giles Parkinson “$16 trillion says they're right”, 17/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/16-trillion-says-theyre-right-pd20090917-VXRQK?OpenDocument&src=sph

The "funds" are a special interest group. They are not necessarily really caring for the climate, but for their own interests of making money out of climate change.

One should treat their calls with care.

Banking regulators need to better their jobs

Comments on Alan Wood “Interest rates on their way up”, 17/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/interest_rates_on_their_way_up/

While it is understandable that "from 1999 to 2007, the official rate and variable mortgage rates moved in lockstep", it is also puzzling that why the low international costs of funding were not much reflected in lower costs of borrowing for consumers.

We have experienced incomplete pass through of the RBA's cuts to official interest rates in the past year or so. But we did not see the reverse of that earlier in the past decade.

The relevant regulators should closely monitor what the banks in Australia are doing in terms of margins, taking into account of costs of funding in international capital market.

It does not appear that they have done a good job. They need to get on top of their jobs.


A chance for Turnbull to win the next election on economic reform

Comments on Paul Kelly “Economic reform a Turnbull minefield”, 16/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26078848-12250,00.html

Economic reform may or may not be a Turnbull minefield. It depends on how Turnbull and the opposition take the current opportunities that the Rudd government has offered them.

Paul Kelly argues that “the Liberal Party confronts a novel political and intellectual dilemma: how does it present as the party of economic reform when the new policy fashion is fiscal stimulus and labour market regulation?” based on that “the two events reshaping Australia's policy debate are Kevin Rudd's 2007 election victory that crushed the 20-year momentum towards labour market deregulation and last year's global financial crisis that enshrined fiscal expansion and state intervention as the ameliorating responses.”

While what Paul Kelly’s statements are true, the performance of the Rudd government over the past two years has presented Turnbull and the opposition some unique gifts in defeating the incumbent government at the next election next year.

Gillard/Rudd have misused the mandate they got from the last election on IR reforms and swinged too much towards inflexibility of the labour market towards collective agreements. This exposes a weakness in their approach to IR reform, that is, ideology driven as opposed to get the balance “right”. Turnbull can attack the Rudd government on productivity and efficiency while keeping fairness as a balance.

Politically, Turnbull needs to accept that Work Choice has been dead and the coalition has moved on from that. What they have to do is to correct Gillard/Rudd’s over regulation of the labour market to make it both fair and efficient. That is what Turnbull should argue.

On the fiscal stimulus, the Rudd government is even more vulnerable. The cash handouts have been wasteful and led to unnecessarily larger budget deficits and government debt. The school education spending has been exposed as not only wasteful, but also as having little to do with education revolution and hence future productivity. The list goes on and on, like the $43 billion NBN with no business case study.

Turnbull and Hocky need to accept the need for fiscal stimulus but focus efficient and effective fiscal stimulus as opposed to panic spending behaviour of throwing money at all costs at the expenses of government budget and debt.

So there are already enough opportunities for Turnbull to get on upper hand with the Rudd government in the two areas that Paul Kelly has argued to be a minefield for Turnbull. They are now in favour of Turnbull than Rudd.

One of the main issues is likely to be in the area of the ETS. This has been the coalition especially Turnbull’s weak political spot. What Turnbull needs to do is to neutralise this issue and that should not be difficult to achieve, particularly given the government has also been exposed as inflexible and could not even get any non-government senators on side.

I see the next election is winnable for the Coalition if it can avoid any more big political mistakes and focus on the economy, labour market and responsible government.

Rethink international imbalances and the East Asian model

Comments on Mohamed Ariff “US-East Asia trade: Is East Asia ready for a rebalance?” 16/09/2009, http://www.eastasiaforum.org/2009/09/16/us-east-asia-trade-is-east-asia-ready-for-a-rebalance/

I had also thought the existing model would not be able to continue until a short while ago after I had read this article and had another thought about this.

It does not appear to me that the existing model needs to change.

When thinking and talking about the existing model in the wake of the financial and economic crises, most thought and argued that the international imbalance is unsustainable. While that is obviously true for the long run. But what is the "long run"? Until that is well defined, then one can get easily confused by "short term" inequilibrium and the needs for long run balancing.

Further, the existing model can continue when assets and trade in them are taken into account, e.g. the US households trade some of their assets for consumption. In that way, current account imbalance can last for a very very long time. That should and need not be a problem.

It is all too easy for one to blame international trade imbalance for any problems, whether it is the cause or not, or the real cause or not.

Comprehensive and solid analyses are needed to understand the implications of the "international imbalances". Partial analysis does not help to address the perceived problems and are very likely to be highly misleading to wrong policies with huge economic costs.

Economists should not just simply follow what a layman or some politicians say. They need to apply serious and rigorous economic thinking.

Rudd government damages Telstra shareholders

Comments on Peter Swan “Rudd playing Ned Kelly with Telstra”, 16/09/2009, http://wl.theaustralian.news.com.au/story/0,25197,26078850-7583,00.html

I have branded Conroy as an economic terrorist. His action is no different from terrorists' destroying the World Trade Centre twin towers, given its damages to Telstra and so many of its shareholders.

There is no justification for any government or politicians to cause material damages to a company or shareholders.

Telstra and its shareholders are justifiably entitled for appropriate compensation and should nail the government in court.

Telstra also needs to bring the ACCC for its adversary effect on Telstra's profits over the past many years by excessively depressing its prices


Conroy's heavy hand on Telstra is showing now

Comments on Stephen Bartholomeusz “Conroy's Telstra ultimatum”, 15/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Conroys-Telstra-ultimatum-pd20090915-VW3YV?OpenDocument&src=sph

The government and Senator Conroy have been acting like an economic terrorist, as a revenge to Telstra's hard tactics in the past! They are forcing Telstra to separate.

That does not show true government leadership in economic management. Instead, it shows how small their minds are.

They need to go back to school to learn more economics and how to live with a natural monopoly in a small country in a sophisticated economic world where efficiency may dictates the size of businesses.

ACCC has been very disappointing in this regard for too long as well.

Gideon Rachman: When China rules the world

According to Gideon Rachman, there is still a long road ahead for China to rule the world, even though China is now more plausible than the past cases with Japan and the former USSR.
"Previous challengers to postwar American supremacy – Japan and the Soviet Union – eventually fell by the wayside."

China is a more plausible challenger according to Gideon Rachman: "In some ways, China is clearly a more plausible challenger than Japan. Japan’s population is about 128 million, China has 1.3 billion people. There are roughly four times as many Chinese as Americans."

But China still faces two very difficult transitions – economic and political, argued Gideon Rachman. Although neither is easy, the more difficult one will be the political one.

http://www.businessspectator.com.au/bs.nsf/Article/When-China-rules-the-world-pd20090915-VVTW2?OpenDocument&src=sph The original appeared on Financial Times: FT.com.

Too big to fail argument half correct and half wrong

Comments on Stephen Bartholomeusz “Lehman: A symptom, not a cause”, 14/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Lehman-A-symptom-not-a-cause-pd20090914-VV9ZV?OpenDocument&src=sph

If Lehman Brothers had been bailed out as opposed to let it collapse, there would have been no impact on any moral hazard issues.

You have to let some to fail to deter firms from being or becoming too reckless.

One question is that why should government have bailed out so many firms rather than letting them fail and nationalise them to let shareholders lose all their money/investments and to remove all those executives, so to avoid and prevent both systematic failures and moral hazard.

While the logic that some firms are too big to fail has some truth, one has to let those firms bear the consequences of their management.

Let those that would fail to do so and use temporary nationalisation to save the system. Rehabilitate any firms if necessary and then sell them so the taxpayers don't have to bear the costs.

This is a correct measure to deal with such difficult issues.

Does WTO have any tooth?

Comments on Alan Kohler “Obama's perilous protectionism”, 15/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/China-America-marraige-hits-the-rocks-pd20090915-VVSFV?OpenDocument&src=sph

It would be interesting to see what the WTO should say on the US new tariff on Chinese Tyers.

Does the WTO have any tooth to enforce its own rules, especially when it deals with world most powerful economies like the US?

Economists need to revisit the rational and efficient market assumption

Comments on Alan Kohler “The Lehman lesson is ongoing”, 14/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/The-Lehman-lesson-is-ongoing-pd20090914-VUSXM?OpenDocument&src=sph

I totally agree with you on that "it’s imperative that economists do the same and come up with a new theory that accepts that economies are run by flawed humans and that they are buffeted by a financial system that is subject to the madness of crowds."

I also agree with you on that "Macroeconomists have suffered a terrible blow to their confidence", except some small handful exceptionally strong Keynesians.

The rational and efficient market assumption just blinded too many economists and diverted too much resource of economic research and policy research away from studying the real market and policies that could have avoided the financial and economic crises.

Economists need to correct that.

A need of an independent commission to scrutinise government spending

Comments on Michael Stutchbury “More waste in train”, 15/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/more_waste_in_train/

This is yet another example of the lack of accountability of government wasteful spending of taxpayers’ money.

There should be an independent statutory accountability commission of spending of public money. Such a body should be set up by the parliament and have enough resources to provide scrutiny of government's spending programs.

It is high time to have such a body. The budget chart is not enough and does not have any hard constraints on the effectiveness and efficiency of government spending.

If the Rudd government wants to enhance productivity and efficiency, wants to improve the nation's living standard, they should have no hesitation to set up such a body. It should be urgent.


Both government and its regulator ACCC should be fair and know what is fair

Comments on Stephen Bartholomeusz “Levelling Telstra's playing field”, 14/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Levelling-Telstras-playing-field-pd20090914-VV5KU?OpenDocument&src=sph

Both the government and the ACCC should not act as big brothers and ignore the economic reality.

They should not artificially change the underlying economics of its NBN versus Telstra's copper net through government regulations and destroy the value of the copper net.

The ACCC had always acted in an anti-economics manner, by artificially lower the price Telstra could charge. A consequence of that has been the lack of investment by the private sector on new a net, so the government has to step in and intervene.

The ACCC should learn how to regulate a monopoly so it does not abuse its market power, but the market will allocate the most appropriate resources to the sector as well.

Read GDP statistics

Comments on Steven Kates “Read the data: it was a recession”, 14/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26067805-7583,00.html

It would be interesting to see how much government technically propped up the GDP figures by its own direct spendings and the effects of its cash handouts on consumption spendings (not really income producing, or maybe a little in retailing earnings).

Some reports were saying the government spent $160,000 to save one job - a pretty hefty price for jobs just to make the government look good and sound good by saying that it has been doing whatever it could/can to save jobs.

While there needs to be consistency in GDP statistics, the ABS would do a better service in explaining better how likely the Australian economy was in a technical recession, given the differences in the three GDP measures used in the average headline GDP figure.

As Steven Kates demonstrates, the economy was in recession from the other two measures. The ABS has been silent on this and that is not the best the nation’s statistical agency could offer to the public.


An idea - good or bad?

Comments on Arvind Subramanian “The G-20: An Idea from India”, 11/09/2009, http://www.eastasiaforum.org/2009/09/11/the-g-20-an-idea-from-india/
Why should the World Bank not be a bank but an institution for generating ideas and technologies?
Surely that would push back the agenda for improvement in developing countries many years, wouldn't?
The author probably assumes the following:
that there are not enough ideas,
that there are not enough technologies for developing countries,
that developing countries are better in assimilating ideas,
that developing countries are better at adopting "new technologies",
that the WB is better at generating ideas,
that the WB is better at developing technologies.
It is highly doubtful any of the above would hold any water, or has any reasonable rationale.
It does not seem to be a good idea at all.

On Dutch disease - a reply to Raghbendra Jha's comments

Comments on Raghbendra Jha’s reply to my comments on his article “India and the Copenhagen summit”, 9/09/2009, http://www.eastasiaforum.org/2009/09/04/india-and-the-copenhagen-summit/

You only mentioned the influx of foreign currency as capital inflow, you have not mentioned the need to use that foreign exchange to: 1. purchase the technologies and equipment necessary to reduce emissions without slowing economic growth, 2. to import other urgently needed technologies, capital goods and inputs by developing countries, 3. why can't a developing country use any foreign exchange to invest abroad, if appreciation is a concern?

The Dutch disease has been over blown out of proportions in many potential real scenarios. It partly reflects a poor understanding of economic development in its totality and to have only focused on effects of part of trade on exchange rate. It ignores so many things and is therefore is so incomplete to be used as a useful guide to economic development policy.

So I am afraid that the concern for appreciation is completely unnecessary and even unfounded. It is likely to reflect a poor understanding of the working processes of reducing emissions and the needs of many developing countries for more foreign currency to improve their economic conditions.

Howard is correct on history

Comments on John Howard “Rudd demeans himself over history”, 11/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26055356-7583,00.html

Howard is now calm and objective about history and he is correct except for a small point that is his IR reforms were too big and went a bit too far.

I think the number of big reforms over the past nearly three decades done by both sides of political sides in government that Howard described have really been outstanding. Both deserve credits for them. Denying either side is attempting to rewrite the history.

While Howard was politically very firm, both in opposition and in government, he become fairly pragmatic during government.

Rudd is in danger of being more politically stubborn by using the financial and economic crises to push outdated earlier Labour ideologies of big government and big spending and skewing too much against efficiency in favour of over playing equity.

He has already been exposed as having gone too far to the left. Whether he will be permanently remembered as that will depend on what he will do from now on.

The jury is still out.


Arthur Sinodinos' advice should be listened to

Comments on Arthur Sinodinos “Bingers can't urge others to abstain”, 10/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26050758-5015664,00.html

What Arthur Sinodinos argues makes imminent sense and the government should listen to his advice very carefully.

This is very pertinent and practical advice from an experienced operator, irrespective what his affiliation has been or is.

It is in the nation's interest to have intellectuals from all sides of politics to contribute to national policies.

Arthur Sinodinos has just made such a useful contribution. He should be congratulated for doing this.

We need more of such contributions.

Miserable Swan that cannot fly, nor swim in economic fields

Comments on Wayne Swan “Rollback is part of the plan”, 10/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26050760-5017272,00.html

The Treasurer seems never to be able to grow up to a normal person, but unfortunately he is in charge of what he cannot manage nor understand, that is the economy and budget.

To just using one point in his little article, he said the stimulus has been designed to withdraw automatically. Let's assume what he said was correct with the original design for the moment. But the economy has already proved that the Treasury forecast was out of order with what has been happening, so why the original design based on that earlier forecast is still correct? Isn't it a common sense that when things are different from one's assumptions, then one needs to change the strategies according to the new reality as opposed to sticking with the original plan?

Mr Swan, you need to get some common sense, not to mention the skills to manage the nation's budget and the economy.

Besides, the nation’s top economic advisors need to get real as well and provide good economic and budgetary advice to the government of the day. It is their advice that has also contributed to Mr Swan’s confused mind.

A good move by the senate to reject the health bill

The following ABS report says that the senate has rejected the government's bill to change the private health insurance scheme and the medicare levy. That is good news.

The government has a mean spirit against middle and high income people and deny people's equal rights to public hospitals. It is a bad policy based on old dated Labour ideology. It should be defeated and it was.

See the report: "Senate rejects private health changes", 9/09/2009, http://www.abc.net.au/news/stories/2009/09/09/2681382.htm?section=justin

Presidency and language skills

The following is an interesting report about language skills of some very famous people or celebrities, including former US president George W Bush and former movie star Arnold Schwarzenegger.

It indicates that language skills do not matter much as far as they are concerned, although there appears strong discrimination based on languages in work opportunities for most ordinary people.

ABC report: "Bush tops English gobbledegook poll", 10/09/2009, http://www.abc.net.au/news/stories/2009/09/09/2681499.htm?section=justin

Democracy and freedom?

The following report should be an interesting reminder of that even democracy does not neceassrily mean much to personal freedom and equality between persons.

I heard in the past that there were different classes of people in India, but have thought those were probably past. But some things in India still appear odd.

Are they part of the human rights that many western politicians talk about?

ABS report: "Indian farmers sell wives to pay debts", 10/09/2009, http://www.abc.net.au/news/stories/2009/09/10/2681503.htm?section=justin


Rudd would be an excellent academia

Comments on Paul Kelly “Rudd aims spear at Liberals' heart”, 9/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26046003-12250,00.html

Rudd should be a lecturer in a university, to spear ahead his ideology and his view of government and contemporary Australian economic history. That is because in that way whatever he argues, it would not affect government policies and Australians’ well beings, while inviting a strong debate.

The problem is that he now occupies the office of the prime minister and that will surely cause a lot of pain and inflict unnecessary suffering to the nation.

Will any good university offer him an academic position soon, so he can consider his future in history seriously? That will only be good for everyone.


Are economists of any use?

The following is links to an article by Luigi Spaventa, in several parts:

Part I: http://www.businessspectator.com.au/bs.nsf/Article/Are-economists-of-any-use-pd20090908-VP7NX?OpenDocument&src=sph

I think the following is the original document:

WTO needs enforcement

Comments on Rajiv Kumar “India: Pumping new life into the Doha Round”, 8/09/2009, http://www.eastasiaforum.org/2009/09/08/india-pumping-new-life-into-the-doha-round/

If existing WTO rules cannot prevent governments from taking protectionist measures in trade, what is the use for the conclusion of another round of trade negotiations that is simply likely to be no secure in safeguard measures?

The fact is that the collapse in trade has been much serious than the decline in economic growth.

WTO needs to enforce existing rules as opposed to let them bended by some governments.

Does it have the courage to do it?

Tap into the international pool of talents

Comments on Terence Lee’s comments on “Managing China’s treasure trove – Singapore Style”, 7/09/2009, http://www.eastasiaforum.org/2009/08/31/managing-chinas-treasure-trove-singapore-style/

I think maybe a gradual process would be better, in the sense that to have some non-citizens to be on the board of some SWFs, or even a deputy chair of the board role to start with. They may not necessarily play the CEO role for a while, but their skills and expertise can be employed and tested.

To have successful arrangements to take advantages of the international pool of talents, there needs a process for confidence building for both sides including the host government and the key international candidates.

In that process, the host country needs to develop some transparent and practical principles governing the operations of those funds and their managers. It also needs to have in place the most appropriate remuneration incentives to ensure the funds are properly managed.

Peter’s basic idea may still be a good one and should be explored by China rigorously.

Australia should start exit from stimulus now but gradually!

Comments on Michael Stutchbury “Unwind the stimulus”, 8/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/unwind_the_stimulus/

Michael Stutchbury is completely correct in arguing for unwinding the stimulus. The government should do it now and exit gradually from its stimulus.

The government should and must start to mind down its stimulus to the economy. The Treasurer, the Prime Minister and other government figures are wrong in saying that the opposition leader Turnbull is a loner in arguing for exit.

He is not and whatever the G20 or IMf have said recently cannot be used against him. This is because while the G20 or IMF said may be applicable to the average scenario of the world economy, or most industrialised economies, they are not applicable to every economy and Australia is such an economy.

If the government wants to be economically responsible and conservative, it must act now to exit the stimulus. It must have its own brain as opposed to simply and mechanically follow what the G20 or the IMF say for the world average scenario.

The government should and must put politics aside otherwise its reckless spending will come back and bite it in the future.

While it may not always be very easy to exit, there are ways to do it. Even for the school spending, it can relax the requirement for school halls or libraries and change to other more needy, useful and productive purposes and give schools longer time to complete them without forfeiting any schools' entitlement.

It can adjust its stimulus measures and at least the timing of some projects so to reduce their short term stimulating impact and be also more productive and less costly.

Politically, it would also reduce the government's vulnerability in terms of being attacked for inefficient and wasteful spending, and increasing budget deficits and debts unnecessarily.

Doing exit from stimulus can only benefit Australia and the government and do no harm to either. So why not do it and start now?

That is common sense. The government should heed it closely.

Paul Kelly is mostly correct on reforms history

Comments on Kevin Rudd “Drive to reform is not bipartisan”, 8/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26040348-7583,00.html

The Prime Minister may have a point in arguing that neo-liberalism was not dead in 1993, if and only if he applies the point in the sense of degree rather than in purity, or in relative terms as opposed to absolute terms.

He is right that the previous government got the Work Choices IR laws a step too far to the right to provide adequate protection for workers. That may be the main and only significant issue in terms neo-liberalism of the previous government.

In terms of reform, the previous government had undertaken quite a number of big ones and continued the Hawke and Keating tradition, such as the introduction of GST and reducing personal and business tax rates, as well as the introduction of Work Choices to increase the flexibility of the economy, even though it went too far for Work Choices.

So the Prime Minister has got it half right and half incorrect. Paul Kelly has got almost completely right after all.

There is an simple explanation to this subtle or not so subtle difference between the Prime Minster and Paul Kelly, the PM is Labour and has been carrying out interventions to the economy partly due to the global crisis, while Paul is a non-partisan political journalist.


Micromanaging PM unlikely effective

Comments on Stephen FitzGerald “Learning to Live with China”, 6/209/2009, http://www.eastasiaforum.org/2009/09/06/learning-to-live-with-china/

It appears that the Prime Minister's tight control and micro managing approach to his government is not only affecting foreign policy but also other areas of governance to an adverse effect.

In the foreign affairs area, it is not only reflected in the relations with China, but also in the likes of the appointment of ambassador to Germany etc. His personal likeness overruled the advice of the foreign minister and the department.

In the climate change area, his approach of no effective negotiations and engagement with the opposition as well as the independent senators severely damaged the government’s credibility in its climate change policies.

In the national broadband network area, his like of grandeur technology has led to the most silly government policy involving tens of billions for a project that did not have a business case study.

For the stimulus packages as responses to what he called a tsunami, cash handouts were done not only once but twice with the second done even knowing that a significant part of the first handouts had been saved rather than spent to stimulate the economy.

What about the building education revolution spending on schools to build a hall or library for each and every school? Was that done properly?

While not all the above were completely the fault of the Prime Minister, his tight control of the government and micromanaging approach obviously played a significant part. Everywhere bears the hallmark of the one man micromanaging and tight control.

Micromanaging and tight control may be good for political spins, but it is rarely good for a government to develop good policies and apply good governance.

Perhaps it is time for Rudd to consider the effects of his approach and empower his ministers and the bureaucrats to do their work so his government can be more effective in all the main areas of governance including foreign policies and relations with important partners.

Australia needs further reforms of its industrial relations system

Comments on Corin McCarthy “On the wrong track when politics drives wages policy”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035134-5013480,00.html

While it is true that a flexible workplace and industrial relations system will benefit the economy, productivity and employment of low paid workers, to let the market completely dictate the conditions and pays of workers like treating low skilled workers as slaves is also unacceptably inhuman. There should a balance between different objectives. Business profits and human dignity are both important.

Tax credits for low income people can be part of the solution. But that should be done for lowly paid workers as opposed to others who may have worked fewer hours with high paid jobs. This is an important principle that should be incorporated into the design of tax and welfare system through the Henry tax review.

Another point is that instead of setting a compulsory bottom for the minimum pay for the lowest paid workers, the relevant agency or commission may recommend a set of indicative decent minimum wages that serve as a reference for business and workers whey they negotiate on wages and conditions.

A third point is that there should be room for individual workplace contracts alongside other forms of employment contracts. To have some safeguard for both employees as well as businesses, such contracts should be lodged with a government agency for filing and potential disputing resolutions.

Australia’s industrial relations system needs another significant change after the next federal election, notwithstanding the current rewriting of it by the Labour government following its mandate in the last election.

While Gillard is constrained by election promises, the huge amount of work in a short time and inexperience so far, the next term Labour government should provide a good platform to do more and do it in a more sensible way.

Government and bureaucrats are abusing economics

Comments on David Burchell “An economist's laugh, but joke's on us”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035133-5013479,00.html

The Keynesian’s main approach to macroeconomic policy is to use government expenditures as the main tool to manage the aggregate demand. Since that comes from government, how successful of that demand management depends on the competency and virtue of the government of the day, as well as top economic bureaucrats.

Unfortunately the experience over the past year or so in Australia shows both were not competent enough and the government was too focused on its own election politics as opposed to the nation’s well beings.

The Treasury, the nation’s top economic advisory agency for example, came up with cash handouts that were the dumbest economic strategy to stimulate the demand. Why didn’t it come up with better targeted demand stimulating measures? One can only guess.

The government, on the other hand, came up with the Education Revolution spending to build a school hall or library in each and every school irrespective whether they needed it or not and irrespective school funding needs at all. That has generated huge wastes and inefficiency and now they have a budget overrun and have to increase funding to that program.

The Indigenous Housing projects in the Northern Territory by the federal government is another prime example of how incompetent of both the government and its bureaucratic agencies. So much money and time have been spent and no single house has been built. How competent was that?

While on the other hand, the government is using the crisis as an excuse to increase spending in the name of jobs. Its own doing has been no different in giving some unemployed people and ask them to fill an ABS job survey to say they are employed.

That is not what Keynes had in mind and not true Keynesians are about. That is a gross abuse of economics, economic principles and proper economic and budgetary governance.

Turnbull may not necessarily paint himself into the coner

Comments on Glenn Milne “Debt rhetoric paints Malcolm Turnbull into a corner”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035135-33435,00.html

While there might be a risk, Turnbull should have a strong point to run, not just for now, but also in leading up to the next election and the opposition’s broad budgetary strategy for going to the next election.

It will not be difficult to do it. It needs some prerequisites. The first one is that it needs that the Rudd government could be exposed to budgetary imprudence. That has been and will continue to be exposed from now on. The school’s wasteful spending and costs overrun is a primary example. The federal government’s Indigenous housing fiasco in the Northern Territory is another. So Turnbull and the opposition have got some real facts already on their hands. The question is how to best use them to their greatest political advantage.

The second one is the ability to prepare a broad budget that is within the federal government’s overall spending but in a smarter design either to deliver a better outcome or the same outcome with smaller spending and hence smaller budget deficit and debt implications. It will not be very easy to do it, but should not be too hard for the coalition if they prepare themselves well and start to do it from now.

The key lies that the opposition needs to hammer the government on budget management and spending priority and efficiency. On that one, the opposition has an advantage.

If the opposition uses its advantages in managing budgets and debts well, it has a very good chance to either significantly closing the gap with the government or win the next election.

With due respect to Glenn Milne, he may be wrong on this point.

Focus on the means but how?

Comments on Bjorn Lomborg “Focus on the means”, 7/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26035132-5015664,00.html

While the means is obviously important in achieving emissions reduction, Bjorn Lomborg is wrong in arguing that the current approaches/proposals by governments will not be effective. Far from it, they are an important step towards finding the best means to achieve emissions reduction.

Bjorn Lomborg’s argument misses the main point in the international community’s global effort to combat global warming, that is both governments and the private sector will need to play a part.

Bjorn Lomborg argues mainly for governments to set aside research funding for finding the means. Why could that not be achieved through mandatory targets for emissions reduction? That will create price signals and business certainty and incentives to innovate and to find solutions to the challenges in an economic way.

Only by unleashing the innovative power of the private sector can and will the global objective be achieved with the minimum costs.

By relying only on governments, Bjorn Lomborg risks sending mixed signals to the private sector, and generate business uncertainties. That is not the right way to this global important and urgent issue of global warming. In fact it is the wrong approach.

We cannot afford any uncertainties and delaying actions. Bjorn Lomborg should not confuse people, whatever agenda he may have in arguing that way.


A useful source - 500强公司面试的经典正确与错误回答对比

This is from 陌上。。的日志, "500强公司面试的经典正确与错误回答对比!!! 看看你的弱点", http://www.pinggu.name/space.php?uid=1121706&do=blog&id=17057


A useful source, maybe.

stanleyjunjun的日志 "[读书] 后美国世界 THE POST-AMERICAN WORLD", http://www.pinggu.name/space.php?uid=311813&do=blog&id=17443

Its source: http://www.pinggu.name/link.php?url=http://fora.tv%2F2008%2F05%2F27%2FFareed_Zakaria_Thriving_in_a_Post_America-Centric_World

Some fast stock market bubbles

Comments on stanleyjunjun的日志 "[转贴] 世界上几次“6倍涨幅”股市的结局", 31/07/2009, http://www.pinggu.name/space.php?uid=311813&do=blog&id=17440


Illusion or disillusion, facts or something else?

Comments on Mohamed Ariff “China’s economic clout may be an illusion”, 4/09/2009, http://www.eastasiaforum.org/2009/09/04/chinas-economic-clout-may-be-an-illusion/

Mohamed Ariff’s argument might be right and might be wrong. The US clearly is the world’s largest economy and China is still a long way behind, not only in nominal terms but also in purchasing power parity (PPP) terms. There is no question about that.

However, there is a big difference between China’s nominal and PPP GDP relative to the US’. I think it is in this area that Mohamed Ariff appears to have got the basic fact wrong.

In PPP terms, I think most people rank China as the second largest economy in the world after the US in 2007, but quite a bit (60-80%) larger than Japan (US $I14.3, China $I7.8, Japan $I4.4, India 3.3 and Germany $I2.7, all in trillions according to CIA estimates). So it well deserves to be the second, unless it has suddenly fell to a hole in the last year and half compared to Japan. I beg it has not happen. For references, see: http://www.scribd.com/doc/16386220/World-Bank-World-GDP-2009-PPP, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html?countryName=China&countryCode=ch&regionCode=eas&rank=3#ch.

In nominal terms china’s GDP in 2008 was estimated to be $US4.2 trillion, compared to US’ $US14.3 trillion, Japan’s $US4.8 trillion and Germany’s $US3.8 trillion. So it is the third largest in nominal terms as opposed to PPP terms. See: https://www.cia.gov/library/publications/the-world-factbook/fields/2195.html?countryName=China&countryCode=ch&regionCode=eas&#ch.

If such facts, so easily available, can be got wrong what about the argument based on them?

Now let’s have a look at Mohamed Ariff’s argument about China’s economic clout. In terms of trade China ranks also as the top 2 and 3 in the world. In terms of exports, the top 4 were Germany, China, the US and Japan with exports estimated to be $US1.50, 1.44, 1.29 and 0.75 trillion respectively in 2008: China was similar to Germany but larger than the US. In terms of imports, the top 4 were the US, Germany, China, Japan, $US2.11, 1.23, 1.07 and 0.71 trillion respectively in the same year: China was about half of the US’.

China’s real GDP growth has been about twice of or higher than that of the US’ over the past decade or so. If assuming that relative growth trend continues for the coming years, it would not be difficult to know that China’s growth impact in absolute terms should be larger than that of the US’. And the gap or differential will be increasing as China’s size further increases relative to that of the US’.

So, while the US will be important to world economic recovery and growth given its size, China’s real impact is likely to be even greater in absolute momentum or growth terms. That is not illusion but a fact. Anyone who fails to see that is no different to see the existence of the sun in our solar system.

This is the scenario under normal circumstances, not to mention that the US has been hit much harder by the crisis than China. That would naturally further enlarges the gap of impact between the two.

It is just as simple as that. End of story, and period.

Australia should continue its economic reforms

Comments on Michael Stutchbury “How we beat the recession”, 5/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/how_we_beat_the_recession/

Australia has benefited from the successful reforms from the previous successive governments, as well as China boom.

We have been able to weather the most severe world recession in many decades thanks to the past successes.

Macroeconomic policies, both monetary and fiscal, have played a useful role and contributed. Both the government and RBA should be congratulated, although the government should not over claim credits.

We should continue economic reforms to raise productivity and to stay in the front of world frontier.

Industrial relations changes are an unfinished business. The Rudd/Gillard government needs a strategy to move beyond its current rewriting of the IR laws after the next election if it retains the government, as it is expected now. There should be no complacency about that.

Relations with Asia especially with China also need to be attended closely.


Good or poor bureaucrats?

Comments on Robert Gottliebsen “Swan's stimulus log-jam”, 4/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Housing-project-not-all-over-yet-pd20090904-VJTMA?OpenDocument&src=sph

It is interesting but ironic that the inefficiency and incompetence of bureaucrats has resulted in costs blow out and slowness in the implementation of the Rudd government’s stimulus programs that now effectively has an effect in reducing the stimulus as the economy powers on beyond and above expectations.

Rather than being sacked, perhaps those involved in such inefficiency and incompetence might be promoted for their positive contribution now. Unexpected things can and do happen!

China will be better off to allow freedom of press

Comments on Daniel Kliman “China: Japan’s Rising Power Conundrum”, 3/09/2009, http://www.eastasiaforum.org/2009/09/03/china-japans-rising-power-conundrum/

If the second point of the policy implications can be achieved, it will be good for everyone, the vast majority of the Chinese included.

It is in the interest of China and its people to allow a reasonable degree of freedom of press. Some people in power may be uncomfortable with that due to increased scrutiny pressure on them. But that will constrain political leaders so that they are more accountable to the people they govern and that can only be a good thing.

A global ETS would be good for everyone

Comments on Raghbendra Jha “India and the Copenhagen summit”, 4/09/2009, http://www.eastasiaforum.org/2009/09/04/india-and-the-copenhagen-summit/

If a global ETS is done on a voluntary basis and everyone has the same right to emit, I don't see any disadvantage to developing countries. To the contrary, I think it will be a good thing for both developed and developing countries, as well as the global climate.

I think if a global carbon tax and a global ETS are done on the basis of equal per capita allocation of emission rights, then it can only be a good thing to everyone.

Such a global scheme will be efficient, effective and equitable and represents the best global policy in dealing with reducing emissions.

The problem is that very few people are promoting a global ETS and a global carbon tax, due to various political reasons. It indicates a lack of leadership both at the global, international and national levels and that is a pity.