Welcome to Dr Lincoln's blog

Welcome for visiting my blog. Hope you enjoy the visit and always welcome back again. Have a nice day!


Emerging multipolar world

Comments on Simon Tay “The US-Asia relationship in 2010: Progress and problems”,
30/12/2010, http://www.eastasiaforum.org/2010/12/30/the-us-asia-relationship-in-2010-progress-and-problems/

Tay's concluding remarks are particularly worth noting: "A new context for American-Asian relations is emerging. America now faces a spectrum of strategic choice running from potential isolationism grounded in the idea of American decline to the acceptance of a more multipolar world and a continued engagement on different terms. Leaders on both sides must work to smooth this new and difficult transition."

History could be a burden, but unrealistic and wrong expectations may also be unhelpful and counter productive and even harmful and destructive.

It is in that context and expectation that every country. including declining and rising powers, should conduct itself and behave in a cooperative way appropriate to that context. Missteps by any may not be in the interests of most countries.

Unions have a useful role to play

Comments on Christopher Bantick “School autonomy plan will be union's last stand”, 31/12/2010, http://www.theaustralian.com.au/news/opinion/school-autonomy-plan-will-be-unions-last-stand/story-e6frg6zo-1225978938975

I must confess that I have little to do with unions at the outset before I begin my commenting.

There are two sides of the story and Christopher Bantick appears to be on the extreme part of one side.

If the public or taxpayers have difficulties to hold the one state government and parliament to account, how could they hold so many taxpayers funded individual schools and hospitals accountable for their performances?

It is easy to say that let poor performed schools die, but what about the students in them? That is especially important and pressing, given the fact that school performance are affected by many factors and the socio economic background of students included.

There should and must be an appropriate administration of taxpayers' money.

Christopher Bantick seems a fun of Gillard's approach, how he feels about her BEN wastes? Don't just simply say that was others responsibility and problems.

So please be realistic and not too idealogical on either side, mate. The reality is much more complex than you presented.

Further, while not all actions by unions are good, but there should be a role for unions to protect the most vulnerable ones in any professions.

Of course, that does not mean that unions should be above everyone else or other organisations.


Bernanke's QE effort applaudable

Commnets on Karen Maley “Primed to pop in the US”, 30/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Primed-to-pop-in-America-pd20101230-CLT7U?OpenDocument&src=sph&src=rot

Ben Bernanke's idea of creating an asset effect is a good one, though it requires a concerted effort by all relevant US authorities to put the best effort for it to work. The condition can be very difficult to be met.

Should the Fed's single minded effort not work, then the consequences would be more serious than without such effort.

But when the economy is in a crisis situation, and there is no other conventional means to get it out of that predicament, then one is attempted to do something novel.

Another way to achieve that goal is for the authorities to purchase foreclosed houses with a predetermined rule that can stimulate the house market by putting a floor under.

It may be difficult to implement it, but should be more effective.

There might be a middle way to combine QE and house purchasing to stimulate both equity and house markets.

In this sense, the different authorities must work together cooperatively while still not to undermine the independence of the Fed or monetary authority in terms of monetary policy.
They are all possible new macroeconomic ways to deal with the balance sheet recession or possibly more serious depression. The US is now in a similar situation to Japan's in the 1990s.

This crisis or more enduring economic recession requires new policy prescriptions. Bernanke has been trying to do that from the monetary policy point of view.

I wish him good luck on his innovative endeavour.

Rudd and Rudd - brothers

Comments on Greg Rudd “Always expect the unexpected”, 30/12/2010, http://www.theaustralian.com.au/news/opinion/always-expect-the-unexpected/story-e6frg6zo-1225978219105

While I was amused when reading the first half about we Australians making jokes about our PMs, I have some questions about G Rudd's second half.

His argument about America and China in terms of unintended consequences, for example, may be only half correct. Clearly, access to large overseas markets like the America's has played a useful and possibly important role in China's rise over the past two decades, the seed of its rise was sod in the late 1970s. Further, the key elements of China's economic rise have lied in its political stability with its main focus on economic development as opposed to political campaigns that has characterised the Mao's era proceeding the reforms.

So, in my view, America to the most played a useful reservoir role to China's economic growth to adjust its uneven processes, and to accelerate its capital accumulation process. But that should not have been the deciding factor.

Another is his argument about 2011: "a leading global issue for 2011 is going to be workforce availability and cost of labour."

That will undoubtedly be true for Australia, possibly for some developing countries including possibly China (the emerging shortage of surplus rural labour supply), but it will be unlikely true for the US, Japan and most of Europe and they still have a lions share of the world economy. The latter' economies will still be struggling to rid of their recession or debt issues or austerity consequences like the UK.

The world has been multi speed economy! The global economic crisis, more more accurately, the North Atlantic financial and economic crisis, has made the differences in economic growth among the world economies much more contrasting and possibly more enduring!

However, for Australia, there is a question about the improvement or benefit for local "labour", of mining boom. Many business people argue that immigration should be used to ease the pressure of labour shortage, but they are for their own interests, that is, more immigration and increases in labour supply will depress labour wages and increase their profits at the expenses of local labour.

The government should consider the impact on local businesses and local labour of immigration, as compared to just taking a pro business approach and liberalise immigration. That is unjust to local labour both in terms of the direct effects on current wages and the indirect effect on their skills upgrading!

That is the essence of analysis of political economy!

More interesting time lies ahead to watch!


When will China be the largest economy?

Comments on the Economist's question and its projection on when China will take over the US as the largest economy. See http://www.economist.com/blogs/dailychart/2010/12/save_date

It seems reasonable that China will take over the US as the largest economy by 2020.

While the assumption about growth rate, inflation and exchange rate changes can be made to project different scenarios, it may be easier to use the purchasing power parity (PPP) as the base of projection and that would involve fewer assumptions and leave the inflation and change rate changes out of the equation.

That would certainly make the projection more focused on the real side, as opposed to nominal side that can swing dramatically from time to time.

Based on CIA world factbook data, China's GDP was $8.8 trillion and the US $14 trillion in 2009, indicating that the US' was 1.591 times of China's economy in real terms in that year.

Assuming the difference in their growth rates is 5% a year in real terms, it would take 9.5 years for China to catch up with US, i.e. 2018-19.

You can vary the assumption on the difference in growth rate and derive a range.

By doing that, the likely scenario is that between 2016 to 2022, China will become the largest economy.
PS: The Economist projection is:
Over the past decade real GDP growth averaged 10.5% a year in China and 1.7% in America; inflation averaged 3.8% and 2.2% respectively. Since Beijing scrapped its dollar peg in 2005, the yuan has risen by an annual average of 4.2%. Our best guess for the next decade is that annual real GDP growth averages 7.75% in China and 2.5% in America, inflation rates average 4% and 1.5%, and the yuan appreciates by 3% a year. Plug in these numbers and China will overtake America in 2019. But if China’s real growth rate slows to an annual average of only 5%, then (leaving the other assumptions unchanged) China would become number one in 2022.

Russia the wild card in Asia Pacific

Comments on John Lee “Watch out for Russian wild card in Asia-Pacific”, 29/12/2010, http://www.theaustralian.com.au/news/opinion/watch-out-for-russian-wild-card-in-asia-pacific/story-e6frg6zo-1225977417402

Russia will be a considerable power to be reckoned in Asia.

However, there is no guarantee that it will be closer to the US and its allies than to China.

For the foreseeable future, it is much more likely that it will be closer to China, given its interest in preserving its world power status and that the US is unlikely to be happy to see a stronger Russia with powerful nuclear arsenals.

China, on their hand, will realise that it is in its interest to see a multi-polar world where the US will no longer dominate the world at will. It will recognise the value of Russia to its world strategy.

The argument that China views the future of the world as bipolar is wrong and China has strongly resisted that view pushed by some. That is a trap for China and China understands that.

In the next 20 to 50 years, the world cannot be anything but a multi polar world, where cooperation will outweigh competition.

That is the best outcome for everyone.

Illogical, irrational and nonsensical arguments

Comments on Michael Hitchens “Our 5 per cent accord pledge is more than enough”, 29/12/2010, http://www.theaustralian.com.au/news/opinion/our-5-per-cent-accord-pledge-is-more-than-enough/story-e6frg6zo-1225977423500

I find Michael Hitchens view incredibly misleading, to say the best of it.

Let's start with his last or concluding sentence, that is, "There is no evidence yet that would support Australia going beyond 5 per cent in Durban next year."

How could he say whether there is evidence or not for next year? Isn't complete and utter nonsense? Does he have a crystal ball to gaze into the future?

Secondly, his third paragraph is just incomprehensibly confusing. He must have misquoted or misrepresented what the government's publicly stated stance.

Thirdly, how can he justify for demanding developing countries to reduce emissions absolutely now, given that they only emit a fraction of what the developed countries' in per capita level? Why didn't he say that the developed countries reduce their emissions to the level of the developing countries' first before demanding the latter to reduce theirs?

The whole post is illogical, irrational and nonsensical.

I wonder why the Australian find it any use to publish this nonsense.

Mining boom and dutch disease

Comments on Tony Makin “Dutch disease no excuse for poor productivity”, 29/12/2010, http://www.theaustralian.com.au/news/opinion/dutch-disease-no-excuse-for-poor-productivity/story-e6frg6zo-1225977420144

Some points to consider:

1. If the mining boom really delivers some positive benefits to the Australian economy including those above mineral royalties, then part of that should be saved for compensating the use of minerals and for the benefit of future generations, as opposed only to lower tax rate for other industries in response to the Dutch Disease effects.

2. The slow down in productivity in the past decade, is that only in Australia or is that also in other industrialised economies? That can have significant implications. If it is a wider phenomenon, then Australia is at least not alone to blame.

3. While reducing government spending may reduce pressure on interest rates, what is the cost of lower government spending? Or government spending is only negative to the economy or neutral? Optimal government spending, excluding ineffecient policies and wastes, should be positive to the economy, it seems.


It is not China but possibly the US

Comments on John W.H. Denton “China need not be an emerging problem”, 28/12/2010, http://www.theaustralian.com.au/news/world/china-need-not-be-an-emerging-problem/story-e6frg6ux-1225976793355

While post is made from the businesses perspective, it has a strong strategic flavour.

Globalisation and economic integration and deep exchange of trade mean that historical examples of great power shifts may be just that, a history.

It is most likely that China's rise will be peaceful, even though there will be challenges in the processes.

The most serious challenge is how the existing power reacts to the power shift in the process and see its relative decline and the rise of another country that can become stronger and replace it as the most powerful.

The attempt of or the tendency of maintaining own power and creating difficulties for the new comer could be very dangerous and would be detrimental to everyone.

Australia is in a unique position in this power shift and its vital that it engages both constructively. It is in Australia's utmost interest to see a peaceful process.

On that note, the revelation of Rudd's ill considered discussion with US concerning China by Wikileak indicates the weakness side of Rudd's personality, and strategic and leadership skills that saw him lost of his prime ministership in the first term.

Australia needs to guard against that kind of amateurish.

The next decade ahead

The second half the 20th century was much better than its first half - no world war and living standards rose for many people with big developing countries particularly China.

The first decade of this century has seen some surprises - the 9/11 event and its wake: the Afghanistan and Iraq wars are still going on now; the financial and economic crisis that still has not ended especially in the North Atlantic quarters by now. All in all, not a particularly good start for this century.

Who knows what will be the next decade in store. But we will see and experience it, bit by bit.

It appears that global changes are likely to continue. They include:

economic power shift to the east;

climate change and human actions to counter it, successful or in vein;

the relative decline of American power and emerging of multi-polar powers;

further globalisation and the evolution of world orders;

more rapid technological changes, some may be frightening.

Let's hope Gillard for the best

Comments on Gavin Atkins “Labor should just stop meddling with markets”, 28/12/2010, http://www.theaustralian.com.au/news/opinion/labor-should-just-stop-meddling-with-markets/story-e6frg6zo-1225976798469

While I share some of the points Atkins argued, I think it may be still too early to conclude on Gillard on her approach to market, regulation or deregulation.

In terms of her role in most of Rudd era mistakes, she can't escape from it.

In terms of the MRRT replacing the RSPT, Gillard did not seem to have too many other options. The MRRT has been an improvement over the RSPT, though it still has its own problems.

Should Gillard have done it? She had too, otherwise she and the ALP government would have been finished by the ALP and the public.

As to the carbon pricing, either a carbon tax or else, she will have to do it too and there is no other easier or better way out. The quesition for her is whether she can pull the best and efficient pricing mechanism among all options available and in the current political environment.

If she can introduce a sensible carbon tax that is flexible to take account international actions, broad based with little or few exemption, revenue neutral to return the revenue to all residents, trade neutral, that would be the best thing she could do.

I think Gillard still have time to change course of governance and show leadership, although there is no guarantee that she will take it.

At Christmas time, I wish Gillard the best and hope she will learn from Rudd mistakes.


Gillard and Swan should learn from Rudd's mistakes

Comments on Paul Sheehan “A blunder to top all the others”, 27/12/2010, http://www.smh.com.au/opinion/politics/a-blunder-to-top-all-the-others-20101226-197tz.html

Rudd tried to further centralise power to Canberra and failed.

His successor and some federal politicians still continue that unfortunate trend. They, and some of their supporters, think that Canberra can do a better job than its states counterparts in delivering services, whenever services by the states are not satisfactory.

They forgot the history of failures of Canberra in services delivery, as the past three years have showed.

More importantly they neglect an important factor, that is the states face stronger competition than the federal government in terms of services delivery, not only the comparison and competition between the federal and states governments in terms of performance, but between the state governments as well in delivering the same services.

The stronger competition, besides and beyond the fact state governments are closer to their respective residents and naturally understand better their needs, keeps each state government work harder than just one Canberra government to do all the services with no alternative horizontal competition.

The competition between state governments works in the same way as business competition to bring out innovations and lowering costs.

I hope those people having the view that power concentration to Canberra and weakening the states should think again and carefully, because they will be very disappointed if that really happens and the costs will be very high.

Abandon those unrealistic wishful thinking and strengthen the Australia federation, please!


Federal Labor should be wise on MRRT with the states

Comments on Paul Kelly “Labor can't afford another humiliation”, 24/12/2010, http://www.theaustralian.com.au/news/opinion/labor-cant-afford-another-humiliation/story-e6frg6zo-1225975606789

Well, Paul, you have set a bar that is too high for Labor.

Another humiliation, unfortunately, is on the way and is inevitable, that is the fight with the states on state mining royalties.

Unless Gillard/Swan and the federal government retreat immediately from their current attempt to force the states to bend to its will on mining royalties, they may lose even more including their current MRRT to the states, should they mount a constitutional challenge on the constitutional validity of the federal government to impose that tax.

The fundamental fact is that the right to royalties or mineral rents as the MRRT says, belongs to the states, unless the land belongs to the Commonwealth.

Gillard and Swan need to be much wiser to launch a fight with the states to pick up royalty revenue from the States.

They have been silly on this for some time and now they need some sanity in their own minds.

What does the entire above mean? It means that another humiliation is already on them, sadly to them.


Long S. Le's norms, values and moral for South East Asia

Comments on Long S. Le “The values dimension of Southeast Asian development and the rise of China”, 22/12/2010, http://www.eastasiaforum.org/2010/12/22/the-values-dimension-of-southeast-asian-development-and-the-rise-of-china/comment-page-1/#comment-354351

I tried to understand what Le meant by values, but may have got half of what he really meant.

He might mean democratic norms and values, as he states in his last paragraph, or his ‘moral dimension’ along economic development.

However, I seem to have noticed Le's difficulties in making his argument of values of ASEAN, given that he mentioned Vietnam, Los, Cambodia and Myanmar, which are all members of ASEAN or South East Asia. He seemed to be painstaking! On that front, he would depend on a lot of thing to happen before his argument can be realised. But whether they will happen as Le wishes is completely out his control and he may have to only wish.

Maybe, in Le's view of the world or history, there is or should be only one way of moral dimension or democratic norms and values, that is, whatever he has got in his mind.

Le talked about the evolution of something along economic development, presumably based on what has existed by now, but what about any possible evolution of those norms, values and morals in the future that may generate what he simply has not embedded in analytic framework?

Does Le believe that the current system will be unchanged forever in the future, without any possibility of evolution, not to mention potential revolution?

Is that what Le’s norms, values and moral about?

PS: It appears Le has very strong moral, values and norms that are very much against China, the rise of China and the so called Beijing consensus irrespective whether it exists or not, if one reads the meaning of his article. He is either vaguely or not so vaguely in the mode of containing China and the rise of China.

Johns population argument misses important points

Comments on Gary Johns “We do not need sustainable population policy”, 23/12/2010, http://www.theaustralian.com.au/news/opinion/we-do-not-need-sustainable-population-policy/story-e6frg6zo-1225975159449

While Gary Johns has the experience as a federal government minister and has many excellent views, it appears that Gary John might need to learn some basics as well as new ideas in terms of sustainable population and immigration.

For example, the use of the contrast of Bill Gates and Thomas Malthus are just hyper because they are two extremes and are far from what most people's talks on sustainability.

Further, while he talked about many points and they may be useful, he missed one important point in terms of immigration in terms of economic growth, that is, does it improve the productivity and pay of Australian labours, besides its benefits to businesses owners?

This point should be one of the key criteria to assess the benefits and costs of immigration, higher, lower or as usual.

Any talks ignoring this point miss the biggest interest and concerns of the Australian public.

PS: the argument in terms of the costs per head of defending the country is seriously either out of date, or irrelevant, or ignorance of Australia's history. How many times we faced a serious invasion by others? On the other hand, we have fought quite a number of wars overseas at our own decisions. Alliance with the US has greatly diminished Johns’ unhelpful argument. Besides, to be able to defend the country on our own without the assistance of others, we would need a much larger population, perhaps a few times of the current size. Is that realistic, or necessary for that matter?
Another important point that I also missed in the comments above is that how Australia can prepare and foster the skilled human resources it needs, as opposed to acting as a pirate and relying on immigration. Relying on immigration is simply irresponsible and immoral!


The fate of MRRT

Comments on Matthew Stevens “Scrap MRRT and start again”, 22/12/2010, http://www.theaustralian.com.au/business/opinion/scrap-mrrt-and-start-again/story-e6frg9lx-1225974669534

Maybe the proposed tax summit next year could provide a useful and convenient opportunity for changing the course of the current MRRT, to make it better and have the effect of scraping it and starting "designing this thing all over again".

That could provide a compromise for everyone currently involved, and also could meet the demand of the Greens.

But people need to guard against the Greens push for a higher effective mining tax than the current MRRT. The Greens have a wider agenda and tend to ignore the practical side of common economics in their single minded pursuit of environmental objectives.

A higher effective mining tax would be very much detrimental to the nation’s interest by killing off the mining industry in Australia and force it to move overseas, or at least to reduce their investment in Australia significantly.

The appointment of Treasury new chief

Comments on Michael Stutchbury “New chief can fill huge shoes”, 22/12/2010, http://www.theaustralian.com.au/business/opinion/new-chief-can-fill-huge-shoes/story-e6frg9p6-1225974683241

I note that you state the following: "He's a good choice if Labor is serious about putting a price on carbon next year. As head of the Department of Climate Change, Parkinson led the development of Labor's shelved emissions trading scheme."

One can almost find some contradictory in those two sentences: does it mean he's done well with the "shelved emissions trading scheme"? Was it because of his contribution to the outcome or the original scheme? Or was the shelf good or bad or indifferent? One has to wonder or struggle to answer those questions.

Further, without commenting on or implying Dr Parkinson's ability in relation to the his appointment to the Treasury post, Treasury's policy brief is much wider than just carbon pricing, albeit the latter is very important.

The latter could also be handled by a competent climate change department head, for example. That would be an alternative.

Use the Mining tax to reduce vertical fiscal imbalance

Comments on Dennis Shanahan “Gillard retreats on levy to save hide”, 22/12/2010, http://www.theaustralian.com.au/gillard-retreats-on-levy-to-save-hide/story-fn6nj4ny-1225974698079

While it is obviously a moot point to move the fight from with the miners to with the states, one would hope that is only a face saving tactics.

If the Gillard government really wants to fight with the states on mining royalties, they may well lose that war constitutionally, given that the states are custodians of their land including the mineral wealth embedded in the land. What it means is that the states are entitled to mining royalties and if the mining tax is a form of royalties, then they should belong to the states as opposed to the Commonwealth.

Even leaving the constitution issue aside, the existing vertical fiscal imbalance suggests that it is not wise for the Commonwealth to grab more tax powers from the states. Rather, it should do the opposite, that is, to give more tax powers to the states to strengthen their finance for meeting the future challenges of services provisions.

This is particularly clear in the wake of the national health / public hospitals reform, which used the prospect of the states’ inability to have the necessary revenue in the longer term to meet the needs of public health in the future.

Further centralisation of revenue powers is not necessarily good for the nation. It blurs the already unclear responsibilities and accountability between the two important layers of government in Australia.

The Commonwealth should not act as a big brother and treat the states with contempt. A truly cooperative federation requires the Commonwealth to be wiser and altruism, focusing on what it should do and do them better, as opposed to bully the weaker states.


Mining tax should be returned to the states

Comments on Matthew Franklin and Amanda O'Brien “Gillard to take mining tax to COAG”, 21/12/2010, http://www.theaustralian.com.au/national-affairs/gillard-to-take-mining-tax-to-coag/story-fn59niix-1225974171014

The problem with the MRRT or RSPT is that the federal government tries to grab mining revenue that should belong to the States.

That is where the tension of whether future increases of royalties by the states can be credited to offset the proposed tax.

Imagine that if all the proposed tax proceeds go to the states where the mining occurs, then there would be such contentions on increasing the royalties by the states or not.

In retrospect, it appears that the Henry review had a natural bias towards to benefit the federal government in terms of revenue.

The process of tax reforms proposed by the Henry review, if the mining tax is to be used as an example, will further exacerbate the vertical fiscal imbalance in Australia.

That is not good for a good federation – a well functioning and efficient federation requires clearer responsibilities and revenue powers at each level of government of the federation. But Henry review, so far at least, has not assisted in that direction.

Henry's legacy

Comments on Stefanie Balogh, Joe Kelly “Ken Henry's Treasury replacement to be climate department head Martin Parkinson”, 21/12/2010, http://www.theaustralian.com.au/national-affairs/treasury/ken-henry-expected-to-be-replaced-at-treasury-by-climate-department-chief-martin-parkinson/story-fn59nsif-1225974318985

Dr Henry is obviously a very talented and capable top public servant.

Had the combination of the trio, namely Swan, Rudd and Henry, was different, his departure might reflect much strongly on his excellent personal attributes, as opposed to being marred by the spectacular failure of RSPT and the demise of Rudd Prime Ministership, as well as the mysterious number changes associated with the RSPT and MRRT projections of revenue from the proposed mining taxes. (Swan, though promoted in spite of his role in the RSPT as Treasurer and his inability and inflexibility to get it over politically, did not only cause the dumping of Rudd, but clouded the Henry Tax review report.)

This is not too different from many politicians who are unable to determine their own best departure time, such as John Howard’s loss his own seat at the last election as the sitting PM.

Nevertheless, Henry should be able to remember his enormous contributions to the nation and public policy as a public servant. And that what he will be remembered, in spite of the RSPT drama.

Kohler must be dreaming!

Comments on Alan Kohler “Now that's a broadband business plan”, 21/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/NBNCo-NBN-broadband-pd20101221-CBS76?OpenDocument&src=rot

Alan, are you kidding, or what?

Are you assuming that the NON Co. people involved, or the government ministers and what staff involved are so dumb that in the current political environment they choose a conservative estimate?

I am not sure you have had a good sleep, or you are still in some dreaming world.

Wake up, get some sanity please!

I hope you have not lost your soul of good analysis.

NBN now and in the future

Comments on Simon Hackett “NBNCo's point of disconnect”, 21/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/NBNCo-NBN-Internode-Telstra-pd20101221-CBR9N?OpenDocument&src=rot

You don't think the NBN Co. will become the ghost of Telecom Australia or another Telecom Australia? I hope you confidence is well placed!

Even now there is the problem about the number of points of interconnect.

What would happen when the government is out of the present pressure it is under now?

A nonsensical logic from Huisten

Comments on Ron Huisten “China and the DPRK: With friends like these….”, 20/12/2010, http://www.eastasiaforum.org/2010/12/20/china-and-the-dprk-with-friends-like-these/#more-15928

Ron Huisten's blame of China for the current situations of the Korean peninsula simply ignores the fact that China has had no troops stayed in the peninsular since the truce of the war while the US has a strong presence in South Korea.

He also ignores the fact South Korea is much stronger than the North economically and in terms of larger population.

What about tactic nuclear arsenals sometimes on the peninsular by the stronger side?

So how balanced or convincing is Ron Huisten's analysis, or more correctly speculation?

Let's look at one example from his post: At least the revelation from the Wikileaks was based on more certain factors than Ron Huisten's pure speculation on what China might have done, re, "It is even possible that Beijing did go down this path ("to revitalise the security assurances that prevailed in the Cold War days would be rejected by Pyongyang and involve a massive loss of face for Beijing") and was rejected, and that we simply do not know about it."

How could an analyst engage in such pure speculation with no fact whatsoever?

Further, Ron Huisten states “The evidence available to us indicates that China made no attempt to test the option of security assurances as a means of diverting Pyongyang’s nuclear program.”

Let’s leave aside this assertion for the time being. However, what security assurance is he talking about, given that the US and the coalition of the willing has invaded Iraq out of false security information of the so called WMD?

In such an environment, few can be sure China’s security given that the US bombed it embassy in Serbia and killed its diplomatic personnel, the US spying planes flew at the Chinese border and its intimidation of Chinese cargoes at open seas and its encircling of China, how could China be able to convince the North Korea that its security can be guaranteed?

If the following statement by Ron Huisten is true, then it directly contradicts the point Ron Huisten argued in his post, namely, “Beijing may have calculated, at least for a time, that the risks of being dragged into a war by its unpredictable neighbour were too great.”

“This acquiescence eroded to breaking point over the course of 2010 with the US eventually signalling its assessment that China has ‘enabled’ Pyongyang in bringing the peninsula closer to renewed conflict than it has been for decades.”

It is an interesting but also appalling piece, I am afraid to say.

PS: Why doesn't Ron Huisten advocate for the US to offer security guarantee, such as withdrawal of, or reducing its troops in exchange for North Korea to give up its nuclear weapons program? Wouldn't that security guarantee be much more effective than what he said about a Chinese offering?

PS: I note that my comments were not shown in the EastAisaforum site, as of late 21/12/2010.

It is interesting but regrettable that my comments are not shown.

In my view, the post is very much biased in its analysis and selective use of facts and using speculations or assertion.

Not allowing comments to point that out is not a good sign.

It has the effect of promoting and perpetuating that particular view!

Is that what the forum moderators want or wish to do?

Faith is not good enough for NBN

Comments on Jennifer Hewett “Stepping out on faith rather than fact”, 21/12/2010, http://www.theaustralian.com.au/business/opinion/stepping-out-on-faith-rather-than-fact/story-e6frg9px-1225974158720

For a national project of the scale of $43 billion, is faith a good enough criterion for a responsible government to decide to go ahead?

It appears this may have some similarity to or the attributes of the Wall Street Madoff ponzi scandal.

There must be more independent and more convincing studies on the costs and benefits of the NBN and on alternative technologies to prove whether it would be economically sound or not.

The government, already wasted so much of taxpayers' money on the BER and pink batts, will commit gross negligence if it doesn't commission independent analyses.


NBN report not believable

Comment on Lauren Wilson “NBN to repay taxpayers 'with interest', says Julia Gillard, citing business plan”, 20/12/2010, http://www.theaustralian.com.au/business/in-depth/nbn-return-to-be-lower-than-in-commercial-plan-business-plan-shows/story-e6frgaif-1225973839279

It looks like to be too good to be true - first the NBN speed jumped dramatically, and cost then came down.

Now it only needs 70% taking up rate and would make profits.

It appears unconvincing and incredible.

There should be a public inquiry on NBN costs and forecast of revenue and profits.

Nothing short of that can deliver public confidence and reasonable governance.

How can people believe what Minister Conroy and Prime Minister Gillard say on NBN costs, given that they keep changing their stance?
Conroy and Gillard are corroding the trust of the public on government policy and politics.
They, instead, should pay the due and reasonable respect to the nation and the public by upholding the proper standard of governance at the national level.

Assange, Wikileak, the US and Gillard

Comments on ABC report “US mulling charges against Assange: Biden”, 20/12/2010, http://www.abc.net.au/news/stories/2010/12/20/3097197.htm?section=justin

It would be a disgrace on its part if the US charges Mr Assange what he does in Wikileakes.

It shows the US is double standard and hypocrisy!

It also shows how it would disregard international laws and impose its unreasonable and unlawful standards to the world as the world hegemony.

A particular pity is the performance of Gillard in the wake of the event. She should be reminded that she the Australian PM and it is her duty to protect Australians' rights and should not act blindly as a puppy and the deputy of the US.

It shows either her low political skills as a politician, or low moral standard as a citizen.

In contrast, Rudd has performed much better and stands like an Australian statesman, at least on this particular matter.

How long will Gillard have to learn to be a really qualified PM? It will be interesting to see.

MRRT and revenue for the states

Comments on Dennis Shanahan “All eyes on Gillard to produce the goods as Labor's vote goes into reverse”, 20/12/2010, http://www.theaustralian.com.au/national-affairs/all-eyes-on-gillard-to-produce-the-goods-as-labors-vote-goes-into-reverse/story-fn59niix-1225973588561

Gillard clearly should stick to her bargain on the MRRT that replaced the flawed RSPT started by Swan and Rudd and ultimately brought down Rudd.

The key must be no or little retrospectivity, that is to say, to make a distinction between existing mining production and future increased mining production.

With that in mind and starting with the agreed MRRT as an intermediate step, the strategy is to design an optimal transition for a mining tax.

The government should not be too greedy in terms of tax grab.

Another key is that the tax mining proceeds should go to the states where they are generated.

The federal government has used the fear of no future revenue for public health in its negotiation with the states, so now we have an increase in mining tax and mining royalties are in the domain of the states, any increased proceeds should go to the states to boost their revenue power to meet future challenges from increased demand for public health.

The Henry tax report should have make this point clear in terms of tax reform to also reform the vertical fiscal imbalance between the two levels of government.

If it didn't, that is a pity and that should be addressed in the planned tax summit next year.


Can't lead?

Comments on Nick Bryant  “Can't bat, can't bowl, can't lead”, 18/12/2010,  http://www.theaustralian.com.au/news/sport/cant-bat-cant-bowl-cant-lead/story-e6frg7rx-1225972430589

Oh, you got to recognise our first female PM - that surely is a huge progress and should be congratulated!

To depose a first term PM and then to negotiate a minority government with self interested independents and the Greens because of the wasteful NBN, it got to be an important achievement.

It is all a relative matter, mate!

Besides, focusing on domestic issues may indicate the importance of Australia – it is above all others!

Peter van Onselen is correct indeed!

Comments on Peter van Onselen “Self-interest proves strongest motivator”, 18/12/2010, http://www.theaustralian.com.au/news/opinion/self-interest-proves-strongest-motivator/story-e6frg6zo-1225972909179

While your argument is not too bad, it is not convincing to say "If, however, some people must blame others and can't bring themselves to hold nature alone responsible, they should focus their energies on the brutal dictators of overseas regimes asylum-seekers flee from, or indeed the people-smugglers who trade on human misery, not a democratically elected prime minister who has a different public policy outlook than they do."

It is obviously not nature alone - there are other factors included in them is the government's ineffective border protection policy.

Yes, it would be true that if there were no those governments there would be no asylum seekers boat arrivals.

Also true that if the weather were good, this tragedy would not have occurred.

But it would be equally true that if the government has an effective border protection policy in place, there would not be so many boat arrivals as we have been seeing over the past three years!

It may be illogical to push your point with your own self interest in mind while ignoring other important points that may contradict your argument!

On this point, the title you used seems so appropriate and relevant! Congratulations Peter!

Immigrations must bring benefits to all

Comments on Paul Kelly “All out of options on boatpeople”, 18/12/2010, http://www.theaustralian.com.au/news/opinion/all-out-of-options-on-boatpeople/story-e6frg6zo-1225972956310

I have not read any of the three reports Kelly mentioned. However, it seems that it may not be a bad thing if "the Sustainable Development report chaired by former NSW premier Bob Carr proposes the biggest changes to immigration since its inception", with recommendations "that immigration levels be linked to sustainability indicators such as biodiversity preservation, reductions in urban encroachments, improved water efficiency and better housing affordability and availability."

Rather than using those popular indicators, it could just using a criterion that requires immigration be linked to demonstrable enhancement of the well beings of existing Australian residents.

There should and must be a appropriate balance between businesses that clearly benefit from more immigrations due to increases in both the supply of labour and the expansion of the markets for many things, and the real earnings of existing labour who may or may not necessarily benefit from more immigrations due to the downward pressure of their wages as a result of increased labour supply.

In the past, the government has been too heavily influenced by businesses because they have very strong lobby groups with loud voices backed by money from businesses. On the other hand, residents are not so strong in their presentations to influence government policies. As a result, there have been natural biases in favour of businesses and larger immigrations.

Now the government should recognise this and set up criteria for immigration policies that have an autonomous mechanism to keep a balance between businesses and labour.

This should be the right way for the population minister out on most of the population issues he is faced including immigrations.

It is a different matter for boat arrivals and border protection.

While many people may say that the Howard government's Pacific solution is on the cruel side, it is a fact that it was effective in preventing or significantly reducing boat arrivals to the Australia shores.

On the other hand, Gillard's regional processing centres are unlikely to produce results any time soon.

Maybe the Pacific solution could be an interim means, pending on a better solution if that could be found.


Gillard must act as the PM

Comments on Joe Kelly “Law not broken by WikiLeaks' publication of US cables: AFP”, 17/12/2010, http://www.theaustralian.com.au/in-depth/wikileaks/law-not-broken-by-wikileaks-publication-of-us-cables-afp/story-fn775xjq-1225972735066

Gillard should feel shame for what she said earlier on Mr Assange.

She should learn some important lessons.

First, she should understand the principle of assuming a person's innocence before being proven guilty.

Second, as the Prime Minister, she should act as a prime minister to protect every Australian citizen.

Third, she should not blindly follow what the US says of does and think independently.

It was a disgrace for her rush and imprudent denouncement of Mr Assange just because he embarrassed the US. She acted simply like a clown.

This was not the first time Gillard made blunders when commenting imprudently. But this was an Australian citizen involved and she prejudiced and could jeopardise his welfare. That is unacceptable.

WTO and FTAs - both can be good

Comments on Barry Desker “Time for rethinking trade policy and refocusing on the WTO”, 16/12/2010, http://www.eastasiaforum.org/2010/12/16/time-for-rethinking-trade-policy-and-refocusing-on-the-wto/

While it may be a time to do some re-thinking, a pre-determined view or conclusion that the WTO approach is definitely preferable to FTAs may be premature.

The very basis of the theory that Professor Jagdish Bhagwati uses may have involved unrealistic assumptions. The WTO rules or a realistic negotiated WTO outcome are themselves second best because of the many exemptions and distortions embedded in those rules. So the argument that FTAs are second best and therefore is inferior to a WTO approach simply ignores the fact WTOs are also second best.

So it should be a case of comparing one second best with another second best. In that comparison, there is no necessity that WTOs are better.

Let's consider a simple point. Is there a way to improve the current WTO based trade outcome for the world as a whole, or at least for those involved in FTAs by designing and implementing some optimising FTAs?

Can anyone say for certain that such improvements do not exist at all? I doubt it.

My view is that it is highly likely that some FTAs can be negotiated to further improve the current WTO trade outcome, based on pure logic and simple reasoning. Of course, complex modelling could be conducted to show that, based on realistic examples and cases.

It is not good enough just to resort blindly to the views of some existing authorities in a field to make conclusions without carefully examining the assumptions involved or used by those authorities.

That is not a sound and scientific approach.

Uncertain sciences in climate change and government policy making

Comments on Michael Asten “Political interference will cripple climate debate”, 17/12/2010, http://www.theaustralian.com.au/news/opinion/political-interference-will-cripple-climate-debate/story-e6frg6zo-1225972366783

While Michael Asten has made very good points in terms of political interference on sciences and scientific work by scientists, it is a different matter for actions on climate change by governments.

There are indeed uncertainties regarding the science of climate change and the role of man induced global warming. That is especially so given that there were reportedly very large variations in temperature on the earth with some higher temperature periods, as well as the data used in many modelling of man induced warming cover extremely short time in comparison with the long history of the earth. It is possible that most modelling could be spurious in that context, even though many of those works in isolation could be regarded as 'sound'.

But governments have to respond to many different voices and make decisions under uncertainties. In this context, there is a question of what is the best policy that a government can make and what are the best actions to take.

While any governments should not disregard the uncertainties in climate change sciences, it would not be prudent for them to ignore the larger voices from scientists who consider that man induced warming is true.

Even for insurance purposes, governments should take active actions to reduce or limit emissions while at the same time to also take actions to adapt to higher temperature future.

The best policy, though, seems to be a flexible carbon tax which can be adjusted to best suit any new evidences or new scientific and empirical findings.

In comparison, an ETS does have the danger and runs the risk of being manipulated for financial gains by participants in the financial markets to hijack its true purposes and to increase the costs of emission reductions accordingly in the due course.

In that regard, it has been unfortunate that the Labor government from Rudd to Gillard seems to have been fixated with an ETS so stubbornly and mistaken it as a good policy.

For your own sake, please give up Treasurer job, Swan

Comments on Peter van Onselen Swan's apprentice outshines the chef”, 17/12/2010, http://www.theaustralian.com.au/news/opinion/swans-apprentice-outshines-the-chef/story-e6frg6zo-1225972364861

It will be in the interests of Swan himself, Gillard, the government and Labor (and the nation dare I say) for Swan to swap to another portfolio that he is capable to handle while keeping the deputy PM role.

His role in many of the policy blunders such as the failed RSPT up to now and in disposing Rudd as PM shows he is not up to the job.

The nation hah not seen a so incompetent Treasurer for a long time until he came to the post.

If he continues the Treasurer job for long, it will be really unfortunate for many and many people including himself.

He should have the knowledge and wisdom of self aware and take the best step for himself.

What job best suits him? That is anyone’s guess.


IMF lost its way on Australian housing market!

Comments on “House prices to stay overvalued: IMF report”, see BusinessSpectators, 16/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Overvalued-house-prices-likely-to-stay-C76J5?OpenDocument&src=hp2

Grant Colbran has made a very good point.

Indeed how did the two poor IMF guys get the figure of 120% growth of Australian house price in the last 20 years? They obviously did not understand the Australian housing market.

While they are correct in saying the strong population growth and high values of terms of trade provide support for the overvalued house market, they have not identified and studied the effects of Australia's geographical location and the impact of other Asian countries on the Australian housing market.

They are important factors, because Australia is a western country with a small population located in the East Asia region, with stable democracy and freedom, and high income, large land and lots of nice beaches. The Japanese bought properties in the 70s and 80s. Now the Chinese are buying properties in Australia.

A small number of people in those big countries can mean a big impact on the Asutralian house market!

Anyone ignores these factors run the risk of getting his analysis wrong.

The IMF has lost its way, just as the Rudd government did as claimed by the current PM!

What to do with IMF as opposed to a PM, not much at the moment it seems.

Evolution and design - extreme forms and common grounds

Comments on Oliver Marc Hartwich “A fundamental Euro flaw”, 16/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/European-Union-France-Germany-politics-pd20101214-C57AR?OpenDocument&src=rot

While the two schools of thought that Dr Oliver Marc Hartwich compared and contrasted may in their own extreme forms be incompatible with each other, there surely are some common grounds they can both work to reflect the different histories of human beings and societies.

There are obvious many differences between different societies that cannot and should not be ignored. However, how has each society developed or evolved in history to become today’s form?

There must have been many human designs in the long history of each society that exists today. Laws, for example, are designed and made by people.

So, it seems that both evolution and human designs must have both worked in the long historical process.

That is not to say that one can design anything that will work and can completely ignore the existing structures of the society.

It is important that one does not have to rely on any one of the two extreme forms of the two schools of thought, even though the euro may have been designed and implemented too hastily and too early.

Tax reforms should be too hard to make

Comments on Arthur Sinodinos “Anyone know the way to the promised land?” 16/12/2010, http://www.theaustralian.com.au/news/opinion/anyone-know-the-way-to-the-promised-land/story-e6frg6zo-1225971755174

While the conventional thinking for a personal tax cut is to raise indirect taxes through the GST, it is interesting but hard to understand why revenue neutral personal tax reforms can't be designed and implemented.

Why isn't it possible to have a personal tax reform in stages to gradually flatten the personal tax rates?

It is true that if some State taxes that are inefficient were to be abolished, there need increases in other taxes, and possibly it is the best option to raise the GST rate or reduce some of the GST exemptions on food.

But for personal tax reform, given that it is not to abolish it, why can't we design a path to translate the opportunities offered by tax bracket creeping into reducing the tax's progressivity?

It is really a myth in terms of tax reforms.

Let's not get unnecessarily too complicated on reforms. If a big bang can’t be achieved, then let’s have a gradual approach!

An important principle for tax reforms to get public support or the support of relevant stakeholders is the observing revenue neutrality for the government and not to use it as an opportunity for revenue grab.

Consistency in argument and market efficiency

Comments on John Daley and Tristan Edis “Market best to reduce carbon”, 16/12/2010, http://www.theaustralian.com.au/news/opinion/market-best-to-reduce-carbon/story-e6frg6zo-1225971753541

While the argument of using a market approach is correct, some of the arguments are problematic.

Firstly, there are market failures and the emissions issue in terms of climate change is such a typical example.

Secondly, it seems the second point in the suggested policy design may have been based on a linear assumption or projection of the effects of emissions, that is, any emissions of greenhouse gases are universally bad, and the best is no emissions at all. That is likely to be speculation and lacks scientific evidence.

Further, the advocate of a price floor is highly questionable. If the objective of dealing with climate change is achieved, then why is there a need for a floor price for emissions to raise unnecessarily the costs of processes that involve emissions? That is exactly the very issue the authors argued against, that is, government interventions can often be inefficient and in this instance it would be attempting to overdo it in emissions reduction to deviate from optimality.

We'd do a better job by being consistent ourselves in our argument and approaches. Otherwise we may be self defeating.

PS: The following is my comments on their article on ClimateSpectator on the same day - http://www.climatespectator.com.au/commentary/let-markets-lead-way Their article there has some nice graphs, though.

I have commented on their article on The Australian entitled "Market best to reduce carbon".

The very problem we are having with emissions and climate change has been the failure of the market in accounting the real costs of emissions.

That fundamental fact cannot and should not be ignored.

So, both the market and government policy are needed to reduce emissions.

In that broad context, the best option for government policy in terms of efficiency and innovative incentives for businesses is to have a carbon tax.

Further, the global nature of emissions and climate change requires a global approach and common actions by many countries especially the major economies with largest emissions.

More than haste and lack of flexibility in BER wastes

Comments on Justine Ferrari “Haste and lack of flexibility to blame”, 16/12/2010, http://www.theaustralian.com.au/news/opinion/haste-and-lack-of-flexibility-to-blame/story-e6frg6zo-1225971780731

It seems a gloss over a miserably failed public project.

The fact appears to suggest there were failures on both levels of government - Commonwealth and state in the processes.

Why didn't they ever consider what problems could likely occur in the first place and make better public decisions?

Why didn't they correct problems earlier?

Now, what could and can Brad Orgill say, given that he is the government appointed for the task?

It is nothing less than a continuation of the same failed policy/program – not too dissimilar to the saying it is difficult to teach old dogs new tricks.

It is a shame of the government and the person involved in the report.

Hemmings' poor analysis of the Korean penisular

Comments on John Hemmings “A rational suggestion regarding North Korea”, 16/12/2010, http://www.eastasiaforum.org/2010/12/15/a-rational-suggestion-regarding-north-korea/

This is by far the most moralistic approach based on ideal by a bystander on the one hand, and extremely irresponsible bordering humanitarian disaster on the other.

However, there is no guarantee that what John Hemmings proposes is workable or even as good as the one he despises as not working.

It is a biased analysis and a dangerous advocate for an extremely risky experiment that has little prospect to succeed but is destined to fail.

This is when people get desperate and attempt to try anything irrespective what it is!


Gittins' one extreme against another!

Comments on Ross Gittins “Only a small part of our good fortune is down to minerals “, 15/12/2010, http://www.smh.com.au/opinion/politics/only-a-small-part-of-our-good-fortune-is-down-to-minerals-20101214-18wqm.html
I note Gittins says that "our material standard of living is around average for the rich countries", as well as more on the average.

This is despite we have been exporting a lot of mining products and agricultural products that all are related to our natural endowment.

Would we still be able to be on the average if we did not have that lucky natural endowment?

So, let's don't use one line of extreme argument against another line of extreme argument, Mr Gittins.

On industry assistance

Comments on Paul Kelly “No time to rest on our laurels”, 15/12/2010, http://www.theaustralian.com.au/news/opinion/no-time-to-rest-on-our-laurels/story-e6frg6zo-1225971162407
Paul, as you pointed out, "Labor's double dilemma is to deliver fiscal restraint post the global financial crisis yet to manage the structural pressures arising from the mining boom."

In that context, it is interesting to see how to interpret and apply correctly one of Banks' listed items, namely "less industry assistance", as well as the introduction of a new mining tax MRRT.

Broadly speaking, the introduction of the MRRT and the lowering of company tax rate is a form of general industry assistance, isn't it? That is because they assist all other industries against the mining industry.

So to manage the mining boom and the two speed economy does require differential treatment to different industries and that is broadly industry policy or assistance.

Someone may say that is not the same as industry assistance, but that betrays the underlying logic of the MMRT and using the proceeds to lower company tax rate. That is no less than or no different from using spin in argument.

In a sense, that would not necessarily to increase or decrease productivity, given that it is our export market customers that pay for this adjustment through the high prices they have to pay for our minerals.

However, that does illustrate the dilemma of the indiscriminate argument against industry assistance.

Governments everywhere do it, albeit in different forms and guises. Needless to say some are good and some are bad in their effects.

Debt, tax, wastes and infrastructure

Comments on Peter van Onselen “Unlike a household budget, the national economy goes on forever”, 15/12/2010, http://www.theaustralian.com.au/business/opinion/unlike-a-household-budget-the-national-economy-goes-on-forever/story-e6frg9if-1225971141902
Peter, what you said is obviously true. However, you ignored a few important points.

Firstly, the combination of wastes and increasing government debt is never to be a good look. Under such circumstances, arguing against increasing public debt is not a bad thing to do. That is because there is available fund to do the things you argued which can be done using public debt.

Secondly, the politics of governing and opposition is very different. The opposition's main job is to hold the government to account and expose any shortcomings, weaknesses and mistakes of the government. It is the job of the government to determine what direction to take and what the priority should be.

In this instance, whether there is a need to increase government debt to fund any infrastructure building. Even under this scenario, the government has had difficulties in arguing its case because of its inability to put a business case and cost benefit study for its NBN that it argues is the largest nation building infrastructure project ever.

Thirdly, it is always better to have no debt or lower debt than higher debt, other things equal. The argument that the nation lives forever and grows forever cannot be used to have government debt for that sake. One must prove that the benefits outweigh the costs of having debt.

Fourthly, there is also a trade off between government debt and higher tax and the net benefits between using the two, just as private companies do in terms of using equity and debt financing. That also has an inter-generational dimension. It is interesting that you have not put any reason using debt is superior to more tax.

In summary, it appears that the opposition has done a very good job in its argument against increasing the nation’s public debt and forced the government to take a more cautious approach to spending than otherwise it would do.

Regrettably, the government is continuing its NBN white elephant project in spite of its exposed wastes in pink batts and BER. That is deplorable.

That should be applauded and supported, as opposed to your half rational argument to the contrary.


Banks' sole criterion of policy reform too bare!

Comments on Michael Stutchbury “Lucky country can't bank on populist reforms”, 14/12/2010, http://www.theaustralian.com.au/business/opinion/lucky-country-cant-bank-on-populist-reforms/story-e6frg9p6-1225970526451
Michael, while I agree with you the Swan banking reforms are not real reforms but popular political treatments that will worsen consumer welfare in total, I do have some issues with the following criterion of reforms put forward by the Productivity Commission Chairman (to quote from your article):

'Last week, Productivity Commission chairman Gary Banks suggested that policy changes should only count as "reform" if backed by compelling evidence that they were the best option for improving productivity.'

Productivity is and should be only a part of overall consideration. Even though it could be an important consideration, it should not be the sole criterion for reforms.

For example, if the productivity effects remain the same and there are other significant benefits (say social distribution) under a policy change, it would be an important and worthwhile reform.

One has to understand that there are trade-offs between different policy objectives and productivity is but one of those objectives.

In that sense, what Banks argued was a partial approach and could be argued as an unhelpful argument or lobby by and from a special interest group, although I do not mean that Banks really had that intention. He might have been either in a different context or misunderstood.

What do you think?

Cancun may mark a point of turning for better climate

Comments on Julian Hunt “Cancun marks a turning point”, 14/12/2010, http://www.theaustralian.com.au/news/opinion/cancun-marks-a-turning-point/story-e6frg6zo-1225970529189
The Cancun outcome does not necessarily mean what Professor Hunt argues it means.

Hunt's assessment shows the disappointment by people who would like greater and more significant actions and earlier actions. To them, Cancun is far short of their expectations.

Let's say Cancun means actions for the next decade. Then we will have a lot of time to take further and possibly more significant actions in the future after the next decade.

If Cancun can result in real actions by major emitters especially the US that has not been part of the Kyoto actions, then it will pave the way for a better future.

The important point is to get every country to act.

Cancun may play that role, if the US government can get congress to approve it.

People should be optimistic as opposed to pessimistic about actions to tackle climate change.

There can be multiple paths of actions. Cancun can only present an earlier part of the paths.

I agree that Cancun may mark a turning point, but that is a point to turn better rather than worse.


Swan's 'reforming' the banking sector

Comments on Michael Stutchbury “Package gives policy a bad name”, 13/12/2010, http://www.theaustralian.com.au/business/opinion/package-gives-policy-a-bad-name/story-e6frg9p6-1225969800721
Is this another grocery watch idea, RSPT idea or pink batts idea?

It is likely to increase the costs to consumers and mortgage holders in the longer run, because of the propping up of smaller non-banking organisations using taxpayers' money.

With Mr Swan at the helm of the nation's economic policies and reforms, how much can you expect, if the RSPT dramas and fiascos were of any guide?

Among the most recent Commonwealth Treasurers, where would people rant him in terms of competency, style and achieving good outcomes for the nation?

But I am not sure how to comment on Swan's legacy. To fair to him, he has been on the position for just three years by now.


Questioning a few of Asher's statements/arguments

Comments on Mukul G. Asher “Ageing Asia’s social protection imperative”, 9/12/2010, http://www.eastasiaforum.org/2010/12/09/ageing-asias-social-protection-imperative/comment-page-1/#comment-311738
I have some questions for Professor Mukul Asher as follows.

Firstly, what does the following statement mean without supplying the information on total population growth in the two regions, Asia and the rest of the world?

"Asia’s share of world population aged 60 or over will increase from 54 per cent in 2010 to 60 per cent in 2030. Asia will more than double its population above the age of 80 over this period."

If population growth is more rapid, doesn't it mean naturally Asia's share of all age groups could be higher?

Secondly, what does the next statement mean? “In China and India by the year 2050 the largest single age cohort will be women over 70 years of age, implying feminization of the elderly.” What are those other cohorts to compare to and where are the boundaries for each of them?

Thirdly, is the next statement correct? “Second, in global terms, there is little accumulated experience in designing and administering pension and health care systems for such large elderly populations. The only way for Asian countries to gain the relevant experience is to invest in social protection themselves.” Don’t we have the experience of population aging in many industrialised countries with pension and health care systems as the experience that could be applied to Asia in the future?

Another question: Why should the next statement be necessarily the case, if social and cultural backgrounds as well as public policies are very different between Asia and the rest? "First, Asian countries should reform their civil service and military pensions, bringing benefits more in line with the rest of the economy."

Why don't you ask the other way round?

PS addition: Professor Asher replied to my questions on the EastAsiaForum site and it is appreciated by me.


Chinese authorities playing magic

Comments on Karen Maley “China's risky rates gamble”, 3/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/China-interest-rates-inflation-yuan-dollar-pd20101202-BQS2M?OpenDocument&src=rot
The Chinese government has gone back to the future in price control using administrative measures.

Many things done by the Chinese government can only be feasible in China.

But that is the reality as it is now and the Chinese authorities can still pull rabbits out of their hats.

How long can that continue is a question mark, and that is another matter for the moment, though.

The world and different worlds

Comments on “The US is only hurting itself”, by Bill Gross, Pimco, 3/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/global-demand-bill-gross-pimco-recession-pd20101202-BQSWL?OpenDocument&src=rot
There is some truth to what is being said here.

A global fundamental realignment in production and income is inevitable and will have to occur sooner than later.

The continuing reliance on cheap labour wages in developing countries to subsidise the living standard in the US and other developed world is unsustainable when large developing countries catch up in industrial production.

You either have high unemployment in the developed world, or have them produce enough industrial goods that can compete with the goods produced in large developing countries. In competition for the same goods, the process of income equalisation between the developed and the developing countries is likely to accelerate.

The recent near death financial and economic crises and the difficulties of the recoveries of the developed economies are a manifestation of the likely more severe tensions between the two world in the years and decades ahead.

The world as a whole has to find a win-win solution to the future for both worlds.

Maybe the G20 is a forum for that solution to be found.

Gillard in a fantasy world

Comments on Dennis Shanahan “Gillard's energy cost arguments don't add up”, 3/12/2010, http://www.theaustralian.com.au/news/opinion/gillards-energy-cost-arguments-dont-add-up/story-e6frg6zo-1225964756523

Gillard appears to be mostly consistent to position herself not to contradict the views of the Greens on most issues.

Gay carbon price, marriage, nuclear, you name it.

She is particularly strategic in mind about the Greens balance of power.

That may be good to her government in the short term, but can be detrimental to the government and the ALP in the longer term.

The Victoria election is an example to the ALP nationally, if it continues its reliance on the Greens – it will not only lose votes to the Greens, but also to the coalition if the coalition takes a principled approach to preferences.

That is the devil she is playing.

On the nuclear power issue, the ALP and Gillard is out of steps with the reality.

As with the NBN, they just live in their own fantasy world.

The problem is that their own intellectual deficiencies are at the expenses of the taxpayers in Australia!


Options of saying a bottle is half full or half empty!

Comments on Peter Sheehan “Containing global warming after Copenhagen: Learning-by-doing approaches”, 2/12/2010, http://www.eastasiaforum.org/2010/12/02/containing-global-warming-after-copenhagen-learning-by-doing-approaches/
While most of what Professor Sheehan said may be true, there is a danger that some countries may be free riding in the process of certain other countries' actions on climate change.

Many countries have taken and are continuing to take serious efforts and actions to deal with climate change. They include some large developing countries such as China that sets ambitious targets for reduction in the economic intensity of emissions.

However, and clearly, businesses in Australia have also been saying loudly that uncertainties on carbon pricing are putting off necessary investment for the future, especially in the power sector or sectors that may be affected by energy prices.

What that means is what the bottom-up processes Professor Sheehan talked about are far from enough for businesses to take adequate actions for what is required by the needs to tackle climate change.

If the case in Australia is this, what about the case in the US? I would guess it is not too much different from here.

So while we have the options to say a bottle is half full or half empty, we need to face the basic fact as opposed by different feelings of using different options of saying the same thing. There is a danger that we may delude ourselves by choosing the option of saying that sounds better and just gives us a better feeling.

Two sides of Sheridan's analysis

Comments on Greg Sheridan “No lurch to the left in Victoria”, 2/12/2010, http://www.theaustralian.com.au/news/opinion/no-lurch-to-the-left-in-victoria/story-e6frg6zo-1225964138058
While it is rare for me to agree with many of Greg Sheridan's views especially when foreign affairs are concerned, I find at least one point in this article agreeable. It is that a well functioning federation needs strong states contained in the second last paragraph when he states the following:

"One thing federal Opposition Leader Tony Abbott has got completely wrong is his preference for Canberra power over state power. Federal systems, such as the US and Australia, derive their dynamism from the innovation and policy competition of states."

In recent times, both major political persuasions in Canberra tend to over-centralise power to Canberra at the expenses of the states that undermines the health of the Australian federation.

It is highly unlikely that further concentration of power to Canberra will improve the quality of services to the public. On the contrary, if anything is more likely, it must be the pink batts fiasco.

On the main issues that Sheridan discussed, he probably ignored a number of important facts. They include the Obama win of the US presidential election in late 2008, Labour in Britain had been in power for a long time, the federal ALP was troubled by Rudd policy back flips especially on climate change and the emissions reduction scheme as well as the blunders in some of its stimulus programs such as the pink batts and the BER wastes.

Another fact was that Rudd’s popularity was very high up to Copenhagen late last year.

In summary, Sheridan seems to only choose what suits his points and ignore important facts that contradict his views.

That is typical of his analysis and opinions. That is not good and balanced analysis!


Why does Julia still have a closed mind on nuclear energy?

Comments on Joe Kelly “Julia Gillard plays down nuclear power push”, 1/12/2010, http://www.theaustralian.com.au/national-affairs/julia-gillard-plays-down-nuclear-power-push/story-fn59niix-1225963754094
It is unclear whether Gillard and ALP are lack of intelligence or commonsense in terms of nuclear energy.

They allow the mining of uranium in Australia and export of it to other countries that use it for power generation, but does not allow a good, open and non political, cost benefit analysis of nuclear option as part of the energy mix in Australia.

Look at the world, the US has nuclear power stations, the Russians, the French, the British and the Chinese all them. Are they all insane or stupid than us in Australia?

That is unbelievably contradictory and hypocritical!

It reflects the dogmatic ideology of the ALP including many of its politicians!

That is hardly good policy, or even a good approach to policy by a political party. They are just too far to the left on the issue of nuclear energy!

Yuhan Zhang's unrealistic idea of Noah’s Ark

Comments on Yuhan Zhang “How the US and China can build a Noah’s Ark together”, 30/11/2010, http://www.eastasiaforum.org/2010/11/30/how-the-us-and-china-can-build-a-noahs-ark-together/
While the US and China are the two largest emitters as individual countries, they are far apart in levels of per capita emissions, not too dissimilar to the difference in the levels of income per capita.

Even that, it appears that China has much more ambitious climate change policies to limit its emissions than the US does.

Further, China is only a new comer to industrialisation, while the US has been rich and the largest emitters for many decades if not a couple of centuries.

Anyone with an open and fair mind must wonder: what do all these mean for "the US and China can build a Noah’s Ark together"?

Furthermore, what do human rights mean for emissions per capita?

While Yuhan Zhang’s idea of the US and Chian act together may have many merits, the stark reality in terms of history and per capita emissions must not and should not be ignored.

They will always be part of the important context for international considerations of climate change policies and emissions reductions.

The G2 concept may sound flattering to China, but China should not and cannot be fooled by empty and worthless vanity at the expenses of its national interests.


Tougher test for Gillard next year

Comments on Paul Kelly “Broadband is Prime Minister's first win”, 27/11/2010, http://www.theaustralian.com.au/news/opinion/broadband-is-prime-ministers-first-win/story-e6frg6zo-1225961716620
Firstly, the passage of the NBN related bills is a win for Gillard and her government and opportunistic independents and the greens, but a loss for the nation and good public policy, as well as the integrity of Labor government.

Secondly, as time passes by, the shortcomings and deficiencies of the NBN and its implementation are likely to be exposed and hence the credibility of Gillard and her government will suffer as a result.

Thirdly, the changes in state governments from Labor to the coalition in Victoria now and in NSW early next year are likely to make the Gillard government's health and other agreements with the states more difficult to implement.

Next year will be tougher for Gillard. If she can survive the test next year, she will be an invincible Prime Minister. Whether that will be for better or worse for the nation is another matter altogether.

Don't over centralise powers to Canberra

Comments on Peter Garrett “More mobile students need a national curriculum”, 29/11/2010, http://www.theaustralian.com.au/national-affairs/more-mobile-students-need-a-national-curriculum/story-fn59niix-1225962379374

I am not necessarily against a national curriculum for schools. But we have got to strike a balance between federal views and state views within the federation.

It appears that there is a tendance of over centralisation of power unnecessarily by the federal government at the expense of advantages of a well functioning federation.

How much is the share of 80,000 in total Australian students? Further How different the State education system and curriculum?

Garret says that 10% of teacher changed states in the past. For how many years in the past?

How about curriculums in other countries?

Australia often tend to think the US as an example to learn from.

Does the US have a national curriculum for schools? How uniform they are there?

The US should not try to corner China

Comments on Aileen S.P. Baviera “Territorial disputes in East Asia: Proxies for China-US strategic competition?” 29/11/2010, http://www.eastasiaforum.org/2010/11/27/territorial-disputes-in-east-asia-proxies-for-china-us-strategic-competition/
It appears two relevant and important points may require consideration and analysis.

First, many commentators tend to conveniently adopt the lines of argument that used in this post, namely, "China’s growing territorial assertiveness may also be a consequence of pressure politics from nationalists within the PLA-Navy. Other compounding factors that could lead to an increase in Chinese territorial activism in the coming years include leadership succession in the Communist Party by 2012, and improving cross-Straits relations under a KMT government in Taiwan."

However, it may ignore the mass sentiment in China that it has been seriously bullied and insulted by the US and some of its allies, like the spying planes near China's border and coastlines, the bombing of Chinese embassy in Serbia and harassments of its ships in open seas. Many Chinese may think China has often been humiliated by the US.

The public assurance of the Diaoyu Islands by the US is unlikely to dampen but further fan that sentiment. Neither is the US intention to be involved in some disputed territories where China is a part.

The second point is how China will respond in near, mediate and longer terms to the US resistance and hostilities to the rise of China perceived by the Chinese public and some of its allies trying to take short term advantages from that.

It could be that China may show its strengths by firstly resolving issues with a hot and weak spot.

Gillard's danger is too opposite to Rudd in vision

Comments on David Burchell “Let grandiose plans wither on the vine”, 29/11/2010, http://www.theaustralian.com.au/national-affairs/let-grandiose-plans-wither-on-the-vine/story-fn59niix-1225962381497
Burchell says: "The worst mistake would be to seek emancipation from Rudd by emulating him. We have no more call for high-flown self-kiddery and flamboyant insincerity. We can live without the grandiose self-puffery and fantastical self-conceptions. Least of all do we need any more prime ministerial philosophy lectures."

That is unlikely to be the case with Gillard. To the contrary, Gillard is in danger of being too far to the other extreme: lack of vision.

That is itself a serious problem for her and the government – no policy but poor ones.

With such a government as Gillard as the PM and its core, as well as the Rudd legacy to reflect, the nation will pay a hefty price!


Mining tax rights and the Australian federation

Comments on Dennis Shanahan “Facing a new mining war”, http://www.theaustralian.com.au/news/opinion/facing-a-new-mining-war/comments-e6frg6zo-1225961149433
There are bigger issues involved in the MRRT. The first one is in the current federation who do resources belong to constitutionally, the states or the federal?

The second issue is should the states have the right to tax the rent of those resources, what can/should the federal do in terms of resources rent taxes? Should that simply grab the tax revenue, or should it respect the states' rights and work with the states to make the royalties or resources rent tax more efficient.

Third, how should the royalties/tax of resources be distributed between the states and the Commonwealth if any should be given to the latter, and how should that tax be used or be kept for future generations?

Fourthly, are the constant threats by the federal government to the states productive and conducive to cooperative federation and to the wellbeing of all Australians? There should be a clearer definition what the Commonwealth can and cannot do in terms of federal relations.

It is a myth to believe that Canberra can do better than the state governments in terms of servicing the people, no matter how poor state governments have shown in some areas.

Just ask the question: if all state governments from all the major political parties cannot do a service well, how can a government of any political persuasion from Canberra can do it better?

The fundamental issues of poor state government services may lie in the poor resources and unclear responsibilities of revenue and services between the two levels of government in Australia. Unless those issues are resolved, any faith on federal government for better services is likely to be badly misplaced.


Final goals and processes to achieve them

Comments on Gary Johns “Flatter tax will work for Labor”, 25/11/2010, http://www.theaustralian.com.au/news/opinion/flatter-tax-will-work-for-labor/story-e6frg6zo-1225960448670
Flatter tax can be introduced and phased in stages.

It generally is not a choice between the most ideal and the current one. Rather, it should be an optimising process.

The flat tax in the Henry review may provide a long term goal, but that does not necessarily mean a one-step process.

It could be implemented through a two stage process, first to a flatter tax and when the benefits of that is clearly demonstrated then move to the second stage, that is, the Henry recommended structure.

Sheridan confused logic

Comments on Greg Sheridan “Attack dog again crosses red line”, 25/11/2010, http://www.theaustralian.com.au/news/opinion/attack-dog-again-crosses-red-line/story-e6frg6zo-1225960447172
Greg Sheridan often has some interesting but strange views on foreign affairs. For example, his second point (of realities) states "Two, China bears a great deal of responsibility for what is happening."

He elaborated later on the reasons as: "Second conclusion: China's responsibility. Rudd has focused on the need for Beijing to exercise maximum influence and restraint on North Korea. It would be unreasonable to hold Beijing responsible for every act of murder and insanity that Pyongyang undertakes. But it was instructive that Beijing prevented the UN from officially concluding that North Korea sank the Cheonan."

From this Sheridan was using the Cheonan as the basis, although he started with Rudd's call "for Beijing to exercise maximum influence and restraint on North Korea".

But I am afraid that Sheridan is having a confused logic here. Does Sheridan mean that had China adopted a different stance for the Cheonan incident North Korea would have not shelled the recent round?

It is interesting to see that the foreign affairs editor of The Australian has so little knowledge on regional international affairs and employ false and confused logic.

His biased and misleading views on foreign affairs appear to reflect an outdated mentality of the cold war era.

Cold war has long gone, but some legacies still linger on with some people. One reason may be that some people find it hard to learn new skills for the changed time, so they have to use what they have had.


Sourabh Gupta's conceptual confusion

Comments on Sourabh Gupta “Obama visit to India: East Asia’s emerging security multilateralism”, 24/11/2010, http://www.eastasiaforum.org/2010/11/24/obama-visit-to-india-east-asia%e2%80%99s-emerging-security-multilateralism/
With great respect, there appear some conceptual confusions in this post.

For example, the following statement obvious was mistaken the US as an Asian economy that is not only confusing but clearly wrong:
"Third, with Asia likely to play host in the not-too-distant future to six of the dozen largest economies in the world – US, China, Japan, India, Russia and Korea, it is not altogether clear that the Asian equilibrium is about to greatly disturbed … let alone submit to a new geo-political hegemony bearing dragon-like features."

While some Asians might be delighted that the inclusion of the US as an Asian economy could increase the weight and importance of Asia, a false self delusion may actually cause even greater disappointment.

Has anyone, or any international organisation apart from the author of this post classified the US as an Asian economy? What is the basis for doing that?

Of course, it is noted that the topic is about the US and India that may provide a clue to this confusion. However, that should not be the excuse for the confusion to occur in the first place.

What should be important to consider on immigration by government?

Comments on Ross Gittins “Punters well aware of economic case against more immigration”, 24/11/2010, http://www.smh.com.au/opinion/politics/punters-well-aware-of-economic-case-against-more-immigration-20101123-185ij.html?posted=error
This is a good article with a balanced view on the issue of immigration from an economist – it is the per capita wellbeing of the local people/workers/labour that should be the first order issue to be considered by government and policy makers.

Most economists only talk about wage and its impact inflation but ignoring the political economy of impact on local wage earners of immigration and the required extra infrastructure.

Of course, the political economy of higher immigration benefits businesses, due to lower wages resulting from more labour supply.

A side issue is the view of taxation of mobile capital and labour and consumption. Business should be made to contribute to building infrastructure, as opposed to taxing less on capital, with consumption tax that is not too different from taxing labour more heavily in a different guise.