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.