Monday, 29 June 2015

Q & A and Free Speech part 2

I previously commented on the Q&A brouhaha HERE. . Steve From Brisbane writes again on the topic.
Mediawatch looked at this and made some sensible comments. The best one being Mallah should have asked the question like David Hicks did in a past Q&A. Incidentally Howard showed a lot more class in his reply than any of the present mob.
What was interesting that all the usual suspects who had a go at the ABC are all divisive people who have reputations for being loose with the truth as they have been here.

A few thoughts on the overall topic.

  • Wilson and Kelly on Q&A looked prize prats ( a technical term) in arguing their positions. News Ltd could interview the man but Q&A couldn't have him. It is bad the ABC has him live but not if TEN has him live!Wilson approves of free Speech but not for Mallah.
  • Kelly said the legislation went through all the usual cabinet areas and was advised by their experts. No if only two misters had read the discussion paper then it most definitely did not go through the usual procedures and no expert would propose unconstitutional legislation
  • Turnbull looked a prize idiot in saying Mallah was a security threat to the audience but wouldn't be in a shopping centre. If he was a security threat was was he free? 
  • Ciobo was lying about his knowledge about Mallah's case. As the Lady said he was found innocent and he was born here i.e. he cannot be deported anywhere.
  • Mallah is not a convicted terrorist
  • Mallah does not support ISIL. Indeed he is totally against them as the Lady pointed out last nigh on Q&A.
  • If the government and News Ltd demonise Mallah who is against ISIL then that plays into ISIL propaganda
  • The only people coming back to Australia from either Syria or Iraq are firstly disillusioned and secondly as David Kilcullen has pointed out are not involved in fighting. Such people have been found to be highly effective in countering ISIL recruitment overseas. This cannot happen if their citizenship is revoked.

If one didn't know any better then one would conclude the government, News Ltd and others were deliberately aiding and abetting ISIL recruitment.

Andrew Catsaras is spot on. So is Chris Graham

Independent directors for Industry Funds. Much ado about nothing

The government has introduced new laws for superannuation funds.
A man from Mars would find this strange, Industry funds are both lower in cost and out perform retail funds ( dominated the the big banks). Why is the government  concerned? There have been a plethora of scandals involving the major banks and financial planners yet the government has been essentially dormant in their interest or wanting to change the industry.

The industry funds are up in arms about this. See Tim Lyons for example. However they should not worry too much.

Every public company has independent directors.The board itself looks for these directors.
The industry funds should just replicate what most public company boards do!

Thursday, 25 June 2015

Around the Traps 26/6/15

It is time for Around the Traps again.

Northern America
Andrew Gelman ( Mainly Stats)
Genial Dave Giles ( econometrics )
Dianne Coyle ( Quirky + Book Reviews)
Vox wonk

Wednesday, 24 June 2015

The Killing Season

The Killing Season ended on Tuesday night.
Can we glean anything out of it?

1) Rudd was one of the main reasons the stimulus was as large vat it was and thus helped Australia avoid a recession or as Keating said we had the worst moment since the Great Depression and lost no skin!

2) ALP politicians particularly those wanting a change had no understanding of basic statistics,. no-one but no-one asked any of the apparatchiks of why the internal polling was so at odds with all the public polls.  I am staggered by this.
 I remember the clueless at Catallaxy saying one such leaked poll had the ALP losing most of their marginal seats. Mumble merely said at the time if this was correct then the ALP would take quite a lot of safe Liberal seats given all the public polls.
Clearly Arbib and Co wanted a change of leadership and relied on ignorance to get it.

3) The ALP government had overall no political nous.

  • Gillard didn't realise that saying a fixed price ETS was a carbon tax would be a killer.
  • Swan didn't realise promising a surplus just around the corner could be a problem.
  • Having your Leader saying climate change is the major moral issue of your generation and then reneging on it would have consequences.
  • If you dump a PM you are saying the government made wrong choices hence overcoming the GFC was lost. This was lost on all the conspirators
I could go on but I doubt if I have to..

I found the series interesting and found my admiration for Greg Combet increased but deceased for everybody else.

Tuesday, 23 June 2015

Q & A. and Free Speech

I do not watch Q&A however I watched the 'terrible' part which has created a bit of brouhaha.

I am trying to understand what the fuss is about.
Michelle Grattan is no help. Katesy shows he should never be allowed out of the asylum. indeed he goes further. There is no hope at all. Malcolm would say he is mentally unhinged. HERE he goes further but he goebellised. Somehow he via the Australian cut out some of the 'unperson's comments. Couldn't lie straight in bed.
Steve from Brisbane is the sanest person around . He actually shows the 'unperson' is actually against people going over to Syria/Iraq to fight.

Democracy is something we supposedly stand for. This means you allow people who have stupid, bizarre, demeaning or depraved views to express themselves.

If they go too far the courts will intervene as people take legal action such as when  Andrew Bolt found when he made inaccurate charges and was forced to admit he was wrong.

I see no reason why the ABC had to admit anything. Plenty of convicted people appear on television.
It appears the government believes the 'unperson' is an ISIL sympathiser when he clearly isn't.

How ironic that the critics of Q&A are acting exactly like ISIL in this regard. They do not care for expression of ideas either.


I have been criticised by some in e-mails that Ciobo did not know the 'unperson' was Australian i.e. born here. I think Ciobo was simply making the point he would have liked the 'unperson' to be taken away from Australia after all he was found not guilty of terrorism and if he knows of the trial he would have known he was born here so I am prepared to allow him some poetic licence.
 See Richard Ackland
Further update:
I am with Brian McNair Michael Brull is worth a read as well. Lets add Dennis Muller

Further Further Update:

There seems to be a debate about the applause when the 'unperson' spoke. It seems pretty obvious to me the audience are applauding the fact the Minister will not be making the decision to revoke citizenship.

Further Further further update:

I heard Greg Barton interviewed by Richard Glover. He confirmed the 'unperson' was hostile to ISIL but a bit of a dill who likes the limelight and Jonathan Holmes gives us some facts that makes the critics look well stupid as the 'unperson' So does Richard Ackland,. Indeed it seems as though Ciobo was talking porkies

Thus we come to the conclusion the critics of the 'unperson' and the ABC totally got their facts wrong and refuse to admit it as such.
We are lucky the Minister will not have the power to revoke citizenship!

All this has to do with is a political attack on the ABC and the ABC's response has made this possible. They need backbone as their critics are lazy and could have been hit out of the park.

Monday, 22 June 2015

Climate: Tamino and Greg Laden

Two articles of interest if you like to read about climate change.

Tamino writes about the 'pause' again only examining the lower troposphere.

Greg Laden examines mark-steyns-newest-attack-on-michael-mann-and-the-hockey-stick. It gives a good history of the topic.

Sunday, 21 June 2015

Why is wage growth so low?

In the latest RBA bulletin we get an excellent paper by David Jacobs and Alexandra Rush on why wage growth is so low.
It puts the meat on the bones of what Glenn Stevens was talking about last week.

This is possibly the guts of the issue.

"The decline in wage growth since late 2012 appears to have been unusually large relative to the increase in the unemployment rate. Based on the estimated 3 There are various theoretical explanations for the slow adjustment in wages, including the use of contracts, imperfect information, the effect of wages on productivity (the ‘efficiency wage’ theory) and the absence of unemployed workers from wage bargaining (‘insideroutsider’ theory). 4 The unemployment gap is the difference between the unemployment rate and a statistical estimate of the non-accelerating inflation rate of unemployment (NAIRU). For a discussion, see Ballantyne, De Voss and Jacobs (2014). While one possible explanation for slow wage growth is a decline in the NAIRU, other evidence does not suggest that a marked reduction in the NAIRU has occurred. Graph 3 Australia South Korea UK Spain Japan Norway France Germany OECD Canada Italy Sweden US -2 -1 0 ppt -2 -1 0 ppt Wage Growth Surprise* 2014 * 2014 growth in compensation per employee (i.e. AENA per head), relative to 2013 OECD forecast Sources: OECD; RBA BULLETIN | JUNE QUARTER 2015 11 WHY IS WAGE GROWTH SO LOW? WHY IS WAGE GROWTH SO LOW? relationship that held from 1998–2012, WPI growth has declined by more than twice as much as would have been expected. A longer-term analysis, based on the measure of average earnings from the national accounts (AENA), also suggests that the wage adjustment has been large given the change in unemployment (Graph 5). What stands out about the current episode is that wages have fallen as sharply as they did in some earlier episodes that had larger and sharper increases in the unemployment rate."

It does say the unemployment rate, a decline in inflation expectations and  the decline in the terms of trade and   account for around 2/3 of the reasons for the low growth in wages.

However  they also add
"Wages may have become more flexible over time. It has been widely recognised that the system of wage bargaining in Australia has become more flexible over the course of the past few decades (Borland 2011), and there are reasons to think that flexibility may have been greater than usual in the current episode. To some degree, individual employment contracts are more prevalent in the industries most exposed to the declines in resource prices and investment, Graph 13 Private Sector WPI Growth Year-ended 3 4 % 3 4 % Actual Fitted model Contributions* 1999 2003 2007 2011 2015 -1.0 -0.5 0.0 0.5 ppt -1.0 -0.5 0.0 0.5 ppt Inflation expectations Unemployment** GDP deflator * Contributions to fitted line relative to average since 1998 ** This includes the effect of the change in the unemployment rate and NAIRU gap terms in the model Sources: ABS; RBA 16 RESERVE BANK OF AUSTRALIA WHY IS WAGE GROWTH SO LOW? WHY IS WAGE GROWTH SO LOW? Graph 14 1995 1999 2003 2007 2011 2015 0 1 2 3 4 % 0 1 2 3 4 % Expected Wage Growth One year ahead Firms (NAB survey) Union officials Sources: Australian Council of Trade Unions; Employment Research Australia; NAB; RBA; Workplace Research Centre Table 1: Enterprise Bargaining Agreements Per cent of total Mar 2008–Sep 2009 Jun 2011–Dec 2014 Agreements replaced(a) 80 105 Employees covered under replaced agreements(b) 75 133 (a) Calculated as the number of non-greenfield agreements negotiated divided by the average number of agreements active during the period (b) Calculated as the number of employees covered under non-greenfield agreements negotiated divided by the average number of employees covered by EBAs during the period Sources: Department of Employment; RBA such as mining and business services. Another factor is the relatively long span of the episode, at more than three years. As a result, a higher portion of employment contracts have been renegotiated during this period of subdued demand conditions. The typical length of an Enterprise Bargaining Agreement (EBA) is around three  years, so virtually all outstanding EBAs have been renegotiated since mid 2011 and some agreements have been negotiated twice (Table 1). By comparison, over 2008–09 a lower proportion of agreements were renegotiated, covering fewer employees."

We have had a flexible labour market ever since Keating instituted EBAs. What we are now seeing is the result of this.
Those people who claim the labour market was re-regulated by the previous government have egg all over their face AGAIN.

Greg Jericho on this as well

Saturday, 20 June 2015

World's best Arnie Swarzenegger joke

Bruce Willis, Sylvester Stallone ans Arnie are talking together and they agree to do a movie. The movie would be based on the great composers.
Bruce wiull is says I will be Mozart.
Sylvester Stallone says I will be Handel.
They both look at Arnie who grins at both of them and says
'I will be BACH"

Thursday, 18 June 2015

Around the Traps 19/6/15

It is time for Around the Traps again.

Northern America
Andrew Gelman ( Mainly Stats)
Genial Dave Giles ( Econometrics)
Dianne Coyle ( Quirky + Book Reviews)
Vox wonk

Wednesday, 17 June 2015


Greece is on the brink again.

I  do not have a lot to add to what Ashoka Mody says here.

I might add two things.
I do find it hard to have sympathy for creditors who did little due diligence on lending money and then advocated policies that meant they would not get their money back.

Another example of classical economics working again.
I do not disagree with Simon Wren-Lewis

Tuesday, 16 June 2015

Simon Wren-Lewis V Roger Farmer

Somewhat surprisingly ( and amusingly) Simon Wren-Lewis and Roger Famer are at odds over fiscal policy in 'normal' circumstances.

I have to admit I am with Roger on this but it might all turn on what are 'normal' circumstances are.

As we have seen before Keynesian fiscal policy is a hellva lot tighter than classical economics in 'normal' circumstances.

I should ad this is vastly different to the letter 364 economists wrote to Margaret Thatcher. they were in fact CORRECT

Monday, 15 June 2015

Revoking citizenship again.

I recently argued against revoking-citizenship. I see no reason for changing my mind.
However the admirable Ken Parish weighed in on stripping-australian-citizenship-the-illusory-protection-of-judicial-review

Moreover David Kilcullen seems to think some of the things we are doing boosts ISIL recruitment. Kim Knott  tells us of valuable lesson on how extremism spreads in the UK.

And we learn that the new laws are more about politics than stopping ISIL recruitment.

Thus the Government is bringing in new laws which would boost ISIL recruitment but may boost their popularity because of THIS

Just disgraceful.

Sunday, 14 June 2015

Niall is nailed

Niall Ferguson has an unfortunate reputation of having opinions at odds with the facts.
We picked up on this recently. Now  we have a plethora of articles from people showing Niall being at odds with the facts. He complains about fact checkers. One only complains if one gets them wrong.

If you hang your ideas of a Ferguson column as Katesy did lately and then complain about people cherry picking statistics to show he was wrong then you are a loony.

Thursday, 11 June 2015

Around the Traps 12/6/15

It is time for Around the Traps again.
Soony there is an article on Batman in the General section. It is in bold.
More 'mathiness' in wonk.

Northern America
Andrew Gelman (Mainly Stats)
Genial Dave Giles ( Econometrics)
Dianne Coyle ( Quirky + Book Reviews)
Vox wonk

Wednesday, 10 June 2015

Glenn Stevens and Derp

The RBA governor Glenn Stevens gave a talk yesterday.

There are two things which I want to highlight.

Labour market

"The slowing in wage growth in response to soft labour market conditions has also undoubtedly helped to hold employment up. In fact wage growth appears to be somewhat lower than previous relationships between wages and unemployment would suggest. This may be a sign of increased price flexibility in the labour market and could help to explain why employment recently has looked a little higher relative to estimated GDP than might have been expected. These hypotheses can be advanced only tentatively, though, until we have more data."


"Meanwhile, as often remarked, infrastructure spending has a role to play in sustaining growth and also in generating confidence. I am doubtful of our capacity to deploy this sort of spending as a short-term countercyclical device. The evidence of history is that it takes too long to start and then too long to stop. But it would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects, surrounded by appropriate governance on project selection, risk-sharing between public and private sectors at varying stages of production and ownership, and appropriate pricing for use of the finished product. The suppliers would feel it was worth their while to improve their offering if projects were not just one-offs. The financial sector would be attracted to the opportunities for financing and asset ownership. The real economy would benefit from the steady pipeline of construction work – as opposed to a boom and bust. It would also benefit from confidence about improved efficiency of logistics over time resulting from the better infrastructure. Amenity would be improved for millions of ordinary citizens in their daily lives. We could unleash large potential benefits that at present are not available because of congestion in our transportation networks."

Thus we see the RBA overall ( as it is never just his opinion but a consensus where senior executives see the economy) have a view on two things.
1) the labour market is a lot more flexible than some people think it is. Wages are lower than unemployment would suggest and indeed unemployment is lower considering the state of the economy.
2) it is not appropriate to adopt austerity policies at present and increased  infrastructure spending would be beneficial to the economy particularly considering the price of bonds at present.

I should add Glenn was a lot more confident on both issues in the Question and Answer session than   in his speech.

Glenn is merely airing what sensible people have been saying for a while.

Meanwhile DERP still reigns in places. Have people like Katesy, Sloan or Henderson ever said gosh we were wrong about the labour market and/or fiscal policy.

Well as Kruggers shows people who view Fox news know less  about reality than people who watch NO news at all.

Says it all really.

I should have added Glenn clearly thinks monetary policy loses its effectiveness or potency as interest rates gradually get to the zero bound level.

Tuesday, 9 June 2015

David Glasner nails it

For astute readers of Around the Traps ( are there any other?) David Glasner wrote a brilliant article entitled repeat-after-me-inflations-the-cure-not-the-disease.

Whilst he does discuss one of the arguments about whether inflation is likely to rise or not to my mind his best piece is in the part of when he discusses the depression and the US Recovery.

I will quote the main part

"Of course the best evidence for the effectiveness of monetary policy at the zero lower bound was provided three years later, in April 1933, when FDR suspended the gold standard in the US, causing the dollar to depreciate against gold, triggering an immediate rise in US prices (wholesale prices rising 14% from April through July) and the fastest real recovery in US history (industrial output rising by over 50% over the same period). A recent paper by Andrew Jalil and Gisela Rua documents this amazing recovery from the depths of the Great Depression and the crucial role that changing inflation expectations played in stimulating the recovery. They also make a further important point: that by announcing a price level target, FDR both accelerated the recovery and prevented expectations of inflation from increasing without limit. The 1933 episode suggests that a sharp, but limited, increase in the price-level target would generate a faster and more powerful output response than an incremental increase in the inflation target. Unfortunately, after the 2008 downturn we got neither.'

This to my mind shows why the US recovered so fast ( growth rates near double digit between 1932-36) and the Australian recovery was so tepid.see HERE. Remember that fiscal policy was really only contractionary in 1931 which is why in 1932 GDP fell!

We had a greater devaluation than the US . Fiscal policy was not accommodating BUT we did not have an inflation target and this is David's great argument. If we had our recovery could have been more robust particularly if Jalil and Rua's study was replicated here.

Naturally I agree with David. Read the Jalil and Rua paper. It is a revelation.