Revenue neutrality a better way to tax negative externalities

Comments on Lennert Veerman, Senior health economist, Cancer Council NSW “Taxing sugary drinks would boost productivity, not just health”, 22/06/2017

While the argument for a tax on sugary drinks may have some appeal for a number of reasons including the additional and new reason put forwarded by the author of this post, there is a danger that a country or politicians in a country may simply look for revenue sources to increase tax revenue, as opposed to achieving health and productivity benefits. Caution must be exercised in calling for a new tax, because it is not always good to increase taxes to raise further the burdens to taxpayers.

As a result, I would suggest that such a tax, and that may be better named, should be designed and done in such a way that it is revenue neutral and any tax revenue raised should be returned/redistributed among all taxpayers or citizens/residents of a jurisdiction in perhaps an equally manner, as opposed to being retained by the tax authorities.

I would further argue that if taxes for a particular purpose is done in such a way, supports for introducing those taxes will be much greater and policies to address some ill effects or negative externalities will be much easier to be carried out and implemented, therefore the objectives for addressing those problems can be achieved earlier and faster.

We should change the way how we approach and address things/issues/problems.

Withdraw THAAD not that too difficult for President Moon

Comments on Kai He, Griffith University “THAAD is no easy withdrawal for Moon”, 20/06/2017

It seems that the author is a bit too pessimistic on what the new president could do on this issue. I think he will be able to achieve a successful withdraw and to do it skilfully and elegantly without too much trouble.

While it would not be a very easy job to withdraw the THAAD in South Korea, it is never an impossibility completely to do so for the new president.
The key is how to best PR a withdraw so that can be perceived as a positive to South Korea as it would be. As the author mentioned, with THAAD installed in South Korea, both Russia and China will have to take counter measures that will be certainly detrimental to South Korea. It would not be totally and completely inconceivable that either Russia or China, when they are under significantly real and imminent threat from the THAAD at some point in the future, would that potential pre-emptive measures to neutralise those threats. It does not take to be a genius of the Einstein type to figure out Who would be the loser from that scenario?

As a result, it would be in South Korea's interest to not have THAAD on its land, even though it would be in the US interest to have it there. I believe that most South Koreans are intelligent enough to see through the issue when there is a divergent interest between it and its US ally. An ally is nothing more or less than an ally!

Yes, it would require a very careful and delicate negotiation with its big brother the US ally to achieve a withdraw, it is doable and is in the interest of South Korea to do so.

Inactions sometimes may not necessarily be bad

Comments on Editors, East Asia Forum “ASEAN, the region’s strategic convenor”, 19/06/2017

I think this editorial may need some rethinking of itself, particularly in terms of its view on 'the uncertainty about consensus within ASEAN on appropriate responses to manifestations of great power rivalries in the Asia and the Pacific', even though it should be commended for its correct judgement regarding 'critique of ASEAN’s achievements through a European lens', by stating that that critique only serves to underline ASEAN’s unlikely success'.

The editorial states: 'What should worry defenders of ASEAN’s relevance is the uncertainty about consensus within ASEAN on appropriate responses to manifestations of great power rivalries in the Asia and the Pacific.'

One should consider perhaps beyond 'the winner takes all approach', in governance and resolving issues and problems. By 'the winner takes all approach', it is meant the simply majority of elections and the subsequent governance. Even by a slightest majority, a government thus formed may want to implement its 'mandate' on issues and policies. While the majority method in deciding and resolving who wins or has won an election, 'the winner takes all approach' to policies may mean such a government may work against the other half of the electorate. Is that a right approach? It is unlikely to be. Rather, a better approach may be some sort of compromise or even no actions on highly non-consensual issues or policies.

Now let's come back to the issue I raised regarding the view or argument by the editorial board. When divisions exist within a nation, the world, a region, a group or an organisation, that is, when it is hard to have a consensus, inactions may be a better approach or result, as opposed to reflect its weakness. That would be my argument that is based on a rethink of dealing with complex issues in a complex world as opposed to the view that actions must be taken on all issues simply to be decisiveness and powerful! It can often occur that the truth or ‘betterness’ on issues may be with minority as opposed to majority.

I think we need to examine some approaches from a different, more innovative and likely to be a better philosophical method. Yes, it may not necessarily be conventional, but we need innovation and creativity in very complex issues.

Having said that, I must say that my comments have ventured to an area that I normally would not wish to be, that is, to comment on the very good work of a very good editorial board.

PS: I would further argue that inactions, sometimes, due to the lack of significant consensus may represent not only a good result/outcome but also a strength as opposed to weakness. Clearly flexibility and the ability to be able to bent as mentioned in this post, can often be superior and shows strengths as compared to rigidity and fragility. That is correct, isn't it?

Singapore has not been neutral between the US and China!

Comments on Ja Ian Chong, NUS "Singapore caught between a rock and a hard embrace", 17/06/2017

It seems that this post is based on a fundamentally slippery basis, that is, Singapore has been neutral and fence sitting. It has not and it has been a US ally and has been on the US side. The military training in Taiwan represents an interesting case of such non-neutrality, because China has always been very concerned with any military exchanges of any outside parties with Taiwan.

It is not Singapore's neutrality but China's willingness to tolerate Singapore's unsatisfactory and from time to time often opportunistic behaviour that has sustained a reasonably good relationship between China and Singapore.

To the contrary of the author’s argument and conclusion, I would think that a truly neutral international stance by any countries would be welcomed by China, given its long-held diplomatic principles, such as its five fundamental principles. Of course, whether a newly and truly neutrality by Singapore will be welcomed by the US or not is another matter, given that would represent a departure by Singapore of its long diplomatic stance and principle because that would also need to exit the ally position.

It appears, should the author really does not believe that Singapore has not been neutral between the US and China, that there may have been a serious misunderstanding of the real situation in this regard. And that would be really unfortunate given it is not hard or difficult to see the truth as it has been crystal clear. How such illusion could exit would be an extraordinary mystery!

Don't be too sensational on Xinjiang policies and be balanced

Comments on Ben Hillman, ANU: "China’s dangerous ethnic policies in Xinjiang", 13/06/2017

This post fails in its grasp with the reality particularly in the context that even the British Prime Minister Theresa May recently has said that enough is enough after the terrorist attacks in Britain and the Australian government has updated its citizenship requirement where there are significant ‘assimilation’ to English, if you like.
What about the banning of electronic devices on planes from a number of countries by at least America flights?
It argues the risks of effects on Uyghur extremists combining forces with other terrorist groups as reflected in the following paragraphs:
“Beijing is already concerned that Uyghur extremists are coordinating with global terror networks, boosting their resources and capabilities for hitting Chinese targets outside China. Uyghurs were allegedly involved in an attack against the Chinese Embassy in Kyrgyzstan in 2016 and Thai police accuse Uyghurs of masterminding a 2015 bombing in Bangkok that killed 20 people, mostly Chinese tourists. There are reports that Uyghurs are training with Al Qaeda and the Islamic State (IS) in preparation for launching future attacks.
“But if China is perceived as anti-Islam, its home-grown Uyghur extremists might not be the only threat. Chinese citizens and assets could become targets for terror outfits in Central Asia, South Asia and the Middle East. Chinese-funded ports, railways, canals, dams and pipelines could become vulnerable to terrorist attacks. Many of the first-phase Belt and Road projects are in politically unstable majority Muslim countries such as Bangladesh and Pakistan. Kazakhstan — a lynchpin in the Silk Road Economic Belt — is also under increasing social, economic and political strain.”
Why don’t you also condemn the terrorists and extremists for their terror acts, as opposed to blaming China for combating terrorists?
It may run the risk as being perceived as China bashing, because it seems different standards are applied to China and other western countries.
At the least it fails terribly to understand the complex reality in China and is likely to be biased in its analysis, I am afraid.
PS: Just listen to the ABC news radio this morning on Australian federal politics on terrorism and on the Prime Minister’s argument/statement on requiring new citizens to be Australian patriots in a bid to secure more supports or passing the new legislations on new citizenship and some visas requirements.
Don’t just criticise China to the degree when there were terrorists attacks there were muted responses from the West and if there is even a small terrorist incident in western countries then talk about it as if the sky is going to fall.

Unwise and ugly acts

Comments on Titli Basu, IDSA: "Asian Development Bank at 50 and Japan’s puzzle", 11/062017

This is a very interesting post that exposes the foolish, futile and self harm acts by some countries in the attempt to maintain their own and long held positions at the costs of other developing countries, as the author put it: “As the US-led international economic order has failed to reflect the shifting alignments, the ADB must grow in order to respond to the varying needs and ambitions of its developing member countries.”

I share the author’s view contained in the following paragraphs:
“The call for re-evaluating ADB’s voting rights is not new. Critics argue that present international institutions should permit space to developing nations and that failure to do so will hurt the relevance of these institutions. The emerging economies have long argued for representative governance, rationalising operations, easing the ADB’s internal processing time and encouraging public-private partnership investments. Japan must take the lead to facilitate governance reforms against the backdrop of AIIB and other new multilateral development banks. Failure to implement internal reforms will impact the ADB’s influence.
“Developing Asian nations will be the beneficiaries of this race for infrastructure financing. Productive competition will diversify emerging economies’ options to choose the most favourable financing terms. Long-term, this will support the larger purpose of empowering emerging Asian economies to augment national growth and enhance Asia’s ability to compete in the global economy.”
PS: I note the author is from the Institute for Defence Studies and Analyses (IDSA), New Delhi.

Many anti-dumping actions against China unfair and unjust

Comments on Minsoo Lee, ADB “China, the US and anti-dumping actions”,
10/062017

The use of anti-dumping against China by some western countries, as analysed by the author in this post, clearly demonstrate that it is ineffective in protecting the domestic producers and is more likely than not, harmful to both their domestic consumers as well as the overall welfare of those countries.

The main reason why some of those countries still hold China as hostage by refusing to acknowledge the market economy status of China, simply is due to the wish to contain China’s economic rise (or more realistically the pace or speed of that rise) and the strong lobbies by some of their domestic producers to protect their increasingly lost competitiveness as evidenced by changing in comparative advantages internationally.

Strong or stronger leaderships in those countries are badly needed to accept that the use of anti-dumping measures in the currently unfair and unjust international trading system and rules is detrimental to their national interests.

But sadly, politics can often trump rationality in economics in many if not all countries. It is particularly true in the contest where domestic politics is mixed with international politics, especially when China is concerned party.

In this case it is not hard to understand why the pure rational economics is compromised in reality. Economic models aiming at capturing the reality need to reflect this to be more effective and truthful.

I commend the objective analysis of this post by Minsoo Lee and tell what the truth is.

Commending courage in research

Comments on Jean-Pierre Lehmann, IMD: "Phasing out the US (dis)order in the Asia Pacific",

9/06/2017

I highly commend the author for this excellent post with bold and a way that does not necessarily bind to the conventionally political-correct view (presumably the main stream and dominant West view and probably not so West views in many quarters in the world).

It requires courage, wisdom and foresight, as well as true independence in thinking and writing.
I also appreciate the fact that the East Asia Forum allows the post to be presented on its forum.
Imagine how many voices are there for a call to abolish NATO, except for an interesting president of the most powerful country on earth?
Nowadays the phrase ‘pivot to Asia’ is not heard so often as it used to be following the change of the president in the US. Yet calling for ‘the US should phase out its military presence’ is so fresh and rare.

International relations should be based on equality and reciprocity

Comments on James Laurenceson, UTS: “Is China really a threat to maritime trade?", 4/06/2017

I think the point that Stephen Fitzgerald, Australia’s first ambassador to China, made is an important one, that is, that ‘what the US is really about is freedom of navigation for its military ships and aircraft to push hard up against Chinese waters — which it would not countenance near its own waters’.
The US should have a balanced, equal and reciprocal approach to international relations broadly and to the provision of freedom of navigation in particular.
An international order which is not equal but one-sided where the US can do anything to other countries (just like the current US president shows) and does not allow or accept other countries to do the same to it in return, is not just and should be changed.
The US should realise it cannot hold that position forever and sooner and later it has to change.

Having said that, every country, big and small and China included, should uphold the same standards in terms of international relations.

There are more monetary tools available

Comments on Ran Li, Peking University, "Monetary policy and China’s soaring leverage problem", 31 May 2017

While your work in that survey and in your pursuit is interesting and possibly important, one has take a broad and creative approach to what monetary tools can and can’t do. A useful lesson is what the FED did or has done in the aftermath of the Global Financial Crisis (particularly the financial crisis in the US following its subprime bursts.
You stated that: “Trying to maintain both inflation and financial stability would divert the limited power of monetary policy and complicate the evaluation of central bank performance.”
Please have a look at what the FED did, often dubbed as the so called an unconventional approach/method, and you may come to a very different conclusion.
One should not simply take the conventional view of monetary policies and be limited by that. One has to think creatively in dealing with the often complex reality.
I think China has done quite a bit of creative approaches in terms of monetary policies in dealing with banking reserve ratios and non-first home housing lending/loans.
You also argued that “To address the surging leverage issue, the root cause of rising leverage should be addressed through reform. China should adopt and strictly implement macro- and micro-prudential measures to prevent systemic risks. Instead of directly targeting leverage, the PBC should take the spillover effects to financial markets into consideration of all their decisions and closely cooperate with financial regulators. Further financial liberalisation and the removal of special protection for SOEs are also essential.”
Unless your reforms include creative approaches such as what the FED and the Chinese authorities have done, your advocate may be really too conventional and lack of some common sense. One should not be simply following a ‘textbook’ approach because that may be dogmatic.