Compulsory voting is not democratic.

Just as voter ID laws are commonplace around the globe, so is non-compulsory voting. Only 10 of the 30 nations in the Organisation for Economic Cooperation and Development (OECD) have compulsory voting, Australia being one of them. The rest recognise that democracy is about choice, including the choice not to vote.

Proponents of compulsory voting argue, among other things, that it prevents disenfranchisement of the socially disadvantaged. While this is a legitimate concern, compulsory voting in a duopoly means that rather than persuade people to vote for them, all the major parties have to do is dissuade people from voting for their opponents.

Compulsory voting offers an easy escape to get away with cheap rhetoric, blame games and mudslinging.

Non-compulsory voting, on the other hand, compels politicians to make a real effort to trigger people’s interest. They have to convince them to come out to vote in the first place.

To read more go to The Conversation.

je suis charlie aussi

REPRINTED FROM ‘The Weekend Conversation’ 10 Jan 2015

Bernard Maris is seldom named as among the 12 victims in English-language reports but he was well-known in France and  he had been an economist, writer, journalist and shareholder in Charlie Hebdo magazine since 1992. He was murdered on 7 January 2015, during the Charlie Hebdo shooting at the headquarters of the magazine in Paris.

[Following is] something written by Maris that was translated into English by Alain Alcouffe as a tribute to Maris’s memory. It is from the last pages of Maris’ 1999 book, Lettre ouverte aux gourous de l’économie qui nous prennent pour des imbéciles

Open letter to the gurus of economics who take us for idiots.

And for that title alone, [we] feel even more deeply the loss to the world of this brave man, who stood by the values of the enlightenment against a darkness that threatens us all.

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What are economists for?

If economics is the science of the market, they are useless – we have known it for a long time (since Keynes), and we get confirmation now from the most ultra orthodox (Debreu).

If the economy is a science that predicts the future, then the greatest economist is Madame Soleil [a famous French astrologer].

If economics is the science which deals only with “trust”, then the greatest economist is Freud. If economics is the science which deals only with “transparency”, then the greatest economists are accountants, policemen, customs officers or judges.

If economics is a religion, then Camdessus is the high priest of it, but the best economist will remain Pope John Paul II.

If economics is only gossip and chatter, many journalists can aspire to be awarded the Golden Palm.

Every activity has a social utility. Even parasites are useful: they allow us to highlight the so-called “useful” people. Just as there is nothing “harmful” in ecology – except in empty heads of hunters – it is rare to be unable to associate a utility to a part of the social body. The parable of Saint-Simon, which showed that the wealth of France would not decrease if we removed many lazy people, writers and others, is questionable, and the same holds for the uselessness of the ancient Greek and music taught at university. So … what are the casuists of utilitarianism for?

Unquestionably the “experts”, the merchants of economic tales have a function of exorcism of the future. In a world without religion, they have the same function as gurus and cult leaders – and many of them combine the two businesses. They also play the role of bards, shamans or witch doctors of Indian tribes who talk incessantly to prevent the sky from falling on the heads. They are the inexhaustible storytellers of irrational, credulous, illiterate and but not uncultured societies that are no doubt more cheerful than ours.

But what have the children of Smith, Marx and Keynes to do? Are they condemned to play the roles of sorcerer, high priest or guru?

Obviously not. They can denounce the merchants of confusion, promote economics as a science of man, and not as a hard science, they can question history, civilisations, they can think about value and wealth. They can denounce efficiency and productivity – or simply leave it to business managers, they are paid for it! – And they can return to psychology, sociology, history, philosophy. Thinking about labour, time, money. In short, they can go back to Smith, Keynes and Marx.

They can also go for soup and sell their beautiful science for the lentils of expertise, and be content with the role of the fool whose legs are pulled twice a year when growth projections are presented, and every day when the Russian mafia recycles dollars which have been loaned to it in false candour.

But then, they should not speak of “quality assessment” or “technical correction”.

Let them put a pointed cap, a red nose, let them wag with their ears and tickle the armpits.

What were economists for, one will ask a hundred years from now? To make people laugh.

Bernard Maris, 1999

Hunting for the facts

ASFA’s White Paper consultation

Based on the results of submissions received from the general public, surveys and research conducted by ASFA, the consultation found Australians recognise that our system is world-leading, and therefore many do not have an appetite for major changes. Instead, minor improvements were suggested, particularly to help ensure the system remains sustainable into the future, and to accommodate the budget demands of an ageing population. While the vast majority of respondents favoured continued access to lump sums, imposing a tax on them, over a threshold, was one area of hot-topic debate, with 56 per cent of the online submissions to ASFA indicating they were in favour of access to lump sums, at the time of retirement being tax-free. Respondents were also in favour of the Government using various incentives to encourage people to save more for their retirement.

Interesting suggestions from the general public included:

• making it compulsory to include member projections of likely income-stream outcomes in retirement on superannuation statements,
• taxing accumulation and pension-phase earnings equally at 15 per cent, to ensure generational equity,
• providing tax and social services advantages to people who invest in lifetime pensions or deferred annuities,
• treating super lump sums as assets for the purpose of Centrelink for five years after they are taken, 
• taxing benefits as assessable income, noting this would still allow most individuals to take income tax free in retirement,
• restricting the amount of a lump sum withdrawal to the amount of non-concessional contributions made to a person’s superannuation account.

A number of broad and diverse views were also received from industry participants, particularly when considering the introduction of a lifetime caps on contributions, with some suggesting a rolling annual cap be implemented over a three to five year period. The issue of defaulting members into an income stream upon retirement was also raised with some submissions in favour of this, while others were firmly opposed, due to concerns with respect to consumer sovereignty and practicality of administration.

Read a description of the system here  and the complete report here. 

 

Stop talking, take action!

Why has the rate of smoking in first world countries declined significantly over the last few decades? Why can we now easily debate the policy options for a further reduction in public harm, such as plain packaging or tax increases? Once the public realised that there was a scientific consensus that tobacco was harmful to health and they perceived that there is a widespread scientific agreement they demanded action.  Following on from the previous blog “the 97% consensus” it is apparent that the battle to convince the public that consensus is not the problem, is well on the way to being won. But what then? What matters is not whether the climate is changing (it is); nor whether human actions are to blame (they are); nor whether future climate change brings additional risks to human or non-human interests (it does). In the end, the only question that matters is, what are we going to do about it?

One way of taking action is to make an economic case that being an environmental vandal is bad for business. Look at what’s happening in our nearest neighbour. Indonesia is the world’s biggest destroyer of forests and four multinational corporations — APP, APRIL, Wilmar and Golden Agri Resources — have been responsible for much of it. Until recently these mega-corporations were considered environmental pariahs, but suddenly things seem to be changing, with all four proclaiming “no deforestation” policies. What gives?

Golden Agri Resources led the way, announcing a no-deforestation policy in 2011. Under growing pressure, its sister company APP (Asia Pulp & Paper) followed suit early last year. APP’s metamorphosis was especially stunning. For years, APP had thumbed its nose at critics while bulldozing ever more forest. This was easy for it to do because APP is largely a privately held corporation and because countries such as China and India — which generally don’t fuss too much about the environment — snapped up much of its pulp and paper products.

But gradually, the tide turned against APP. Its critics mounted, its reputation turned increasingly toxic, and it began to lose more and more market share and an increasing number of companies refused to conduct business with them. Even if we’re dubious about their motives, their initiatives could represent an important wave of corporate realpolitik in our increasingly eco-conscious world. As such, they might become models for other natural resource-exploiting companies and business sectors internationally. Beyond this, the four corporations have large land interests globally, so one can’t ignore the potential upside of their new policies alone.

And if you haven’t heard about the growing campaign for fossil fuel divestment, and what it means for both your retirement funds and for the global economy, it’s time to pay attention – because now even the World Bank has come on board when it announced it would not fund any new coal power plants “except in exceptional circumstances”. Similar restrictions on new coal generation investments have now been announced by US, Scandinavian, European and UK development banks.

In January 2014,  17 US philanthropic groups with combined assets of about US$1.8 billion promised to sell their investments in fossil fuel companies and instead put their money into clean-energy technology.

“The magnitude of the climate crisis requires that we no longer conduct business as usual,” the Wallace Global Fund’s executive director Ellen Dorsey told reporters. “If we own fossil fuels, we own climate change.”

That US announcement came just days after Norway’s oil-funded sovereign wealth fund – which owns around 1% of the world’s stocks – revealed that it has already halved its investments in coal.

For Australians the answer is a no brainer! The national compulsory superannuation scheme has resulted in a vast aggregate of capital, some of which is invested in companies that are major polluters. For instance, Pacific Aluminium, a subsidiary of Rio Tinto, has burnt 850,000 tons of bunker oil in its refinery at Nhulunbuy each year for 45 years, generating, in addition to massive levels of PCB, nearly 2 million tpa of GHG pollution, is quite a popular investment with superannuation funds.

GetUp! should analyse the portfolio of the industry super funds, construct a list of all the companies that engage in pollution and campaign for all members of those funds to DEMAND the fund divest all the shares it has in fossil fuel companies before their businesses suffer.

Exploding myths – the 97% consensus.

Myths are persistent, stubborn and memorable.  E.g. ‘STOP THE BOATS’. To dislodge a myth, you need to counter it with an even more compelling, memorable fact. The Skeptical Science team set out to debunk two climate myths in 2013. They were guided by cognitive psychology as they constructed rebuttals to tackle arguably the most destructive climate myth of all, that there is no scientific consensus about human-caused global warming. This misconception has grave consequences for society. When the public think that scientists don’t agree on human-caused global warming, they’re less likely to support policies to mitigate climate change.

The Skeptical Science team spent about a year doing the scholarly research – reading the abstracts of 12,000 climate papers published from 1991 to 2011. They identified 4000 abstracts stating a position on human-caused global warming and among those papers, more than 97% endorsed the consensus. The goal was for the message of scientific consensus to push beyond people already engaged with the climate issue, and raise awareness among people who had no idea that there is overwhelming agreement among climate scientists..

The result was the Consensus Project website that explained the results of the paper with clear, simple animations. They released a series of shareable infographics, making it easy for people to share results on social media.

The second myth they tackled was the mistaken belief that global warming has stopped. This myth has many variants, such as “global warming stopped 15 years ago” (the time period varies) or “no statistically significant warming since 1998”. Typically, scientists respond to the “no warming” myth using statistical explanations that go over the heads of most people.They released a website with an animated ticker widget to show how much heat our planet is building up each second. The widget, which can be freely embeded on other websites, also includes a number of other metrics such as the amount of energy in hurricane Sandy, an earthquake and a million lightning bolts.

They knew the Hiroshima metaphor would be controversial but ultimately, the cognitive science told them this was the most compelling way to refute the “hiatus” myth.

So next time you have to argue that GHG emissions are suffocating the planet simply pull up the website and quote REAL stats.

[WARNING: the following video is LOUD and contains some swearing: turn down your sound.]

Who’s a climate scientist?

Why negative gearing is bad policy.

The real estate industry claims that negative gearing is necessary to meet the demand for new housing [see RP Data article]. It uses stats from the period 1985 to 1987 to reinforce its argument. Nearly twenty years later circumstances are much different and it is becoming impossible to enter the real estate market because prices are being driven to ridiculous heights by investors cashing in on the generous tax deductions available.

The Conversation article explains how the CGT main residence exemption distorts the market as owner occupiers invest more in their residence, diverting capital from other more productive investments in the expectation of tax free capital gains. The latest tax expenditure statement costs the CGT exemptions on owner-occupied housing at A$30 billion.

Firstly, expenses are deducted from income in calculating the income or loss from an activity, and secondly we apply a global system under which income from all sources is aggregated to determine a taxpayer’s income for a year. Therefore, in the absence of any specific restrictions, losses from one activity can be applied to reduce the tax payable on income from other sources. All that is needed to prevent this distortion is strict quarantine of deductions. If investors want to make money from rent let them do it under an ABN, quarantining their rental activities from other income producing pursuits.

The tax statistics for the 2010-11 year show that 2.5 million rental property schedules were lodged by individuals, showing nearly A$30 billion of rental income received during the year. The deductions claimed against this income amounted to A$37.8 billion, of which A$22 billion was interest on loans. A further A$1.8 billion was claimed as capital works deductions, which allows a write down for the capital cost of a building used to earn rental income.

In fairness to the first home buyers the Tax Act needs modification to create a level playing field, simultaneously  adding about $40 billion to tax receipts.

Lies, damned lies and Kevin Andrews.

A report [Income support customers: a statistical overview 2012] showing one in five Australians receive income support has prompted Social Services Minister Kevin Andrews to label the welfare system “not sustainable” and order a review. Talking on ABC radio, Mr Andrews said: “With the population ageing at the rate that it is, we’ve got to ensure in the future that we’re able to sustain the welfare system, otherwise we’ll find ourselves in 10 or 15 years’ time in the situation that some of the countries in Europe are in”.

The ABC Fact Check team has used OECD stats to show that Mr Andrews needs to check his analysis of the report. After looking at the relevant charts compared to European countries the ABC concludes; “There is nothing to indicate that as the population ages Australia is heading toward the high welfare spending of some European countries. Treasury projections to 2050 show welfare spending as a proportion of GDP will remain steady over the next three decades.”

Declaration of interest:

The appointment of the Member for Menzies as responsible for Social Services is a travesty. Andrews is the troglodyte who sponsored the repeal of the Territory’s Rights for the Terminally Ill legislation, condemning terminally ill people to suffer in agony. Not content with traumatizing the sick and dying, it appears he is now attacking the remainder of the vulnerable in society.  Be afraid, be very afraid if you are old or in need of support because Kevin has shown again that he has no soul.

It’s where we live!

Northern policy has long been a source of conflict. Debates have raged about the success or otherwise of government interventions in indigenous communities. Quick-draw policy responses on complex issues like the live cattle trade have devastated many communities. Additionally, media images of coast-bound refugees keep the north’s strategic importance center-stage, raising unresolved tensions about our Asian-Pacific relationships.

Those debates are often crafted by, and for, a southern audience. In my view, we will continue to repeat the mistakes of the past until we rethink governance of northern Australia. Governance is not sexy, but it’s fundamental to making things happen. As a regional water official at a Mekong Basin workshop in northern Thailand recently stated, governance is “how society shares power, benefit and risk”.

The north is different to the south in many ways. It has a low population and institutional capacity. Land tenure is largely public rather than private. It is primarily an indigenous domain. It has enormous mineral and soil wealth, but resource limitations and a vastly different climate. Much of it is closer to populous Asia-Pacific capitals than to Perth, Brisbane or Canberra.

Northerners don’t want separatism, but they do want a genuine dialogue between northern and southern Australia; one focused on how the nation as a whole might secure better northern governance. Australian and state and territory governments should negotiate big policy decisions in the north and manage government policy and programs in radically different ways.

Read more at: Northern Australia should have a say in its own future.