Last night George Friedman, founder of the Stratfor forecasting company, spoke at the ANU. He was sceptical about claims of impending doom for the US economy, and not, he made clear, because he loves the culture there. Rather he pointed to vast size of the US megalith, which dwarfs the total of the next 3 or 4 economies. If the total net worth of the US is $329, as he stated, then he is probably correct in saying the odd few trillion in debt is neither here not there.
His approach, as I know from reading his analyses over the years, is one of geo-political strategy and constraints on options, long term patterns and pesty historic bugbears. It would be a mistake to think that international relations is free from grudges. Friedman emphasises the importance of tribalism, from the family to the nation state.
He forecasts that this century will be shaped by, among other things, a dramatic fall in the birthrate. This is clearly already happening in a few developed countries, but he says it is much more widespread and will soon affect basic economic assumptions. These include a believe that the value of land will always increase, as the need for food and housing expands inexorably. The corrolary is that the price of labor drops, as population grows. Both these assumptions fall apart when population shrinks, and thereby hangs an opportunity. We can see the problems of the superstates, and learn, or keep trying to build more houses. That seems to be what the ACT government is doing, and the Greens with the theoretical balance of power don’t seem to have slowed that.
As the excellent articles on this site by Tim Murray and George Gu reveal, population growth does not always bring prosperity growth, and China faces increasing disruption if they do not get their legal system working better. These issues come together when we consider how much China holds in US Treasury bonds, currently nearly $770 billion. As an online article on Al Jazeera pointed out, in this case the creditor is left holding the bag. The US is just too big to fail, and the Chinese may be their banker of last resort. Ironic, but clearly any dramatic moves by the Chinese to dump their US bonds would immediately rebound in the form of reduced Chinese imports, and where would they be then?
Friedman points out that the Chinese can’t just sell to themselves to make up for any drop in exports to the US, because of their 1.6 billion population, about 1.4 are quite poor.
Meanwhile, reforms to the Chinese legal system need to speed up before their own limits to growth and environmental collapse catches up with them. In Australia we have the rule of law (sort of) but not one good enough to keep us from plundering our ecosystems. Lazy politicians, even some of the Greens, balk at discussing population limits here.
It comes down to a game of who blinks first. But Obama understands this 3-legged race, and has wisely been brokering a deal with the Chinese over emission reductions. If both sides can pull that off, these two critically important countries might just hop along together to Copenhagen. Do I hear Rudderless snoring?
May 27, 2009 | Ronda Jambe
China and the US – conjoined at the hippocket
May 17, 2009 | Ronda Jambe
Sloshing around in the greenhouse
This morning I clumsily misjudged how full my coffee cup was, and some splashed on the startled cat. I thought I could manage it while walking and carrying a newspaper. This trivial blunder reminded me that our tendency to think in straight lines, lines of logic and control, must be hardwired into our brains.
Maybe that’s why boxes, rather than Gaudiesque curves, dominate our architecture. Since I’ve visited Sagrada Familia, I’ve seen spin-offs in a few places, including a town in Victoria off the Hume Highway, and this little eco village in Costa Rica:
We humans love to make a splash, let others know about our delight in the natural world. But physics doesn’t care about our esthetics or our engineering. Even though I am nearly obsessed with non-linearity, I have been thinking (logically, I presumed) that a one metre rise in sea level would make the road out to Moruya Heads a bit dicey at high tide. But a new report shows how narrow and imprecise this kind of thinking is.
The oceans, our blue treasure (I got that from a recent Spanish lesson about El Tesor Azul) cover most of the planet, and they make our globe a large bowl, whose basin is gravity. Now scientists believe that the way the water sloshes in this global bowl will be profoundly affected by melting ice caps, and the news is not good.
North America will experience a disproportionate sea level rise, about 25% more than the global average. Here it gets complicated, but it comes down to less mass in the Antarctic due to less ice, and therefore weaker gravity in the Southern Hemisphere. This will cause water to ‘pile up’ in northern oceans.
This, in turn, will alter the distribution of the Earth’s mass to such an extent that the rotation of the planet would alter, and cause water to slosh onto North America. An article about this report is at: http://www.sciencedaily.com/releases/2009/05/090514153032.htm
Just another human blunder, a misjudgment of our impacts, our power, our influence. Paul Krugman has recently been to China, and says they will have to cut back their coal-dependent emissions, even if it takes tarriffs on the products they produce to make them clean up their act. I wonder if Rudd has taken this possibility into account, when assessing Australia’s optimistic growth projections. Maybe he should be paying attention.
Meanwhile, I will continue my own splashing, I call this one ‘birth canal’:
May 13, 2009 | Graham
Being there budget
Never waste a good crisis is a good maxim. Tough times allow organisations to fundamentally re-engineer what they do. Many of our public and private companies understand that, and we’re seeing restructuring all over the place at the moment.
Paul Keating, probably the best treasurer Australia has ever had, recognised it in 1983. Peter Costello also recognised it in 1996. The combination of their two tenures set Australia up so that of all the OECD countries it is probably weathering the current crisis the best.
Yet Wayne Swan gets the “best” crisis since World War II, and instead of continuing the reform business, it is pretty much business as usual combined with a spending binge which, in the worst traditions of John Howard, appears designed for political, rather than economic, ends.
What should last night’s budget have done?
It should have continued the regimen which has seen the Australian economy become stripped-down and muscled. That means implementing measures to improve productivity and flexibility, allowing individuals to direct assets to areas of best return. It should also have embarked on the task of unwinding the one asset bubble that threatens our longterm economic health – housing.
Instead it used the crisis as an excuse to start fattening the economy up, a process which will inevitably lead to shifting more of the economy away from the private sector and to the government, which will limit the growth potential in the economy. We’re not artheriosclerotic yet, but we’re on the way.
There were some good points in the budget. Pensioners needed a catch-up to growth in the economy, although as Alan Kohler points out, this need was limited to single pensioners. Raising the pensionable age is also a good idea, although so far in the future that it will be left to the first Pyne government to introduce it!
The government might be preparing to move away from its ETS if the increase in funding for renewable energy projects is anything to go by, and this would be a good move on two counts. The ETS is a stinker, and we do need replacements for fossil fuels when they run out which may not be readily available if we rely only on market signals. So I’ll tick that one.
Changes to superannuation are also a step in the right direction. It’s one thing to have a compulsory savings scheme and give people some tax shelter as a “reward” for taking the burden off the taxpayer, but the super benefits long ago moved beyond that.
On the other hand the infrastructure projects seem quite misconceived. There’re train lines to everywhere apart from where they are really needed. The Melbourne to Brisbane inland line has always seemed like a good idea, but no mention of it here. Then there is the issue of being able to get coal to port in Queensland, and iron ore in W.A. Nothing there either. When the next minerals boom sets in we want to be able to get our minerals to market while the rest of the world is still trying to work out how to dig theirs up.
Innovation was also ignored, with the increase in payments to the education sector miniscule.
And the extension of the first home buyers grant will help to perpetuate the housing bubble we currently have. While house prices may be affordable at current interest rates, current interest rates will be heading up at some time in the near future, and the housing crisis will start again. Particularly for some of those currently being shoe-horned into mortgages by the firs home owners scheme.
The budget lives with the consequences of previous decisions. Spending $43B on broadband, which ships virtually nothing, and will be done more cheaply by private enterprise, is a complete diversion from the real infrastructure issues, while continued padding of the car industry “saves” jobs at the cost of destroying far more, misallocating resources and sending all the wrong messages.
This government was elected on the flimsiest of platforms. People voted for it because they either had tired of the previous government, and thought this one would be basically the same, but a little kinder; or because they thought that it had an agenda that would be quite different from the previous one, and would bring it out after the election. Both groups were wrong.
This government had a flimsy agenda because it had no other goal than to get elected. It still doesn’t. That’s the problem with this budget.
May 12, 2009 | Graham
Infrastructure the runaway favourite for budget
(Cross-posted from What the people want)
Can Wayne Swan justify a $50B deficit? It’s a meaningless question in isolation. If he spends it on things that the public wants, then it will be justified. According to our polling about the only thing that the treasurer ought to consider spending on is infrastructure. According to our poll 74% rate infrastructure as the first or second most important thing that government should do. The next most popular are spending on social services on an anaemic 37% and means testing welfare on 35%.
The least popular initiatives are giving individuals money to go out and spend, whether by direct handouts or tax cuts. 60% rated tax cuts 7th or 6th on their list of priorities, and 62% gave the same ranking to the direct handout.
Tightening of tax concessions was also popular, with 73% putting it in their top 4 priorities.
However, analysis of priorities against voting intention shows significant variations between Labor, Liberal and Greens.
May 11, 2009 | Graham
Coalition improves and Turnbull tanks
(Cross posted from What the people want.)
According to the results of our May Omnibus poll, the Coalition is improving its vote, but its leader is less popular than ever.
On our First Preference Index, which seeks to measure the vote against a base of September 2008, Labor is at 98, which means slightly less popular than September last year, the Liberal Party is 120, substantially up, while the Greens are marginally up on 106.
However, Malcolm Turnbull’s approval has taken a further dive. I haven’t applied the index approach to these figures so they have to be used with care as our sample is consistent over time, but not necessarily representative of the general population.
He’s not on his own as Kevin Rudd has also taken a tumble, but still enjoys 50% popularity.
Turnbull and Rudd have both dropped 10 percentage points on their approvals (although expressed as a percentage of a percentage this is roughly 33% loss of supporters for Turnbull versus 16% loss to Rudd). Where their approvals are different is in the disapproval figure with Turnbull’s larger than 50%, and three times as high as when we first measured it in September.
However, Turnbull’s preferred PM status has barely moved from September, and is actually up from January.
Which illustrates the problems with judging political parties on the basis of the approval of their leader. It doesn’t necessarily translate into votes.
Why is Turnbull’s approval tracking so badly while things appear to be improving for him? We’ll have some qual later in the week, but at the moment it appears to be his two-stools problem. Because of his urbanity and his past association with the Republican Movement he appeals to centre voters, but they already have Kevin Rudd to vote for. These same characteristics make more conservative voters suspicious of him. It is impossible for him to service both constituencies, so his approval rating is eroded from both directions.
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May 03, 2009 | Ronda Jambe
Junkies are the Scum of the Earth (4)
This is the year of letting go. It is hard to think of anything worse than backing away from your children, but it has come to that. For about 14 years I’ve comforted myself with ever decreasing signs of parental pride or satisfaction: no education, interests, job, or prospects. A criminal record, but at least he’s not a violent drug addict, I told myself. In recent years, due to the drug-induced epilepsy and Hep C, even the crime has stopped. For a long spell he even had a mobile phone, and I could reach him regularly. He has had a lovely government flat for several years now, although he has turned it into a plausible setting for a bad movie. Filth you wouldn’t want to see, the perfect setting for a final act.
But now that tenet of non-violence no longer holds, after a cowardly outburst from behind on my partner while he was driving. I see my previous blog in this series was also about taking him to the coast for some food and fresh air. That also ended in tears, always mine. Since then, another call from intensive care. Suicide in slow motion. Now I’ve drawn the line, and there will be no more reaching out, no more forgiving.
His brother is a n’er do well, but at least he has music in his life. He didn’t bother to follow up this week, after I called him from the police station. Charges have been filed. There is going your own way, and then there is rejecting all values that mean anything to your parents. Even their father worked for most of his life and had education and skills. He just didn’t do any parenting, or achieving.
And how boring is all that? It is a counterpoint to a book I’ve just finished, about a boy with Asperger’s Syndrome. Written by John Robison, the brother of the author of Running With Scissors, it is a memoir of coping and above all, trying. In a much more dynfunctional family than my sons knew, he was also burdened with an inability to relate to people. He was told ‘Look me in the Eye’, which became the title of his memoir. But his strong intelligence and desire to not be a nothing carried him along. He was accused of being a sociopath, but he knew he wasn’t. One wants to cheer at every chapter: Good on you! He got into repairing tape decks at school, then sound design for the band KISS, later game design and eventually a car repair business. He was good at all of it, and that gained him acceptance. The only pyrotechnics I can manage are the ones I conjure up in Photoshop:
My sons’ father has always been a social misfit, never happy, never able to settle into just doing the right thing by anyone, including himself. If there is a gene for social integration, all 3 of them are lacking it. (My genetic profile merely indicates I am missing the sport gene and the car gene, but I get by.) And genetic tendency is never an excuse for throwing a whole life away, or justifying never working, never contributing. How wonderful that someone like John Robison, with real problems, both mental and circumstancial, found a way to live in peace with the world and himself. How sad when talented young men with lots of advantages discard it all for a life of addiction, which becomes a daily choice. Is there a personality for a time and place, or do all happy individuals share some traits?
Why can’t they step outside their tiny view of the world, and see how much they have to be grateful for? There is a video narrated by Darryl Hannah on the Amazon Watch site newsroom (http://www.amazonwatch.org/ ) What Occidental Petroleum has done there, and the courage of those people in standing up for justice and reparation, is a miracle that multiples John Robison and his brother’s. Time to celebrate those who make the world better and kinder, and let the sad one keep sleeping.
