Monthly Archives: September 2008

Automobile tariff cut irrelevant

Trade-weighted index australian dollar 2008

Why it’s impos­si­ble to get too excited about the planned cut in auto­mo­bile tar­iffs from 10% to 5% in 2010. Despite the howls of cap­i­tal and the unions, the volatil­ity of the Aus­tralian exchange rate makes a 5% mar­gin irrel­e­vant. Already in 2008 the trade-weighted index has fallen more than 7 per­cent. Click the thumb­nail for a larger image.

 

Dissenters Day

galilleo_inquisition.jpg

Sep­tem­ber 11 is a day of infamy, but also the anniver­sary of a tri­umph for Gallilean empricism

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Bombs or bridges?

Bil­lions of dol­lars spent on arma­ments would be more pro­duc­tively spent on infra­struc­ture. This would be a less waste­ful and much more cer­tain way to main­tain Australia’s sup­posed global ‘mid­dle power’ sta­tus (Is that a ‘sta­tus’? Or is it a bunch of diplo­mats exer­cis­ing their vow­els?). Our bal­ance of pay­ments plunged back into the red this month because—among other reasons—we can­not ship the min­er­als and coal ordered by our cus­tomers on time and in the vol­umes required. Our export per­for­mance—not to men­tion our national productivity—is held back by decades of neglect of essen­tial infra­struc­ture. But the Prime Min­is­ter, accord­ing to reports, wants to give pri­or­ity to keep­ing up with an arms race.

Some ana­lysts have described this as a “catch­ing up” exer­cise, sug­gest­ing more invest­ment would be nec­es­sary. Mr Rudd appears to agree.
“For the gov­ern­ment, a major pri­or­ity is to ensure we have enough naval capa­bil­i­ties in the future, enough naval assets, enough naval per­for­mance, and there­fore enough fund­ing put aside to invest in that, long term,” he said.
Mr Rudd also insisted in his speech that Aus­tralia, which is a close ally of the United States, wanted to main­tain its sta­tus as a global “mid­dle power”.  [From BBC NEWS | Aus­tralia fears Asian arms race]

Garnaut Review Economic Model

Extract from Garnaut Review modeling results On a quick first read­ing of the sup­ple­men­tary report, this seems to be the key data related to the mod­el­ing results. For the more mod­er­ate 550ppm CO2 objec­tive, the costs of a 10% cut in 2000 car­bon emis­sions to 2020 are esti­mated at 1.1% of GDP (1.8% cut to con­sump­tion) com­pris­ing a net decre­ment of about 0.1+% of GNP per year. In other words, the expected net ben­e­fits are some­where toward the end of the cen­tury (and seem to com­prise assump­tions about ‘avoid­ing catastrophies’).

Despite the boost to growth in the sec­ond half of the cen­tury, the sac­ri­fice in the first half of the cen­tury is sub­stan­tial, though the loss to GNP is fully recov­ered with a mar­gin by the end of the cen­tury. The ben­e­fits that are pur­chased by this sac­ri­fice take sev­eral forms. One is insur­ance against the effects of severe and pos­si­bly cat­a­strophic out­comes on mate­r­ial con­sump­tion dur­ing this cen­tury. Another is increased pro­tec­tion against loss of non-market ser­vices this cen­tury. Yet another is avoid­ance of all of the rapidly increas­ing costs in through the 21st and into the 22nd cen­tury and beyond: the rapidly increas­ing neg­a­tive impact on mate­r­ial con­sump­tion; the risk of out­comes much worse than the median expec­ta­tions from the applied sci­ence (although beyond the 21st cen­tury, the median out­comes include more and more of the severe and pos­si­bly cat­a­strophic); and the impacts on non-market values.

Drought in the “Sunburnt Country”

Ian Cas­tles has pub­lished—as a trib­ute to Dorothea Mackellar’s poem, My Coun­try (often known from a line in its sec­ond verse as ‘A Sun­burnt Coun­try’), pub­lished just one hun­dred years ago today—a typ­i­cally well-mannered but metic­u­lous crit­i­cism of the CSIRO’s paper on the future inci­dence of drought in Aus­tralia. Ian detects, and doc­u­ments, the CSIRO authors’ habits of ignor­ing per­ti­nent but incon­ve­nient crit­i­cism and points to some not-quite-credible claims that the CSIRO authors have pre­vi­ously published—in the IPCC’s Fourth Assess­ment report.

It defies belief that the range of rain­fall change in 2080 (rel­a­tive to 1990) from all of these sce­nar­ios and mod­els could be from minus 27 per cent to plus 54 per cent for “North­ern NSW, Tas­ma­nia and cen­tral North­ern Ter­ri­tory” — and yet be from minus 80 per cent (i.e. one-fifth of the 1990 level) to nil “within 400 km of west­ern and south­ern coasts”   [From One hun­dred years of drought and flood­ing rains — On Line Opin­ion]

Precautionary principle, misleading and undemocratic

The “pre­cau­tion­ary prin­ci­ple” makes a dis­hon­est claim (I don’t say that peo­ple who invoke it are dis­hon­est) because it pre­tends to be one thing—a jus­ti­fi­ca­tion—while being, in fact, a very dif­fer­ent thing—an expla­na­tion.

I say that pre­cau­tion jus­ti­fies, at best, a wager and that wagers should not be the basis of pub­lic pol­icy in democ­ra­cies, cer­tainly not when we are debat­ing a deci­sion that will cost us bil­lions of dol­lars in taxes and prob­a­bly still more in lob­by­ing and tax-avoidance.

Chroming the Internet

I find it much eas­ier to believe the first part of this state­ment than the sec­ond part.

So why are we launch­ing Google Chrome? Because we believe we can add value for users and, at the same time, help drive inno­va­tion on the web.”   [From Offi­cial Google Blog: A fresh take on the browser]

I’m guess­ing that it’s mostly about the money.