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Thursday, 28 January


Listening to past Treasurers is a dangerous past-time Bill Mitchell – billy blog

On January 23, 2016, a former Australian Treasurer Peter Costello (1996-2007) gave a speech to the Young Liberals (the youth movement of the conservative party in Australia) – Balanced Budgets as a Youth Policy – which was sad in the sense that some people never get over being dumped as out of touch and unpopular and was ridiculous in the sense that it is a denial of reality and macroeconomic understanding. He mounted the same old arguments that have been used to justify the pursuit of fiscal surpluses (grandchildren etc) but failed to recognise that his period as Treasurer was abnormal in terms of our history and left the nation exposed to the GFC as a result of the massive buildup in private sector debt over his period of tenure. The only reason he achieved the surpluses was because growth was driven by the household credit binge which ultimately proved to be unsustainable. Fiscal deficits are historically normal and should not be resisted. They are the mirror image in a national accounting sense of non-government surpluses, which historically, have proven to be the best basis for sustained growth and low unemployment.

Peter Costello was the Treasurer in the last conservative government which held office between 1996 and 2007. He aspired to be the Prime Minister to replace John Howard but he never had the numbers to depose the increasingly disliked Howard.

When the Liberals lost power in 2007, he declined to stand as Opposition leader and retired from Parliament. He never really had the heart to see his way through the Opposition years and instead we saw Tony Abbott take over the conservative leadership and become Prime Minister in 2013 (he has now been shown the door by his party).

While Costello was the Treasurer, the government ran fiscal surpluses in 10 of the 11 years is in office.



Education is an investment, not a filter John Quiggin

There’s been a fair bit of fuss about reports that it’s now much easier to get into a university course than it used to be. This is the unsurprising result of decades of public policy aimed in this direction (with some brief reversals, most notably when David Kemp was minister). This piece by Leith van Onselen is fairly representative

Thanks to the former Labor Government’s uncapping of university places in 2012, allowing universities to recruit as many students as they can fit, actual tertiary entrance scores have plummeted, meaning every man and his dog can now get a degree, devaluing their worth in the process.

Implicit in this statement is the “screening” theory of education, that the point of getting a university degree (or finishing high school for that matter) is to show that you are smarter than the people who didn’t. The idea that doing a degree might equip you with useful specific knowledge, or with general skills in reasoning, writing and so on, doesn’t get mentioned.

Assuming, as is fair in this context, that the “worth” of a degree is being conceived in monetary terms, the claim that degrees have been “devalued” depends on the future earnings of the students now being admitted. We can’t know this (neither can van Onselen). However, the long-term evidence is clear: in Australia, as everywhere else in the world, the wage premium for graduates has remained large enough to make going to university a very good decision, even as the proportion of young people undertaking university education has risen f...


Australian regulators struggle with shift to an energy democracy Renew Economy

Australia's state and federal energy regulators are struggling to deal with the idea of an "energy democracy". The cosy cabal that once made all investment and tariff decisions is being challenged by the emergence of more than a million electricity "pro-sumers."


Hinkley delayed again amidst fund shortage, union challenge and safety fears Renew Economy

EDF has again been forced to delay its “final investment decision” on the Hinkley point nuclear plant in Somerset.


Hunt under pressure as Australia loses climate cred, gains carbon risk Renew Economy

Australia tumbles 10 places on key environmental performance index, while Oxford report warns its coal mines and plants are among the world's riskiest investments.


Alinta launches renewables tender in sign investment drought may be breaking Renew Economy

Alinta breaks private sector 'capital strike' with call for expressions of interest in large-scale renewable generation projects.


Your car air-con is consuming half your fuel in heavy traffic Renew Economy

In a traffic jam, air conditioners can use half the fuel consumed by a car. This looks like fertile ground for research into new cars and their air conditioners, and retrofit measures.


Liverpool Plains coal mine developer Shenhua calls a halt to imports Renew Economy

Shenhua, the Chinese coal giant proposing to develop controversial coal mine in Liverpool Plains, cut its imports last year to virtually zero. Does it really need a new mine?


288 – Bowie albums ranked Pannell Discussions

Since David Bowie’s death a couple of weeks ago, I’ve playing his albums pretty incessantly. Playing them all within a short time made me think about which ones I prefer. I’m sharing, in case it’s helpful to others thinking of expanding their Bowie collections.

David Bowie is in my second rank of favourite musicians: not someone whose music I’m completely obsessed with, but definitely one of the greats. He fits into mainstream rock, but like the most original and creative rock artists (The Beatles, Bob Dylan, Elvis Costello, Radiohead) he was renowned for making radical changes in his music from time to time. In fact, Bowie’s changes were more radical and more frequent than any other major artist.

My decade-by-decade summary would be:

  • The 1960s: An awkward debut, one brilliant single, and a very good second album.
  • The 1970s: Mostly stunningly good, progressing through five utterly distinct phases.
  • The 1980s: Starts with one very good album. After that, several dreadful albums that I can’t bear to listen to it.
  • The 1990s, 2000s and 2010s: Everything from 1995 on was very good to excellent.

You can see that I have a strong preference for his more adventurous work, and a very strong dislike of his most commercial work (from the mid 1980s).

To be more specific, here is my ranking of all his albums, from best to worst, with some comments about each.

1. Low (1977). The secon...


NZ Labour says TPP threatens sovereignty AFTINET

The New Zealand Labour Party has released a statement expressing its concern that the TPP threatens sovereignty for little economic gain.

Opposition leader Andrew Little told the media:

“This analysis confirms the Trans Pacific Partnership will prevent future governments making laws in the interest of New Zealand.

“The public is still in the dark over what this deal means for Pharmac and the future cost of medicines.”

He also emphasised that many Kiwis are opposed to the Trans-Pacific Partnership deal.

Read NZ Labour’s full media statement here.

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Wednesday, 27 January


European-wide unemployment insurance schemes will not solve the problem Bill Mitchell – billy blog

On June 10, 2015, the Italian finance minister wrote an Op Ed article for the UK Guardian – Couldn’t Brussels bail out the jobless? – which continued the call from those who sought ‘reform’ of the Economic and Monetary Union in Europe for a European-wide unemployment insurance scheme. This idea continues to resonate within European circles and is held out as a major improvement to the failed Eurozone system. My response is that if this is as far as the political imagination can go in Europe among progressives then there is little hope that the EMU will become a vehicle for sustained prosperity. The creation of a European-wide unemployment insurance scheme is better than the current situation where the responsibility for providing income support to the unemployed outside of the private insurance arrangements is left to their Member States who surrendered their currency sovereignty upon joining the Eurozone. But, it is a weak palliative at best and fails to address the basic problem of mass unemployment, which is inadequate capacity for Member States to run fiscal deficits of a size necessary to bridge the spending gap left by the savings desires of the non-government sector. Until the European debate shifts towards that issue and the policy players and the people who elect them realise that the fiscal design of the Eurozone is flawed at the most elemental level and that the fiscal rules superimposed upon that flawed design only serve to exacerbate the initial failure to construct a sustainable monetary union. Introducing a European-wide unemployment insurance scheme does not take us very far down that road of enlightenment.

The proposal by Italian finance minister, Pier Carlo Padoan was motivated by the his observation that:

… the euro area’s economic per...


Facebook announces newest 100% renewable data centre to be built in Ireland Renew Economy

Facebook has announced that it plans to build a 100% renewable energy powered data center in Ireland, its second in Europe.


China’s first domestic green bond sales come on the heels of the hottest year on record Renew Economy

Concern about climate change is helping to fuel the growth of the market for green bonds.


US could cut power emissions 78% by 2030 using existing technology, says study Renew Economy

The US could construct a nationwide energy infrastructure that cuts carbon dioxide (CO2) emissions by up to 80%, says a study in Nature Climate Change.


Vietnam shifts stance on new coal Renew Economy

Vietnamese PM signals reduced role for new coal-fired power against backdrop of slow electricity growth, environmental concerns and cheap renewables.

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Tuesday, 26 January


The urban impact of the failure of austerity Bill Mitchell – billy blog

I use the descriptor ‘failure’ in a selective way, although it is probably the meaning that that vast majority of citizens would ascribe to the term. In this context, I’m thinking that successful policy improves the lives of the most disadvantaged citizens in a region. A small minority of people might think of success in terms of how rich the top end of the distribution becomes (in wealth or income). Yesterday (January 25, 2016), a UK research group, the Centre for Cities released their latest – Cities Outlook 2016 – which is a comprehensive analysis of how the larger cities in Britain are performing across a variety of indicators. In this release, the theme was centred on the claim by the British Chancellor that his policy design was intending to produce a “higher wage, low-welfare economy in Britain”. The report suggests the British government has failed and that “almost half of lower wages, and higher welfare, than the national average” and “welfare spending since 2010 has grown at a much faster rate in high-wage cities”. I’ve also been trying to disentangle the impacts of deindustrialisation on urban spaces, which began in the 1980s, from the more recent impacts of policy austerity, driven by misguided understandings of the capacities of currency-issuing governments. I want to address the claim from the Left, that the shifting patterns of capitalist production across regional spaces, is inevitable and undermines the capacity of cities to prosper. The shifting patterns might be inevitable but the conclusion that is drawn about the options available to cities are largely incorrect.

The Centre for Cities Report is very interesting and worth reading. It studied the 63 largest cities in the UK, which “account for 54 percent of the population, but gene...


China Fears Escalate As World Economy Slows The Diplomat » Pacific Money

2016 looks increasingly like a difficult year for the global economy.

Thursday, 24 December


TPP take action AFTINET

The TPP text of thousands of pages was released on November 5, 2016, and it confirms our fears.See our initial assessment  hereThe TPP text will be reviewed by parliamentary committees from February 2016 before Parliament votes on the implementing legislation. AFTINET will be campaigning to block the implementing legislation in the Senate.  

What you can do:

  • Download and distribute our leaflet ...

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