Second comments on Ronald McKinnon “The appreciation of the yuan: A compromise solution”, 30/03/2010, http://www.eastasiaforum.org/2010/03/30/the-appreciation-of-the-yuan-a-compromise-solution/
Maybe, a potential solution is for the US and the Chinese governments to sign an agreement to change the denomination of Chinese official holdings of bonds from current $US alone into a mixed denomination of the two currencies, so the impact of the relative movement of the two currencies on the yuan value of those assets can be cushioned to a certain degree.
This de-coupling between trade issues and assets holdings may make both sides more comfortable and leave them enough flexibility and rooms to make changes to the exchange rate to address trade imbalances should they be deemed as important.
I am, however, not sure how they can handle the official reserves of $US, though. That is an issue that the Chinese central bank has to confront and consider how to handle it.
2010-03-31
McKinnon proposal has merits
Comments on Ronald I. McKinnon “The appreciation of the yuan: A compromise solution”, 30/03/2010, http://www.eastasiaforum.org/2010/03/30/the-appreciation-of-the-yuan-a-compromise-solution/
Not a bad idea.
There is an issue that the two sides also need to come to some sort of accommodation, that is, the Chinese official $US reserves and holding of US government bonds.
I think for the Chinese government to be able to face its increasingly demanding and restless domestic audience, it has to have some way to say o them it has not sold out their interests in those assets.
That is not an easy job, given that many Chinese are now aware that issue related to the exchange rate and the implications of currency appreciation.
Not a bad idea.
There is an issue that the two sides also need to come to some sort of accommodation, that is, the Chinese official $US reserves and holding of US government bonds.
I think for the Chinese government to be able to face its increasingly demanding and restless domestic audience, it has to have some way to say o them it has not sold out their interests in those assets.
That is not an easy job, given that many Chinese are now aware that issue related to the exchange rate and the implications of currency appreciation.
Authentic Rudd - are you kidding Paul?
Comments on Paul Kelly “Election's economic narrative reveals real Rudd”, 31/03/2010, http://www.theaustralian.com.au/news/opinion/elections-economic-narrative-reveals-real-rudd/story-e6frg6zo-1225847684728
Paul, again, with respect I have to say it is wrong to even consider the concept of authentic Rudd.
His philosophy has been the foundation of his government's spending programs - his finger prints are everywhere from the pink batts, more than $10 billion BEU with arguably 20-30% waste, the $43 billion NBN with no business plan. You name it, what program has gone well?
What about the cash handouts at a time where government finance was going into deep deficit hole?.
His incomplete and partial health reform plan in which many details are still in the making?
So on what basis can people believe he is authentic?
Paul, again, with respect I have to say it is wrong to even consider the concept of authentic Rudd.
His philosophy has been the foundation of his government's spending programs - his finger prints are everywhere from the pink batts, more than $10 billion BEU with arguably 20-30% waste, the $43 billion NBN with no business plan. You name it, what program has gone well?
What about the cash handouts at a time where government finance was going into deep deficit hole?.
His incomplete and partial health reform plan in which many details are still in the making?
So on what basis can people believe he is authentic?
Business Council Australia and Australian population
Comments on Graham Bradley “If we want more people we have to plan better”, 31/03/2010, http://www.theaustralian.com.au/news/opinion/if-we-want-more-people-we-have-to-plan-better/story-e6frg6zo-1225847684873
Graham Bradley's argument is deeply flawed.
How can anyone with a good analytical mind claim that growth in population must be the foundation for economic growth.
Did Graham Bradley include how population growth impacts on per capita growth in which living standards are measured?
Has he ever considered the delusional effects of immigration on the natural wealth that Australia has that belong to Australians?
He should declare clearly that his living standards apply only to businesses and handful rich capitalists.
Graham Bradley needs to go back to primary school for some re-education to be analytically competent enough to talk about living standards in Australia.
Graham Bradley's argument is deeply flawed.
How can anyone with a good analytical mind claim that growth in population must be the foundation for economic growth.
Did Graham Bradley include how population growth impacts on per capita growth in which living standards are measured?
Has he ever considered the delusional effects of immigration on the natural wealth that Australia has that belong to Australians?
He should declare clearly that his living standards apply only to businesses and handful rich capitalists.
Graham Bradley needs to go back to primary school for some re-education to be analytically competent enough to talk about living standards in Australia.
2010-03-30
A health reform plan for Abbott
Comments on Niki Savva “Abbott's plan shouldn't rot in closet”, 30/03/2010, http://www.theaustralian.com.au/news/opinion/abbotts-plan-shouldnt-rot-in-closet/story-e6frg6zo-1225847156302
I think Abbott should move beyond his old and shelved health plan before the last election.
Instead, he should propose to 100% takeover of public hospitals in NSW and QLD with a reduction in their GST allocation, and a plan to work cooperatively with the other States. Completely dissolve the State health bureaucratic layer for those two States and replace them by local boards and they are responsible for their local hospitals and the Commonwealth.
For the other States, make a change in healthcare funding from the Commonwealth and require the States to match or to fund in a certain ratio to the Commonwealth funding.
Treat the states differently and reduce the resistance of the States as a whole and isolate the most serious problematic States. It will send a signal to the other States as well.
In addition, there should be at least some new and increased health funding, using improved efficiency in operation from other areas of Commonwealth spending.
It should be fairly easy to plan and do.
I think Abbott should move beyond his old and shelved health plan before the last election.
Instead, he should propose to 100% takeover of public hospitals in NSW and QLD with a reduction in their GST allocation, and a plan to work cooperatively with the other States. Completely dissolve the State health bureaucratic layer for those two States and replace them by local boards and they are responsible for their local hospitals and the Commonwealth.
For the other States, make a change in healthcare funding from the Commonwealth and require the States to match or to fund in a certain ratio to the Commonwealth funding.
Treat the states differently and reduce the resistance of the States as a whole and isolate the most serious problematic States. It will send a signal to the other States as well.
In addition, there should be at least some new and increased health funding, using improved efficiency in operation from other areas of Commonwealth spending.
It should be fairly easy to plan and do.
Publicity, dishonesty, misleading information and truth
Comments on David Hamilton’s comments on my comments, 30/03/2010, see http://www.eastasiaforum.org/2010/03/28/the-chinese-legal-system-and-the-stern-hu-case/
Your suspicion is noticed.
There is no question that the Chinese legal system is different from that in Australia, and what is available in Australia may not always be available in China involving a legal case.
But, have a look at what has been happening in Australia involving this case. Some of Australian media reports or comments have just been incredible!
For example, even after the admission of receiving bribery by those involved, some media were still talking about they don't know whether it was under duress or forced admission.
Tell me if you can please, how do those people on earth know every detail of every case in the world? Why didn't they contact the Australian consular in Shanghai for that matter or for a bit of clarification?
Of course, there will be no one to sue them for defamation - they are free to say whatever they wish, that is what their freedom is about!
Now in terms of your specific point. If the Chinese legal system handles confidential matters in closed fashion if a party to it asks for that, then regrettably one has to accept that is still the case in China. There is no point to score some points either politically or audience purpose, even by misleading methods or information. In this case, at least the bribery part of the court hearing was open. What does that mean? Does it mean "no way of assessing whether the trial was conducted fairly or impartially"? Is that statement right?
There was clearly something, as opposed to nothing, to use to assess, even though it is incomplete. Why ignore that part and state something that is obviously wrong?
Give me a break!
Your suspicion is noticed.
There is no question that the Chinese legal system is different from that in Australia, and what is available in Australia may not always be available in China involving a legal case.
But, have a look at what has been happening in Australia involving this case. Some of Australian media reports or comments have just been incredible!
For example, even after the admission of receiving bribery by those involved, some media were still talking about they don't know whether it was under duress or forced admission.
Tell me if you can please, how do those people on earth know every detail of every case in the world? Why didn't they contact the Australian consular in Shanghai for that matter or for a bit of clarification?
Of course, there will be no one to sue them for defamation - they are free to say whatever they wish, that is what their freedom is about!
Now in terms of your specific point. If the Chinese legal system handles confidential matters in closed fashion if a party to it asks for that, then regrettably one has to accept that is still the case in China. There is no point to score some points either politically or audience purpose, even by misleading methods or information. In this case, at least the bribery part of the court hearing was open. What does that mean? Does it mean "no way of assessing whether the trial was conducted fairly or impartially"? Is that statement right?
There was clearly something, as opposed to nothing, to use to assess, even though it is incomplete. Why ignore that part and state something that is obviously wrong?
Give me a break!
The case of Stern Hu and different legal systems
Comments on Stanley Lubman “Rio Tinto trial shines harsh spotlight on Chinese criminal justice”, 29/03/2010, http://www.eastasiaforum.org/2010/03/29/rio-tinto-trial-shines-harsh-spotlight-on-chinese-criminal-justice/
Although I share some of the concerns of Stanley Lubman, it can hardly be said that the case is markedly different from most cases involving Chinese nationals only.
So in that respect, the international implications argued by some people in terms of doing business in China may not have strong foundation.
China does not appear to have targeted foreign investors.
While some people in western countries may think the sentence of Stern Hu is harsh by western standard, by Chinese standard it may not be so, bearing in mind the sum of money involved reported was substantial by Chinese standard in terms of income, or for that matter in Australian standard. The death sentence can be involved for very large sums of money in China.
Even in Australia, I remember a former judge in NSW, former Federal Court Justice Marcus Einfeld, was sentenced extremely severely to three years imprisonment with a non-parole period of two years, for an evasion of a speeding fine, how many years for $A 75.
Which was harsh, or harsher in comparison?
Although I share some of the concerns of Stanley Lubman, it can hardly be said that the case is markedly different from most cases involving Chinese nationals only.
So in that respect, the international implications argued by some people in terms of doing business in China may not have strong foundation.
China does not appear to have targeted foreign investors.
While some people in western countries may think the sentence of Stern Hu is harsh by western standard, by Chinese standard it may not be so, bearing in mind the sum of money involved reported was substantial by Chinese standard in terms of income, or for that matter in Australian standard. The death sentence can be involved for very large sums of money in China.
Even in Australia, I remember a former judge in NSW, former Federal Court Justice Marcus Einfeld, was sentenced extremely severely to three years imprisonment with a non-parole period of two years, for an evasion of a speeding fine, how many years for $A 75.
Which was harsh, or harsher in comparison?
Common versus diverging regional intersts
Comments on Ezra Vogel “Regionalism in Asia: Why we should stick with existing structures”, 30/03/2010, http://www.eastasiaforum.org/2010/03/30/regionalism-in-asia-why-we-should-stick-with-existing-structures/
The author's view clearly reflects more of the interests of the US in the region, as well as its role in the region of Asia Pacific.
However, it remains to be seen if there are interests of Asian or East Asian countries that may go beyond those of the US interests.
For example, they may have their intra Asian regional affairs that have little to do with the US.
If those interests do not interest the US and the US has no desire or capacity to contribute to those intra Asian regional affairs, why shouldn't be an Asian regional body be set up to look after their own interests?
Understandably, there are common as well as diverging interests between Asia and the US.
Why should the US have a say on such a body?
Contrast to the view of the author, I see the need for both the current bodies and other regional bodies, with region properly defined.
The author's view clearly reflects more of the interests of the US in the region, as well as its role in the region of Asia Pacific.
However, it remains to be seen if there are interests of Asian or East Asian countries that may go beyond those of the US interests.
For example, they may have their intra Asian regional affairs that have little to do with the US.
If those interests do not interest the US and the US has no desire or capacity to contribute to those intra Asian regional affairs, why shouldn't be an Asian regional body be set up to look after their own interests?
Understandably, there are common as well as diverging interests between Asia and the US.
Why should the US have a say on such a body?
Contrast to the view of the author, I see the need for both the current bodies and other regional bodies, with region properly defined.
2010-03-29
Build independent insitutions to safeguard and advance Australian interests
Comments on Anne Bligh “Let's get real on population”, 29/03/2010, http://www.theaustralian.com.au/news/opinion/lets-get-real-on-population/story-e6frg6zo-1225846610958
Surely, there should be independent studies of optimal population growth in Australia, taking into account all important factors.
Treasury is not an independent agency from the government.
So is the ABS.
Further, while the ABS is good at statistics, it does not mean it is good at population forecasting, not to mention whether it is optimal or not on which it does not have the expertise.
There should be open and transparent debates on population growth in Australia.
Any government, both federal and State ones in Australia should encourage that debate and facilitate it.
In fact, Australia should develop some independent institutions funded publically that can inform the nation on important issues, both long and short terms.
Government can provide some terms of reference for work done by those institutions. In addition, they should be able also to initiate what they see important and relevant to Australia.
Surely, there should be independent studies of optimal population growth in Australia, taking into account all important factors.
Treasury is not an independent agency from the government.
So is the ABS.
Further, while the ABS is good at statistics, it does not mean it is good at population forecasting, not to mention whether it is optimal or not on which it does not have the expertise.
There should be open and transparent debates on population growth in Australia.
Any government, both federal and State ones in Australia should encourage that debate and facilitate it.
In fact, Australia should develop some independent institutions funded publically that can inform the nation on important issues, both long and short terms.
Government can provide some terms of reference for work done by those institutions. In addition, they should be able also to initiate what they see important and relevant to Australia.
Treasury under Dr Henry
Comments on Nicola Berkovic “Treasury boss Ken Henry's plea on climate”, 29/03/2010, http://www.theaustralian.com.au/news/treasury-bosss-plea-on-climate/story-e6frg6xf-1225846612979
It is good to hear Treasury boss talking about climate change.
The report mentions two points, water in Australia and international climate change agreement or lack of it.
It would be interesting to know what Treasury has done in terms of both points.
What advice or policy proposals has Treasury given to the government in terms of water in Australia?
What advice or policy proposals has Treasury given to the government in terms of climate change, including both domestic ETS and international agreement?
Dr Henry talked about free rider in terms of international agreement on climate change.
What has Treasury advised the government in terms of a fair, effective and efficient international agreement on climate change?
From available information on the domestic ETS and Australian government's proposal on international agreement and its doing before and at Copenhagen, it is difficult to see any good, reliable economically sound proposals were made.
For example, how can Australia government solve the national water problem? There have been years and years past and a lot of talks have been done, but the situation has improved little.
How can Australia advance an international agreement on climate change with fair and internationally acceptable, efficient and effective international or world policies to deal with climate change?
The prime minister was a friend of the chair of Copenhagen and was involved in the draft document leaked or circulated at the gathering. Was that a fair, efficient and effective proposal?
What is or was Treasury view on this and more broadly?
One has to wonder why the Treasury boss only talks, but with few actions.
It is good to hear Treasury boss talking about climate change.
The report mentions two points, water in Australia and international climate change agreement or lack of it.
It would be interesting to know what Treasury has done in terms of both points.
What advice or policy proposals has Treasury given to the government in terms of water in Australia?
What advice or policy proposals has Treasury given to the government in terms of climate change, including both domestic ETS and international agreement?
Dr Henry talked about free rider in terms of international agreement on climate change.
What has Treasury advised the government in terms of a fair, effective and efficient international agreement on climate change?
From available information on the domestic ETS and Australian government's proposal on international agreement and its doing before and at Copenhagen, it is difficult to see any good, reliable economically sound proposals were made.
For example, how can Australia government solve the national water problem? There have been years and years past and a lot of talks have been done, but the situation has improved little.
How can Australia advance an international agreement on climate change with fair and internationally acceptable, efficient and effective international or world policies to deal with climate change?
The prime minister was a friend of the chair of Copenhagen and was involved in the draft document leaked or circulated at the gathering. Was that a fair, efficient and effective proposal?
What is or was Treasury view on this and more broadly?
One has to wonder why the Treasury boss only talks, but with few actions.
Hard rock mind and habits of free thought
Comments on David Burchell “A blind eye keeps the wheels of commerce turning”, 29/03/2010, http://www.theaustralian.com.au/news/opinion/a-blind-eye-keeps-the-wheels-of-commerce-turning/story-e6frg6zo-1225846613004
It is interesting that Burchell has resorted to so much history and so many big historical names.
Does Burchell, in his own habits of free thought, believe anything that might be morally right and correct in China and the Chinese justice?
Or in his own habits of free thought and his respected moral, Stern Hu, as an Australian, could never be doing anything wrong or unlawful?
Further, how could Burchell's habits of free thought guarantee that in every second of Stern Hu's life he is doing everything morally right and lawfully correct?
One has to wonder how Burchell, in his own habits of free thought, has got such over-confidence and self indulgence!
To me, Burchell's habits of free thought is nothing more than a mind full of hard rocks that can never change even when evidence proves it is completely wrong and utterly immoral.
It is interesting that Burchell has resorted to so much history and so many big historical names.
Does Burchell, in his own habits of free thought, believe anything that might be morally right and correct in China and the Chinese justice?
Or in his own habits of free thought and his respected moral, Stern Hu, as an Australian, could never be doing anything wrong or unlawful?
Further, how could Burchell's habits of free thought guarantee that in every second of Stern Hu's life he is doing everything morally right and lawfully correct?
One has to wonder how Burchell, in his own habits of free thought, has got such over-confidence and self indulgence!
To me, Burchell's habits of free thought is nothing more than a mind full of hard rocks that can never change even when evidence proves it is completely wrong and utterly immoral.
2010-03-28
Statics and dynamics of world affairs
Comments on Joseph Nye “China’s bad bet against America”, 28/03/2010, http://www.eastasiaforum.org/2010/03/28/chinas-bad-bet-against-america/
After reading the article I looked at the credentials of the author and noticed that "Joseph Nye is Chairman of the Pacific Forum CSIS Board of Governors and a former US Assistant Secretary of Defence. He is also currently University Distinguished Service Professor at the Harvard Kennedy School."
I would like to make a few comments as follows.
Firstly, a few variables in elementary physics in terms of speed, acceleration and different momentums. It is not enough to just discuss the speed of an object without considering its acceleration that is the rate at which its speed changes. I am not sure Nye had this in mind or not when he was talking about a number of things.
Secondly, many economists and commentators talk about the yuan versus $US as if the issue was just between China and the US and ignore or are ignorant about a wider international context. In fact, as some economists and commentators have pointed out, the matter is much more complex than the former group or people naively think. It involves, I would argue, mainly competitions between China and other countries than the US. Yes, if the yuan was appreciated that will have an effect on the relative competitiveness between China and the US, but it is unlikely to change the imbalances the US has been having, because others would simply take the vacuum vacated by China and increase their surplus with the US.
Thirdly, some of the historical events that Nye has mentioned were obviously true, but has he noticed and considered the differences now and the past, that is, between China and the USSR, as well as Japan? Don’t the huge differences in sizes of population and potential economic power and its implications ring a warning to Nye’s analysis and his simply and mechanically using historical examples? Will history always simply repeat itself like natural mechanics, or new history can be made? Had the US always been asa powperful as it is now before, say the last century? Are humans still as primitive as many tens of thousand years ago? Don’t those people also need to catch up with reality?
I do not wish to comment on the decline of the US. It is still the sole superpower in the world now. But it has had problems with the Iraq and Afghanistan wars. Its military capabilities can be very powerful in destruction, but not necessarily very constructive. If taking into account the sizes and powers of those two countries, the US, as that powerful as it has been, is not that invincible as some people might think it is. That is an irony and should be respected perhaps. Maybe the first point that I have just made has some relevance here. Einstein’s relativity will work in static and dynamic senses.
Fourthly, the role of the $US internationally should never be underestimated, but at the same time many people have realised the limitations of the current or the past arrangement or state of play. In economics, people take expectations very seriously. In that context, what expectations will people have, if a model of the world economy is taking into account? What implications will that have for international currencies?
However, I don’t want to leave people with an impression that I have nothing in common with Nye. I do want to reach an agreement with Nye, that is, the cooperation between China and the US will be win-win and beneficial to both countries and the world as a whole. That is human spirit. We have come a long way in terms of globalisation and human beings should not move backwards toward barbarous state where power rather than rationality prevailed.
After reading the article I looked at the credentials of the author and noticed that "Joseph Nye is Chairman of the Pacific Forum CSIS Board of Governors and a former US Assistant Secretary of Defence. He is also currently University Distinguished Service Professor at the Harvard Kennedy School."
I would like to make a few comments as follows.
Firstly, a few variables in elementary physics in terms of speed, acceleration and different momentums. It is not enough to just discuss the speed of an object without considering its acceleration that is the rate at which its speed changes. I am not sure Nye had this in mind or not when he was talking about a number of things.
Secondly, many economists and commentators talk about the yuan versus $US as if the issue was just between China and the US and ignore or are ignorant about a wider international context. In fact, as some economists and commentators have pointed out, the matter is much more complex than the former group or people naively think. It involves, I would argue, mainly competitions between China and other countries than the US. Yes, if the yuan was appreciated that will have an effect on the relative competitiveness between China and the US, but it is unlikely to change the imbalances the US has been having, because others would simply take the vacuum vacated by China and increase their surplus with the US.
Thirdly, some of the historical events that Nye has mentioned were obviously true, but has he noticed and considered the differences now and the past, that is, between China and the USSR, as well as Japan? Don’t the huge differences in sizes of population and potential economic power and its implications ring a warning to Nye’s analysis and his simply and mechanically using historical examples? Will history always simply repeat itself like natural mechanics, or new history can be made? Had the US always been asa powperful as it is now before, say the last century? Are humans still as primitive as many tens of thousand years ago? Don’t those people also need to catch up with reality?
I do not wish to comment on the decline of the US. It is still the sole superpower in the world now. But it has had problems with the Iraq and Afghanistan wars. Its military capabilities can be very powerful in destruction, but not necessarily very constructive. If taking into account the sizes and powers of those two countries, the US, as that powerful as it has been, is not that invincible as some people might think it is. That is an irony and should be respected perhaps. Maybe the first point that I have just made has some relevance here. Einstein’s relativity will work in static and dynamic senses.
Fourthly, the role of the $US internationally should never be underestimated, but at the same time many people have realised the limitations of the current or the past arrangement or state of play. In economics, people take expectations very seriously. In that context, what expectations will people have, if a model of the world economy is taking into account? What implications will that have for international currencies?
However, I don’t want to leave people with an impression that I have nothing in common with Nye. I do want to reach an agreement with Nye, that is, the cooperation between China and the US will be win-win and beneficial to both countries and the world as a whole. That is human spirit. We have come a long way in terms of globalisation and human beings should not move backwards toward barbarous state where power rather than rationality prevailed.
Different rules for finance and banking
Comments on Stephen Grenville “A post-GFC international framework for finance and banking”, 22/03/2010, http://www.eastasiaforum.org/2010/03/22/a-post-gfc-international-framework-for-finance-and-banking/
There may be a need for different set of rules to be applied to different types of banks and financial institutions.
For predominantly domestic banks, that the rules may be more relaxed and each country's authority can deal with them as they see fit, because there is not much international ramifications if a domestic bank failed.
For international banks, that is, they have extensive international operations, the rules should be international by nature, or subject to each and every countries rules where they operate.
So, overreacting and introducing unnecessarily harsh rules can be very harmful. They will certainly raise capital costs in many countries unnecessarily.
The point made by Grenville that most Asian banks including Australian banks worked well during the global financial suggests that not many changes will be necessarily needed for those countries.
There may be a need for different set of rules to be applied to different types of banks and financial institutions.
For predominantly domestic banks, that the rules may be more relaxed and each country's authority can deal with them as they see fit, because there is not much international ramifications if a domestic bank failed.
For international banks, that is, they have extensive international operations, the rules should be international by nature, or subject to each and every countries rules where they operate.
So, overreacting and introducing unnecessarily harsh rules can be very harmful. They will certainly raise capital costs in many countries unnecessarily.
The point made by Grenville that most Asian banks including Australian banks worked well during the global financial suggests that not many changes will be necessarily needed for those countries.
New policies needed for Japan's economic problems
Comments on Richard Katz “Inflation targeting will not work on Japan’s deflation problem”, 24/03/2010, http://www.eastasiaforum.org/2010/03/24/inflation-targeting-will-not-work-on-japans-deflation-problem/
It seems that the Japanese case has some uniqueness and consequently any policy for dealing with the Japanese economy will have to address the causes underlying that uniqueness.
In my view, the economic experience Japan has had since the late 1980s or early 1990s has been different from any financial and economic problems the world leading economies have had, including the great depression of the 1930s.
There are two main differences. One is that Japan has been experiencing population aging, and in danger of declining. This has implications for social burden or the so called dependent ratio. Clearly the dependent ratio has been expected to rise and people will live longer, including more years after retirement.
The second is that Japan has had relatively high productivity. The implication of this is that it is difficult to expect that significant advances in productivity from Japan if it is on the world production frontier.
Thirdly, Japan, as similar to other East Asian countries, has had high saving rates.
While there can be other uniqueness, but the combination of these three factors can be very serious and indeed deadly, especially following the serious balance sheet recession that occurred in the early 1990s.
People’s expectations have been formed under these factors. They had realised that the past rapid economic growth was over; that their assets values have permanently decreased and cannot increase much; their income from work was also limited by being already high and on the world productivity frontier; that they will need more savings for their retirement.
Conventional fiscal policies, whether they are in the form of government investment in infrastructure or giving people spending power may be ineffective, because it can be regarded as purely wasteful rather than productive. Conventional monetary policies are ineffective when they came to liquidity trap, that is zero or near zero interest rates.
It is likely that any policies will have to be credible to change the underlying behaviours out of those concerns. They need to shape people's “rational expectations”, so people can see a credible way to increase their current consumptions and still be able to live in retirement comfortably, due to the implementation of those policies
It seems that the Japanese case has some uniqueness and consequently any policy for dealing with the Japanese economy will have to address the causes underlying that uniqueness.
In my view, the economic experience Japan has had since the late 1980s or early 1990s has been different from any financial and economic problems the world leading economies have had, including the great depression of the 1930s.
There are two main differences. One is that Japan has been experiencing population aging, and in danger of declining. This has implications for social burden or the so called dependent ratio. Clearly the dependent ratio has been expected to rise and people will live longer, including more years after retirement.
The second is that Japan has had relatively high productivity. The implication of this is that it is difficult to expect that significant advances in productivity from Japan if it is on the world production frontier.
Thirdly, Japan, as similar to other East Asian countries, has had high saving rates.
While there can be other uniqueness, but the combination of these three factors can be very serious and indeed deadly, especially following the serious balance sheet recession that occurred in the early 1990s.
People’s expectations have been formed under these factors. They had realised that the past rapid economic growth was over; that their assets values have permanently decreased and cannot increase much; their income from work was also limited by being already high and on the world productivity frontier; that they will need more savings for their retirement.
Conventional fiscal policies, whether they are in the form of government investment in infrastructure or giving people spending power may be ineffective, because it can be regarded as purely wasteful rather than productive. Conventional monetary policies are ineffective when they came to liquidity trap, that is zero or near zero interest rates.
It is likely that any policies will have to be credible to change the underlying behaviours out of those concerns. They need to shape people's “rational expectations”, so people can see a credible way to increase their current consumptions and still be able to live in retirement comfortably, due to the implementation of those policies
2010-03-27
Abbott and Rudd health reform
Comments on Paul Kelly, “Abbott march checked by a dose of realism”, 27/03/2010, http://www.theaustralian.com.au/news/opinion/abbott-march-checked-by-a-dose-of-realism/story-e6frg6zo-1225846160109
On health, there is an easy way for Abbott, namely, accepting the invitation for cooperative bipartisan approach to participate in the process and be prepared to negotiate, and at the same time ask Rudd to be cooperative with the States to have their acceptance of Rudd's health plan, or accept Abbott's alternative or modified plan.
That can neutralise the health issues and put spotlight on Rudd for cooperation with other parties, namely the States and other political parties.
Abbott can ask Rudd's assistance with costing by public services for different scenarios, through which to potentially expose the deficiencies and shortcomings of the Rudd plan.
So, it would appear that it will be more difficult for Rudd than Abbott, if a cooperative plan is to be developed.
If Abbott can’t grab the opportunity presented to him, he is bound to be finished as an alternative prime minister.
On health, there is an easy way for Abbott, namely, accepting the invitation for cooperative bipartisan approach to participate in the process and be prepared to negotiate, and at the same time ask Rudd to be cooperative with the States to have their acceptance of Rudd's health plan, or accept Abbott's alternative or modified plan.
That can neutralise the health issues and put spotlight on Rudd for cooperation with other parties, namely the States and other political parties.
Abbott can ask Rudd's assistance with costing by public services for different scenarios, through which to potentially expose the deficiencies and shortcomings of the Rudd plan.
So, it would appear that it will be more difficult for Rudd than Abbott, if a cooperative plan is to be developed.
If Abbott can’t grab the opportunity presented to him, he is bound to be finished as an alternative prime minister.
Wake up to modern and real world please
Comment on Terry McCrann “Rio Tinto gets to grips with a new reality in China over Stern Hu & co”, 27/03/2010, http://www.theaustralian.com.au/business/opinion/rio-tinto-gets-to-grips-with-a-new-reality-in-china-over-stern-hu-co/story-e6frg9if-1225846167483
With all respect, it appears that the author relies too much on "guess" work and has used too little rational analysis and intuition based on facts.
Closer economic ties with China do not necessarily mean any loss of sovereignty or dignity for Australia, in a modern, globalised and progressive world.
The past and outdated mentality of power international politics emanating from Australia's reliance on the US as a protector has had too much bearing on some Australians, so they cannot escape from it and continue to use that in their analysis of the future.
Closer economic ties in the context of different political systems and values to some extent means both ways: we need China and China needs us, it should be a win-win to both, not the situation where one wins and other loses.
The world is moving to a multi polar system and becoming more equal as opposed to hegemony, or two camp rivalries. Politically speaking, differences in size like population are becoming less and less important.
Our analysts and commentators cannot live in the past forever but to catch up with the new international reality.
Otherwise they will become irrelevant.
PS: the fact that it has been so difficult (maybe for some even impossible) to come to terms that Stern Hu and his other three colleagues have accepted bribes, just manifests so clearly how close-minded some people in Australia are. Don't any Australians commit crimes or behave inappropriately ever?
Rio was adamant that Stern Hu did not do anything wrong earlier on, how did it know for that sure? Did it monitor their movements in China all the time? Was that possible? That simply blind faith just defies logic and begs belief.
With all respect, it appears that the author relies too much on "guess" work and has used too little rational analysis and intuition based on facts.
Closer economic ties with China do not necessarily mean any loss of sovereignty or dignity for Australia, in a modern, globalised and progressive world.
The past and outdated mentality of power international politics emanating from Australia's reliance on the US as a protector has had too much bearing on some Australians, so they cannot escape from it and continue to use that in their analysis of the future.
Closer economic ties in the context of different political systems and values to some extent means both ways: we need China and China needs us, it should be a win-win to both, not the situation where one wins and other loses.
The world is moving to a multi polar system and becoming more equal as opposed to hegemony, or two camp rivalries. Politically speaking, differences in size like population are becoming less and less important.
Our analysts and commentators cannot live in the past forever but to catch up with the new international reality.
Otherwise they will become irrelevant.
PS: the fact that it has been so difficult (maybe for some even impossible) to come to terms that Stern Hu and his other three colleagues have accepted bribes, just manifests so clearly how close-minded some people in Australia are. Don't any Australians commit crimes or behave inappropriately ever?
Rio was adamant that Stern Hu did not do anything wrong earlier on, how did it know for that sure? Did it monitor their movements in China all the time? Was that possible? That simply blind faith just defies logic and begs belief.
2010-03-26
Hiding, trust and suspicion
Comments on Joe Kelly “Treasurers pore over health reform details”, 26/03/2010, http://www.theaustralian.com.au/politics/treasurers-pore-over-health-reform-details/story-e6frgczf-1225845889744
While I refrain from endorsing entirely what the opposition has been saying that the Rudd government can't be trusted, I would say it is highly suspicious.
Why the government can't trust the public?
Why it would take very long to consider the government position and responses even when they have the full force of bureaucrats from APS to advise it?
Where does the incompetency lie to result this situation?
Doesn't it mean the government has something to hide from the public, or it debase the intelligence of the public?
While I refrain from endorsing entirely what the opposition has been saying that the Rudd government can't be trusted, I would say it is highly suspicious.
Why the government can't trust the public?
Why it would take very long to consider the government position and responses even when they have the full force of bureaucrats from APS to advise it?
Where does the incompetency lie to result this situation?
Doesn't it mean the government has something to hide from the public, or it debase the intelligence of the public?
Stronger independent institutions needed to improve governance
Comments on ABC report “Keneally, O'Farrell accentuate the positive during debate”, 26/03/2010, http://www.abc.net.au/news/stories/2010/03/26/2856993.htm?section=justin
I share one point by Mr O'Farrell, namely, the government should not make changes to its election promises that easily.
NSW, as for Australia as well, needs stronger institutions to minimise the detrimental impacts of short term focus by political parties for short term political gains at the expense of the taxpayers, the State and the country.
Stronger institutions mainly comprised of public services and politically independent private sector representatives should formulate long term strategies and plans that are good and will be good for the taxpayers and are not affected by short terms political opportunists, irrespective whichever side of politics is in government.
Those strategies and plans should be published and updated, independent of the government, and are always available to compare with what government's policies and plans. In that way, taxpayers will have more information and are equipped with independent advices to scrutinise government policies and priorities.
That will be better and good for the State and the country.
I share one point by Mr O'Farrell, namely, the government should not make changes to its election promises that easily.
NSW, as for Australia as well, needs stronger institutions to minimise the detrimental impacts of short term focus by political parties for short term political gains at the expense of the taxpayers, the State and the country.
Stronger institutions mainly comprised of public services and politically independent private sector representatives should formulate long term strategies and plans that are good and will be good for the taxpayers and are not affected by short terms political opportunists, irrespective whichever side of politics is in government.
Those strategies and plans should be published and updated, independent of the government, and are always available to compare with what government's policies and plans. In that way, taxpayers will have more information and are equipped with independent advices to scrutinise government policies and priorities.
That will be better and good for the State and the country.
Don't think others are fool and be fool yourselves
Comments on “Treasurer to discuss health plan detail”, NEWS - Politics & IR, 26/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Treasurers-to-discuss-health-plan-detail-3VTPZ?OpenDocument&src=hp4
It is so fascinating that the government excluded the GST from the Henry tax review, but before the release the review report it announced a takeover of 30% of the GST from the States.
And Swan wants to discuss with his State counterparts on the health plan detail that include the 30% of GST takeover by the fed, but does not inform them about the review report that, presumably contains recommendations on reforms of many State taxes.
Does anyone believe Swan is serious or the Rudd government is genuine with the States and the public on its health plan without relevant information?
I beg nobody does.
It is so fascinating that the government excluded the GST from the Henry tax review, but before the release the review report it announced a takeover of 30% of the GST from the States.
And Swan wants to discuss with his State counterparts on the health plan detail that include the 30% of GST takeover by the fed, but does not inform them about the review report that, presumably contains recommendations on reforms of many State taxes.
Does anyone believe Swan is serious or the Rudd government is genuine with the States and the public on its health plan without relevant information?
I beg nobody does.
Misleading and low academics
Comments on Joh Lee “In dealing with Beijing, overambition tends to backfire”, 26/03/2010, http://www.theaustralian.com.au/news/opinion/in-dealing-with-beijing-overambition-tends-to-backfire/story-e6frg6zo-1225845497854
This appears to be a very distorting view of the events and their underlying causes.
A person starting with a very biased and fixed views and mind is unlikely to get the basic facts right, let alone analysis.
It is nothing more than being misleading and attempting political mind cleansing.
It is poor and appalling.
It is low politics and equally low if not lower academics.
This appears to be a very distorting view of the events and their underlying causes.
A person starting with a very biased and fixed views and mind is unlikely to get the basic facts right, let alone analysis.
It is nothing more than being misleading and attempting political mind cleansing.
It is poor and appalling.
It is low politics and equally low if not lower academics.
2010-03-24
Xiong Zhijun's views on 房地产行业
Comments on "国资委官员:应对房地产行业征暴利税", see Devan的日志, 21/03/2010, http://www.pinggu.name/space-1517848-do-blog-id-38087.html
Cheers for 熊志军, a friend or colleague back more than 20 years at MMI.
His view on GOEs and they should aim at profits as any firms do, is correct.
However, I feel his view in terms of how to deal with abnormal super profits from land and real estate assets may be problematic.
The State should not punish many small investors, but to manage how big firms behave in terms of pure speculations and destabilising the markets.
Cheers for 熊志军, a friend or colleague back more than 20 years at MMI.
His view on GOEs and they should aim at profits as any firms do, is correct.
However, I feel his view in terms of how to deal with abnormal super profits from land and real estate assets may be problematic.
The State should not punish many small investors, but to manage how big firms behave in terms of pure speculations and destabilising the markets.
Bureaucrats need to be held accountable
Comments on Robert Gottliebsen “Time for a Canberra shake-up”, 23/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Kevin-Rudd-Tony-Abbott-JSF-pd20100323-3SS56?OpenDocument&src=rab
Absolutely right!
There is a need for the APS to be accountable to its outcomes and responsibilities be taken when necessary.
Bureaucrats cannot simply hide behind the scene and escape their responsibilities.
The design and implementation of a number of big policy items in the stimulus programs should be accounted for, so future APS advice and services can learn from them.
The cash handouts (to necessarily increase deficits, debt and future taxpayers liabilities), the NBN, the pink batts, the BER, you name it.
Some people must take responsibilities for them.
Who are they?
Absolutely right!
There is a need for the APS to be accountable to its outcomes and responsibilities be taken when necessary.
Bureaucrats cannot simply hide behind the scene and escape their responsibilities.
The design and implementation of a number of big policy items in the stimulus programs should be accounted for, so future APS advice and services can learn from them.
The cash handouts (to necessarily increase deficits, debt and future taxpayers liabilities), the NBN, the pink batts, the BER, you name it.
Some people must take responsibilities for them.
Who are they?
Assets bubbles and their macro management
Comments on Takatoshi Ito “China’s property bubble worse than it appears”, 23/03/2010, http://www.eastasiaforum.org/2010/03/23/chinas-property-bubble-worse-than-it-appears/
It is more than likely that the housing bubbles in China are more serious than the official statistics shows and are likely to be a huge challenge to the Chinese authority in managing its economy as a whole.
China may be doing slightly better than Japan did back then, due to a number of reasons.
The first is that China is unlikely to completely bow to the US and EU pressure for currency appreciation, like Japan did in the Plaza accord. China may allow some appreciation when time is right, but that is likely to be tightly managed.
Secondly, repeated historical lessons of bubbles and bursting and their effects on the real economy may be learnt, that is, how to prevent bubbles from forming, growing and bursting too rapidly. I think China should be able to and can do better. When there are bubbles, the important task for the authority is not to burst but to manage the bubbles.
To use an analogue, when there is hyper inflation, the task is not to move the price back i.e. to deflate it rapidly, but to stop the further inflation. Managing bubbles is not completely the same as that, but has some similarity.
Thirdly, China's capital market is not as free as Japan was or other major western economies, and its monetary authority has more instruments to use than its overseas counterparts.
Fourthly, the stage of Chinese economic development now is different from that of Japan in the late 1980s or early 1990s, and there is enough room for expansion including fiscal expansion to smooth out the similar problems that Japan faced back then, or the US is facing now.
So in my view, while the housing bubbles in China is potentially more problematic, China should have the capacity and instruments to manage them and manage them in a much better way.
Certainly, if I had the authority to manage the Chinese economy, I would be highly confident to do it successfully, much more so than any other western countries in their recent history.
It is more than likely that the housing bubbles in China are more serious than the official statistics shows and are likely to be a huge challenge to the Chinese authority in managing its economy as a whole.
China may be doing slightly better than Japan did back then, due to a number of reasons.
The first is that China is unlikely to completely bow to the US and EU pressure for currency appreciation, like Japan did in the Plaza accord. China may allow some appreciation when time is right, but that is likely to be tightly managed.
Secondly, repeated historical lessons of bubbles and bursting and their effects on the real economy may be learnt, that is, how to prevent bubbles from forming, growing and bursting too rapidly. I think China should be able to and can do better. When there are bubbles, the important task for the authority is not to burst but to manage the bubbles.
To use an analogue, when there is hyper inflation, the task is not to move the price back i.e. to deflate it rapidly, but to stop the further inflation. Managing bubbles is not completely the same as that, but has some similarity.
Thirdly, China's capital market is not as free as Japan was or other major western economies, and its monetary authority has more instruments to use than its overseas counterparts.
Fourthly, the stage of Chinese economic development now is different from that of Japan in the late 1980s or early 1990s, and there is enough room for expansion including fiscal expansion to smooth out the similar problems that Japan faced back then, or the US is facing now.
So in my view, while the housing bubbles in China is potentially more problematic, China should have the capacity and instruments to manage them and manage them in a much better way.
Certainly, if I had the authority to manage the Chinese economy, I would be highly confident to do it successfully, much more so than any other western countries in their recent history.
How autonomy works?
Comments on Huw Slater “Tibetan autonomy: A compromise three-state solution”, http://www.eastasiaforum.org/2010/03/22/tibetan-autonomy-a-compromise-three-state-solution/
I have no experience or expertise in terms of autonomy governance.
While there is some common understanding how autonomy works, in reality it is likely to be more complex.
For example, what about the rights of non-Tibetans in any of those areas mentioned by the author and their role in the autonomy proposed or insisted by Dalai Lama?
Should they have equal rights as Tibetans, or should they have fewer rights?
I don't know how many non-Tibetans in those areas and their share in the populations.
But it can be expected they may be significant and that can have serious implications for how the autonomy can work.
It is probably inappropriate to ignore their presence and not feasible to ask them to leave to make the region more pure in terms of ethnicity.
But unfortunately most commentators do not mention their presence and its implications in their analysis.
After all, this is not too different from the Northern Ireland situation where you have two groups that have or had different aspirations or goals.
I have no experience or expertise in terms of autonomy governance.
While there is some common understanding how autonomy works, in reality it is likely to be more complex.
For example, what about the rights of non-Tibetans in any of those areas mentioned by the author and their role in the autonomy proposed or insisted by Dalai Lama?
Should they have equal rights as Tibetans, or should they have fewer rights?
I don't know how many non-Tibetans in those areas and their share in the populations.
But it can be expected they may be significant and that can have serious implications for how the autonomy can work.
It is probably inappropriate to ignore their presence and not feasible to ask them to leave to make the region more pure in terms of ethnicity.
But unfortunately most commentators do not mention their presence and its implications in their analysis.
After all, this is not too different from the Northern Ireland situation where you have two groups that have or had different aspirations or goals.
Rudd won the great health debate? How?
Comments on Paul Kelly “Rudd skates home with sweet reason”, 24/03/2010, http://www.theaustralian.com.au/news/opinion/rudd-skates-home-with-sweet-reason/story-e6frg6zo-1225844495756
Paul, I have watched your video comments or judgement on the debate as well.
What I must say is although I respect your view on the debate, I nevertheless feel that you don't appear to get it right. The main reason for that lies in the fact that Rudd used a surprise tactic by presenting himself as cooperative, but the fact he is nothing by cooperative in his dealing with the States, the opposition and the public, even on the matter of health policy.
First to the States, has Rudd be cooperative with them? By presenting a poorly designed partial plan and withholding many parts of the plan, without consultation with or advice to the States like the premiers, is not cooperative. Further, the so called increased funding of the commonwealth is coming from the GST that that belongs to the States. So how much Rudd has increased its own funding?
Then to the opposition, again, why not asking for cooperation earlier and stating he is open for negotiation on his plan? Why hasn't he presented the complete plan, with the full support of APS, more than two years in government and 8 months later than his pre-election promise of take over?
For the public, has he explained how his plan can end the blame game, and how? As the opposition leader pointed out the Rudd plan does not and can not do that by changing from 40-60% to 60-40% funding. You would have local board, State bureaucracy and commonwealth bureaucracy. The States will by all probability pay more than 40 percent, because the 60% commonwealth funding is based on efficient operation and by definition there will inevitable less efficient operations that will have to be funded unless you are going to close them. Rudd said the local board is State statutory appointed, so they should be responsible to the State where they are, not the Commonwealth.
So, does Rudd, by using surprise tactics purely for debate, really won the debate? Does his performance in the debate advance the health cause for Australians?
I think the jury is still out, albeit you have happily and readily given Rudd the tick.
Paul, I have watched your video comments or judgement on the debate as well.
What I must say is although I respect your view on the debate, I nevertheless feel that you don't appear to get it right. The main reason for that lies in the fact that Rudd used a surprise tactic by presenting himself as cooperative, but the fact he is nothing by cooperative in his dealing with the States, the opposition and the public, even on the matter of health policy.
First to the States, has Rudd be cooperative with them? By presenting a poorly designed partial plan and withholding many parts of the plan, without consultation with or advice to the States like the premiers, is not cooperative. Further, the so called increased funding of the commonwealth is coming from the GST that that belongs to the States. So how much Rudd has increased its own funding?
Then to the opposition, again, why not asking for cooperation earlier and stating he is open for negotiation on his plan? Why hasn't he presented the complete plan, with the full support of APS, more than two years in government and 8 months later than his pre-election promise of take over?
For the public, has he explained how his plan can end the blame game, and how? As the opposition leader pointed out the Rudd plan does not and can not do that by changing from 40-60% to 60-40% funding. You would have local board, State bureaucracy and commonwealth bureaucracy. The States will by all probability pay more than 40 percent, because the 60% commonwealth funding is based on efficient operation and by definition there will inevitable less efficient operations that will have to be funded unless you are going to close them. Rudd said the local board is State statutory appointed, so they should be responsible to the State where they are, not the Commonwealth.
So, does Rudd, by using surprise tactics purely for debate, really won the debate? Does his performance in the debate advance the health cause for Australians?
I think the jury is still out, albeit you have happily and readily given Rudd the tick.
2010-03-22
Academia ideal and political reality
Comments on Joel Rathus “Japan’s early moves on the East Asian Community”, http://www.eastasiaforum.org/2010/03/21/japans-early-moves-on-the-east-asian-community/
I assume that the first meeting has not finished, but the second one has and got its consensus already.
It would be equally interesting to see what comes from the first meeting and what kind of consensus it may reach.
It may be expected that it would be easier to start with what those key members in common, that is, a common denominator, given the lack of progress for so long, irrespective consensus or lack of consensus, among academia or officials.
Academia may have very nice ideas, but sometimes those ideas lacks practical support, or in another word, impractical.
There seems a need for a balance between ideal and practical.
I assume that the first meeting has not finished, but the second one has and got its consensus already.
It would be equally interesting to see what comes from the first meeting and what kind of consensus it may reach.
It may be expected that it would be easier to start with what those key members in common, that is, a common denominator, given the lack of progress for so long, irrespective consensus or lack of consensus, among academia or officials.
Academia may have very nice ideas, but sometimes those ideas lacks practical support, or in another word, impractical.
There seems a need for a balance between ideal and practical.
Don't be distracted by others
Comments on Kyung-Tae Lee “Where is the East Asian Community going?” 21/03/2010, http://www.eastasiaforum.org/2010/03/21/where-is-the-east-asian-community-going/
While some of the proposals may on their own have some merits, some of them may have acted as distractions and have the effect to hinder the progress of establishing an East Asia community.
East Asian countries need to unite and have in mind a common regional interest that assists its members' interests.
They need to look forward, as opposed to look backward.
Some issues should be left as bygone as bygone, and people should be focused on the common interest that will be better for every member from Pareto efficiency point of view, if I can borrow a jargon.
It may be easier to start with a common denominator to establish the core, and then keep the community open to legitimate members, as long as they share the chart for the community.
While some of the proposals may on their own have some merits, some of them may have acted as distractions and have the effect to hinder the progress of establishing an East Asia community.
East Asian countries need to unite and have in mind a common regional interest that assists its members' interests.
They need to look forward, as opposed to look backward.
Some issues should be left as bygone as bygone, and people should be focused on the common interest that will be better for every member from Pareto efficiency point of view, if I can borrow a jargon.
It may be easier to start with a common denominator to establish the core, and then keep the community open to legitimate members, as long as they share the chart for the community.
Asain affairs are for Asians to decide
Comments on Peter Drysdale “Japan and the East Asian Community – Weekly editorial”, 22/03/2010, http://www.eastasiaforum.org/2010/03/22/japan-and-the-east-asian-community-weekly-editorial/
With all respect, Asia and East Asia do not need to be US centric.
They can live by their own as a region.
They have enough weight and strength to be equal with EU or the US.
They need to think and act as a region, not a handicap.
It is interesting but not always helpful to naturally link to the US when people discuss about Asia, or East Asia.
People should not always live in the past. They need to look into the future.
Further, it is especially unhelpful for outsiders to tell Asia or East Asia what they should do for their own affairs.
Whether the US wishes to be everywhere and stay in Asia or East Asia's affairs should not be a key issue for Asians to consider their future.
With all respect, Asia and East Asia do not need to be US centric.
They can live by their own as a region.
They have enough weight and strength to be equal with EU or the US.
They need to think and act as a region, not a handicap.
It is interesting but not always helpful to naturally link to the US when people discuss about Asia, or East Asia.
People should not always live in the past. They need to look into the future.
Further, it is especially unhelpful for outsiders to tell Asia or East Asia what they should do for their own affairs.
Whether the US wishes to be everywhere and stay in Asia or East Asia's affairs should not be a key issue for Asians to consider their future.
Paul Krugman no saint
Comments on Rowan Callick “Spat over the yuan will shake global finance”, 22/03/2010, http://www.theaustralian.com.au/business/opinion/spat-over-the-yuan-will-shake-global-finance/story-e6frg9if-1225843472041
Although Paul Krugman is a Nobel Prize winning American economist, but that does not mean whatever he says or does is right.
He is not a saint by any means, is he?
There have been so many economists, mostly Americans, of Nobel Prize winners. But we still have had the GFC that originated from America that nearly brought down the whole world banking industry and pulled the world into a great recession.
So, what is the use of Paul Krugman in this debate?
Maybe it has some traction in Australia, but if one really understands economics and its limitations and the limitations of most economists in terms of their partial and stubborn viewpoints, one would not simply do nodding to them without critically evaluate them and compare with the views of others to form one's own view.
His views are opposed by many economists Americans included.
He is showing that he is an American political economist working not for economics but for America.
He is very much biased on the issues of yuan and international imbalance.
Although Paul Krugman is a Nobel Prize winning American economist, but that does not mean whatever he says or does is right.
He is not a saint by any means, is he?
There have been so many economists, mostly Americans, of Nobel Prize winners. But we still have had the GFC that originated from America that nearly brought down the whole world banking industry and pulled the world into a great recession.
So, what is the use of Paul Krugman in this debate?
Maybe it has some traction in Australia, but if one really understands economics and its limitations and the limitations of most economists in terms of their partial and stubborn viewpoints, one would not simply do nodding to them without critically evaluate them and compare with the views of others to form one's own view.
His views are opposed by many economists Americans included.
He is showing that he is an American political economist working not for economics but for America.
He is very much biased on the issues of yuan and international imbalance.
Improve natinal governance
Comments on Malcolm Colless “.Rudd roasts Conroy over the national broadband report”, 22/03/2010, http://www.theaustralian.com.au/business/rudd-roasts-conroy-over-the-national-broadband-report/story-e6frg8zx-1225843475077
Given the scale and the costs of the project and its deep effects on people's life in terms of costs and the government effected mandatory to so many aspects of the economy, surely it is a case that an or more than one studies into it should be supervised by a senate committee, as opposed to the Communication minister who is more hateful than the average government minister.
Senate supervised studies should ensure their impartiality and sound investigation of its cost benefit effectiveness.
Australia will be better served to be non-partisan when it comes to important national events. NBN is a good candidate of such events.
Given the scale and the costs of the project and its deep effects on people's life in terms of costs and the government effected mandatory to so many aspects of the economy, surely it is a case that an or more than one studies into it should be supervised by a senate committee, as opposed to the Communication minister who is more hateful than the average government minister.
Senate supervised studies should ensure their impartiality and sound investigation of its cost benefit effectiveness.
Australia will be better served to be non-partisan when it comes to important national events. NBN is a good candidate of such events.
2010-03-19
Balance or not balance
Comments on Ernest Bower “A durable, serious and balanced US strategy for ASEAN”, 16/03/2010, http://www.eastasiaforum.org/2010/03/16/a-durable-serious-and-balanced-us-strategy-for-asean/
While it is understandable why the author has argued what in this article, the author may be assisted if considering why the US has taken that approach.
Is it that the US has got the priority wrong?
Or it has been based on cost benefit analysis?
It may be the case that you need to foregone something to maximise your objective.
Everyone will ask for attention, but the matter of fact is that not everyone will get the same attention.
While it is understandable why the author has argued what in this article, the author may be assisted if considering why the US has taken that approach.
Is it that the US has got the priority wrong?
Or it has been based on cost benefit analysis?
It may be the case that you need to foregone something to maximise your objective.
Everyone will ask for attention, but the matter of fact is that not everyone will get the same attention.
Real or ad hoc progress in emissions reduction?
Comments on Jeffrey Frankel “The Copenhagen Accord: Real progress through 2020 emission goals?” 19/03/2010, http://www.eastasiaforum.org/2010/03/19/the-copenhagen-accord-real-progress-through-2020-emission-goals/
Any ad hoc approach and hope all important parties will accept that approach may be some wishful thinking.
If emissions are really having a negative effect on climate change, the best and most equitable approach is to correct that negative effect by explicitly "taxing" emissions wherever they occur and distribute that tax proceed to those who have a right to a good climate.
That does not need to arbitrarily define who should and who shouldn't bear the costs or how much each should bear.
It is simply so puzzling why such a simple economic principle taught in economics is so easily forgotten or abandoned by virtually all bright economists around the world. Instead, they are inventing this scheme, that scheme, then they try to rationalise with this or that.
To me it is not too different from reinventing the wheel and is simply silly approaches, to put it mildly.
Any ad hoc approach and hope all important parties will accept that approach may be some wishful thinking.
If emissions are really having a negative effect on climate change, the best and most equitable approach is to correct that negative effect by explicitly "taxing" emissions wherever they occur and distribute that tax proceed to those who have a right to a good climate.
That does not need to arbitrarily define who should and who shouldn't bear the costs or how much each should bear.
It is simply so puzzling why such a simple economic principle taught in economics is so easily forgotten or abandoned by virtually all bright economists around the world. Instead, they are inventing this scheme, that scheme, then they try to rationalise with this or that.
To me it is not too different from reinventing the wheel and is simply silly approaches, to put it mildly.
A Rhodes Scholar but not a worldly scholar
Comments on Jonathan Bonnitcha “The real costs and benefits of investment treaties”, 16/03/2010, http://www.eastasiaforum.org/2010/03/16/the-real-costs-and-benefits-of-investment-treaties/comment-page-1/#comment-104303
I noticed Jonathan Bonnitcha's main conclusion and some of its implicit implications, although not entirely by any means.
I also noticed the qualifications, or the likes of seems likely or unlikely he used in deriving his conclusion.
Having considered the qualifications and conclusion, I am left very much bewildered to say the least: what can the readers get out of Jonathan Bonnitcha's article?
More specifically, does his conclusion seem likely, if I can borrow his tactics but not trying to be too slippery myself, to be sufficiently reliable?
This is by no means to be disrespect to a Rhodes Scholar such as Jonathan Bonnitcha. However, I do feel that the use of the tactics “on the one hand, …, on the other hand, …..”, as what some people mock the economic profession, is not necessarily cutting through with the worldly readers.
I noticed Jonathan Bonnitcha's main conclusion and some of its implicit implications, although not entirely by any means.
I also noticed the qualifications, or the likes of seems likely or unlikely he used in deriving his conclusion.
Having considered the qualifications and conclusion, I am left very much bewildered to say the least: what can the readers get out of Jonathan Bonnitcha's article?
More specifically, does his conclusion seem likely, if I can borrow his tactics but not trying to be too slippery myself, to be sufficiently reliable?
This is by no means to be disrespect to a Rhodes Scholar such as Jonathan Bonnitcha. However, I do feel that the use of the tactics “on the one hand, …, on the other hand, …..”, as what some people mock the economic profession, is not necessarily cutting through with the worldly readers.
Threats of a trade war or wars
Comments on Alan Kohler “Trade war sabre-rattling”, 19/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Trade-war-sabre-rattling-pd20100319-3NRFS?OpenDocument&src=sph
The Americans and their allies are in full play to have possibly their last show of imperialism in their long and inevitable declines, this time not in the military sense but in economic sense.
All we have seen is some sort of threats, that is, how the surplus countries are more likely to lose or unlikely to be the winners, how a trade war can result in a rebalance of the world economy, etc.
Strategic gaming to show their desperation, or scare tactics to scare non-full grown children?
Who cares what they say and what they might do!
Let it happen and we will see another 1930s for some countries.
Yes, undoubtedly there will be a rebalance of the world economy, with acceleration of the declines of some and faster ascendance of others.
Will be fascinating to see!
On Rudd’s public warning on the Stern Hu case, it indicates he has not learnt from his past failures, not just his lecture in China, but also his Copenhagen.
Be mature, and don't use that as a distraction from his domestic problems!
The Americans and their allies are in full play to have possibly their last show of imperialism in their long and inevitable declines, this time not in the military sense but in economic sense.
All we have seen is some sort of threats, that is, how the surplus countries are more likely to lose or unlikely to be the winners, how a trade war can result in a rebalance of the world economy, etc.
Strategic gaming to show their desperation, or scare tactics to scare non-full grown children?
Who cares what they say and what they might do!
Let it happen and we will see another 1930s for some countries.
Yes, undoubtedly there will be a rebalance of the world economy, with acceleration of the declines of some and faster ascendance of others.
Will be fascinating to see!
On Rudd’s public warning on the Stern Hu case, it indicates he has not learnt from his past failures, not just his lecture in China, but also his Copenhagen.
Be mature, and don't use that as a distraction from his domestic problems!
2010-03-18
More detail is needed of Hu Angang's climate change proposal
Comments on Peter Yuan Cai “Hu Angang and China’s climate change policy”, 18/03/2010, http://www.eastasiaforum.org/2010/03/18/hu-angang-and-chinas-climate-change-policy/
I have known Angang for a long time and he always command my respect.
He is a very versatile, productive and highly respected Chinese economist.
Having said that, I am not sure whether it is the representation of this article or his work itself, I am puzzled by what is shown in this article.
There is no way to know what HDI means and how it is calculated for each country and how the boundaries of different divisions are determined from this article. As a result, it is difficult to evaluate and comment on whether the proposal is fair or not, one of the two principles attributed to that proposal.
But it is probably possible to comment a little bit on the other principle that is efficiency.
I am not sure that said principle is met by such a proposal, given that it does not appear to be based on or equivalent to a market approach to equalise the marginal costs of emissions reduction, in a country, a region, or the whole world. At least the article even did not make it clear what is meant by efficiency, let alone how to realise that principle.
It would be more helpful if enough information is provided to enable and assist the readers to form a view.
From this article, we only read that "Hu Angang proposes an emission reduction scheme that is applicable internationally as well as domestically to China based on the principles of fairness and efficiency. He challenges the traditional dichotomy of developed countries versus developing countries in climate change debate with four new divisions based on the Human Development Index, HDI. He argues that major emitters including the United States and China should bear the brunt of responsibility for emission reduction."
But why should China be together with the US to bear the brunt of responsibility for emission reduction, given that on per capita basis, there are many countries that emit much higher emissions?
What is that rationale and is that sound?
Without enough details one is left only to wonder.
I have known Angang for a long time and he always command my respect.
He is a very versatile, productive and highly respected Chinese economist.
Having said that, I am not sure whether it is the representation of this article or his work itself, I am puzzled by what is shown in this article.
There is no way to know what HDI means and how it is calculated for each country and how the boundaries of different divisions are determined from this article. As a result, it is difficult to evaluate and comment on whether the proposal is fair or not, one of the two principles attributed to that proposal.
But it is probably possible to comment a little bit on the other principle that is efficiency.
I am not sure that said principle is met by such a proposal, given that it does not appear to be based on or equivalent to a market approach to equalise the marginal costs of emissions reduction, in a country, a region, or the whole world. At least the article even did not make it clear what is meant by efficiency, let alone how to realise that principle.
It would be more helpful if enough information is provided to enable and assist the readers to form a view.
From this article, we only read that "Hu Angang proposes an emission reduction scheme that is applicable internationally as well as domestically to China based on the principles of fairness and efficiency. He challenges the traditional dichotomy of developed countries versus developing countries in climate change debate with four new divisions based on the Human Development Index, HDI. He argues that major emitters including the United States and China should bear the brunt of responsibility for emission reduction."
But why should China be together with the US to bear the brunt of responsibility for emission reduction, given that on per capita basis, there are many countries that emit much higher emissions?
What is that rationale and is that sound?
Without enough details one is left only to wonder.
2010-03-17
Martin Wolf lacks common sense
Comments on Martin Wolf “Germany and China aren't making sense”, 17/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Germany-and-China-arent-making-sense-pd20100317-3M36P?OpenDocument&src=sph
I beg that Martin Wolf is neither a German nor a Chinese.
Further I beg he is emotionally and possibly intellectually closer to the US.
I am even not sure that his common sense is necessarily the common sense other people have or share.
For example, he talks about the potential consequences of the US resort to trad protections. But if one is neutral and is not afraid of the US economically and politically, then why it a common sense that the consequences of US protection would not be equally bad if not more worse for the US itself?
Certainly it does not make sense or is common sense to me! Rather, it lacks common sense!
In terms of possible penalties for fiscal irresponsibility of members in a monetary union like the euro zone, why should there not be a penalty to deter members from behave fiscally irresponsible? If there are no disincentives in place, how can a member be prevented or deterred from behave irresponsibly?
What common sense does Martin Wolf have in his argument?
I beg that Martin Wolf is neither a German nor a Chinese.
Further I beg he is emotionally and possibly intellectually closer to the US.
I am even not sure that his common sense is necessarily the common sense other people have or share.
For example, he talks about the potential consequences of the US resort to trad protections. But if one is neutral and is not afraid of the US economically and politically, then why it a common sense that the consequences of US protection would not be equally bad if not more worse for the US itself?
Certainly it does not make sense or is common sense to me! Rather, it lacks common sense!
In terms of possible penalties for fiscal irresponsibility of members in a monetary union like the euro zone, why should there not be a penalty to deter members from behave fiscally irresponsible? If there are no disincentives in place, how can a member be prevented or deterred from behave irresponsibly?
What common sense does Martin Wolf have in his argument?
Macklin's welfare change lacks enough flexibility
Comments on Paul Kelly “Macklin's welfare fight is only the beginning”, 17/03/2010, http://www.theaustralian.com.au/news/opinion/macklins-welfare-fight-is-only-the-beginning/story-e6frg6zo-1225841562048
While Paul Kelly seems a strong supporter for this policy change, he nevertheless has taken the easy road of siding with any change by the government when facing a difficult issue.
Yes, there is a need for change, but it does not mean any change will be better or equally good.
Unfortunately in this regard, Paul does not analyse the issue critically enough.
A more sensible approach is giving the government the mandate to use that on any welfare it sees fit, but without any predetermined and possibly a compulsory percentage without taking account the real situations or with little regard to the real need in different situations in the complex world.
The main shortcoming of government income management in the name of changing behaviour is that it can be very disempowering for those under management. For some it may produce the opposite effect to the legislation’s intention, that is, rather than change their behaviour to the better it may actually worsen theirs.
So there is a clear need to restrict its use to absolute minimum and target well.
While Paul Kelly seems a strong supporter for this policy change, he nevertheless has taken the easy road of siding with any change by the government when facing a difficult issue.
Yes, there is a need for change, but it does not mean any change will be better or equally good.
Unfortunately in this regard, Paul does not analyse the issue critically enough.
A more sensible approach is giving the government the mandate to use that on any welfare it sees fit, but without any predetermined and possibly a compulsory percentage without taking account the real situations or with little regard to the real need in different situations in the complex world.
The main shortcoming of government income management in the name of changing behaviour is that it can be very disempowering for those under management. For some it may produce the opposite effect to the legislation’s intention, that is, rather than change their behaviour to the better it may actually worsen theirs.
So there is a clear need to restrict its use to absolute minimum and target well.
Rudd's days as PM numbered
Comments on Peter van Onselen “PM on verge of becoming a drag on Labor vote”, 17/03/2010, http://www.theaustralian.com.au/news/opinion/pm-on-verge-of-becoming-a-drag-on-labor-vote/story-e6frg6zo-1225841584447
A winning strategy not just for the next election but also for the ALP as a whole is to change horse as early as possible from now.
It will give the government a real chance to change its policy approaches and improve its delivery of policies and do them properly.
Rudd cannot be expected to change overnight and there is not much time left before the election for him to turn around.
Even as he will undoubtedly try very hard, the public have just got too sceptical and cynical about his spins and no actions and will take any changes negatively. Further, there is way too much work left undone and it is virtually impossible to get things in a reasonable order under Rudd to convince the voters.
The recently announced health reform reflects this. It lacks the minimum required home work by the government with the full government machinery including the public services.
If Rudd has the political courage, he should have the decency to transfer the Prime Ministership to his deputy now to halt Abbott's advance and the government's decline.
Failing to do so, it is very likely that he will be forced out soon.
A winning strategy not just for the next election but also for the ALP as a whole is to change horse as early as possible from now.
It will give the government a real chance to change its policy approaches and improve its delivery of policies and do them properly.
Rudd cannot be expected to change overnight and there is not much time left before the election for him to turn around.
Even as he will undoubtedly try very hard, the public have just got too sceptical and cynical about his spins and no actions and will take any changes negatively. Further, there is way too much work left undone and it is virtually impossible to get things in a reasonable order under Rudd to convince the voters.
The recently announced health reform reflects this. It lacks the minimum required home work by the government with the full government machinery including the public services.
If Rudd has the political courage, he should have the decency to transfer the Prime Ministership to his deputy now to halt Abbott's advance and the government's decline.
Failing to do so, it is very likely that he will be forced out soon.
2010-03-16
Fallacy in mechanically applying conventional economic wisdoms
Second comments on Yiping Huang “Krugman’s Chinese renminbi fallacy”, 15/03/2010, http://www.eastasiaforum.org/2010/03/15/krugmans-chinese-renminbi-fallacy/
I think this article has generated useful and interesting debates. Some of those are related to conventional wisdoms of economic theories.
For example, the point made by some about China’s exchange rate regime is implicitly based on the assumption that a flexible exchange rate regime is superior or better, so China should move to that or restore that mechanism.
The implicit problem with some of conventional economic theories that most people accept or use as truth nothing but the whole truth can be very inappropriate and indeed very dangerous at times. Further, it is often ignored by many people that the whole context of a particular regime is operating.
For example, many economists, based on some conventional economic theories, had thought GFC had been over and would not happen. What has happened in the last couple of years or so?
Many economists, based on some conventional economic theories, did not have a clue how to tackle the GFC, but to have the government stay out of any interventions. An example was the Fed has used and probably still using so called non-conventional method of quantitative easing, as opposed to what many economists had been used to and content with.
Shouldn’t governments intervene at all in the face of the GFC? Isn’t that dangerous?
Now let me turn back to the exchange rate regimes. Undoubtedly, many if not most economists would probably assume that the flexible regime is better. OK, let’s assume that they are right for the moment. What about Japan’s lost decade of the 1990s? Was Japan using a flexible or fixed exchange rate regime? Did it help Japan? Or from another viewpoint, did it solve Japan’s trade surplus, or for that matter the US trade deficits? I assume they both had a flexible exchange rate regime when very large trade imbalances could still have occurred.
Another point, while a flexible exchange rate regime is said to allow the monetary authority to pursue a free monetary policy of its own. However, we have seen wild fluctuations in some exchange rates, say even the $US and the Euro, for example. Do those wild fluctuations in exchange rates not have a destructive effect on the economies or businesses? When people talk about the freedom of monetary policies, did they have an idea of the potential costs to businesses or the economies in mind? Have they done a cost and benefit analysis as such?
Further, many economists have been talking about allowing currency to appreciate and its effect to dampen inflation. I am not arguing they are wrong. But have they thought about how the Chinese monetary authority conducts its monetary policies and how that can deal with a fixed exchange rate regime and effective monetary policies?
While I am not an academia and am very rusty in economic theories and policies, are many economists really having rational expectations, in the sense that they have a correct model of the real economies and how they work?
I have no answers to that, but sometimes it pays to be a little suspicious, or a bit diligent, and not be blind-sided and simple accepting what some people are saying, no matter how elegant they may be. After all, history has proved that many people can be wrong, and sometimes serious wrong, in both their theories and their beliefs.
The fact that there are serious disagreements among the best minds and most bright and great economists on so many issues is a proof that a particular economic theory or conventional economic wisdom is not necessarily always sacrosanct. It can be dangerous to use them mechanically.
To me, that acts as common sense and simple risk management.
I think this article has generated useful and interesting debates. Some of those are related to conventional wisdoms of economic theories.
For example, the point made by some about China’s exchange rate regime is implicitly based on the assumption that a flexible exchange rate regime is superior or better, so China should move to that or restore that mechanism.
The implicit problem with some of conventional economic theories that most people accept or use as truth nothing but the whole truth can be very inappropriate and indeed very dangerous at times. Further, it is often ignored by many people that the whole context of a particular regime is operating.
For example, many economists, based on some conventional economic theories, had thought GFC had been over and would not happen. What has happened in the last couple of years or so?
Many economists, based on some conventional economic theories, did not have a clue how to tackle the GFC, but to have the government stay out of any interventions. An example was the Fed has used and probably still using so called non-conventional method of quantitative easing, as opposed to what many economists had been used to and content with.
Shouldn’t governments intervene at all in the face of the GFC? Isn’t that dangerous?
Now let me turn back to the exchange rate regimes. Undoubtedly, many if not most economists would probably assume that the flexible regime is better. OK, let’s assume that they are right for the moment. What about Japan’s lost decade of the 1990s? Was Japan using a flexible or fixed exchange rate regime? Did it help Japan? Or from another viewpoint, did it solve Japan’s trade surplus, or for that matter the US trade deficits? I assume they both had a flexible exchange rate regime when very large trade imbalances could still have occurred.
Another point, while a flexible exchange rate regime is said to allow the monetary authority to pursue a free monetary policy of its own. However, we have seen wild fluctuations in some exchange rates, say even the $US and the Euro, for example. Do those wild fluctuations in exchange rates not have a destructive effect on the economies or businesses? When people talk about the freedom of monetary policies, did they have an idea of the potential costs to businesses or the economies in mind? Have they done a cost and benefit analysis as such?
Further, many economists have been talking about allowing currency to appreciate and its effect to dampen inflation. I am not arguing they are wrong. But have they thought about how the Chinese monetary authority conducts its monetary policies and how that can deal with a fixed exchange rate regime and effective monetary policies?
While I am not an academia and am very rusty in economic theories and policies, are many economists really having rational expectations, in the sense that they have a correct model of the real economies and how they work?
I have no answers to that, but sometimes it pays to be a little suspicious, or a bit diligent, and not be blind-sided and simple accepting what some people are saying, no matter how elegant they may be. After all, history has proved that many people can be wrong, and sometimes serious wrong, in both their theories and their beliefs.
The fact that there are serious disagreements among the best minds and most bright and great economists on so many issues is a proof that a particular economic theory or conventional economic wisdom is not necessarily always sacrosanct. It can be dangerous to use them mechanically.
To me, that acts as common sense and simple risk management.
Congress is bluffing!
Comments on Karen Maley “Congress calls China's bluff”, 16/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Congress-calls-Chinas-bluff-pd20100316-3KRDF?OpenDocument&src=sph
Krugman is no saint and is certainly hypocritical!
He thinks he got the Nobel Prize and what he says is truth. Far from it!
Did China force the US sub-prime mortgage practice? Wasn't that practice the fundamental cause of the GFC?
Which country caused the world great damage through the export of its own GFC to cause the world GFC? The US or China?
Who has long had very low savings rate and high budget deficits? Did any other countries have the power to force the US to do that in the past, say few decades?
The US has been used to power politics or imperialism, either military or economic. It congress thinks it has the power over the world and force any other countries according to its will and wayward.
But unfortunately for them, those days seem to be over and they have to come to terms with their own vulnerabilities. The sooner they realise it, the better it will be for them. Otherwise, they will be more deeply disappointed, not with others, but themselves.
Krugman is no saint and is certainly hypocritical!
He thinks he got the Nobel Prize and what he says is truth. Far from it!
Did China force the US sub-prime mortgage practice? Wasn't that practice the fundamental cause of the GFC?
Which country caused the world great damage through the export of its own GFC to cause the world GFC? The US or China?
Who has long had very low savings rate and high budget deficits? Did any other countries have the power to force the US to do that in the past, say few decades?
The US has been used to power politics or imperialism, either military or economic. It congress thinks it has the power over the world and force any other countries according to its will and wayward.
But unfortunately for them, those days seem to be over and they have to come to terms with their own vulnerabilities. The sooner they realise it, the better it will be for them. Otherwise, they will be more deeply disappointed, not with others, but themselves.
Krugman in actions of practice
Comments on Yiping Huang “Krugman’s Chinese renminbi fallacy”, 15/03/2010, http://www.eastasiaforum.org/2010/03/15/krugmans-chinese-renminbi-fallacy/
Krugman is good and famous at the so called strategic trade. Now he has found an occasion to apply his theories at the world scale.
When I heard or read about Krugman's talking about the Chinese currency versus the $US, I have always been reminded by a remark by Frank Milne (hope it is correct) once at his lecture of microeconomics at the graduate/masters level: economic policies can kill at a mass scale - look at what happened in China during the great leap forward and how many people died as a consequence!
Now Krugman, a winner of the Nobel Prize in Economics, is making his prescriptions to real economic problems and doing his economic advices to the US and possibly to some others.
It will be interesting to anticipate what his advices will result in, even for the Americans whom he tries or intends or has said or is said to help.
A few points to consider in teh context of US external deficits:
1. The US external deficit, is the US having external trade deficit with China? Or is China the largest and for how long it has been as the largest?
2. If China is currency manipulator then it must have devalued its currency against the $US which its currency pegs into. Has China devalued its currency in recent years? Against the $US?
3. Isn't the US a currency manipulator? Haven’t we often heard the US authorities say or have said that they want or wanted strong or weak $US? What do they mean or have they meant? Not a currency manipulator?
4. PPP and currency valuation: it is a general knowledge that most developing countries' GDP is higher in PPP, as opposed to their market currency. Does it mean their currency is undervalued in market terms?
5. The US has been blaming others for its external deficits, that is because they trade with others. Who should it blame for its out of control budget deficits?
6. Why balances, as opposed to imbalances should be the norm? Just think about savings and borrowings, consumptions and investments, why should any unit except the world as a whole be always balanced at all time? Is that good or bad for the living standards and welfares of the world?
7. Why does the US argues for free trade sometimes and say a different thing some other times? Isn't it political economy at the world scale?
8. Why has the US had the lowest and sometimes negative saving rate? Did any other countries force it to do that? Whose fault is it?
Krugman is good and famous at the so called strategic trade. Now he has found an occasion to apply his theories at the world scale.
When I heard or read about Krugman's talking about the Chinese currency versus the $US, I have always been reminded by a remark by Frank Milne (hope it is correct) once at his lecture of microeconomics at the graduate/masters level: economic policies can kill at a mass scale - look at what happened in China during the great leap forward and how many people died as a consequence!
Now Krugman, a winner of the Nobel Prize in Economics, is making his prescriptions to real economic problems and doing his economic advices to the US and possibly to some others.
It will be interesting to anticipate what his advices will result in, even for the Americans whom he tries or intends or has said or is said to help.
A few points to consider in teh context of US external deficits:
1. The US external deficit, is the US having external trade deficit with China? Or is China the largest and for how long it has been as the largest?
2. If China is currency manipulator then it must have devalued its currency against the $US which its currency pegs into. Has China devalued its currency in recent years? Against the $US?
3. Isn't the US a currency manipulator? Haven’t we often heard the US authorities say or have said that they want or wanted strong or weak $US? What do they mean or have they meant? Not a currency manipulator?
4. PPP and currency valuation: it is a general knowledge that most developing countries' GDP is higher in PPP, as opposed to their market currency. Does it mean their currency is undervalued in market terms?
5. The US has been blaming others for its external deficits, that is because they trade with others. Who should it blame for its out of control budget deficits?
6. Why balances, as opposed to imbalances should be the norm? Just think about savings and borrowings, consumptions and investments, why should any unit except the world as a whole be always balanced at all time? Is that good or bad for the living standards and welfares of the world?
7. Why does the US argues for free trade sometimes and say a different thing some other times? Isn't it political economy at the world scale?
8. Why has the US had the lowest and sometimes negative saving rate? Did any other countries force it to do that? Whose fault is it?
Spin doctor needs a good doctor now and urgently
Kevin Rudd, the Prime Minister, is good and famous at political spins and management at media cycles. He has shown an interesting but terrible habit of control freak.
The problem with his style of management or leadership is that it cannot last for long, that is, it is not sustainable. You have got to have real, hard policies and deliver them with good governance and achieve good outcomes.
That, unfortunately, is where and what Rudd is lacking, or slacking.
The media has long noticed his style and problems, and been critical for quite sometime. Rudd should have a look of the Australian's website today, 16 March 2010, to see how his problems are so serious and widespread. The following are the titles of all six opinion articles on show at 4.30 AM.
Up close and personal for PM: http://www.theaustralian.com.au/news/opinion/up-close-and-personal-for-pm/story-e6frg6zo-1225841126155
Wait 15 years before judging doctor success: http://www.theaustralian.com.au/news/opinion/wait-15-years-before-judging-doctor-success/story-e6frg6zo-1225841126396
China won't boom forever: http://www.theaustralian.com.au/news/opinion/china-wont-boom-forever/story-e6frg6zo-1225841087569
"WONDER why Kevin Rudd's rejection of Tony Abbott's paid parental leave bribe sounds hollow and technical? Why doesn't he just say we can't afford this reckless marriage of Tory populism and feminist fantasy?
It's because his government has yet to cut off its wasteful stimulus spending and explain why Australia needs to tighten its budget belt, even amid a re-emerging mining boom.
Why not tax big business another couple of billion dollars so politicians can hand out $75,000 to upper-income new parents for not working? That's as ludicrous as spending a couple of billion dollars on bungling the installation of ceiling insulation. Labor ministers are still trying to wring political dividends out a couple of hundred million dollars of stimulus money spent on playground monkey bars and the like."
Memo to Tony and Kevin: no sex please, we're voters: http://www.theaustralian.com.au/news/opinion/memo-to-tony-and-kevin-no-sex-please-were-voters/story-e6frg6zo-1225841086597
Broadband network will be $43bn white elephant: http://www.theaustralian.com.au/news/opinion/broadband-network-will-be-43bn-white-elephant/story-e6frg6zo-1225841083908
Kevin Rudd in no hurry to lift superannuation guarantee: http://www.theaustralian.com.au/business/opinion/rudd-in-now-hurry-to-lift-superannuation-guarantee/story-e6frg9if-1225841106865
He is now a problem for the government and it seems that he will not be able to be PM for too long, once the ALP realises he has become a real liability rather than an asset to it.
Rudd, the spin doctor, now urgently needs a doctor for his leadership. But the issue is whether it is too late to cure the diseases in time for the next election.
Rudd may have thought he is good for Australians, but it turns out that he has unfortunately done enormous damages to Australians and taxpayers.
He is the source and should go. The earlier the better, for himself and for all Australians.
The problem with his style of management or leadership is that it cannot last for long, that is, it is not sustainable. You have got to have real, hard policies and deliver them with good governance and achieve good outcomes.
That, unfortunately, is where and what Rudd is lacking, or slacking.
The media has long noticed his style and problems, and been critical for quite sometime. Rudd should have a look of the Australian's website today, 16 March 2010, to see how his problems are so serious and widespread. The following are the titles of all six opinion articles on show at 4.30 AM.
Up close and personal for PM: http://www.theaustralian.com.au/news/opinion/up-close-and-personal-for-pm/story-e6frg6zo-1225841126155
Wait 15 years before judging doctor success: http://www.theaustralian.com.au/news/opinion/wait-15-years-before-judging-doctor-success/story-e6frg6zo-1225841126396
China won't boom forever: http://www.theaustralian.com.au/news/opinion/china-wont-boom-forever/story-e6frg6zo-1225841087569
"WONDER why Kevin Rudd's rejection of Tony Abbott's paid parental leave bribe sounds hollow and technical? Why doesn't he just say we can't afford this reckless marriage of Tory populism and feminist fantasy?
It's because his government has yet to cut off its wasteful stimulus spending and explain why Australia needs to tighten its budget belt, even amid a re-emerging mining boom.
Why not tax big business another couple of billion dollars so politicians can hand out $75,000 to upper-income new parents for not working? That's as ludicrous as spending a couple of billion dollars on bungling the installation of ceiling insulation. Labor ministers are still trying to wring political dividends out a couple of hundred million dollars of stimulus money spent on playground monkey bars and the like."
Memo to Tony and Kevin: no sex please, we're voters: http://www.theaustralian.com.au/news/opinion/memo-to-tony-and-kevin-no-sex-please-were-voters/story-e6frg6zo-1225841086597
Broadband network will be $43bn white elephant: http://www.theaustralian.com.au/news/opinion/broadband-network-will-be-43bn-white-elephant/story-e6frg6zo-1225841083908
Kevin Rudd in no hurry to lift superannuation guarantee: http://www.theaustralian.com.au/business/opinion/rudd-in-now-hurry-to-lift-superannuation-guarantee/story-e6frg9if-1225841106865
He is now a problem for the government and it seems that he will not be able to be PM for too long, once the ALP realises he has become a real liability rather than an asset to it.
Rudd, the spin doctor, now urgently needs a doctor for his leadership. But the issue is whether it is too late to cure the diseases in time for the next election.
Rudd may have thought he is good for Australians, but it turns out that he has unfortunately done enormous damages to Australians and taxpayers.
He is the source and should go. The earlier the better, for himself and for all Australians.
2010-03-12
Finance 001
Comments on Timo Henckel “Australia lifts its bank guarantees”, 11/03/2010, http://www.eastasiaforum.org/2010/03/11/australia-lifts-its-bank-guarantees/
I am not sure I haven't missed an important point in banking guarantees.
Why should a guarantee necessarily be related to the moral hazard issue?
Can't it be done in way that does its promised guarantee, but also severely punish the culprits, at least to the degree that deters moral hazard behaviours by the banks or financial institutions?
Why don't economists or policy makers see the possibility of a better approach than the conventional thinking of and approach to guarantees and improve such a policy?
For example, if a government guarantee for some sort is actually being used, then the government can make the agents involved pay a reasonable price up to the point of completely wiping out all its shareholders and creditors value, as well as potential prosecution of the relevant persons with responsibilities.
In that way, let’s say the normal types of bank depositors are protected and hence can avoid unnecessary bank runs, but the bank in question will have to pay a big price.
Is that too difficult to devise or design, or what?
I am not specialised in finance, but should that be called Finance 001?
I am not sure I haven't missed an important point in banking guarantees.
Why should a guarantee necessarily be related to the moral hazard issue?
Can't it be done in way that does its promised guarantee, but also severely punish the culprits, at least to the degree that deters moral hazard behaviours by the banks or financial institutions?
Why don't economists or policy makers see the possibility of a better approach than the conventional thinking of and approach to guarantees and improve such a policy?
For example, if a government guarantee for some sort is actually being used, then the government can make the agents involved pay a reasonable price up to the point of completely wiping out all its shareholders and creditors value, as well as potential prosecution of the relevant persons with responsibilities.
In that way, let’s say the normal types of bank depositors are protected and hence can avoid unnecessary bank runs, but the bank in question will have to pay a big price.
Is that too difficult to devise or design, or what?
I am not specialised in finance, but should that be called Finance 001?
Rudd government's new round of offensive
Comments on Dennis Shanahan “Labor locks in on negative message”, 12/03/2010, http://www.theaustralian.com.au/news/opinion/labor-locks-in-on-negative-message/story-e6frg6zo-1225839770993
There are two or more possible reasons for the record number of failures of the Senate to pass the Rudd government bills.
One is, as the government has been trying to portray - the non-government parties are “Senate obstructionists".
The second, surely, is that the government is incompetent one way or another to come up with good bills.
Of course, naturally, there is the possibility of a combination of the two.
As the case of Copenhagen, the government is blaming everyone else but itself.
Are the government or those ministers including the PM honest with the public in this round of offensive?
What is the government's role in those record failings?
There are two or more possible reasons for the record number of failures of the Senate to pass the Rudd government bills.
One is, as the government has been trying to portray - the non-government parties are “Senate obstructionists".
The second, surely, is that the government is incompetent one way or another to come up with good bills.
Of course, naturally, there is the possibility of a combination of the two.
As the case of Copenhagen, the government is blaming everyone else but itself.
Are the government or those ministers including the PM honest with the public in this round of offensive?
What is the government's role in those record failings?
Left and Leftist thinking!
Comments on Nick Dyrenfurth “The battle for the Left”, 12/03/2010, http://www.theaustralian.com.au/news/opinion/the-battle-for-the-left/story-e6frg6zo-1225839752277
It appears that the author confused himself very deeply and in the course also effected confusion for the readers.
He confused The Australian economic fundamentals with Labour's superficial management role - if no recession is proof of good economic management, many current governments in the world are much better economic managers, but are they really? What about the gifts from decades of economic reforms and prudential management by its predecessors? Further, what are the true and unnecessary costs to the budget and government debt?
He confused the already discredited Rudd/Wong ETS with real market based approach - what are those free handouts of the rights to pollute to polluters and inequitable subsidies?
In terms of thinking logic, one has to wonder the author is not an “extreme left” himself!
But certainly some sorts of extremist.
It appears that the author confused himself very deeply and in the course also effected confusion for the readers.
He confused The Australian economic fundamentals with Labour's superficial management role - if no recession is proof of good economic management, many current governments in the world are much better economic managers, but are they really? What about the gifts from decades of economic reforms and prudential management by its predecessors? Further, what are the true and unnecessary costs to the budget and government debt?
He confused the already discredited Rudd/Wong ETS with real market based approach - what are those free handouts of the rights to pollute to polluters and inequitable subsidies?
In terms of thinking logic, one has to wonder the author is not an “extreme left” himself!
But certainly some sorts of extremist.
2010-03-11
How good are official economic modelling and forecasts in Australia are?
I came to this article in the Australian Financial Review on 11 March 2010. It is interesting timing and very timely indeed.
The article in in the Features section and on page 61, with a full page and some interesting pictures, featuring the forecasts by RBA and Treasury amd four key people: RBA assistant govenor Phil Love, Treasury head Ken Henry, Director of Outlook Economics Peter Downes and ANU professor Warwick Mckibbin.
Peter Downes says "there's a lot of problems in the forecasting area. We are tlaking about faorecasting errors that statistically should occur only every thousand years."
Warwick Mckibbin says "they didn't have a model that looked at how things added up in the end."
There is digital deition available online from AFR, but it requires charges vis membership subscription. But if you querry by the article name, it should come up for login.
The article in in the Features section and on page 61, with a full page and some interesting pictures, featuring the forecasts by RBA and Treasury amd four key people: RBA assistant govenor Phil Love, Treasury head Ken Henry, Director of Outlook Economics Peter Downes and ANU professor Warwick Mckibbin.
Peter Downes says "there's a lot of problems in the forecasting area. We are tlaking about faorecasting errors that statistically should occur only every thousand years."
Warwick Mckibbin says "they didn't have a model that looked at how things added up in the end."
There is digital deition available online from AFR, but it requires charges vis membership subscription. But if you querry by the article name, it should come up for login.
Climate change science is hard
Comments on ABC report “Climate change is a fact, says China” by China correspondent Stephen McDonell, 11/03/2010, http://www.abc.net.au/news/stories/2010/03/11/2842415.htm?section=justin
Irrespective whether global warming is due to human activities or not, the logic that the Chinese officials employ is illogical.
He said "climate change is a fact based on long-time observations by countries around the world."
How long are those observations, as compared to the existence of the earth and its known variation in temperature or climate change?
That just indicates many people simply do not have the common sense when it comes to climate change.
What they may take as given as science actually is a extremely short time in the long history of climate change and it is likely to be the effects of "white noises".
However, irrespective the climate change debate, taking actions to reduce consumptions of fossil fuels is good, given the limited nature of fossil fuels.
Irrespective whether global warming is due to human activities or not, the logic that the Chinese officials employ is illogical.
He said "climate change is a fact based on long-time observations by countries around the world."
How long are those observations, as compared to the existence of the earth and its known variation in temperature or climate change?
That just indicates many people simply do not have the common sense when it comes to climate change.
What they may take as given as science actually is a extremely short time in the long history of climate change and it is likely to be the effects of "white noises".
However, irrespective the climate change debate, taking actions to reduce consumptions of fossil fuels is good, given the limited nature of fossil fuels.
Hansen's carbon tax and distribution method has merit
Comments on James Hansen “Only a carbon tax and nuclear power can save us”, 11/03/2010, http://www.theaustralian.com.au/news/opinion/only-a-carbon-tax-and-nuclear-power-can-save-us/story-e6frg6zo-1225839327862
I share Hansen's view on carbon emission tax and the principle of distributing the revenue on an equal basis, although I would argue the distribution should be based on per person as opposed to per adult.
Also I think it is possible to have a global carbon emissions tax and apply the same distribution principle among the whole world population.
But that difference is subtle and not substantial.
Applaud Hansen.
I share Hansen's view on carbon emission tax and the principle of distributing the revenue on an equal basis, although I would argue the distribution should be based on per person as opposed to per adult.
Also I think it is possible to have a global carbon emissions tax and apply the same distribution principle among the whole world population.
But that difference is subtle and not substantial.
Applaud Hansen.
Health reform in Australia - a third way
Comments on Arthur Sinodinos “King Kong health plan threatens the PM”, 11/03/2010, http://www.theaustralian.com.au/news/opinion/king-kong-health-plan-threatens-the-pm/story-e6frg6zo-1225839327575
Sinodinos describes the Rudd health reform plan as half pregnant and I say it is half cooked. They all characterise the same poor nature of the Rudd plan.
But I would disagree with Sinodinos on federal take over health responsibility. I think there is a case for doing it by taking the full responsibility of both funding and managing the services. That is one way to rebalance the vertical imbalance between the Commonwealth and the States. Taking some GST from the States is not necessarily unreasonable, as long as it is not too much and the States are completely relieved from health service responsibility.
The argument that the Commonwealth can’t run good health services is problematic and illogical. If 8 State bureaucratic health departments can run it, of course one national health department can also run it.
The Rudd plan is half cooked because it still has the States with more than 40% funding responsibility with little say, and it will not end the blame game and cost shifting.
Off course, there is another way to health reform that would involve a complete takeover of health by the States and increase funding from the Commonwealth to them, but specify how much minimum each State has to spend on health, base on advice of an independent analysis umpire. Then the responsibility of improving the hospitals is with the States. No blame game and no cost shifting.
Sinodinos describes the Rudd health reform plan as half pregnant and I say it is half cooked. They all characterise the same poor nature of the Rudd plan.
But I would disagree with Sinodinos on federal take over health responsibility. I think there is a case for doing it by taking the full responsibility of both funding and managing the services. That is one way to rebalance the vertical imbalance between the Commonwealth and the States. Taking some GST from the States is not necessarily unreasonable, as long as it is not too much and the States are completely relieved from health service responsibility.
The argument that the Commonwealth can’t run good health services is problematic and illogical. If 8 State bureaucratic health departments can run it, of course one national health department can also run it.
The Rudd plan is half cooked because it still has the States with more than 40% funding responsibility with little say, and it will not end the blame game and cost shifting.
Off course, there is another way to health reform that would involve a complete takeover of health by the States and increase funding from the Commonwealth to them, but specify how much minimum each State has to spend on health, base on advice of an independent analysis umpire. Then the responsibility of improving the hospitals is with the States. No blame game and no cost shifting.
Need different thinking on cutting top marginal tax rate
Comments on Robert Carling “Tax reform should include cuts to marginal rates”, 11/03/2010, http://www.theaustralian.com.au/news/opinion/tax-reform-should-include-cuts-to-marginal-rates/story-e6frg6zo-1225839327651
While Carling uses conventional economic wisdom to argue for cuts to the marginal rates of personal income tax, there are two serious issues that just make the argument too hollow.
The first one is a practical one that the GST was quarantined from the Henry review, so there is little room for tradeoffs between income taxes and consumption taxes. Given that most State taxes are more inefficient than the federal income taxes, one has to wonder how any government can design a reduction in the marginal rates of personal income tax, unless it is tradeoffs between higher and low rates that are politically not feasible.
The second one is theoretical. Conventional economic wisdom states the harmful or disincentive of higher top marginal rates on work that is logical thinking. But that logic thinking may also have some practical holes. For example, the top marginal rate may only apply to a small number of people; the so called harmful effects are minimal. More importantly, high income earners are more likely to be intellectual and entrepreneurial, so the conventional labor and disincentive to work of using labor may not necessarily hold.
Taking into account of issues of social equity, the case for arguing a reduction in top marginal personal income tax rate is neither sound nor convincing.
So it seems Carling is too theoretical and surreal.
While Carling uses conventional economic wisdom to argue for cuts to the marginal rates of personal income tax, there are two serious issues that just make the argument too hollow.
The first one is a practical one that the GST was quarantined from the Henry review, so there is little room for tradeoffs between income taxes and consumption taxes. Given that most State taxes are more inefficient than the federal income taxes, one has to wonder how any government can design a reduction in the marginal rates of personal income tax, unless it is tradeoffs between higher and low rates that are politically not feasible.
The second one is theoretical. Conventional economic wisdom states the harmful or disincentive of higher top marginal rates on work that is logical thinking. But that logic thinking may also have some practical holes. For example, the top marginal rate may only apply to a small number of people; the so called harmful effects are minimal. More importantly, high income earners are more likely to be intellectual and entrepreneurial, so the conventional labor and disincentive to work of using labor may not necessarily hold.
Taking into account of issues of social equity, the case for arguing a reduction in top marginal personal income tax rate is neither sound nor convincing.
So it seems Carling is too theoretical and surreal.
2010-03-10
Green cities - not a dream but a near realtiy
I was very excited when reading the interview report "Building China's green future" by Isabelle Oderberg, see the link below for the article:
http://www.businessspectator.com.au/bs.nsf/Article/China-Climate-Change-Green-Construction-Woods-Bago-pd20100309-3CUF2?OpenDocument&src=sph
It is not only challenges but enormous opportunities. A whole city is green, that will really make cities much more ennergy friendly and sustainable.
http://www.businessspectator.com.au/bs.nsf/Article/China-Climate-Change-Green-Construction-Woods-Bago-pd20100309-3CUF2?OpenDocument&src=sph
It is not only challenges but enormous opportunities. A whole city is green, that will really make cities much more ennergy friendly and sustainable.
China's sustainability
Comments on Robert Gottliebsen “Is China's growth an illusion?” 10/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Can-China-contiue-pd20100310-3DSPU?OpenDocument&src=sph
With all respect to John Garnaut and those mentioned in the article including Prof Yu, I think they either all don't understand the development process especially the Japanese and some other East Asian economies showed in the past and are afraid of massive changes, or they are used to some conventional economics or statics and traditional bubble theories.
They all missed the point that the average income in China is still low and it is in a stage of rapid industrialisation and urbanisation.
While such investments may be serious problems in most economies, they will not be in China. Its physical stock including infrastructure in many parts of the country is far from a saturation point and an increase will improve its productivity.
Sometimes experts (albeit with partial knowledge of economics or economic development) can be completely confused by rapid change or unprecedented scale.
One needs some common sense and logic within a cool head.
Further, it would be interesting to see who are in illusion.
The reality will teach some experts a useful lesson.
With all respect to John Garnaut and those mentioned in the article including Prof Yu, I think they either all don't understand the development process especially the Japanese and some other East Asian economies showed in the past and are afraid of massive changes, or they are used to some conventional economics or statics and traditional bubble theories.
They all missed the point that the average income in China is still low and it is in a stage of rapid industrialisation and urbanisation.
While such investments may be serious problems in most economies, they will not be in China. Its physical stock including infrastructure in many parts of the country is far from a saturation point and an increase will improve its productivity.
Sometimes experts (albeit with partial knowledge of economics or economic development) can be completely confused by rapid change or unprecedented scale.
One needs some common sense and logic within a cool head.
Further, it would be interesting to see who are in illusion.
The reality will teach some experts a useful lesson.
Scientology issues
Comments on ABC report By Sabra Lane “Scientology 'putting lives at risk'”, http://www.abc.net.au/news/stories/2010/03/10/2841369.htm
Either a senate inquiry or a government regulation would do the purpose.
It should be like a clear specification like for a taxation rule, so people can distinguish what is a religion and what is not a religion.
While everyone should and must have the freedom to any religions he or she wishes to do, others or taxpayers should not be asked to subsidise what are not regarded as religions by the society as a whole.
More importantly, any acts whether that are in the name of religions or not breach the law should be dealt with by the law.
Equally important is that people should be allowed to choose and practice what they like, as long as it does not breach the law. The society should not be very restrictive and limit people's freedom either.
Either a senate inquiry or a government regulation would do the purpose.
It should be like a clear specification like for a taxation rule, so people can distinguish what is a religion and what is not a religion.
While everyone should and must have the freedom to any religions he or she wishes to do, others or taxpayers should not be asked to subsidise what are not regarded as religions by the society as a whole.
More importantly, any acts whether that are in the name of religions or not breach the law should be dealt with by the law.
Equally important is that people should be allowed to choose and practice what they like, as long as it does not breach the law. The society should not be very restrictive and limit people's freedom either.
Hidng the Henry Review report from public refelcts weaknesses of Rudd ministry
Comments on Paul Kelly “Rudd must seize on once-in-generation tax review”, 10/03/2010, http://www.theaustralian.com.au/news/opinion/rudd-must-seize-on-once-in-generation-tax-review/story-e6frg6zo-1225838874528
The entertaining of the idea of delay the Henry Review report indicates the core weaknesses of Rudd, his approach to governance and his whole ministry.
For Rudd, it is his micromanaging focus more on media and politics driven by election desire, and disempowering others including his senior ministers, but himself lacking a whole strategy of governing a nation.
For his senior ministers especially those with economic responsibilities, it is their inabilities to economic management and reforms including tax or structural reforms and how to manage the budget in that context.
It is also the weaknesses of his senior economic ministers especially the Treasurer to advise and advocate strongly on economic reforms, namely tax reforms in this instance.
In addition to the delay of the release of the tax review report, the release of a half cooked health reform plan indicates the incompetence and confusing among the Rudd ministry including both the line ministers and the Treasurer and finance ministers.
They do not appear to have an effective whole strategy. It will retain the blame game in place with the States have to pick the bills of the nation’s public hospitals by all probability more than 40% and possibly more than half. It is unlikely to have the supports of all States, because it is proposed to strip them off any say in funding and running the hospitals. It does not specify any increase in funding from the Commonwealth for possibly after two elections, so it is so empty.
What role did the health minister play in getting such a bad reform plan beside stealing half of the coalition's idea of hospital boards but making it worse?
What did the Treasurer and the finance minister play in making such a plan involving a significant shift in nation's revenue and services?
The entertaining of the idea of delay the Henry Review report indicates the core weaknesses of Rudd, his approach to governance and his whole ministry.
For Rudd, it is his micromanaging focus more on media and politics driven by election desire, and disempowering others including his senior ministers, but himself lacking a whole strategy of governing a nation.
For his senior ministers especially those with economic responsibilities, it is their inabilities to economic management and reforms including tax or structural reforms and how to manage the budget in that context.
It is also the weaknesses of his senior economic ministers especially the Treasurer to advise and advocate strongly on economic reforms, namely tax reforms in this instance.
In addition to the delay of the release of the tax review report, the release of a half cooked health reform plan indicates the incompetence and confusing among the Rudd ministry including both the line ministers and the Treasurer and finance ministers.
They do not appear to have an effective whole strategy. It will retain the blame game in place with the States have to pick the bills of the nation’s public hospitals by all probability more than 40% and possibly more than half. It is unlikely to have the supports of all States, because it is proposed to strip them off any say in funding and running the hospitals. It does not specify any increase in funding from the Commonwealth for possibly after two elections, so it is so empty.
What role did the health minister play in getting such a bad reform plan beside stealing half of the coalition's idea of hospital boards but making it worse?
What did the Treasurer and the finance minister play in making such a plan involving a significant shift in nation's revenue and services?
2010-03-08
Rudd committed to governance - are you kidding?
Comments on Andrew MacIntyre “Anticipating Obama’s visit to Indonesia and Australia”, 7/03/2010, http://www.eastasiaforum.org/2010/03/07/anticipating-obamas-visit-to-indonesia-and-australia/
First things first, the author says: "Rudd remains strongly committed to strengthening the institutional framework for regional cooperation in Asia. Explicit support from Washington would be helpful now in accelerating this cause. While the precise institutional form for achieving this outcome remains an open question, anything that enhances America’s ability to advance its core interests in Asia is likely to find favour with Obama."
If Australians are forgiving enough for Rudd's governance style and the outcomes such as the pink batts fatalities and ETS fiascos, as well as the cash handouts, the $43 billion NBN without business case study, a half cooked product for health reform after two years in the making and 8 months later than his pre-election promise, so far after just two years with his governance, it is by no means certain that peoples in other countries would believe his governance capability, even probably his very desire after his firstly declaration of fiscal/economic conservative before the last election and only then having a huge assault in his economic essay to advocate big government.
Even within Australia, he has been questioned and he has confessed he did not anticipate how hard it is to deliver services/policies.
Does he anticipate how hard it will be for international affairs, after his role as one of the friends of the chair in making the draft at Copenhagen? Or is it easier to spin politically internationally than domestically, perhaps some other nations may not be as intelligent as Australians in his eyes?
It is interesting to see there is still some loving affairs from some circle of the academia for a failed prime minister. Are they eagerly waiting for the MyUniversity website, perhaps?
Another interesting piece from the author is: “Surprisingly, there may be greater gains to be had from cooperation in the security sphere. For more than a decade, the Leahy Act, prohibiting the US from training military units with a history of human rights abuse, has meant that security cooperation with Indonesia has been limited to police-based counter-terrorism efforts. Both sides now want to move beyond this. Driven by China’s growing regional weight, Obama seems prepared to go further than Bush in finding ways to restart military-to-military engagement. There are signs that the Obama administration may seek to re-establish training programs with Indonesia’s controversial elite commando unit, Kopassus, by engaging with younger officers who could not have participated in past abuses.”
Is there any principle in either some of the US approaches in the past or the author’s advocacy, or just hypocrisy?
People’s memories are fortunately not that short: Saddam was backed and supported by the west led by the US earlier and only to be overthrown by the invasion of a circle of friends including Australia led by the US, at the expense of any international institutional mandate.
Maybe, this is a show of governance or good international institution framework at work from the author point of view?
Academia, poor academia!
People often use "out of touch" to describe some politicians, like prime ministers/presidents, etc. It is interesting to observe that some other people including academia sometimes can also be suitable candidates for this dubious title.
Those academics who are really out of touch should get out of their lovely ivory towers and know what the real world is and how it looks like.
In that way they may increase their relevance.
Of course, people in China often describe universities have been institutionalised to have equivalent ranks as government officials. Understandably, some university administrators may be fairly good in that contest so they either don't have or have lost their academia capacities.
In economics, that is perhaps called specialisation!
I am really getting forgetful!
Oh, I forgot the Prime Minister’s handling of the Sri Lanka boat people on the Oceanic Vikings and its effect on the relations between Australia and Indonesia, a clear demonstration of the PM's diplomatic skills and resolves.
Another example is what; the 2020 summit after the PM became the PM? A millennium event! In addition to many photo opportunities and media coverage, a thousand ideas were generated from those preeminent people/participants at the summit. It was a success, maybe.
What happened afterwards? Isn't that the case that about 9 ideas were planned to be acted upon? What are they? Are they the best for Australia among the thousand?
Only time can tell, but some people probably already cast their doubts at the time when the 9 was announced, perhaps rightly so!
First things first, the author says: "Rudd remains strongly committed to strengthening the institutional framework for regional cooperation in Asia. Explicit support from Washington would be helpful now in accelerating this cause. While the precise institutional form for achieving this outcome remains an open question, anything that enhances America’s ability to advance its core interests in Asia is likely to find favour with Obama."
If Australians are forgiving enough for Rudd's governance style and the outcomes such as the pink batts fatalities and ETS fiascos, as well as the cash handouts, the $43 billion NBN without business case study, a half cooked product for health reform after two years in the making and 8 months later than his pre-election promise, so far after just two years with his governance, it is by no means certain that peoples in other countries would believe his governance capability, even probably his very desire after his firstly declaration of fiscal/economic conservative before the last election and only then having a huge assault in his economic essay to advocate big government.
Even within Australia, he has been questioned and he has confessed he did not anticipate how hard it is to deliver services/policies.
Does he anticipate how hard it will be for international affairs, after his role as one of the friends of the chair in making the draft at Copenhagen? Or is it easier to spin politically internationally than domestically, perhaps some other nations may not be as intelligent as Australians in his eyes?
It is interesting to see there is still some loving affairs from some circle of the academia for a failed prime minister. Are they eagerly waiting for the MyUniversity website, perhaps?
Another interesting piece from the author is: “Surprisingly, there may be greater gains to be had from cooperation in the security sphere. For more than a decade, the Leahy Act, prohibiting the US from training military units with a history of human rights abuse, has meant that security cooperation with Indonesia has been limited to police-based counter-terrorism efforts. Both sides now want to move beyond this. Driven by China’s growing regional weight, Obama seems prepared to go further than Bush in finding ways to restart military-to-military engagement. There are signs that the Obama administration may seek to re-establish training programs with Indonesia’s controversial elite commando unit, Kopassus, by engaging with younger officers who could not have participated in past abuses.”
Is there any principle in either some of the US approaches in the past or the author’s advocacy, or just hypocrisy?
People’s memories are fortunately not that short: Saddam was backed and supported by the west led by the US earlier and only to be overthrown by the invasion of a circle of friends including Australia led by the US, at the expense of any international institutional mandate.
Maybe, this is a show of governance or good international institution framework at work from the author point of view?
Academia, poor academia!
People often use "out of touch" to describe some politicians, like prime ministers/presidents, etc. It is interesting to observe that some other people including academia sometimes can also be suitable candidates for this dubious title.
Those academics who are really out of touch should get out of their lovely ivory towers and know what the real world is and how it looks like.
In that way they may increase their relevance.
Of course, people in China often describe universities have been institutionalised to have equivalent ranks as government officials. Understandably, some university administrators may be fairly good in that contest so they either don't have or have lost their academia capacities.
In economics, that is perhaps called specialisation!
I am really getting forgetful!
Oh, I forgot the Prime Minister’s handling of the Sri Lanka boat people on the Oceanic Vikings and its effect on the relations between Australia and Indonesia, a clear demonstration of the PM's diplomatic skills and resolves.
Another example is what; the 2020 summit after the PM became the PM? A millennium event! In addition to many photo opportunities and media coverage, a thousand ideas were generated from those preeminent people/participants at the summit. It was a success, maybe.
What happened afterwards? Isn't that the case that about 9 ideas were planned to be acted upon? What are they? Are they the best for Australia among the thousand?
Only time can tell, but some people probably already cast their doubts at the time when the 9 was announced, perhaps rightly so!
Another piece of Rudd chameleon - cooperative federation
Comments on Peter Van Onselen “PM is looking for a fight with the states”, 8/03/2010, http://www.theaustralian.com.au/politics/opinion/pm-is-looking-for-a-fight-with-the-states/story-e6frgd0x-1225837976670
A product of two years making is nothing but a half cooked one, still full of blood in it.
One has to wonder if it is not poison.
The contrast also applies to his declaration before the last election he was a economic/fiscal conservative, and the behaviour of spending splash, such as:
the twice cash handouts of $20 billion
the over $10 billion for school halls/libraries and school signs dressed up as education revolution
the pink batts program that now is deadly and a complete mess
the $43 billion NBN
To name just a few all at the expense of hundreds of billions government debt down the track.
A product of two years making is nothing but a half cooked one, still full of blood in it.
One has to wonder if it is not poison.
The contrast also applies to his declaration before the last election he was a economic/fiscal conservative, and the behaviour of spending splash, such as:
the twice cash handouts of $20 billion
the over $10 billion for school halls/libraries and school signs dressed up as education revolution
the pink batts program that now is deadly and a complete mess
the $43 billion NBN
To name just a few all at the expense of hundreds of billions government debt down the track.
2010-03-07
Rudd must change his health reform plan quickly
Comments on Peter van Onselen “Prelude to more blame “, 6/03/2010, http://www.theaustralian.com.au/politics/opinion/prelude-to-more-blame/story-e6frgd0x-1225837497106
First, the holding up of the Henry taxation review report from public consumption and discussion is extremely arrogant of the government and a clear insult on the public's intelligence.
Second, the Rudd health reform proposal so far is nothing short of disgrace and disappointing – a half cooked product, a grab of money from the States but would still leave them with more than 40% funding for public hospitals due to the idea of so called efficient funding, but strip off their say from managing public hospitals and monopoly power to Canberra.
Clearly the proposal at its current form will not end the blame game between the federal and State governments. Rather, now there will be another layer in the chain that increases the chances of more blames between the three of them.
Third, a better funding formula is for the federal government to assume all funding responsibilities for national public hospitals and transfer all responsibilities of funding and operational to one layer of government and force that government to be accountable for the outcomes of national public hospitals.
The federal government can reach agreement with the State governments to reduce the GST payments to them at the current funding levels by the States. There should not be a need for referendum. The federal government can start with any States that agree to hand over the responsibility of operation and funding of public hospitals. For those States that don’t agree, their funding of GST will not include the parts for public hospitals and primary health care.
Fourth, yes, that government can sign contracts with boards of some hospitals or groups of hospitals or some new regional bodies. The Productivity Commission, in conjunction with the Commonwealth Grants Commission as well as representatives from those boards or even from the State government, can form an independent body to assess the funding needs of each board in terms of their responsibilities and expected outcomes.
The boards should be made of health professionals, local representatives and State representatives, but should not include federal representatives, so they operate at arm’s length from the funding source. The federal government should generally not interfere with the making of board members.
If a particular board is ineffective in running their hospitals, it should be refelected in the pays of its board members. In addition, the federal can intervene in the making of the board.
Fifth, while the Productivity Commission has been assessing the performance of State government in many areas, its assessment is fairly superficial and lack of details. The Grants Commission, in its capacity to determine funding for States through the allocation of the GST, has particular expertise in making detailed assessment of State operation costs taking into many factors into account.
Lastly but not leastly, the federal government needs to put more funding into the national health system, at least for those States that hand over the funding and servicing responsibilities, starting from year 1.
First, the holding up of the Henry taxation review report from public consumption and discussion is extremely arrogant of the government and a clear insult on the public's intelligence.
Second, the Rudd health reform proposal so far is nothing short of disgrace and disappointing – a half cooked product, a grab of money from the States but would still leave them with more than 40% funding for public hospitals due to the idea of so called efficient funding, but strip off their say from managing public hospitals and monopoly power to Canberra.
Clearly the proposal at its current form will not end the blame game between the federal and State governments. Rather, now there will be another layer in the chain that increases the chances of more blames between the three of them.
Third, a better funding formula is for the federal government to assume all funding responsibilities for national public hospitals and transfer all responsibilities of funding and operational to one layer of government and force that government to be accountable for the outcomes of national public hospitals.
The federal government can reach agreement with the State governments to reduce the GST payments to them at the current funding levels by the States. There should not be a need for referendum. The federal government can start with any States that agree to hand over the responsibility of operation and funding of public hospitals. For those States that don’t agree, their funding of GST will not include the parts for public hospitals and primary health care.
Fourth, yes, that government can sign contracts with boards of some hospitals or groups of hospitals or some new regional bodies. The Productivity Commission, in conjunction with the Commonwealth Grants Commission as well as representatives from those boards or even from the State government, can form an independent body to assess the funding needs of each board in terms of their responsibilities and expected outcomes.
The boards should be made of health professionals, local representatives and State representatives, but should not include federal representatives, so they operate at arm’s length from the funding source. The federal government should generally not interfere with the making of board members.
If a particular board is ineffective in running their hospitals, it should be refelected in the pays of its board members. In addition, the federal can intervene in the making of the board.
Fifth, while the Productivity Commission has been assessing the performance of State government in many areas, its assessment is fairly superficial and lack of details. The Grants Commission, in its capacity to determine funding for States through the allocation of the GST, has particular expertise in making detailed assessment of State operation costs taking into many factors into account.
Lastly but not leastly, the federal government needs to put more funding into the national health system, at least for those States that hand over the funding and servicing responsibilities, starting from year 1.
2010-03-06
Multiple equilibriums in exchange rate and implications for over or undervalue of a currency
Comments on Mathew Joseph and Karan Singh “Is the Indian rupee overvalued?” 6/03/2010, http://www.eastasiaforum.org/2010/03/06/is-the-indian-rupee-overvalued/
I'm even slower today and having difficulties in linking the two charts to form an idea what the authors are talking about.
Secondly, I am not sure the concept is always sound that the exchange rate is in equilibrium at the time when the current account is balanced.
While seemingly convincing, it would not be difficult for the existence of multiple equilibriums (i.e. multi value) of the exchange rate if such a criterion is used. So there is at least a mechanism to reconcile such multiple equilibriums.
This is because there are so many factors that affect current account balance (e.g. a severe incident can cause a change in current account balance), not to mention differential growths in productivity between countries and changes in consumer preferences between countries.
A simple test, though not necessarily always sound by itself, would be to see: how has the current account balance changed in India since 2004-05? Do they correspond to the changes in the exchange rate, nominal or real?
A use of a different equilibrium point in a system of multiple equilibriums has a different implication for overvalue or undervalue!
I'm even slower today and having difficulties in linking the two charts to form an idea what the authors are talking about.
Secondly, I am not sure the concept is always sound that the exchange rate is in equilibrium at the time when the current account is balanced.
While seemingly convincing, it would not be difficult for the existence of multiple equilibriums (i.e. multi value) of the exchange rate if such a criterion is used. So there is at least a mechanism to reconcile such multiple equilibriums.
This is because there are so many factors that affect current account balance (e.g. a severe incident can cause a change in current account balance), not to mention differential growths in productivity between countries and changes in consumer preferences between countries.
A simple test, though not necessarily always sound by itself, would be to see: how has the current account balance changed in India since 2004-05? Do they correspond to the changes in the exchange rate, nominal or real?
A use of a different equilibrium point in a system of multiple equilibriums has a different implication for overvalue or undervalue!
2010-03-05
Reform the hukou system in China
Comments on Kam Wing Chan “Making real hukou reform in China”, 3/03/2010, http://www.eastasiaforum.org/2010/03/03/making-real-hukou-reform-in-china/
While the author's suggestions are interesting and have merits, I think it is important not to introduce new inequality in the process of remedying existing inequality in any hukou system reform.
The proposal to allow more skilled migrant workers to have more privileges over other unskilled migrant workers would introduce new inequality between those two groups. Rather than one group get all the benefit and the other get nothing, both groups should be provided equal opportunities to benefit.
In light of that, a gradual reform of the hukou system is preferred. Such reform would include some important elements that will benefit all migrant workers and are affordable by a city authority's budget:
For any real migrant workers
1. create acceptable living environment for them to ensure their basic living conditions and security
2. allow their children to go to local schools with no discriminations for those real migrant workers
3. gradually increase their entitlement for social securities for every migrant worker and their families who live and work in cities over time
4. relevant governments and urban authorities develop long term plans for urbanisation for whole regions that include both planned growth of existing cities and the transformation of some current rural centres into new urban townships and cities
But there should be a timeframe for the end goal of the reform to be achieved in the whole country, say in 10, 15 or 20 years by that time there should be no discrimination between urban and rural people in terms of movement and social securities.
This means the reform is unlikely to be uniform across all urban areas. Some may proceed with a faster pace if they have greater capacities to do so.
The equal voting right should be introduced immediately, and there is no excuse for any delay. Migrant workers and their family members should be allowed to vote where they work and live for most of the time.
While the author's suggestions are interesting and have merits, I think it is important not to introduce new inequality in the process of remedying existing inequality in any hukou system reform.
The proposal to allow more skilled migrant workers to have more privileges over other unskilled migrant workers would introduce new inequality between those two groups. Rather than one group get all the benefit and the other get nothing, both groups should be provided equal opportunities to benefit.
In light of that, a gradual reform of the hukou system is preferred. Such reform would include some important elements that will benefit all migrant workers and are affordable by a city authority's budget:
For any real migrant workers
1. create acceptable living environment for them to ensure their basic living conditions and security
2. allow their children to go to local schools with no discriminations for those real migrant workers
3. gradually increase their entitlement for social securities for every migrant worker and their families who live and work in cities over time
4. relevant governments and urban authorities develop long term plans for urbanisation for whole regions that include both planned growth of existing cities and the transformation of some current rural centres into new urban townships and cities
But there should be a timeframe for the end goal of the reform to be achieved in the whole country, say in 10, 15 or 20 years by that time there should be no discrimination between urban and rural people in terms of movement and social securities.
This means the reform is unlikely to be uniform across all urban areas. Some may proceed with a faster pace if they have greater capacities to do so.
The equal voting right should be introduced immediately, and there is no excuse for any delay. Migrant workers and their family members should be allowed to vote where they work and live for most of the time.
2010-03-04
Henry Review's congestion tax is a flawed concept
Comments on Samantha Maiden “Rudd steers conversation away from tax”, 4/03/2010, http://www.theaustralian.com.au/politics/rudd-steers-conversation-away-from-tax/story-e6frgczf-1225836880878
While I am by no means in disrespect to Dr Henry and his tax review committee, I would say that some of the proposals from leaked information seem illogical and irrational.
For example, the so called congestion tax sounds nice and reasonable at first thought, but if one thinks through that carefully, one would find it a stupid idea.
Why? Because it is the government's responsibility to plan and build good transport system and reduce people's unnecessary waste of time and costs on travelling everyday to and from work, isn't it?
Then why should the victims of poor government planning and policies be punished instead of the government?
That is just one example from the Henry tax review.
It is not too dissimilar to a prostitute’s demand for prosecution of those who use it.
The only difference is now it is the government who is proposaing to do such a thing!
While I am by no means in disrespect to Dr Henry and his tax review committee, I would say that some of the proposals from leaked information seem illogical and irrational.
For example, the so called congestion tax sounds nice and reasonable at first thought, but if one thinks through that carefully, one would find it a stupid idea.
Why? Because it is the government's responsibility to plan and build good transport system and reduce people's unnecessary waste of time and costs on travelling everyday to and from work, isn't it?
Then why should the victims of poor government planning and policies be punished instead of the government?
That is just one example from the Henry tax review.
It is not too dissimilar to a prostitute’s demand for prosecution of those who use it.
The only difference is now it is the government who is proposaing to do such a thing!
2010-03-03
Rudd healthcare reforms proposal falls too short
Comments on “Rudd's hospital overhaul to cost states $50b”, By ABC online political correspondent Emma Rodgers, 3/03/2010, http://www.abc.net.au/news/stories/2010/03/03/2834814.htm?section=justin
While some of the ideas in Rudd health reforms proposal are good, it is disappointing to see there are significant shortcoming in some areas.
For example, why is there a need to continue to have State health department and existing regional arrangements?
Secondly, why the fed only fund 60% but not 100% excluding privately funded part? Who will fund that shortfall? If it is the states to shoulder that, then why the States should give public hospitals or any other healthcare to the fed?
Why is there a need for local hospital networks uniformly? Why can the fed health department directly sign contracts with some large hospitals and local health bodies if there is a need for such bodies?
After all, why is there a need for a referendum for this? Why can't the fed simply takeover all healthcare responsibility and funding?
Is it another promise and another trick?
What if for some reason the referendum returns a no outcome? Is there a plan B? Or does that mean the end of health reforms and a continuation of the current poor healthcare state?
It seems there is much left to be desired from Rudd health reforms proposal.
While some of the ideas in Rudd health reforms proposal are good, it is disappointing to see there are significant shortcoming in some areas.
For example, why is there a need to continue to have State health department and existing regional arrangements?
Secondly, why the fed only fund 60% but not 100% excluding privately funded part? Who will fund that shortfall? If it is the states to shoulder that, then why the States should give public hospitals or any other healthcare to the fed?
Why is there a need for local hospital networks uniformly? Why can the fed health department directly sign contracts with some large hospitals and local health bodies if there is a need for such bodies?
After all, why is there a need for a referendum for this? Why can't the fed simply takeover all healthcare responsibility and funding?
Is it another promise and another trick?
What if for some reason the referendum returns a no outcome? Is there a plan B? Or does that mean the end of health reforms and a continuation of the current poor healthcare state?
It seems there is much left to be desired from Rudd health reforms proposal.
Is Li-Gang Liu kidding or fooling himself and others?
Comments on “What China bubble?” 3/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/China-economy-ANZ-economst-Li-Gang-Liu-pd20100302-367SC?OpenDocument&src=sph
It is reported that in an interview, ANZ's head of China economics Li-Gang Liu tells Business Spectator's Isabelle Oderberg:
The biggest threat to China's economy in 2010 is inflation, especially in food
• He would describe China's property market as a boom, not a bubble
• The biggest myth propagated in the western media is that China is a market-driven economy; it is still managed centrally
With all respect to Liu, he is way off the mark.
China's property is not a bubble, but a boom? Is he kidding?
Where does he live, on the earth or on the moon?
The biggest myth propagated in the western media is that China is a market-driven economy?
What are his criteria of a market economy?
Give me a break!
Lie is so out of touch with the Chinese economy and markets.
It appears that he clearly has neither the knowledge nor the capacity to understand the Chinese economy.
He is what? ANZ's head of China economics?
I have thought ANZ has some knowledge of Asian economies. It seems I have been mistaken!
It is reported that in an interview, ANZ's head of China economics Li-Gang Liu tells Business Spectator's Isabelle Oderberg:
The biggest threat to China's economy in 2010 is inflation, especially in food
• He would describe China's property market as a boom, not a bubble
• The biggest myth propagated in the western media is that China is a market-driven economy; it is still managed centrally
With all respect to Liu, he is way off the mark.
China's property is not a bubble, but a boom? Is he kidding?
Where does he live, on the earth or on the moon?
The biggest myth propagated in the western media is that China is a market-driven economy?
What are his criteria of a market economy?
Give me a break!
Lie is so out of touch with the Chinese economy and markets.
It appears that he clearly has neither the knowledge nor the capacity to understand the Chinese economy.
He is what? ANZ's head of China economics?
I have thought ANZ has some knowledge of Asian economies. It seems I have been mistaken!
It is not just personal tax, but also GST as a missing key
Comments on “Henry review 'hollow' with no income tax rejig: CIS”, by AAP, 3/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Review-hollow-with-no-income-tax-rejig-36JPH?OpenDocument&src=hp7
While it is clearly correct that any serious tax reforms should inevitably include personal income tax, the exclusion of GST from the Henry review has already sowed the seed for big disappointments.
With a constraint not to touch the GST and reduce the room for trade-off of different revenue sources, it is not possible to consider best options for personal income tax reforms.
So that is an indication that Rudd/Henry are too ideological and not serious about real tax reforms.
They were too weak to make serious decisions on taxation reforms, because they don’t have a strong base within the ALP.
While it is clearly correct that any serious tax reforms should inevitably include personal income tax, the exclusion of GST from the Henry review has already sowed the seed for big disappointments.
With a constraint not to touch the GST and reduce the room for trade-off of different revenue sources, it is not possible to consider best options for personal income tax reforms.
So that is an indication that Rudd/Henry are too ideological and not serious about real tax reforms.
They were too weak to make serious decisions on taxation reforms, because they don’t have a strong base within the ALP.
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