Comments on Henry Ergas “After the GFC, it's business as usual”, 9/04/2010, http://www.theaustralian.com.au/news/opinion/after-the-gfc-its-business-as-usual/story-e6frg6zo-1225851577496
This is a good piece, though also with some shortcomings of its own, as most cases are - perfection rarely exists.
The criticism on "proposed global cures of high cost and dubious efficiency" is well and correctly made.
The argument of the Chinese currency ignored the fact that it is not just an issue of trade, but also an issue of assets values. That is additional complexity to the Chinese currency issue that most commentators and analysts have yet to properly and adequately take into their considerations.
While it is probably a step too far to criticise the role of government in managing the economy, Henry Ergas has got a good point that liberalisation, incentives and the market do play a far more significant and useful role than Rudd derided they had been in his economic essay last year.
2010-04-09
Brumby health plan deserves careful analysis
Comments on Adam Cresswell “Self-interest rules in Premier's plan”, 9/04/2010, http://www.theaustralian.com.au/news/opinion/self-interest-rules-in-premiers-plan/story-e6frg6zo-1225851594480
It appears unfortunately that Adam Cresswell's short piece is so short of real analysis.
Obviously it appears that Adam Cresswell is for a big highly Centralised Canberra controlled health system which would be bond to fail if the experience of the past two years or so serves any purposes.
Adam Cresswell is so quick to criticise the Brumby plan organised in a month or so for lacking of detail, but is presumably much more comfortable to the fact of the incomplete disorganised Rudd plan after two years in the making.
The 50-50 model resolves the funding and costs issues altogether. It also makes it clear who is responsible for any issues in providing health services, that is squarely the States. It deserves much more analysis than Adam Cresswell has poorly done.
If Victoria is efficient in providing health services, why should it hand over to Commonwealth, a proven failed service provider? The Victoria health system is not broken. Most of the unmet needs can arguably attributed to the lack of adequate funding from the Commonwealth. So what is the case for Commonwealth to take an efficient provider?
It begs belief how Adam Cresswell can so casually dismiss an alternative health plan in such a short and empty piece devoid of any analysis?
Isn’t better that we have some competition on plans for reforming the health system? Isn’t better that the nation is not fall into hostage of Rudd’s confrontational threat to the States? Where is Rudd’s earlier claim for a cooperative federation?
Why is Adam Cresswell so undemocratic?
Adam Cresswell probably needs to go back to school to get some sense and sensibility.
It appears unfortunately that Adam Cresswell's short piece is so short of real analysis.
Obviously it appears that Adam Cresswell is for a big highly Centralised Canberra controlled health system which would be bond to fail if the experience of the past two years or so serves any purposes.
Adam Cresswell is so quick to criticise the Brumby plan organised in a month or so for lacking of detail, but is presumably much more comfortable to the fact of the incomplete disorganised Rudd plan after two years in the making.
The 50-50 model resolves the funding and costs issues altogether. It also makes it clear who is responsible for any issues in providing health services, that is squarely the States. It deserves much more analysis than Adam Cresswell has poorly done.
If Victoria is efficient in providing health services, why should it hand over to Commonwealth, a proven failed service provider? The Victoria health system is not broken. Most of the unmet needs can arguably attributed to the lack of adequate funding from the Commonwealth. So what is the case for Commonwealth to take an efficient provider?
It begs belief how Adam Cresswell can so casually dismiss an alternative health plan in such a short and empty piece devoid of any analysis?
Isn’t better that we have some competition on plans for reforming the health system? Isn’t better that the nation is not fall into hostage of Rudd’s confrontational threat to the States? Where is Rudd’s earlier claim for a cooperative federation?
Why is Adam Cresswell so undemocratic?
Adam Cresswell probably needs to go back to school to get some sense and sensibility.
2010-04-08
Frequent fallacies of the imbalances argument
Second comments on Yang Yao "China’s growing pains, globalisation and adjustment", 7/04/2010, http://www.eastasiaforum.org/2010/04/07/chinas-growing-pains-globalisation-and-adjustment/
In addition to having more international financial assets for financing world development, I have some comments on a number of specific points in Yao's article.
While people often argue this or that and make statements on this or that, it is also fairly often that many arguments are incorrect even though they may be seemingly attractive to some particular audiences.
It is said that “the financial crisis demonstrates the unsustainability of the current pattern of global specialisation.”
But is that statement true or false? I would argue that it is not true but false. There are a number of reasons for my argument. Firstly, there is an issue on the real and fundamental cause of the financial crisis. While some people conveniently say it was the imbalances, most informed and rational people would think it was the malpractice lending by US banks associated with the sub-prime mortgages in the US prior to the crisis.
Then was the malpractice a necessary product of the imbalances, that is, low costs of finance prevailing in the US back then? The answer again is negative and no. It was irresponsibility and greed by some banks. It was their mistakes. It had very little to do with low costs finance available. Who on the earth wants to unnecessarily raise the costs of finance, given that the US also needed and still in need of investment in infrastructure projects? Alternatively they could have used low costs financing to investment overseas in other countries. There was nothing inevitable for that malpractice to happen.
Secondly, what is the problem with the current pattern of global specialisation? I can hardly see any and I think most people would not think it is a problem. Leaving the current practical and political issues aside, there are two points to argue for the positive of current global specialisation. One is that imbalances, whether it is domestic or international, households or regions or countries, are not necessarily a problem per se, as long as inter-temporal budget constraints are satisfied. It will be very counterproductive and welfare reducing one requires balance all the time for any unit. Why do people ignore this point when talking about imbalances just as if they are inherently a sin. They are not and are part of daily life and are good for everyone as long as they are responsible in their behaviour.
Leaving that aside, it should be abundantly clear that there are mechanisms that can resolve or reduce imbalances should that really be a problem without the need to significantly alter the global specialisation pattern.
I didn’t realise it is already so long in this comment, so I’d better take a rest on the case.
In addition to having more international financial assets for financing world development, I have some comments on a number of specific points in Yao's article.
While people often argue this or that and make statements on this or that, it is also fairly often that many arguments are incorrect even though they may be seemingly attractive to some particular audiences.
It is said that “the financial crisis demonstrates the unsustainability of the current pattern of global specialisation.”
But is that statement true or false? I would argue that it is not true but false. There are a number of reasons for my argument. Firstly, there is an issue on the real and fundamental cause of the financial crisis. While some people conveniently say it was the imbalances, most informed and rational people would think it was the malpractice lending by US banks associated with the sub-prime mortgages in the US prior to the crisis.
Then was the malpractice a necessary product of the imbalances, that is, low costs of finance prevailing in the US back then? The answer again is negative and no. It was irresponsibility and greed by some banks. It was their mistakes. It had very little to do with low costs finance available. Who on the earth wants to unnecessarily raise the costs of finance, given that the US also needed and still in need of investment in infrastructure projects? Alternatively they could have used low costs financing to investment overseas in other countries. There was nothing inevitable for that malpractice to happen.
Secondly, what is the problem with the current pattern of global specialisation? I can hardly see any and I think most people would not think it is a problem. Leaving the current practical and political issues aside, there are two points to argue for the positive of current global specialisation. One is that imbalances, whether it is domestic or international, households or regions or countries, are not necessarily a problem per se, as long as inter-temporal budget constraints are satisfied. It will be very counterproductive and welfare reducing one requires balance all the time for any unit. Why do people ignore this point when talking about imbalances just as if they are inherently a sin. They are not and are part of daily life and are good for everyone as long as they are responsible in their behaviour.
Leaving that aside, it should be abundantly clear that there are mechanisms that can resolve or reduce imbalances should that really be a problem without the need to significantly alter the global specialisation pattern.
I didn’t realise it is already so long in this comment, so I’d better take a rest on the case.
Create new international and secure financial asset classes
Comments on Yang Yao “China’s growing pains, globalisation and adjustment”, 7/04/2010, http://www.eastasiaforum.org/2010/04/07/chinas-growing-pains-globalisation-and-adjustment/comment-page-1/#comment-109532
There is clearly a need for more international assets classes for investors including sovereign funds and central banks.
In that context, IMS SDR might be a good candidate. Alternatively, the World Bank could issue WB bonds. But for liquidity purposes, the IMF or the World Bank must be ready to act as a market maker too in case there is not enough liquidity.
Leaving that aside, why can't China be more innovative to set up an international bank to provide loans in foreign currencies at reasonably favourable rates to sovereign countries? In that way it can also have security and reasonable returns for its international reserves.
Alternatively, why doesn’t China work together with the IMF or the World Bank to create some monetary facilities to create some new international financial asset classes.
Once the issues of assets in foreign currencies and current account trade needs are separated, it is easier for China and indeed other countries too to move more freely on exchange rate issues.
There is clearly a need for more international assets classes for investors including sovereign funds and central banks.
In that context, IMS SDR might be a good candidate. Alternatively, the World Bank could issue WB bonds. But for liquidity purposes, the IMF or the World Bank must be ready to act as a market maker too in case there is not enough liquidity.
Leaving that aside, why can't China be more innovative to set up an international bank to provide loans in foreign currencies at reasonably favourable rates to sovereign countries? In that way it can also have security and reasonable returns for its international reserves.
Alternatively, why doesn’t China work together with the IMF or the World Bank to create some monetary facilities to create some new international financial asset classes.
Once the issues of assets in foreign currencies and current account trade needs are separated, it is easier for China and indeed other countries too to move more freely on exchange rate issues.
What is the ratinale for a big Australian population?
Comments on ABC report “Australians wary of 36m population target”, by Sabra Lane and staff, 8/04/2010, http://www.abc.net.au/news/stories/2010/04/08/2866842.htm?section=justin
The rationale for a big Australia has never been made clear to the public.
We all know that there is infrastructure and natural wealth in Australia that belong to all Australians, not just the politicians or big businesses.
When you have dilution in population, your per capita wealth diminishes.
Further, the argument that a bigger population if good for geopolitical and economic reasons is utterly untenable what difference does it make between 28 million and 35 million in terms of military strength in a region where countries have more than 100 millions or a billion people?
Poor Rudd a complete and intellectual dumb on this issue, like him with many other issues.
The rationale for a big Australia has never been made clear to the public.
We all know that there is infrastructure and natural wealth in Australia that belong to all Australians, not just the politicians or big businesses.
When you have dilution in population, your per capita wealth diminishes.
Further, the argument that a bigger population if good for geopolitical and economic reasons is utterly untenable what difference does it make between 28 million and 35 million in terms of military strength in a region where countries have more than 100 millions or a billion people?
Poor Rudd a complete and intellectual dumb on this issue, like him with many other issues.
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