John Quiggin

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Before the 2008 US election, I wondered how rightwing commentators, quick to hurl the charge of anti-Americanism against anyone who disagreed with the policies of the Bush Administration, would deal with the election of a Democratic President. I shouldn’t have worried. In this , Janet Albrechtsen makes it clear that she sees no need to change her views. An anti-American, according to Albrechtsen is someone who supports the current President of the United States, favors the policies of his Administration, and opposes demonstrators invoking revolutionary slogans against the current government.

All of this is summed up in the favorite slogan of the Tea Party crowd “I want my country back”. In the view of this overwhelmingly white and mostly upper-income group, which started operations within weeks of Obama’s inauguration, the only legitimate government is one that embodies their tribal values and hatreds. If the majority of Americans vote for a different government, then, as in Albrechtsen’s twisted logic, that just means most Americans are anti-American.

Update: Quite a few commentators seem to think I’m misrepresenting Albrechtsen here. I find this bizarre. The first use of the term “anti-American” in her article is para 3, which reads (with emphasis added, given that it seems to be needed)

Not just the sleep-inducing sound and sight of five voices all nodding and shaking their heads to the same anti-American melody. Yes, we all voted for Barack Obama , yes, we all want action on climate change, no to religion, nuclear power, the Tea Party movement, the Bush administration (“evil was being actively pursued every single day”),

I’ve been busy for the last few days, working on a statement by a group of economists in support of the principle of a resource rent tax to replace existing royalties. The statement calls for informed debate about the proposal and takes no position on particular design issues, such as the choice between the existing system used for the Petroleum Resource Rent Tax (40 per cent on returns above about 11 per cent) and the government’s proposed Resource Super Profits Tax (40 per cent on returns above the bond rate, with a corresponding offset for returns below the bond rate).

My own view is that the RSPT design would be more efficient, but the losers under this design (those who can confidently expect high profits) have been very vocal, while the potential gainers (smaller miners undertaking riskier projects) have not given the government any support. Add to that the fact that the PRRT design is long-established (making scare campaigns a little bit harder) and simpler and there is a strong political case for a compromise along these lines. The most important thing is that the government cannot and should not back down on the basic principle of a resource rent tax.

Here’s the Press Release and Letter.

Apropos of recent proposals to stop giving Miranda warnings to terrorism suspects,

, the reaction is still exactly the same to every Terrorist attack, whether a success or failure, large- or small-scale. Apparently, 8 years of the Bush assault on basic liberties was insufficient; there are still many remaining rights in need of severe abridgment. Even now, every new attempted attack causes the Government to devise a new proposal for increasing its own powers still further and reducing rights even more, while the media cheer it on. It never goes in the other direction.

This kind of policy “ratchet” is quite common, but I haven’t seen a fully satisfactory, or general, analysis of either the metaphor or the phenomenon.

Read more…

Not that long ago, I said that, in the absence of a policy change on privatisation, I’d be putting Labor last on my next Queensland ballot, behind the Greens and, more relevantly, the Liberal National Party. Doubtless as a result, the LNP has promptly .

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

I’ve been flat out with final revisions to my book manuscript and various other things. So I didn’t get time to say I would be on Australia Talks this evening talking about the resource rent tax. It went fairly well, I thought. You can judge for yourselves when the podcast becomes available

Not quite sure when I will surface from my current deluge of work. Light posting until then.

* Budget lockup low point: Only instant coffee, had to get my caffeine hit from Diet Coke. High point: Asked for autograph by Treasury officials. Also, a fun dinner with Robert Gottliebsen, Alan Kohler, Natasha Stott-Despoja, the Crikey crew and others. Not quite as lively as some accounts suggested, but a good time was had by all.
* One thing I missed: Got through some of the confusion on the aid budget but wasn’t able to work out if the money for Copenhagen commitments was additional new money (as promised) or old money taken from elsewhere in the aid budget. Unsurprisingly, it was old money
* A bigger thing I missed: What Possum’s Pollytics correctly calls the most important chart in the budget, a graph showing a regression of the size of economic stimulus against economic growth relative to IMF forecasts. The relationship is highly significant, and the coefficient is approximately 1. That is, each dollar of stimulus resulted in (roughly) a dollar of extra output. No doubt this will be subject to reanalysis, but it’s a striking result.

* Tony Abbott’s reply: predictably weak. Freezing public service recruitment is silly symbolism, not a serious way of cutting spending.

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

Last year’s Commonwealth Budget represented a huge, and, for the most part, successful economic gamble. The gamble last year was that a big budget deficit would yield an economic stimulus sufficient to outweigh the associated increase in public debate and provide a basis for sustainable economic growth in the future.

As the Treasurer’s speech points out, the Australian economy has recovered strongly at a time when the US and European economies are only marginally stronger than at the depths of the recession. Public debt is now projected to peak at 6 per cent of GDP, compared to a developed world average of more than 80 per cent. The government’s claims as strong economic managers have a fair bit of credibility.

This year’s Budget is a political gamble; that the government can win re-election based on that credibility, without offering any significant electoral sweeteners. The government doubled down on this gamble with the series of backflips and repudiated promises in the leadup to the Budget, motivated largely by the desire to achieve an early return to surplus. The political price for these backflips, most notably the indefinite deferral of the CPRS, has been steep, and it’s far from obvious that the Budget will provide any offsetting bounce.
Read more…

I’ve changed this a bit to be clearer on points that I hadn’t sorted out in the lockup. It was a long day

Read more…

My response to the Budget’s international outlook

Read more…

I’m going to post a bunch of pieces I wrote for Crikey during my day at the Budget lockup. Here’s some pre-budget speculation. The reasoning still looks OK, but the government didn’t go for the rabbit from the hat I thought possible: a return to surplus in 2011-12.

Read more…

I’m going to be in the Budget lockup tomorrow, so I probably won’t be posting much after this. So, rather than polish it up, I’m going to bang out some thoughts on the Resource Rent Tax proposal, the main element of the Henry Review adopted by the government. The shorter version: the Tax is a good idea, and the criticisms we have seen are what you would expect from rent-seekers seeking to protect their rents.

The central arguments in favor of the RRT proposal are intertwined, and I’ll try to put them together in coherent way

* The basic efficiency argument: Since mineral deposits yield super-normal profits to those who have the right to exploit them, a tax on those profits will not lead to less investment – the profit will still be enough to induce investment

* The economic equity argument. Compared to almost any other tax we could impose, the burden of the RRT falls least on low-income Australians and most on high-income investors, many of whom are foreigners

* The legal equity argument. In Australia, mineral resources are, and always have been, owned by the state, representing all Australians, and not by individuals. So we should seek to maximize the return on our own assets.

* The political economy argument. Ever since I can remember, and probably before that, mining companies have been threatening to pack their bags and go overseas. They’ve made these threats when they were upset about tax policy, about environmental restrictions, about Aboriginal land rights, about union wage demands and work practices and when they were in a bad mood for no particular reason. But, even though lots of Australian industries have disappeared, or contracted drastically for a range of reasons, the miners are still here. The reason is obvious. They can leave, but they can’t take the minerals with them. It’s precisely this immobility that underlies the case for RRT
Read more…

Open for your thoughts on mothers and motherhood, reminiscences, and so on.

I’m getting tired of comments threads being derailed by disputes over nuclear power. So I’m going to give everyone a final chance to state their views on the question, then declare this topic off-limits. Here are my views:

* If there is no better option, I’d prefer an expansion of nuclear power to continued reliance on fossil fuels (particularly coal) to generate electricity

* We don’t have enough information to determine whether nuclear power is more cost-effective than the alternatives (conservation, renewables, CCS) and we have debated this question at excessive length (a fact which itself reflects our lack of info)

* In practical terms, there is no chance of any movement towards nuclear in Australia for at least the next five years.

So, I’m going to ask everyone to have their final say, and come back in five years when we might have something new and relevant to say.

Update I’ve been asked by Fran Barlow in comments to reconsider my policy, and here is my response. If I see anything new and interesting (to me, that is) on the topic, I’ll post on it, and open up discussion. Readers who see something suitable are welcome to email me and tell me. Otherwise, nothing more on this until further notice, please, including in open threads.

Because the government ignored most of the Henry Review, I put off reading it until I had a bit of free time. I expected to find myself in agreement with most of it, and in fact, I agreed with a lot. But I found one big problem, as I discuss below (previously posted at Crikey)

As Ross Gittins observed recently, the Henry Review will set the agenda for taxation reform for a long time to come and most of its recommendations will probably be implemented sooner or later. It’s important therefore, to give it some close and critical scrutiny now, before it acquires the status of holy writ.

There’s a lot of good sense in the Henry Review. In particular, its central recommendation, to get rid of the many inefficient taxes and imposts that have accumulated over the years, and replace them with broad, efficient taxes on four bases: personal income (comprehensively defined), business income, private consumption expenditure and economic rents from natural resources and land. On most points of detail, it’s sensible and well thought out, though there will no doubt be room for disagreement.

There is however, a fundamental flaw in the reasoning of the Review, which undermines its whole approach to the appropriate balance between the four tax bases defined above. That flaw is the assumption that the primary goal of economic policy should be to promote economic growth, as measured by GDP (along with other objectives such as equity and sustainability).
Read more…

One problem with the recent discussion of epistemic closure (or, in my preferred terminology) agnotology ( (that is, the manufacture and maintenance of ignorance) on the US[1] political right is that a lot of it has been discussed in fairly abstract terms. However, there is a fair bit of agreement that climate change is both a key example, and that the rightwing construction of a counternarrative to mainstream science on this issue marks both an important example, and a major step in the journey towards a completely closed parallel universe of discourse.

Climate change as a whole is too big and complicated to be useful in understanding what is going on, so it is useful to focus on one particular example, which does not require any special knowledge of climate science or statistics. The Oregon Petition, commonly quoted as showing that “31000 scientists reject global warming” not only fits the bill perfectly but was raised by Jim Manzi in his critique of Mark Levin.

So, it provides a useful test case for understanding the agnotology of the right.

Read more…

… and brought forth a mouse

That’s my initial reaction to this ABC report of government’s response to the Henry Review of Taxation. All that effort, five months of waiting and we get a Resource Rent Tax and some tweaks to superannuation and company tax. Just about everything else has gone into the too hard basket.

An intriguing exception, it seems, is the proposal for congestion charges to replace existing road user charges, which has been neither accepted nor ruled out. Judging by the speed at which the Bligh government ran from the idea, I’d have thought this one would be very much too hard (if not as much so as the most sensible measure in the whole list, replacing existing burdens on homebuyers with a land tax paid by homeowners). I can’t see that happening, but I’m surprised to see it still a live option.

The Resource Rent Tax is a step forward, especially in the current environment where a booming minerals sector is placing all kinds of pressure on other sectors. And, I guess, it wouldn’t have been politically feasible a year ago, when the miners looked to be in trouble. So, I guess the delay hasn’t cost too much, and the Henry Review gives future governments an agenda that will last them a while.

When I get a bit more time, I’ll try and respond properly to the Review. Obviously, there’s no rush.

Stephen Long has a similar view

I’ve been arguing for a while that, after a long defensive struggle, the left/labour movement needs to start thinking about how to respond to the opportunities created by the intellectual collapse of the right and the economic failure of market liberalism. In a lot of areas, such as those of the welfare state, and community services, the defensive struggle was reasonably successful, and the question now is how best to move forward.

That’s not true of worker and union rights, where the left has lost much ground over the past few decades: drastic declines in union membership, a declining wage share, and the expansion of managerial power and managerialist ideology. On May Day, the traditional day of celebration of the trade union movement it’s natural to focus on the question of how best to push back against these forces, and where we should be going. I don’t have a lot of answers, but I’ll throw in a few points (not all that well worked out) and open up for discussion.

Among the recent successes of the worldwide labor movement, the ACTU’s “Your Rights at Work” campaign was one of the most notable, not so much for its concrete achievements (which included a significant contribution to the defeat of the Howard government, and the partial repeal of its anti-worker laws) but for the way it turned the debate around. It was entirely successful in posing a rights-based argument that workers do not (or should not) have to trade away their human rights for a job. The government’s “WorkChoices” rhetoric proved utterly unappealing to most Australians. And, while the Rudd government has disappointed in many respects, it not only scrapped the worst of WorkChoices (following some backdowns under pressure by Howard), but pushed forward with initiatives like parental leave[1].

It seems to me that this is the right way to go. The old-style politics of class (with the working class represented by male manual workers, gathered in large, naturally solidaristic workplaces) is no longer relevant to the great majority of Australian workers. That doesn’t mean that class has ceased to matter, but it does mean that workers experience class and power relationships more in terms of individual experience than as collective interactions between classes. So, in particular, unions need to be seen more as mutual aid associations that protect their individual members against exploitation and unfair treatment than as vehicles for the mobilisation of the working class. The kinds of legal changes sought to reverse the generally anti-union trend of past decades needs to reflect this orientation.

We also need to go beyond national perspectives in responding to a globalised economy. Big business has been globalised for decades, and labour has been slow to respond, but the Internet has evened things up to some extent. Organizations like LabourStart do a great job, but we need a lot more.

More May Day thoughts from Mark Bahnisch.

fn1. Opposition leader Tony Abbott’s opportunistic attempt to outbid the government will make it difficult for any future Liberal government to reverse this advance.

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.