Is the true situation "nobody knows"?

Adam Creighton has another one of his peculiar columns up where the headline position doesn't seem all that well supported by the details.  It says in the opening paragraph that Treasury has "hit back" at claims a tax cut for companies will hurt Australia, but the details of the analysis don't sound all that convincing.

For example:

Labelling it a “tax on foreign capital”, the analysis said a company tax cut to 25 per cent would increase employment in the long run by 0.1 per cent, equivalent to about 12,000 jobs, and boost real wages 1.1 per cent.

0.1% is supposed to be impressive??

Creighton then goes on to note one dissenter:

Janine Dixon, a researcher at Victoria University, last month challenged the orthodox view, finding gross domestic product and workers’ wages would rise but not by enough to make up for the transfer of government revenue to foreigners, which could no longer be spent on public services.

“The right indicator of national benefit is the impact of a company tax rate cut on national income and that’s clearly negative,” she said.

Of course, there is the fact that Ken Henry was a supporter of a company tax cut to 25% to make us "more competitive with Asia."   On the other hand, the US doesn't exactly seem crippled by its corporate tax rate, although no doubt there is the argument that big corporations find motivation for their off shore tax shenanigans in the relatively high tax rate.

I reckon the truth is that no body really knows how good an idea it really is.

Climate change and Canadian fires

Did climate change contribute to the Fort McMurray fire?

It's a short article, but some surprising figures in there for the increase in the area of Canada burnt in bushfires over recent decades.

Agreed

Donald Trump isn’t going to be president.: Donald Trump begins the general election with a huge deficit in head-to-head polls, deep unpopularity, and major demographic headwinds. Unless he wins unprecedented shares of black and Latino voters, or, barring any improvement with nonwhite voters, unless he wins unprecedented shares of white voters, he loses. And he has to do this while running as the most unpopular nominee in 30 years of polling. He has to do it while running against a Democratic Party operating at full strength, with popular surrogates (including a former president) crisscrossing the country against his campaign. He has to do it with a divided Republican Party. He has to do it while somehow tempering his deep-seated misogyny and racism. All this, again, in a growing economy with a well-liked president—solid conditions for a Democratic candidate.

Donald Trump has to become a radically different person to win.

Donald Trump isn’t going to win.

Budget reaction

M'eh.*

A bit more detail:

*  is the Murdoch press in the can for full on support for a Coalition win in July, or what?

*  a significant danger for the Coalition in the election campaign should be the deferral of a decision on university fee deregulation and HECS support.   But will that get swamped by the "big picture"?

*  the IPA and small government types are not going to be impressed with this budget, but seriously, how many of them would really manage to vote without at least preferences going to the Coalition?  (Bolt has already put the boot into it to a surprising degree - but he tends to take his economics talking points straight from the IPA.  I would bet a pile of money that he will not, however, endorse a vote for Shorten.) 

*  the danger - the big, big danger - for Labor will be things like that downwards revised estimate for revenue from tobacco taxes.   People are too easily convinced that Labor is too optimistic on revenue to justify its spending.  

*  listening to Richard de Natale on Radio National this morning - he's really the best Greens leader we've ever had.   Sounds extremely reasonable.

*  why did aged care have to take such a hit?  Have we got too many nursing homes now?

*  politically, it's not great; but on the other hand, it looks fantastic compared to the dire first attempt by Abbott.

Update:   hey, hell is about to freeze over:  I will now quote Judith Sloan as making a useful contribution in economic commentary:

Why should we believe this when none of the other budget projections have come to pass? We are expected to believe that nominal GDP growth, the key driver of revenue, will jump from 2¼ per cent this financial year to 4¼ per cent next year and 5 per cent per annum thereafter. Note that nominal GDP grew by only 1.6 per cent in 2014-15.

The reasoning behind this optimism is Treasury’s view that the economic output gap (the difference between actual and potential output) must eventually narrow. However, any significant hiccup in the world economy or China means the assumptions on ­nominal GDP growth are out the window.

And just take a look at what is expected to happen to revenue. Next financial year, general government revenue is expected to come in at 24.2 per cent of GDP. By the end of the forward estimates, revenue will be bringing in 25.9 per cent of GDP.

In historical terms, this would be an extraordinary outcome. In the period since 1996-97, there have been only two years when revenue as a percentage of GDP exceeded 25.9 per cent, in 2000-01 and 2005-06. Now many of us would agree that we live in extraordinary times, just not the sort of extraordinary times that would generate the surge in government revenue assumed in the budget.

And there are a number of breathtaking assumptions. Capital gains tax revenue is expected to go from $13.4bn this year to $17.5bn in 2019-20. And superannuation taxes will rise from $6.6bn this year to $10.9bn at the end of the forward estimates, an increase of 65 per cent.

Even taking into account the changes to the taxation of superannuation contained in the budget — a series of measures that will no doubt induce anger among the ­Coalition’s base and negate the Treasurer’s pledge to spare current retirees — the increase in superannuation taxes looks implausible. There is a long history of appalling forecasting of super­annuation taxation receipts on the part of Treasury.

In other words, it is quite on the cards that the Budget will suffer the same fate as those under Swan - based on cheery Treasury forecasts which don't sound all that likely, and will have to be revised downwards.

Update 2:  Peter Martin really praises the good bits of the budget.

Yeah, I agree up to a point.   The bigger issue, and one for which I blame both sides of politics, is that a moderate increase in GST (I was arguing for 2.5%)  would have given a substantial, and pretty much dead certain, boost in revenue.  Instead, we get changes which are of uncertain revenue impact over many years.   Both sides aren't really being serious about revenue measures.   And the Coalition is especially profligate when it comes to defence.  There has also been no serious discussion about the Coalition's climate change spend - when a modest carbon tax would make much more sense.



*  I see the "correct" spelling is "meh", but I always have the urge to put in an apostrophe.  I can't see why both can't be right.

Japanese ghosts are nasty

In the early 2000's, I was busy baby wrangling (with my wife, of course) and so didn't catch up with the Japanese ghost/horror genre of the likes of The Ring, and The Grudge.

Well, on Sunday night my son declared an interest in watching something scary, so I found the 2004 US version of The Grudge available on the streaming service Stan.

The movie received mixed reviews at the time, and I'm not the biggest fan of Sarah Michelle Gellar, but it did strike me (and my son, more so) as being very efficient at delivering scares.    I liked the way it was set in the complete opposite of a gothic city (Tokyo), and the silence that accompanied many of the dreaded "walking up the stairs to see what's making that sound" scenes.   I see that it was only rated PG-13 in the US (on Stan it showed as M), and I am quite surprised at that - it would have to be one of the creepiest movies to get that rating, surely?

After it finished, something fell unexpectedly out of the cupboard behind the living room, delivering an appropriate final fright for the night.

Airport security is not just "security theatre"

Carry-Ons Bristle With Loaded Guns At Airport Security - The New York Times

Just last night, on SBS on Demand, I was watching for the first time (and with my son) Adam Ruins Everything, and it was pretty entertaining.

But the second one we watched spent time dissing American's TSA, and claimed that airport security was more "security theatre" than effective.

I said to my son that I don't find this a convincing argument, and today by coincidence, I come across this in the NYT:

Anyone annoyed at long airport security lines and
picayune-seeming inspectors should be grateful that watchful agents of
the Transportation Security Administration have been confiscating guns
at an unfortunately record pace from travelers who mindlessly pack them
in their carry-on bags.

This is plainly illegal, but last year, 2,653 firearms —
83 percent of them loaded!  — were seized from carry-on luggage, up 441
guns from the previous record haul in 2014. The pace keeps rising. In
the week of April 18, airport agents detected and seized 73 guns from
carry-ons, the most ever in a week. Sixty-eight of them were loaded and
27 had a round chambered and ready to be triggered. That violates the
most basic safety precautions that the gun lobby insists most
law-abiding, gun-carrying citizens carefully observe in indulging their
Second amendment rights in public.

Stopping a couple of thousand loaded guns getting on board aircraft is not mere "security theatre".

A new dark matter solution?

Speculative theories of gravity are a dime a dozen on arXiv, and I don't usually pay that much attention to them (well, they are hard to understand); but I am interested to see that there are two recent papers up, one by a handful of European physicists, and another by a couple of Japanese ones, talking about a bimetric theory of gravity that incorporates something that makes sense as a dark matter particle.  Here's the European abstract:

Observational evidence for the existence of Dark Matter is limited to its gravitational effects. The extensive program for dedicated searches has yielded null results so far, challenging the most popular models. Here we propose that this is the case because the very existence of cold Dark Matter is a manifestation of gravity itself. The consistent bimetric theory of gravity, the only known ghost-free extension of General Relativity involving a massless and a massive spin-2 field, automatically contains a perfect Dark Matter candidate. We demonstrate that the massive spin-2 particle can be heavy, stable on cosmological scales, and that it interacts with matter only through a gravitational type of coupling. Remarkably, these features persist in the same region of parameter space where bimetric theory satisfies the current gravity tests. We show that the observed Dark Matter abundance can be generated via freeze-in and suggest possible particle physics and gravitational signatures of our bimetric Dark Matter model.

You heard it here first.  Probably.

How ignorant can you get?

Very, very ignorant, if you just live in the Right wing climate change denial-o-sphere, as does Steve Kates.    (Climate change denial goes hand in hand with believing Obama has crushed and killed freedom, the American economy, and all Western values, by the way.  That's Kates' other favourite line at Catallaxy.)

Anyway, my evidence for his extreme, gob smacking ignorance, is this from his recent short post:

Global warming is almost totally out of the news since the evidence that is happening has all but disappeared.

This is by way of introduction to a video by retired climate scientist Lindzen, which had already been thoroughly debunked (at length) by Barry Bickmore.  

Not that Kates would have known of the Bickmore post.   It's outside his denial-o-sphere. 

I see that only a few comments have been made at the Catallaxy post.  Is it possible that even they can see when Kates is exaggerating to a ridiculous extent?

Skepticism on company tax cuts

From Crikey.   (Bernard Keane is a real mix of policy beliefs, no?   Often, when it comes to "nanny state" issues like licensing hours, he sounds like a libertarian.  But he hates them on guns, and hardly follows their small government economics to the letter.)  

About those submarines...

It's been a little while since the Turnbull government announced it was going to go with a fleet of French designed, Australian built, submarines.  Twelve of them, in fact, but (as I understand it) to be built at a somewhat glacial pace.

A few observations, if I may:

a.  of course this will be criticised.  Surely the public has noticed that all major Defence acquisition programs look, at one stage or another, to have been a wrong decision: at least in terms of cost, and often in technical  ways too. So it doesn't matter which of the contenders had been chosen - any would have been criticised and would go wrong in one way or another.

b.  Apparently, Defence came out strongly in favour of the French bid.   Given that Abbott had told the Japanese, apparently on a handshake (and probably one of his stupid winks) that they had the deal in the bag, this gives someone like me who disliked PM Abbott decidedly mixed feelings.   On the one hand, it's deprived us of the criticism of the Japanese subs which would have been inevitable (see above), and hence the blaming of Abbott when the Defence preference was made known;  on the other hand, I have a sneaking suspicion that Abbott might have been right - the Japanese submarine probably would have been ultimately fine; cheaper too.  The Japanese remain good at hi tec stuff at a reasonable price.  The French do well in aerospace, but not sure about cost.   Is it silly of me to think I can judge a nation's likely submarine building capacity from their car making ability?   Because I would prefer a Japanese luxury car to a French one.   Not that I know anything really about luxury cars, either.

c.  The criticism of the contract is already starting, and, amusingly, it's the "delcons" who don't like Turnbull, such as Andrew Bolt, leading the charge.   All further evidence of the internal crisis in the Coalition.  Does Bolt really think he is doing the Coalition a favour by criticising them for making a decision that Defence wanted?  Or that he is helping Australia's diplomatic standing by dredging up what France did 50 years ago?   Once again, I sense a Turnbull "with friends like Bolt, who needs enemies" response coming.

d.  Twelve submarines?  Really?   As I have mentioned before, without a willingness to have Filipino seaman run them under contract, I thought we couldn't even manage [insert gender neutral word for "manning"] the 2 or 3 Collins class that are available at any one time.  And that's despite throwing money at sailors to try to convince them to become submariners.  Seriously, how does the government intend dealing with that problem?   And is there room for Labor to make political headway by announcing that if it wins the next election, it'll only be going to contract for 9 or 10 submarines, saving a substantial amount of money in the process?  I reckon there could be.

e.  Building them here was an inevitable result of politics trumping dry economics, but I have no big problem with that.   There does seem to be speculation, though, that what the Liberals are doing in concentrating spending in Adelaide and WA is going to be at the expense of votes in Queensland - especially with them not being able to at least throw Queensland the bone of some patrol boat builds. 

A somewhat more serious take on the economics of supporting industry (esp defence industry) can be found here at the Lowy Institute.

Following the Republicans

It's kind of fascinating, if not edifying, to watch the Coalition in Australia follow the path of the Republicans.

I don't know how long the Liberals have sent people over to America to study Republican electoral tactics, and I suppose that you can't blame them for thinking they might learn something useful.

Instead, it has just encouraged a contagion of the American Republican problem to Australian right wing politics - what with the climate change denial, economic rabid anti-Keynesians and Laffer-ites continually decrying economic pragmatists in Treasury (and confused Coalition Treasurers trying to walk a path between the two), and the revival of culture wars amongst the conservatives with more than a dash of misogyny thrown in.

On the last point, it's hard to read the return of Chris Kenny to his own vomit of the Abbott/News Ltd attack of Gillian Triggs in any other way.   It's just the nuttiest and most strangely obsessive personal attack on a statutory appointment I can ever recall coming from the Right of Australian politics. 

I expect it must also dismay Malcolm Turnbull, too.  But one of the mysteries for which we have to wait (perhaps) another few years, until he publishes his account of his time in office, is how he must really feel about having to dance with and corral the conservative ideologues in his party.   Surely he is doing his part, with hypocritical walking back from former views on everything from climate change policy to negative gearing, but is he really happy doing it? 

The split within the Right in Australia at the moment is such an obvious (but smaller scale) version of the split within the Right in America.   Sure, we don't have a populist like Trump shaking up the corridors of Right wing power; but we did have the pretty close analogue of blowhard Clive Palmer.   Perhaps in that respect we are slightly ahead of the Americans, in that Palmer has (politically) blown apart already, but we are waiting another 6 months or so before we see it happen to Trump.  Who can doubt that, if we had some similar electoral system to the Americans, that Palmer would have run for President in the same self funded manner?  

It could be right, what the dimwitted Abbott diehards are muttering to themselves - that the best thing that can happen to the Coalition is a surprise fail at the next election.   [It's hilarious reading Catallaxy at the moment, where the pro Abbott supporters congregate and threaten a Labor vote, while openly dissing Sinclair Davidson for his support of the Turnbull overthrow.  It seems that SD can't ban anymore commenters who are rude to his face (up to and including one who now openly calls him an "idiot") because of the large number he would have to cull.]   The only thing is, the "delcons" (delusional conservatives) think that it will vindicate them - so their imperviousness to evidence will remain a problem, unless they are the ones to then leave the fold and establish a breakaway conservative party.   Yes, let that happen, and let the moderates of the Right tell their Party they have to decide whether to stand with the evidence free, ideologically driven side of the Right, or go with the centrist and and pragmatic Right.   It may be the only way to resolve the current problems.

MIT needs a new writer

The Curious Link Between the Fly-By Anomaly and the “Impossible” EmDrive Thruster

What's this?  MIT Technology Review appears to have a  writer who is completely on board with the EmDrive being a real, new physics thing.

I remain deeply skeptical.  And someone in comments claims (not sure if it is right, though), that the EmDrive, if true and configured right, could generate its own power and zip around forever.  So you could build your own UFOs powered by perpetual motion, I guess.  Would be rather cool, but come on, how likely is that? 

I'll take it up when they can get it down to 45 seconds

The Case for the 1-Minute Workout Is Getting Stronger | TIME: In the latest study, published in PLOS One, exercise scientists led by Martin Gibala, chair of kinesiology at McMaster University, who has spent the last several years documenting the health benefits of interval training, found that as little as one minute of intensive exercise could have the same health benefits for the heart, respiratory fitness and muscles as 45 minutes of more typical continuous exercise over three months.

Granted, those 60 seconds have to be at a sprint-like pace, as if you’re being chased down by a tiger and fueled by adrenaline. But it’s just 60 seconds. “I think there is good evidence that shows you can see comparable benefits despite the fact that intervals require less total exercise and reduced time commitment,” says Gibala.

Stiglitz on economists

Joseph Stiglitz Talks About Inequality and the Economy - The Atlantic: 

Stiglitz: The prevalent ideology—when I say prevalent it’s not all economists— held that markets were basically efficient, that they were stable. You had people like Greenspan and Bernanke saying things like “markets don't generate bubbles.” They had precise models that were precisely wrong and gave them confidence in theories that led to the policies that were responsible for the crisis, and responsible for the growth in inequality. Alternative theories would have led to very different policies. For instance, the tax cut in 2001 and 2003 under President Bush. Economists that are very widely respected were cutting taxes at the top, increasing inequality in our society when what we needed was just the opposite. Most of the models used by economists ignored inequality. They pretended that macroeconomy was unaffected by inequality. I think that was totally wrong. The strange thing about the economics profession over the last 35 year is that there has been two strands: One very strongly focusing on the limitations of the market, and then another saying how wonderful markets were. Unfortunately too much attention was being paid to that second strand.

What can we do about it? We've had this very strong strand that is focused on the limitations and market imperfections. A very large fraction of the younger people, this is what they want to work on. It's very hard to persuade a young person who has seen the Great Recession, who has seen all the problems with inequality, to tell them inequality is not important and that markets are always efficient. They'd think you're crazy.

Gut microbiome research, continued

Lifestyle has a strong impact on intestinal bacteria

This study of some healthy Dutch people still concludes that having a higher diversity bunch of bugs in your gut is healthier.  Not exactly an intuitive result, compared to what people probably would have thought until recently:

This DNA analysis made it possible to examine which factors impact the diversity of the microbiome (the intestinal bacterial community unique to each of us). And that appears to be many. Wijmenga says, "You see, for example, the effect of diet in the gut." People who regularly
consume yogurt or buttermilk have a greater diversity of gut bacteria. Coffee and wine can increase the diversity as well, while whole milk or a high-calorie diet can decrease it.


"In total we found 60 dietary factors that influence the diversity. What these mean exactly is still hard to say," explains UMCG researcher Alexandra Zhernakova, the first author of the Science article. "But there is a good correlation between diversity and health: greater diversity is better."

Clear writing on negative gearing

How negative gearing replaced the great Australian dream and distorted the economy | Greg Jericho | Business | The Guardian

An excellent, clear bit of explanation from Greg Jericho on the investment distorting effect of our current negative gearing/CGT system in Australia.

It's pretty appalling, really, that once again, political games prevents politicians (I'm looking at you, Malcolm Turnbull) speaking honestly about an economic issue.  (It's going to do the same to him on climate change policy, too.)  This is why people become cynical about politics.  

Disturbing food

The BBC has an article up about food photographers, and it includes this example:

I'm pretty sure that I wouldn't be the only person who would be feel a tad queasy if served that dish in a restaurant.   Oh, sure, everyone with a phone would probably want to photograph it (although I personally have never done that in public), but that's not the point.

A pretty convincing analysis

The truth about gun ownership after Port Arthur - The Drum (Australian Broadcasting Corporation)

One thing that interested me in this is the explanation that the increase in gun numbers in Australia in the last decade or so has not been into more households - proportionally, about the same number of households have guns.  As the author notes, this is a similar phenomena as has occurred in America.

In America, I take it as pretty convincing evidence of the paranoid streak that runs in its right wing politics (especially in the last decade or two), and reading the gun nutters who comment at Catallaxy, I find it hard to deny there is a similar strain in Australia.

Those in Australia who buy one (or want to buy one) for self protection ignore the risk to themselves and their family that having a gun in the household creates.  (Nor the fact that there's a good chance the crim's gun they are worried about had a good chance of having originally come from a legal owner.)   But then again, scratch a gun obsessed nut, and you'll have a much better than even chance of finding a climate change denier, too.   They just aren't good at understanding the big picture.

The seriously immature Senator

Wicked Campers critics 'authoritarians disguised as hippies or feminists': Senator

Yes, it's Leyonhjelm, who says of the seriously sexist and routinely offensive Wicked Campers slogans:

"You need to be a particularly wowserish type of person to not find them funny."

Actually, Senator, you need to have a sense of humour of the kind found in immature 14 year boys, as you do, to find any of them funny.

Hot in Asia

Punishing Heat Wave Sets Records Across Asia

You really have to feel sorry for the poor people in these regions who do not have airconditioning.  This really sounds like heat that will kill:

And just how hot is it?

Titlagarh in the Indian state of Odisha sizzled at 48.5°C on April 24
— the highest reliably measured temperature for the country in any
April. Schools in Odisha were unexpectedly let out for the summer on
Tuesday. Classes will remain suspended until, at least, the third week
of July.

Cambodia saw a national all-time record high of 42.6°C set in Preah
Vihea province on April 15. That was two days after its neighbor to the
north, Laos, set its own national all-time high temperature of 42.3°C at
Seno.

Dozens of Thai weather stations have broken or tied their all-time record maximum temperatures this month.

The thermometer has been reaching 46.0°C in several towns in Myanmar,
still shy of the national record high of 47.2°C at Myinmu observed on
May 14, 2010.