Sgt Hulka Uncut

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Archive for category Economics

Start the New Year Off Wrong

Jan 2

Posted by Sgt Hulka in Bad Ideas, Economics, International, Politics | Comments off

. . . with some politics on both sides of the pond.

So the US Senate passed a compromise and now the US House has to vote on it, and the fanatical Republicans (all the usual actors, Bachman, Goh, etc.) don’t like it and are having a spack.

Then fucking don’t vote for it and fer fucks sake get on with it. There isn’t a filibuster in the US House, so unless the speaker is too much of a girl to bring it to a vote, and then hopefully not get re-elected speaker on the 3rd, as could happen with the reduced numbers the Republicans got in the last election. Also remember that that election (for President) was also run on a tax hike for the rich, and a specific one that is a hell of a lot tougher on them than the one in the US Senate bill. The progressives get the tax hike and you get exactly nothing is my starting point. Take it or leave it and we slash defence by 20% and blame it on you for sure. Obama can figure out a way to take care of the poor within its programs, and take more of a fair amount from the rich, in the many welfare programs for companies and the middle class that end up benefitting the rich more anyway.

Now shall we talk about the debt ceiling. I am totally in to reducing the total amount owed by the US government, and also the current account deficit, where it suits given the macro economic conditions. However, if we really want to reduce overall debt, we have to start with defence and health care (not health insurance) and forget about trying to take it all out of the middle class and poor. Look at productivity gains and distribution of those gains over the last 30 years, and you should come to the conclusion that what is proposed is very fair on the rich, and that there is a lot more that we need to do to make sure that workers share from increased productivity they provide.

Here at home in Australia, we have what passes for a scandal these days, with Maclin reportedly saying she could live on the $35 a day new start allowance. Well I got some news for some whingers here too, harden the fuck up. I can and do live on less than $35 a day now, and although Jenni makes allegedly 25x what the new start allowance equates to in a salary, and I have no idea what I am on. But I live on that amount now, and I don’t think that new start is meant to be the full amount to maintain any “lifestyle” whatsoever. Its meant to be the money use use to get around and feed yourself while you look for work. The Labor party needs to look straight down the barrel of the camera on the next dozen occasions and talk about a few things that really matter, and not worry if someone tries to pick at them, from right or left over statements that don’t really mean anything in the overall scheme of things.

Otherwise, show me the data that Australia and the States are fucking over poor people on a regular basis, forcing them to live in inhumane conditions, or not providing them additional support if they have bigger problems like disability or drug dependency. $35 a day to look for a job sounds about right to me at present.

Fearing fear itself

Mar 27

Posted by Sgt Hulka in Bad Ideas, Climate Change, Economics | Comments off

I recently read an article ominously entitled:

“SMEs will be hit with carbon tax reporting requirements”

The article is based on a survey performed by the Australian Institute of Management, and provides the opinion that small business (SMEs) will have carbon tax requirements passed on to them by the major emitters that pay the tax, when they are in the supply chain of the large companies. I think this article, while presenting some very interesting information, gets its analysis wrong for a couple of reasons that I detailed in comments to it, but unfortunately they were not accepted so I will present them here.

While I do expect large companies to require information from their supply chain regarding their activities and energy use so that the large emitters may complete their mandatory filings and purchasing of carbon credits, any attempt to turn the supply chain on its head and pass down costs to the supply chain will not be the result.

Further, I believe that the conclusion that a significant number of large businesses that make up the 700 or so companies that are currently covered by the NGERs legislation from 3 years ago, and will start having to pay the carbon tax in July will pass on requirements to their supply chain in a manner that is going to be detrimental in time and money costs on that supply chain is overstated.

The truth is, most of the NGERs companies that will be required to acquit permits at $23/ton to the Australian Government will be acquiring and acquitting those CO2-e credits (and therefore paying their tax) on the basis of CO2-e emissions that come from burning fossil fuels and manufacturing process industries. It is clear that based on these increased tax payments, electrical utility suppliers will pass on costs to everyone, including small business. But that may be the end of it for many SME’s, based on the nature of their operations.

Where any large business wants to “pass on” requirements to reduce emissions to its supply chain, or require the supply chain to document their emissions of CO2-e , this will mostly be passing on requirements to establish energy use/efficiency information in most cases, since suppliers are not primary emitters of CO2-e. Primary emitters of CO2-e are typically large electrical power generators and some high carbon intensity industries, like cement manufacturing. These large primary emitters are the subjects of the regulations of carbon emissions to meet the country’s long-term goals to reduce emissions. However, all businesses can benefit from examining their activities on the same basis that large companies are required to do.

Basically, all companies should see the carbon tax as a heads up that they should start to “internalise” their emissions of combustion products from fossil fuel burning and energy use. Any business (large or small) that gets that change in their mindset can then begin the process of determining where they are at with respect to their competiveness related to these additional characteristics of their performance.

As the only HSE Consultancy in Australia to be Carbon Neutral certified, my company (An Meá) has direct evidence that the process of documenting CO2-e performance (and even voluntarily participating in the CO2-e neutral programmes) is not difficult or that costly. Anyone telling you otherwise should be required to demonstrate their case in the same manner we can.

The only of those companies that have anything to fear are those that do not have any interest in what their energy efficiency is, or think climate change is a hoax. If you are in that basket, you are going the way of the dinosaur. However, if your organisation does not have a philosophical issue of doing something about CO2-e, or simply wants to benefit from energy efficiency, primarily, then you might see more benefits (and opportunities) than detriments.

There’s a difference between cunning and intellegence

Mar 21

Posted by Sgt Hulka in Climate Change, Economics, Evil Motherfuckers, Other Topics, Science | Comments off

So, the Minerals Rent Tax has made it through the Senate and will become law on 1 July 2012, delivering a 30% tax on the wealth dug out of OUR ground by a few to make THEM bazillions. And despite the likely legal challenges from Twiggy on a constitutional basis that are unlikely to hold water {cough cough, petroleum rent tax at 40%}, the law is likely to hold. And fair enough. There is certainly nothing wrong with all of Australia sharing in the wealth of minerals we all own, and nothing unfair in taxation that is drawn from wealth that is currently being generated in Western Australia versus the more populous eastern states. Remember that it was only up until the very recent past that Western Australia wasn’t supported annually through sharing wealth of the east over here. You didn’t hear anything about unfairness of taxation from the sand-gropers when their schools and roads were all being subsidised by the folks out east. Remember, we may need them again when the boom goes bust, because the GDP in Australia is still primarily generated in NSW and VIC, despite the current mining boom (ref. Wikipedia)

Screen shot 2012-03-21 at 7.51.25 AM

But so as not to miss out on the news cycle that reported the Minerals Rent Tax, one of the current new developments that he is not suing anyone over, Clive Palmer instead waded into the conspiracy theory market, accusing Greenpeace of being funded by the CIA to undermine Australian coal exports. He’s already backing off the statements made, as he is demonstrably full of shit, but I bet the retractions don’t make the national radio and TV like the first assertions did. Funny that.

Now if Clive was really worried about a conspiracy of foreigners trying to shape the debate here in Australia, he would watch a bit of Media Watch and then look into the funding of the fluffy sounding Australian Environment Foundation, and Australian Climate Science Coalition. What he would see is that virtually all the funding coming from German and US agrichemical companies and the American Climate Science Coalition. The AEF and CSC promote views that are based on climate change denial from the US and have an agenda on the Murray Darling Basin that are not in the public interest as much as they are in the interest of the agrichemicals industry. Also very funny that.

Pity none of the networks that take statements from the AEF point out these connections when they are basically reading off the AEF’s media releases to meet their story deadlines, or that Clive isn’t railing on the TV about them.

Now I acknowledge that a lot of these super rich mining magnates got there by their own skill and hard work, but an equal number got there by coming from a life of privilege, their connections and inheritance, or simply making a big pile of money a huge pile of money by turning the handle on machine already invented for them.

That’s cunning, not intelligence. So the next time you are at something that Clive is presenting at, feel free to call him out on his bullshit, as you are more likely than not to win the argument. He has all the intellectual depth of a carpark puddle, and is possibly also going burko.

Here’s what happened, and how it did

Mar 6

Posted by Sgt Hulka in Bad Ideas, Economics, Good Ideas | Comments off

There is no way I can summarise what happened during the GFC, and provide an analysis of how it played out the way it did better than the Professor Krugman, so I won’t try. Read for yourself his remarks in Portugal last week. Read them critically, for the facts and for where he clearly identifies what his opinion is on the matter. Because the facts are the facts, and whether you agree or not with the hypothesis of the failure to respond, it is a fantastic summary of the events.

And then have a think and see if you can come up with an alternative explanation on why so many “very serious people” got the response to the crisis very wrong, because its important. It’s important because Europe still has a vast amont of private debt that it has to de-leverage from, not to mention the sovereign debt, and the currently proposed all-austerity approaches all smells like failure.

To me, the big failure I define in terms of efficiency. You can have an argument over what the role of government is in relation to an economy, but the argument about whether it can have an effect is over. The loss by not doing effective stimulus (a large amount of tax cuts aren’t stimulus) in the US and Europe is incredible. Imagine if the US had done a 1.2 trillion dollars of real stimulus (as opposed to 300 billion of stimulus and 400 billion of tax cuts mostly to the rich that then did not trickle down). Now imagine if the US had borrowed most all of that at 1% (which it still can by the way, check the US long term bond rate). Imagine how effective that borrowing would have been had it been ploughed into the infrastructure repairs needed countrywide, the teachers that need not have been laid off or not hired in the first place, and the beginning work to transform the transmission grid in the US to set it up for the energy efficiency and micro-generation improvements that could solve the vast majority of its greenhouse problems without anyone having to modify their lifestyle. Now think about the generation of people who have left or are leaving university in various disciplines in the past 4 years and the next two that would be employed in their chosen field.

I call the efficiency loss and failure to capitalise on the possible gain monumental. Personally I would love to be able to borrow all the money I wanted for 1% for 10 or 30 years. I bet I could do some good things all on my own.

Something unexpected

Feb 8

Posted by Sgt Hulka in Bad Ideas, Economics | Comments off

What I’d like to do today is something you would likely never expect if you are familiar with my views on things. I’d like to quote David Frum from his review of a new book called “Coming Apart” by Charles Murray:

You are a white man aged 30 without a college degree. Your grandfather returned from World War II, got a cheap mortgage courtesy of the GI bill, married his sweetheart and went to work in a factory job that paid him something like $50,000 in today’s money plus health benefits and pension. Your father started at that same factory in 1972. He was laid off in 1981, and has never had anything like as good a job ever since. He’s working now at a big-box store, making $40,000 a year, and waiting for his Medicare to kick in.

Now look at you. Yes, unemployment is high right now. But if you keep pounding the pavements, you’ll eventually find a job that pays $28,000 a year. That’s not poverty! Yet you seem to waste a lot of time playing video games, watching porn, and sleeping in. You aren’t married, and you don’t go to church. I blame Frances Fox Piven.

What David is doing here is providing the basis for an alternative reason to why white people in America would be experiencing more social ills presently, as opposed to the degradation in morality proposed by the author. David goes on to identify the ties to economics and disparity in wealth with societal social problems. I agree with him, and would go further. In my study of history, I see a lot of parallels between the US today and Victorian England. Back then Thomas Malthus tried to tie all the socials ills to the morals of people (particularly the poor). They also had a record number of people in prisons, and tried to address their social problems by toughening penalties and making more things a crime. They were facing fundamental changes to their economy through industrialisation.

But after the fact, what proved to be true then remains – most all crime has an economic basis, and the similar can be said for most social problems. Peoples morality and ethical makeup don’t change much after they reach adulthood, or thereabouts, in my experience. But when the economic conditions of someone who is basically honest get bad enough, they can at some point begin to rationalise their ethics and perhaps result in lawbreaking to get by. Certainly they will seek escape from reality and choose to make higher use of alcohol or drugs. But they rarely turn into violent criminals.

The circumstances of the record populations of the prisons in the US, support this thesis. Prisons have been swollen in the last thirty years with non-violent drug offenders and the economically underprivileged. The US does not have a morality problem, but instead a bog standard economic problem just like they had 1900 in England. It would be nice to see leaders world wide (I’m looking at you Europe) spend more time trying to address the micro and macro economic problems that affect peoples lives universally rather than trying to paint everything as a morality play.

A few predictions

Feb 7

Posted by Sgt Hulka in Climate Change, Economics, Politics | Comments off

Before it gets to late in the year, I want to write down a few predictions so that I can remind myself next year of what I thought. I remembered to do this today after reading a couple that I passed on verbally to friends a month ago, and are now being taken up by those such as the head of the IMF, and I want to see how I go against the experts.

• The carbon tax will end up being a non-issue, or even net positive to the Gillard government with the electorate when it comes into effect on 1 July. As my buddy JC said in October, as long as the difference to what the average taxpayer gets back in benefit is greater than their additional costs by the price of a a slab of VB or more, it will be seen as a net benefit.

• Kevin Rudd will not successfully challenge Julia Gillard to take over leadership of the Labor Party. In fact, he probably won’t even mount an actual challenge at all. Tony Abbott is as likely to face a challenge of leadership as Julia Gillard is as it comes closer to the next election and the Coalition discovers that “no” is not a policy position that excites the electorate.

• Europe is already in a recession, and when they finally do the numbers after the fact, it will be a big one. My guess is a drop in GDP in the Euro zone of 3% and a duration of 2 years. Keynesian economic theory will win out in the argument over austerity or stimulus, but the Germans (and others) who want to paint the sovereign debt issues in Europe as a morality tale will realise this way to late, or refuse to admit it at least.

• Greece will default on its sovereign debt after failing to come to an agreement with its lenders and failing to get assistance from the European Central Bank (due to the point above) and will therefore leave the euro and reintroduce its own currency so that it can devalue it in order to address its problem as an alternative to the austerity program being pushed on it (that cannot work in any case).

• The USA will escape any serious damage from the european sovereign debt crisis and have surprisingly good growth in 2012 of about 2% of GDP.

• Barack Obama will be re-elected as President in the USA over Mitt Romney. Unfortunately for Mittens, this is not going to be the year for someone in the 0.01% of the wealth category to win amongst the Occupiers or the Tea Party, and despite what they say in public, I don’t think most Americans (religious or not) are ready to elect a Mormon as president. In addition, the economy in the US is starting to get better for real people, and they will vote based on their current economic condition.

• Synaptor apps will be one of the biggest internet successes of the year in Australia

Staying Away From The Simplistic

Aug 22

Posted by Sgt Hulka in Economics | Comments off

Long time away. I had a holiday where I thought I might do more posting on the blog, but in fact did none. So a real holiday.

Lots has happened, however, although not a lot of new things but noise on our Carbon Tax here in Australia, so I thought I might have a bit of a rant on something one of my low-tax, government-is-bad, simple-answer friends. People love sending me this stuff, possibly just to set me off. Here’s the forward, spelling intact:

“This is a great example of Micawberan Threory! Even I can understand this… This below states the USA financial position succinctly: U.S. Tax revenue: $2,170,000,000,000 . Fed budget: $3,820,000,000,000 . New debt: $ 1,650,000,000,000 . National debt: $14,271,000,000,000 . Recent budget cut: $ 38,500,000,000 Now just remove 8 zeros and pretend it is a household budget: . Annual family income: $21,700 . Money the family spent: $38,200 . New debt on the credit card: $16,500 . Outstanding balance on the credit card: $142,710 . Total budget cuts: $385. Now THAT is not a pretty picture is it?”

Yes, a fairly interesting, if distorted view of things based on simplistic view of a country as a family. I suppose that is Micawber’s forte. However, let’s look at the analogy more accurately given that paradigm. If the US was a family then its income would be $14.2 trillion, or $142,000 in the example above.

If a family had an income of $142,000 per annum, and they only artificially allowed themselves to have a maximum debt limit of that much, then pretty much they would always be renting and never own their own place. A standard middle income mortgagee in the USA is allowed to have a debt load for a mortgage that is 28% of its income after tax, excluding all other credit cards and personal debt. So, if the US was a family and went to get a loan on a new house and wanted to rent out the old one to Mexicans that have moved into the neighbourhood, they would easily get a new loan under FHA rules there from a bank (say a Chinese owned one) at a good government guaranteed rate (currently 2% for long term bonds) for a maximum capital cost of $2,030,000, assuming they put 10% down.

So, they don’t look like that bad a debtor at present really, do they?

Does the US have a credit card problem? Yes undoubtedly. If you think the government is bad, you should look at personal debt.

Does the US need to have an honest conversation with itself about taxes and entitlements? Also, definitely. But keep in mind that taxes as a % of GDP have NEVER been lower since records have been kept, before you start privatising social security, medicare or medicaid. You can go ahead and eliminate all those programs if you want, from my perspective, and I would be OK (even if I still lived there), but then you should also prepare to live with the consequences, and examine the lives of people in the US society in the period 1885 through 1920 and see if that is really where you want to go back to.

The truth is, if the US eliminated its optional foreign wars and eliminated the Bush tax cuts, it would be in surplus just barely, and then should talk about the viability of entitlements

But instead, it ran itself down in front of the world and the corrupt credit ratings agencies (that only a couple of years ago were triple A rating shitty CBOs), tarnished its reputation as a good financial risk, and spawned simplistic evaluations like the proposition above.

A regular dude

Apr 24

Posted by Sgt Hulka in Bad Ideas, Economics, Zombie Plans | Comments off

You gotta love it when Krugman quotes David Bowie songs, and has intimate knowledge on zombies. Like making sure you use the double-tap.

An honest discussion on tax

Apr 19

Posted by Sgt Hulka in Climate Change, Economics, International, Politics | Comments off

Tax, as it is said, is the price we pay for civilisation. So as we begin the shouting, gnashing of teeth and get deluged with millions of dollars in advertising over whether a carbon tax here in Australia is going to destroy our economy or not, it would be nice to have an honest conversation for a change. I found a little bit of that honesty when I was reading Paul Krugman again the other day, between the lines of the point he was trying to make.

The graph in the Professor’s post shows overall government revenues as a percent of GDP for a number of countries, as below:
Screen shot 2011-04-19 at 3.21.49 PM
The key point that he was trying to make is what a low-tax country the USA is, in comparison to all the current demonising of all government and taxes that the right is trying to do there again. But the point it made to me is not the red bar for the USA, but the one below it. See, the truth is that Australia, even with our single-payer health system, uniform funding for schools out of general revenue (not property tax), and generally more social welfare than in the USA, actually do it all for less money than the USA on a normalised basis. Now how does that work?

Well, I haven’t finished my research yet, but I have a big feeling that the first big difference has to be that we don’t lie to ourselves as much. See, Americans have a great constitution, and a bill of rights, and pretty universal voting rights. But they got all those things long ago and haven’t really used them much since, that I think they have become complacent and still believe they have a functioning democracy. The truth is, the political system and public discourse through media in the US are so dominated by moneyed interests, that they virtually never have an honest conversation about serious issues like the role of government and what it costs (tax). Ever since I remember first having a political discussion in relation to the presidential primary between Bush I and Reagan, I have heard continually in virtually every discussion about the issue the fake truism that the US is taxed too highly. The discussion is pretty much always handled very simplistically and centres around rates. And it is easy to swing opinion to the side of the fake truism with the majority of people who draw a paycheck from an employer. They understand it: take your gross salary, multiply it by the rate and thats the tax the government gets from you. But what they don’t work through is the way most companies, and wealthy people do their tax with deductions, special tax subsidies, losses that can be carried forward and the different treatment of earned and unearned income. When you factor those things in that make up a huge portion of the US tax code, the result are absurdities such as those below as compiled by Senator Bernie Sanders (I-VT):
bernie-sanders-corporate-tax-4001
See, only suckers really pay the full 30% rate for corporations. The same is true for individuals paying tax, which is why the US can end up collecting so little revenue as a portion of GDP.

So, when I hear yesterday here in Australia that the government is now at 31% support, and that 60% of people now oppose a carbon tax, I wonder if we in Australia are also now buying into the sort of lies that have worked their “magic” in the USA. The truth is, we are also a very low tax country. The truth is that the carbon tax is going to have very little impact on the economy in Australia, and will also be made more fair to lower income households through the compensation already announced. We will even then still be able to afford to fund good things, and provide some relief to companies that are energy intensive and exposed to international trade.

And even though I generally support unions, if the unions here in Australia require that not one job be lost in order to address climate change, then its time for them to get honest with themselves as well. The truth is jobs digging up and burning the magic dirt have to go, and it won’t be a bad thing unless your only goal is to maintain the status quo.

At some point everyone needs to ask themselves, “What is my civilisation worth?”.

The funny thing is, it really will be a buck-o-five

Apr 5

Posted by Sgt Hulka in Climate Change, Economics, Politics | Comments off

OK, its time for a bit more math, but basically the amount required is pretty much going to be about $1.05. Here’s the facts for you to work with.

The Australian Department of the Treasury has announced that before assistance costs that will trickle down through all the sectors of the economy will cost the average household in Australia (worst case) $860 a year, assuming carbon costs $30/ton in tax.

Using my previous estimates of total emissions upon which the tax is payable results in a massive $10 billion of revenue for the government, and more than cover a compensation program to reduce the $860 a year to pretty much any amount you want, as well as fund appropriate research and investment into long term renewables.

But to be honest, it doesn’t have to be a program that big. Let’s say, for instance, that we set the price not at my previous lowball $15/ton, but rather split the difference between that amount and this whopping big program, and go with a price of $23/ton. This price is relatively familiar to those that have been trading in international carbon markets for the last few years, so it seems like a good balance.

OK, so we raise $7.67 billion in carbon tax at $23/ton, and fund all the good programs I identified previously with about 2/3rds of the money ($5.26 billion) and return the rest ($2.41 billion) to the 8.75 million households in Australia on monthly basis resulting in a net cost to them of $383.25 a year, or $1.05 a day.

And if you won’t kick in $1.05, who will?

I mean, if you have seen the movie reference here, and know the social commentary in it, you will see what a accurately portrayed view of our pathetic existence it is, rather than a near perfect parody using puppets. I believe we will really prove this point, and have a ready made theme song to go with it (on a slightly different theme), and still we won’t be able to get the common user to kick in a buck-o-five to solve a problem when it is almost too late. Frankly, we deserve zombies.

However, on an up note, finally, I am glad to see dolt* get the treatment he deserves on the ABC from Jonathan Holmes, and I am glad I am not the only one that thinks dolt’s bullying should be stood up to. His strawman argument of the cost to Australia versus the actual reduction in temperature that will be seen immediately is as offensive as his views on aboriginals that is currently on trial in Victoria.

* – see, he is already diminishing in importance and doesn’t even rate capitalisation. He’s just another anonymous dolt.