The intellectual collapse of the right

John Quiggin reprises an old theme of his – which I recall supporting previously (I’d forgotten that my post “the stupid party” was actually in response to another of John’s posts/columns). In any event, I was talking to a CIS person the other day and mentioning that for me the IPA had lost all credibility with me by sponsoring the visit of Lord Monckton. He pointed out that the CIS had been offered the rare privilege of sponsoring the tour and turned it down. Anyway, it’s a pity how hard it is to be serious on the right these days. It’s not as if the right aren’t the custodians of an important strand of thinking about our society. But they’re not if they’re getting Lord Monckton to tell us how wicked the carbon and mining taxes are. It was Monckton’s focus on the evils of the latter mining tax that shows his true colours. No clue as to why the tax, which the free market Treasury has regarded as a crucial tax reform for some time might be a good idea.

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399 Responses to The intellectual collapse of the right

  1. Mike Pepperday says:

    Totally off topic…

    Remember the thread a week or two ago on Libya’s prospects of the Dutch disease on account of they have resources? It’s on. The headline in today’s NYT:

    “West Sees Libya as Ripe at Last for Businesses
    By SCOTT SHANE
    Companies from NATO countries hope that gratitude for assistance in the Libyan rebellion will be a factor in awarding contracts.”

    So it does rather look as if Libya is about to succumb to a new clique of oppressors aided and abetted by NATO countries.

  2. Jim Belshaw says:

    From a purely personal perspective, Nicholas, I struggle to understand what is meant by left or right today or even how I fit in within the spectrum as defined. According to those sometimes popular quizes, I am now left of centre, yet my instinctive reactions to some of the left of centre blogging clearly places me on the right or at least the centre right.

    I would argue, I think, that the problem with both the “left” (John Q, Club Troppo, Larvatus Prodeo) and the “right” (Catallaxy)is that they combine responses on values or particular issues with certain analytical models to make judgements as to whether something is left or right. They are also both selective.

    To my mind, there is a risk of circular argument. Surely the question of the intellectual poverty of the right, or of the left for that matter, depends on how you define the terms?

  3. Yobbo says:

    Perhaps Nick could explain why the mining tax might be a good idea. Nobody else has been able to do so up to this point.

    It was Monkton’s focus on the evils of the latter mining tax that shows his true colours.

    Yeah, his true colours as a person who thinks new taxes on business – in a country with one of the highest tax rates in the world – are a bad idea. Someone put a stop to this madness.

  4. Nicholas Gruen says:

    Yobbo, why do you think Treasury which supports lower taxes supported the resource rent tax?

  5. Nicholas Gruen says:

    Jim,

    I guess I agree with you in a sense – and with Pedro. Why have I picked on the right. I don’t know if I put John Pilger in the Monckton category, but I expect Pedro and I are not far apart on our thoughts about him. I can’t think of anything much good to say about Pilger.

    I did in fact say that the IPA had lost all credibility with me for sponsoring Monckton. I have also said in another post somewhere that it’s a pity that the twin right leaning think tanks in Oz – the CIS and the IPA have reacted to the GFC pretty much as if it’s business as usual – govts bad, markets good – when it’s pretty obvious that in the extreme circumstances we were in (and that much of the rest of the world remains in up against the zero bound of short term interest rates) call for greater thoughtfulness than that.

    I never hold the Opposition too responsible for what it’s saying, because the media insist that the only way to get any coverage is to carry on like a pork chop and impose virtually no penalty for saying the opposite of what you said last week. But certainly in Australia the current Abbott Opposition seems pretty empty headed and prepared to say and oppose pretty much anything, so it certainly can’t be described as a high point (except in its understanding of how low the media’s standards are). In the US you can’t really run as a mainstream candidate without subscribing to various fantasy based opinions about the world.

    The mainstream left on the other hand are just suffering from a beige out. Not very edifying, but not actively irresponsible, destructive or fantasy based.

  6. Yobbo says:

    But certainly in Australia the current Abbott Opposition seems pretty empty headed and prepared to say and oppose pretty much anything

    If the Gillard government came up with a single decent policy proposal in their entire term, Abott’s coalition probably wouldn’t oppose it. But so far it’s been one dismal failure after another from the worst government in Australian history.

    Yobbo, why do you think Treasury which supports lower taxes supported the resource rent tax?

    Because it results in more money for Treasury. And while we’re on this subject, does Treasury even support lower taxes? Proof please. The plan put forward by Gillard would increase the total tax paid on income, and treasury supports that, so how can you say they support “lower taxes”?

  7. KB Keynes says:

    err Yobbo,

    The mining tax too less as a% of profits than royalties etc did in the 60s.

    Everyone saw that when it was put on the public spotlight.

    you cannot have lower taxes unless you have lower expenditure and we haven’t seen that from either side as the public do not demand it.

  8. Jim Belshaw says:

    Yobbo, I don’t want to get into a debate on Mr Abbott because this detracts from the original discussion. However, I do want to pick up a couple of points. This comment deals just with your point on the resource rent tax.

    The original discussion on the tax was based on rigorous structured arguments. Now I happen to to have reservations about those arguments, but I do not deny their intellectual content.

    My own reservations were threefold.

    First, I simply wasn’t sure about the likely impact on economic activity. I placed greater weight on the potential adverse effects.

    Secondly, I had real problems with a proposal that combined tax with spend. These are different issues. Even if I supported the tax, and here I was open to arguments, I might well oppose the expenditure side.

    Thirdly, I thought that the way the whole thing was done was a breach of federal principles. It would have been open to the Feds to work out an arrangement that took state needs into account. They chose not too.

  9. KB Keynes says:

    Jim’s second point is what had Warwick McKibbin up in arms. He wanted the revenue coming in to dissipate part of the increase in National income coming from the commodities boom. Unfortunately the government chose to use a lot of the revenue to make expenditure in other areas.

    This was the bad policy.points one and three are arguable.

  10. Jim Belshaw says:

    KB Keynes, you are absolutely right on one and three. They are arguable.

    Continuing, Yobbo.

    I find it hard to describe the Gillard Government as the worst Government in Australian history. I remember aspects of the Whitlam and Fraser Governments. I could also point to various state governments including the now departed NSW Labor Government.

    If we forget Nicholas’s focus on the right and focus equally on right and left however defined, I note Pedro’s comment, the problem we have is that both sides talk at each other. There is, I would argue, very little real discussion.

    A lot of public policy discussion is actually purely technical, centered on the question of likely results. Here the need is simply to tease the arguments through.

    Another part of discussion focuses on values. My view, for example, on growing disparities in income and wealth is both technical (am I right, what does it mean) and reflects my views about equity. Take whaling as another example. This is all about values, although the question of practical effects is relevant. In discussion, it is important to tease the value components out.

    One more comment to come after dinner & my favourite TV show.

  11. KB Keynes says:

    Of course it isn’t the worst government.

    We avoided the GFC and now have had the fastest fiscal consolidation without much help from the commodity boom.

    Concur on both Whitlam and Fraser.

  12. Nicholas Gruen says:

    I think it’s quite a good government actually. I’ve rather taken myself by surprise in coming to that realisation. After all its well known that the Gillard Government is terrible for all those important reasons – that they couldn’t sell a Big Mac to a starving man. All those things that the columnists write about. But their policy performance has been pretty good in a difficult situation.

    It’s managed to get through carbon pricing against heavy opposition and with a minority in the House. They’ve brought in a resource rent tax bringing in nearly 1% of GDP at present much of the revenue of which they’ll spend on higher super and lower company tax. That’s a pretty damn big micro-economic reform.

    It’s looking like doing something worthwhile on gambling.

    Of course you can say that these things have been foisted upon them. So that gets the media salivating on the spin of it all, but both policies are highly worthwhile and politically difficult to boot.

    They’re implementing major elements of the Cooper Review which will extract the snouts of the spivs from the trough of many Australians’ super, improve super management and leave them tens of thousands of dollars richer in their retirement. That’s required some courage as well. They’re going ahead with disability insurance which will be a great thing.

    They’re addressing at least some of the inequities of the super system that they set up and Costello managed to make much worse, and they’re increasing contributions to compulsory super.

    Seems quite good to me.

  13. Captain Australia says:

    Look Nick you are just going to have to stop bluffing mate. You don’t understand climate science and have no evidence that could justify the global warming fraud.

    I’ll tell you what. Talk to me about a rotating body, with an atmosphere, versus a non-rotating flat body, without? Talk to me about the concept of SURFACE TEMPERATURE as it relates to the latter. Then since you idiotically and erroneously think of yourself as an expert, you tell me how you can derive a temperature anomaly, heroically leaping from the one to the other.

    You are going to have to accept that you know nothing. Nothing about science. Nothing about economics. Nothing about epistemology. So quit with the arrogance, You are in no position to be arrogant.

  14. Captain Australia says:

    “It was Monckton’s focus on the evils of the latter mining tax that shows his true colours. No clue as to why the tax, which the free market Treasury has regarded as a crucial tax reform for some time might be a good idea.”

    You see this is just all nonsense.

    1. The treasury is not, and never was, free market. They were never economically competent. They were idiots.

    2. The mining tax is proof positive of their incompetence, when it is an increase in royalties that ought to have been their focus.

  15. Yobbo says:

    It’s managed to get through carbon pricing against heavy opposition and with a minority in the House.

    And in the face of massive public opposition, and the rest of the world’s ambivalence. And you think this is an example of why the Gillard government is good?

    I mean, if that’s really your thought process here, then we don’t really have much to discuss, so what’s the point.

    but both policies are highly worthwhile and politically difficult to boot.

    lol

  16. Peter Patton says:

    I find it very difficult to keep a civil tongue on the topic of that Roxon woman. WTF is she doing in the ALP?

  17. Sancho says:

    And in the face of massive public opposition, and the rest of the world’s ambivalence. And you think this is an example of why the Gillard government is good?

    Like the GST? And the Iraq war?

    Unpopular decisions by governments seem to be classed either as incompetence or bold leadership depending on which side of the political divide the critic is coming from.

    As for “massive public opposition” to carbon pricing, 60% of the population believes polluters should pay more, a third think it’s currently about right, and only ten percent believe they pay too much. The government is acting on behalf of the majority of Australians.

  18. Yobbo says:

    Like the GST? And the Iraq war?

    Both of these were taken to an election, and won. The Carbon Price was ruled out by the Labor government before the election, and then introduced afterwards, in the face of massive public opposition.

    As for “massive public opposition” to carbon pricing, 60% of the population believes polluters should pay more, a third think it’s currently about right, and only ten percent believe they pay too much. The government is acting on behalf of the majority of Australians.

    That must be why they are polling so well.

  19. Sancho says:

    And yet an unprecedented number of people voted for the Greens, which went to the election with a carbon price firmly in sight, which caused Labor to adopt it as the price of forming a coalition government.

    Those new Greens voters didn’t defect from the Liberals, did they? Because of the way our electoral system works, the majority of Australians did vote for a carbon price. The way 60% are in favour of it as of October this year is another clue as to what the electorate voted for.

    It’s interesting that you avoid the dismal polling numbers against a carbon price and instead want to focus on Labor’s current numbers. Nicholas already mentioned Labor’s inability to sell its brand, but that’s a separate issue to the carbon price.

  20. Yobbo says:

    Because of the way our electoral system works, the majority of Australians did vote for a carbon price.

    How do you figure? Only one party went into the election with a carbon price, and they received less than 12% of the primary vote. Labor categorically ruled it out, although they were later proven to be liars.

  21. Sancho says:

    Labor lost votes to the Greens due to Labor’s Liberals-lite facade, and right now 60% of Australian voters are in favour of a carbon price.

    Unless you believe that a carbon price is the one and only issue that the electorate cares about, it’s perfectly clear that most Australians went to the polls, if not actively in favour of it, then certainly not opposed.

    As for Labor being “liars”, Labor wouldn’t have introduced the carbon price if it had won the election outright. But when you form a coalition, compromise is necessary. That’s how we have a supposedly free-market, no-subsidy conservative party that can’t win a federal election without siphoning votes from a party of rural socialist tariff addicts.

    And, really, as long as the leader of the Liberal party is a former minister of the Howard government, with its “non-core promises” and a Saddam WMD under every bed (paid for by Alexander Downer and the Australian Wheat Board), accusations of lying amount to nothing more than comedy.

  22. Yobbo says:

    But when you form a coalition, compromise is necessary.

    The key difference being that people who voted for the Liberal/National coalition knew in advance that’s what they were voting for.

    Most Labor voters did not know they were in fact voting for greens policies, which is why they have jumped off Labor in historically unprecedented numbers.

  23. Sancho says:

    Do you mean that voters knew they were voting for “non-core promises”, or that they knew they were voting to invade Iraq in pursuit of WMD which didn’t exist?

    The Liberals went to elections on promises they had no intention of fulfilling, while Labor went in with a promise that it was unable to keep because of the election results. Not quite sure how you conclude that it’s the latter that qualifies as a lie.

    The polls clearly show that the electorate is in favour of a carbon price, with only a tiny, noisy minority opposed. Plus, so many Australians were disappointed in Labor’s election platform that they voted for the Greens instead.

    No matter how you spin it, the majority of Australians were either neutral or actively in favour of a carbon price going into the last election, and are clearly in favour now.

  24. Pedro says:

    Nicholas, maybe your own evidence for the defence is the same stuff the prosecution will adopt.

    The carbon tax was not an achievement, it was the price of the treasury benches; and was negotiated with a bunch of people all for it from the get go. The extent of that “achievement” is best demonstrated by the list of people who have turned against it.

    I’m surprised you are in favour of the increase in super. The mining tax has been completely mismanaged, the NBN a farce, refugee policy a disaster. Their greatest claim is the mildness of the local recession, but I don’t for a second believe you think the previous 20 years had less to do with that than the immediate policy reaction of PM Henry. In fact, policy management is a constant weakness.

    Oh, and the Fair Work Act.

  25. Marks says:

    I suggest that the proposition by the right that the present government is the worst is an excellent example of the right’s intellectual collapse.

    Is this assessment accompanied by any comparison of key performance indicators? Is it accompanied by any historical comparison of governmental dealing with important issues such as wars, economic crises, legislation passed good or bad? In other words, is there any intellectual basis for the position being put by the right at all? Or is it just saying it?

    Is that lack of intellectual approach due to a decision not to worry about facts, or a complete inability to actually assess any facts?

    Now, maybe the present government is the worst. However, there is absolutely no intellectual basis for saying so – in terms of what most people would regard as intellect that is.

    FWIW, unintellectually speaking, I would vote the MacMahon Coalition government as being Australia’s worst, and perhaps the Menzies years too should figure in the pantheon of the incompetent.

    I mean, years of living under a resources boom in agriculture, under high tariff walls for decades leaving Australian industry so inefficient that it was still producing valve radios in the sixties, and do you remember the Australian cars of the late sixties compared to the Japanese counterparts? Frankly, it is a wonder that Whitlam was able to achieve anything (oh, and there was an oil price shock in there too). However, when these ‘worst government in history’ jibes are thrown around, there is zero analysis.

    Of course, the left is not far behind. I have not actually heard a challenge to the right on this worst-government-ever claim which actually calls for the right to put up some hard data.

  26. derrida derider says:

    … the IPA had lost all credibility with me by sponsoring the visit of Lord Monkton …

    Well they’ve never had credibility with me. I’ve always regarded the IPA as a bunch of shills for whoever paid their bills today, and (worse) low-rent shills at that. They lack originality sa well as integrity – that’s why I don’t bother reading Des Moore’s letters to the AFR anymore (how does he get printed there so often? If I wrote that poorly the editor would put it straight in the discards).

    The IPA is very unlike the CIS, which is worth getting angry at. In fact I wish more of our lefty writers had as much intellectual verve and integrity as some of the CIS people.

  27. Richard Tsukamasa Green says:

    Nicholas – Even if we ignore Monkton as an extreme example (albeit an inexplicably coddled on), we still get left with people like Niall Ferguson, whom you’ve lamented before. Somehow he maintains a currency, including with people I generally respect, despite their absurdities..

    This review is astounding. It has the kind of quotes you need to preface with “Not from The Onion.

    ‘America’s brightest and best,’ he complained, ‘aspire not to govern Mesopotamia but to manage MTV; not to rule the Hejaz but to run a hedge fund.’

    ‘If one adds together the illegal immigrants, the jobless and the convicts,’ he argued, ‘there is surely ample raw material for a larger American army.’

  28. KB Keynes says:

    no-one voted for a GST. howard got the lowest vote ever for a government and the worst result in the Senate since Trumper was batting.

    Despite that I approved the GST.

    Gillard ruled out a carbon tax but said that an ETS was certainly on the Agenda.

    We have an ETS.

    mining tax has been mismanaged but we still will get one at least.

    Why is the NBN a farce?

    Refugee policy has been a disaster ever since Keating put Refugees in prison

    what is wrong with the rise in SGC. People do not put up enough money to live in retirement by themselves. Everyone who has looked at this across the world has known this for sometime.

    That is why our Retirement income set up has widespread support from the world Bank, OECD etal.

  29. Richard Tsukamasa Green says:

    DD – A point of clarification is that Moore isn’t at the IPA, but rather the IPE (or as it is more generally known “Des Moore’s bedroom”).

  30. KB Keynes says:

    DD is on the money.
    the IPA is a bit of a joke whereas the CIS has always been intellectually rigorous on most subjects.

    no Richard it is the white room

  31. Sancho says:

    Which polls show that Sancho?

    http://www.smh.com.au/environment/climate-change/carbon-tax-opposition-grows-newspoll-20111025-1mhfa.html

    http://www.news.com.au/national/tony-abbott-would-win-an-election-in-a-landslide-if-it-were-held-as-voters-oppose-carbon-tax/story-e6frfkvr-1226168098094

    Aah, well now we’re into the arcana of polls.

    The poll I cited asked 2000 Australians for their views, and enquired about the carbon price in three different ways, two of which returned a majority in favour of polluters paying more, and one with a majority either favouring more government expenditure to combat carbon pollution, or satisfied with current spending.

    None of the three questions, from two thousand respondents, found a majority against a carbon price or against more spending on carbon abatement.

    Now, putting aside that Galaxy is NewsCorp’s pet polling agency and Newspoll conducts its carbon price polls for The Australian, have you got some information about the methodology of the polls you cited?

    The only Newspoll I can find regarding a carbon price is from July, and surveyed 1200 people, while Galaxy seems to be in the habit of taking samples of 500 as representative of the entire population.

    The ANU poll appears to be superior in every facet and gives a much more comprehensive assessment of the public’s opinion.

  32. Sancho says:

    DD – A point of clarification is that Moore isn’t at the IPA, but rather the IPE (or as it is more generally known “Des Moore’s bedroom”).

    Except when Moore writes to the newspapers to defend the interests of his clients, of course. In those cases he omits the Institute and broadcasts his opinions as a private citizen.

    If people realise he’s a corporate lobbyist it might, you know, detract from the message.

  33. Dan says:

    IPE was appended to his letter in the Fin today.

  34. Sancho says:

    That’s progress. Shame all his just-plain-old-Des-Moore letters to the Oz in defence of corporations are paywalled now.

  35. Dan says:

    Yeah, but pfff, it’s the Oz for Heaven’s sake – complaints about integrity and intellectual honesty here are tragically misplaced.

  36. Pedro says:

    Homer, I’m glad you agree that the mining tax has been bungled. The NBN is a farce because at great expense the govt is turning the internet into the GPO so some jackeroo gets a quicker download on debbie does dallas.

    I didn’t say the carbon tax was or wasn’t a backflip, I said it was not an achievement.

    You might not have liked the old refugee policies, but they didn’t become a policy management disaster until after 2007.

    As for the super contribution, I’ll bet that there are plenty of people who would rather have that extra 3% in their pay packet, which I recall is the treasure view.

  37. Sancho says:

    The NBN is a farce because at great expense the govt is turning the internet into the GPO so some jackeroo gets a quicker download on debbie does dallas

    You truly, honestly believe that porn is the only function of communication technology?

  38. FDB says:

    From Des Moore’s letter:

    If there is to be any chance of meeting the aim of keeping temperatures increases to no more than 2 per cent

    Dude’s really up on the science, that much is obvious.

  39. Dan says:

    Or indeed the simple definitional difference between interval and ratio measures.

  40. Sancho says:

    Be fair. It’s not like he’s an archbishop or something.

  41. Yobbo says:

    The ANU poll appears to be superior in every facet and gives a much more comprehensive assessment of the public’s opinion.

    Colour me surprised that after applying your intense, objective scrutiny to all the polls that you came to that conclusion.

    Put your money where your mouth is. Who needs to interpret a poll when you have bookmakers?

  42. Sancho says:

    Ah, the good old evasive non-sequitur.

    To clarify, you concede that the ANU poll is more accurate to the Galaxy and Newspolls, and you cannot provide any information on their methodology. Correct?

    Now, which bookies are taking bets on whether there was massive public opposition to the carbon price?

  43. TimT says:

    Hmmm, you wouldn’t be stirring up a bit of controversy for controversy’s sake now would you Nick? ;)

    It depends what you mean by ‘intellectual’ but certainly a superficial survey of the net would reveal a large number of thoughtful right-wing bloggers both from the libertarian and conservative strains: this is evidence of intellectual strength, not weakness.

    To what extent should a intellectual faction dominate a political movement anyway? I know pollies like to give the impression that they are experts about everything, but their reliance on jargon and rhetoric, and willingness to misrepresent, exaggerate, and straight out deceive, in order to win a minor point belies that

  44. Sancho says:

    a superficial survey of the net would reveal a large number of thoughtful right-wing bloggers both from the libertarian and conservative strains: this is evidence of intellectual strength, not weakness.

    Can you name some?

  45. TimT says:

    Yes. You can’t?

  46. Sancho says:

    Nope. Go ahead.

  47. Nicholas Gruen says:

    TimT,

    1) Alas I didn’t really try to stir up controversy. I don’t really enjoy it. My headline should be read in sympathy with the words below it. Personally, like I said above, I’m a respecter of right wing ideas. If the IPA sponsor a trip by Lord Monckton, then they blow any respect to which they were entitled. Further, in an earlier post I threw out a challenge. Can someone point me to a careful exposition of the case against the stimulus as a piece of macro-economics. I mean by that something I could read that I would consider makes reasonable counterarguments against the commonsense of a Keynesian response to the crisis – rather than throw away lines that regard the matter as a foregone conclusion either because one can say ‘pink batts’ or one can drag up some point of Austrian dogma.

    I’m also contrasting the relative usefulness of organisations like the CIS and the IPA in the 80s and 90s.

    And yes, there are some good right leaning bloggers like Andrew Norton and thoughtful right leaning commentators on this blog – like Patrick.

  48. TimT says:

    Do your own research, Sancho – you might like to start with some links on Catallaxy.

  49. Jim Belshaw says:

    Tim T. I don’t span the whole blogosphere. Still, try me to begin with. I am certainly to the right of most of the commenters, and do write a lot of analytical pieces.

    Then look at the skepticslawyer group – http://skepticlawyer.com.au/. Skepticlawyer herself is a libertarian. Legal Eagle is left on social issues, but also challenges conventional left views. Regular guest poster Lorenzo writes high quality thought pieces from a some what right libertarian position. A lot of the catallaxy pieces are short, but Rafe and Judith Sloan provide substance.

    One of the problems in all the opposing chatter between certain blogs is that it ignores the fact that there are a lot of writers who really aren’t interested in left/right.

  50. Sancho says:

    Right. There are intellectually strong conservative and libertarian bloggers, it’s just that you can’t name a single one.

    Have to say, it does look a teensy bit like you either don’t know of any, or that you’re afraid to have your choices scrutinised.

  51. Jim Belshaw says:

    [email protected] You make an interesting point re time and the 1980s. Somwtimes views that are important and stimulating at one point become problematic at another. I am just thinking of my own chnaging reactions here on issues over time.

  52. Yobbo says:

    To clarify, you concede that the ANU poll is more accurate to the Galaxy and Newspolls, and you cannot provide any information on their methodology. Correct?

    No, I don’t concede that at all. I’m saying of course you’d defend the ANU poll, since that’s the one that came up the findings you like. The fact that every other poll in the last year has found massive opposition to the Carbon Tax doesn’t worry your muddled little leftist head at all, as long as one produced by a nursery for public servants agrees with your pre-conceived beliefs.

  53. Sancho says:

    Why are you so afraid of going beyond beyond superficial partisan barracking, Yobbo?

    Here’s where you’re at:

    1. The ANU study evaluated the responses of 2000 people, and asked about three different aspects of carbon pricing and pollution. The Newspoll and Galaxy polls took a sample of 1500 combined, and you’ve been completely unable to describe the questions or methodology they used.

    You have offered no serious reasons to believe the ANU study isn’t the more authoritative and accurate.

    Why not?

    2. Where are these bookies that are offering odds on whether there was massive opposition to a carbon price prior to the last election?

    Correct me if I’m wrong, Yobbo, but you seem to be throwing in anything that will distract from the lack substance to your claims, and running away from the very simple facts.

  54. Yobbo says:

    Not really Sancho. I already posted links to 2 different polls that support my claims, and if I wanted to waste another half hour I could post links to a dozen more. But you would ignore all those just the same, so why waste my time?

  55. Jimmy-Jive says:

    “Can someone point me to a careful exposition of the case against the stimulus as a piece of macro-economics.”

    Isn’t that a bit premature? So far you’ve not made any case for throwing tens of thousands of people out of work, getting us further in the debt hole, and wasting billions on rubbish.

  56. Sancho says:

    Ah, yes. A complete lack of evidence is all the evidence you need.

    It raises an obvious question: why are you even worried about a carbon price when the world is flat and being secretly dominated by reptile aliens?

    You get points for not citing a Sun Herald online poll, at least.

    Still want to know which bookies are currently taking bets on the carbon price before last election. I’ll clean up.

  57. Pedro says:

    “You truly, honestly believe that porn is the only function of communication technology?”

    Of course not, you can also have arguments with people. Seriously (which you seem to take everything), I just used that as a way of highlighting that there is a whole lot of money being spent for limited marginal benefit. A lot less NBN would be just as functional.

  58. Pedro says:

    NG, I believe that the supporters of stimulus make a lot of noise about zero lower bounds and such, which clearly didn’t apply here. Even good old homer makes that claim and then denies his own argument by supporting the stimulus anyway. I recall quite a few stimulus supporters also saying it had been significantly over-cooked.

  59. Sancho says:

    Of course not, you can also have arguments with people

    Faster, more partisan arguments than ever before!

    The idea that I take everything seriously is comical. Maybe you haven’t noticed that it’s quite common for neo-Luddites to claim that people only want faster internet for porn and movie piracy. When you make satirical statements that others make sincerely, you’re at risk of being taken seriously – which, incidentally, is why emoticons were originally created.

    It’s possible that cutting back on the NBN would be efficient, but currently the primary argument against it is some technologically-ignorant babble about wireless, which apparently can violate the laws of physics if that’s what it takes for Labor to be wrong.

  60. Dan says:

    Personally I don’t care if the majority of today’s voters don’t like the carbon tax, because it’s actually an intergenerational issue – short-term fear, idiocy and greed be damned. On this issue, in 30 years, probably sooner, I guarantee that there’ll be a very clear right and wrong side of history. (And yes, I’d put money on it.)

    Re: the NBN – the possibilities for remotely-delivered health services make someone who works in health policy evaluation (and knows the stats on how crappy regional and remote outcomes can be, just by dint of remoteness) want to cry tears of joy.

  61. Dan says:

    While I can’t think of any right-wing bloggers that have impressed me much, as for commentators – I’d give Andrew Bacevich a big round of applause.

    Perhaps if the right had some more like this, they might not be on the wrong side of every fricking issue.

  62. Yobbo says:

    Maybe you haven’t noticed that it’s quite common for neo-Luddites to claim that people only want faster internet for porn and movie piracy.

    Maybe you should tell us what you want faster internet for then Sancho, and why it’s so important that we need to spend 100 billion dollars giving it to you.

    So far, after years of defending the NBN, the best the Labor party has come up with is allowing doctors to diagnose regional patients via webcam.

    Re: the NBN – the possibilities for remotely-delivered health services make someone who works in health policy evaluation (and knows the stats on how crappy regional and remote outcomes can be, just by dint of remoteness) want to cry tears of joy.

    And it’s also the only thing another NBN defender can come up with. Seems the bottom of the barrel is pretty bare.

  63. JC says:

    Can someone point me to a careful exposition of the case against the stimulus as a piece of macro-economics. I mean by that something I could read that I would consider makes reasonable counterarguments against the commonsense of a Keynesian response to the crisis – rather than throw away lines that regard the matter as a foregone conclusion either because one can say ‘pink batts’ or one can drag up some point of Austrian dogma.

    Yep. This guy. He’s a monetarist. You have to pick it out in his blog pieces. But in some of the threads he’s suggested the US stimulus didn’t work because the Fed was not targeting a high enough NGDP simultaneously. There was no co-ordination. Scott thinks the stimulus never had any hope of working because monetary policy was still far too tight which ate the stimulus away.

    He believes Keynesians are far too hung up on with zero, as it’s believed Monetary policy has a limit at zero bound when it doesn’t.

    I don’t agree with that line as I don’t think fiscal stimulus works. However his line of thinking is pretty novel and he’s a pretty decent monetary economist. He work safe for Keynesians as even Krugman has taken up his call for the Fed move to NGDP targeting. Recently the Economist has too.

  64. Sancho says:

    Well, obviously, Yobbo.

    The NBN is another white elephant. Just like those highways built solely so that landed gentlemen could roar in their motor-cars at speeds of up to forty miles per hour! What pie-eyed nincompoops would think such a costly nation-wide project could benefit productivity in the future?

    The NBN doesn’t pass even the most basic tests of common sense. I only use the internet to read these “eee-mails” and view tasteful nudes, so it stands to reason that no other sector, industry, or individual could possibly use it for anything else. Why, even the stock exchange copes merely with messenger-boys and the occasional carrier pigeon! And now these egg-heads want to impose a technocracy upon hard-working traders!

    The role of government is to maintain technologies that are a century old or more, not brave political opposition to make a nation competitive in the future.

    Now, I say, Yobbo dear boy, which of these esteemed bookmakers is taking bets on the popularity of a carbon price prior to the previous election? You claimed upthread that this was quite an influential measure. Don’t be a damp squib and say you just made it up to bolster a flimsy argument.

  65. Sancho says:

    I don’t agree with that line as I don’t think fiscal stimulus works.

    You should check out that large island in the Antipodes. What is it…Australia!

    The stimulus there has worked so well that it’s become the gold standard in staving off recession, and has suffered very little compared to other western economies.

  66. JC says:

    Sanchez

    What is the ultimate cost level where you would say, no, it costs to much.

  67. Dan says:

    Yobbo, we have no *idea* what the NBN will be used for, just like the people who installed the copper network weren’t thinking of the internet.

    In fifty years’ time, let’s give it another look – maybe you’ll owe me some money on that too ;)

  68. Sancho says:

    What is the ultimate cost level where you would say, no, it costs to much.

    At the point it exceeds the price of unnecessary wars of aggression, pointless middle-class welfare, punitive imprisonment of refugees to satisfy the media, and no longer continues to benefit the nation.

  69. JC says:

    Sanchez

    I don’t honestly care one way or another if you agree or not. Nic asked a specific question and I tried to offer him a link to someone that is a little more nuanced and is a full time academic economist holding a more nuanced position. He may like the link or may not.

  70. JC says:

    oops didn’t check the para.

    …..someone who is a full time academic economist holding a more nuanced position.

  71. Sancho says:

    I don’t honestly care one way or another if you agree or not.

    You don’t have to agree, but you’re still in the position of being a citizen of the nation that proves you’re mistaken.

  72. Nicholas Gruen says:

    Pedro,

    On the lower bound – yes we could have pursued monetary policy – which works much more slowly than cheques in the mail – that is obvious. We gave it both barrels – fiscal and monetary and avoided a (technical) recession. And the stimulus was then wound down – the RBA, the Treasury and the Government were essentially in agreement on the strategy.

    Presumably the aim of macro-economic smoothing should be to take the top off the rise in unemployed resources. Why? Because there will be a lot of churn and if you keep the unemployment rate at a constant full employment level you’ll encounter a lot of inefficiency. So in allowing unemployment to rise, but not rise above 6 percent it seemed about right.

    As Ken Henry asked the Senate Committee, should they have targeted a 7% or 8% unemployment rate if if so why?

  73. Yobbo says:

    I only use the internet to read these “eee-mails” and view tasteful nudes

    You have the internet already you say? Without the government building it for you?

    My point is not that we do not need the internet. My point is that we have a perfectly functioning one already provided by private enterprise, why waste $100b on building a new one that far outstrips what we actually need it for.

    To use your road analogy, it’s equivalent of building an 8-lane interstate highway between Perth and Darwin. Great for the few hundred people who might benefit from it, a complete waste of time and money for the majority of people who will not.

    And in IT it’s even more of a risk, since we probably won’t have an alternative to roads in 20 years time, but we could very well have an alternative to fibreoptic cable.

  74. Dan says:

    Yobbo – are you actually convinced by your own arguments? I’d be embarrassed to present them if I were you.

  75. JC says:

    As Ken Henry asked the Senate Committee, should they have targeted a 7% or 8% unemployment rate if if so why?

    Why would Ken Henry think its Treasury’s duty to target an employment rate? Those things are generally considered to be the central bank’s mandate.

    As for monetary policy taking its time to work. Sumner correctly takes issue with that as it assumes the capital and consumer markets wouldn’t adjust to a sudden and permanent shift in monetary policy. They do.

  76. Sancho says:

    Yobbo, where did you get the idea that the internet is funded by private enterprise?

    Go to your modem and follow the cable to the wall. Where did it lead? That’s right – to the good old copper landline, installed by Telecom! In fact, the word “broadband” only applies to wire transmission.

    This why I mentioned neo-Luddites upthread. You’re commenting on technology you’re not even close to comprehending.

    Just to be clear, do you believe, Yobbo, that highways between Perth and Darwin have no benefit to the nation?

    And we’re ready for the names of those bookies any time you’re ready.

  77. Sancho says:

    And in IT it’s even more of a risk, since we probably won’t have an alternative to roads in 20 years time, but we could very well have an alternative to fibreoptic cable.

    This is just embarrassing.

    We don’t have fibre-optic cable yet. That’s what the NBN’s all about.

    The idea of wireless broadband being more efficient than cable is a fantasy. Not in any economic sense, but because the laws of physics don’t make it feasible.

  78. Yobbo says:

    Now, I say, Yobbo dear boy, which of these esteemed bookmakers is taking bets on the popularity of a carbon price prior to the previous election?

    You can’t bet on the results of unofficial polls, but you can bet on the result of the one poll that counts.

  79. JC says:

    Here is the RBA mandate.

    The Reserve Bank Board’s obligations with respect to monetary policy are laid out in Sections 10(2) and 11(1) of the Act. Section 10(2) of the Act, which is often referred to as the Bank’s ‘charter’, says:

    ‘It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank … are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

    the stability of the currency of Australia;
    the maintenance of full employment in Australia; and
    the economic prosperity and welfare of the people of Australia.’

    It’s more than clear the CB has the “full employment” mandate. Treasury doesn’t.

  80. Dan says:

    [email protected]: Obviously hindsight is 20:20, but you’re ignoring the possibility of a liquidity trap. Essentially you’re prescribing a solution (adequate of otherwise) for a problem different in nature from the one that policymakers were faced with.

    In fact, even on the 20:20 hindsight thing: if you think the less interventionist policy prescriptions you’re advocating would have seen Australia ride this thing out as beautifully as it has, you’re just plain old wrong.

  81. JC says:

    We don’t have fibre-optic cable yet.

    Umm yes we do Sanchez. The CBD’s are literately swimming in it. You’re wrong. I have it in my home as a matter of fact and its 5 years old.

  82. Dan says:

    JC: If we’re going to play dictionaries –

    “The Treasury monitors and assesses economic conditions and prospects, both in Australia and overseas, and provides advice on the formulation and implementation of effective macroeconomic policy, including monetary and fiscal policy, and labour market issues.”

    Hmm. I’d consider the possibility of recession a macroeconomic and labour market issue. Yourself?

  83. JC says:

    In fact, even on the 20:20 hindsight thing: if you think the less interventionist policy prescriptions you’re advocating would have seen Australia ride this thing out as beautifully as it has, you’re just plain old wrong.

    Okay evidence please.

  84. Dan says:

    *Every other fricking OECD nation.*

  85. Sancho says:

    You can’t bet on the results of unofficial polls, but you can bet on the result of the one poll that counts.

    Which poll is that?

    At post #44 you said that we can gauge past opposition to a carbon price through bookmakers.

    Which bookies are offering odds on opposition to a carbon price at the last election? You seem very coy about backing up this claim.

  86. Dan says:

    Sancho – he’s just a stirrer; all tip, no iceberg.

  87. Sancho says:

    Umm yes we do Sanchez. The CBD’s are literately swimming in it. You’re wrong. I have it in my home as a matter of fact and its 5 years old

    Oh? Who installed that? Links are welcome.

    For Yobbo’s sake I hope it’s a private company.

  88. JC says:

    That’s not evidence Dan.

    Dan you don’t seem to understand the point being made. You are suggesting that monetary policy is less interventionist than fiscal policy. It’s not actually.

    You don’t seem to know what the argument is about.

    You say:

    In fact, even on the 20:20 hindsight thing: if you think the less interventionist policy prescriptions you’re advocating would have seen Australia ride this thing out as beautifully as it has, you’re just plain old wrong.

    Then suggest:

    *Every other fricking OECD nation.*

    That’s not evidence. It’s meaningless nonsense.

  89. Yobbo says:

    Yobbo, where did you get the idea that the internet is funded by private enterprise?

    Go to your modem and follow the cable to the wall. Where did it lead? That’s right – to the good old copper landline, installed by Telecom! In fact, the word “broadband” only applies to wire transmission.

    Why do you assume that there would never have been any copper wire if it wasn’t for the government? Who built the copper network in the US?

    Just because the Australian federal government historically liked to nationalise and regulate every important industry doesn’t mean that’s the best way of doing things, although I’m sure you’re one of those who still thinks Telstra and Qantas should be a government monopoly.

    Just to be clear, do you believe, Yobbo, that highways between Perth and Darwin have no benefit to the nation?

    Nobody’s saying the NBN would have no benefit. Just like a road would have non-zero benefit. But in the real world, the benefits have to be weighed up against the costs, and that is something that the Labor government have steadfastly refused to do since the first mention of the NBN.

    It the road from Perth to Darwin cost $100 billion dollars and increased GDP by only $20 million per year, it would be a giant waste of money. Same goes for the NBN, and any other enterprise you care to name.

    And this is without even considering the damage the NBN will do to the already existing telecommunications industry in Australia.

  90. JC says:

    Oh? Who installed that? Links are welcome.

    Oh please, this getting silly.

    Optus, Tesltra, private building owners. FFS.

    If you’re asking who specially installed, I wouldn’t know Sanchez as I don’t know then individual names.

    I bet there would have been lots of petes, Johns, Steve, charlies and the occasional Angus.

  91. Dan says:

    [email protected]:

    1) Monetary policy is more interventionist than monetary plus fiscal? Gee, for a statistician my arithmetic’s pretty lousy.

    2) Re: meaningless nonsense – reality actually; interest rates near zero and still the doldrums. I know what I’d propose under those circumstances (not a million miles off what happened here in Oz).

    3) You didn’t know that Treasury had a policy advice role (and worse, insisted they didn’t), so I’d say your authority on matters of economic policy is somewhat diminished.

  92. Dan says:

    Yobbo:

    “…the benefits have to be weighed up against the costs, and that is something that the Labor government have steadfastly refused to do since the first mention of the NBN.”

    You’re being either disingenuous or ignorant here. Which is it?

  93. Sancho says:

    Spare us the Gish gallop, Yobbo.

    Your internet runs on copper wire, installed by the federal government. Yes?

    It doesn’t run on wireless supplied by a private company, does it?

    Where does that leave your claim that private enterprise has supplied a perfectly functional internet connection?

    It’s sad that I have to ask this, but do you realise that in this thread you’ve said that it’s foolish to make guesses about how internet technology will progress in future, then immediately backed up your own argument by saying that no one knows how internet technology will progress in future?

    Also, those bookies. Who are they?

  94. Yobbo says:

    Oh? Who installed that? Links are welcome.

    For Yobbo’s sake I hope it’s a private company.

    Optus is the biggest one, but Telstra, IInet and Internode had started laying their own as well. I say “had” because I’m sure they’ve all shelved it now that the government has planned to nationalise that industry.

    Put your postcode in here to see if you have it already.

    And I’m the luddite.

  95. Yobbo says:

    You’re being either disingenuous or ignorant here. Which is it?

    Here’s a link to a news article of Gillard again re-iterating that a cost-benefit analysis of the NBN was not on the table.

    http://www.theaustralian.com.au/national-affairs/nbn-cost-benefit-analysis-a-waste-of-time-of-time-and-money-stephen-conroy/story-fn59niix-1225942826919

    This is the only link I’m going to provide on this simple, obvious fact.

  96. JC says:

    Dan

    Yes monetary policy could potentially be more interventionist the fiscal policy at times which of course id dependent on the size of the intervention. Monetary policy would certainly be more effective.

    Gee, for a statistician my arithmetic’s pretty lousy.

    It would be if we were talking about statistics, but we’re talking about economics.

    ….reality actually; interest rates near zero and still the doldrums.

    Interest rates at zero bound doesn’t mean monetary policy is finished. You are confusing interest policy policy which is the price of credit and money. Those two aren’t the same.

    I didn’t know Treasury had a full employment mandate like the CB, no. Suggesting otherwise means running policy capriciously.

  97. Sancho says:

    Oh please, this getting silly.

    Oh, you mean copper-hybrid coaxial cable?

    I assumed that when you said “fibre-optic cable” you meant, you know, fibre-optic cable, not enhanced copper.

    Hey, there’s Greyhound bus that goes to Perth. That’s the same as a flight, right?

  98. Yobbo says:

    Also, those bookies. Who are they?

    Again, one link.
    http://centrebet.com

    Coalition $1.25
    Labor $3.80

    go crazy.

  99. Dan says:

    No, I know that. My point was that, well, a CBA would be a waste of time and money. So why are you carrying on about why they haven’t conducted one?

    Or: better yet. Just do a little back-of-the-envelope. C’mon! You’re a reasonably well-informed sort of guy, certainly well-informed enough to know that the NBN is a bad idea. Show us your sums.

  100. Sancho says:

    Put your postcode in here to see if you have it already.

    And I’m the luddite.

    You didn’t try it yourself, did you?

    The top result is copper wire broadband.

  101. Sancho says:

    Again, one link.
    http://centrebet.com

    Coalition $1.25
    Labor $3.80

    go crazy.

    I can’t spot the part about opposition to a carbon price, which is what you claimed.

    Don’t tell us that you think overall opinion of the major parties is the same as public opinion on a single issue.

  102. Dan says:

    My take is that he doesn’t (nobody capable of stringing a sentence together would), rather that he just doesn’t have the honesty to admit he’s been caught out. In a corner. Holding a paintbrush.

  103. JC says:

    I can’t spot the part about opposition to a carbon price, which is what you claimed.

    So the coalition isn’t running on a policy to reverse the tax?

    You didn’t try it yourself, did you?

    Call optus and Telstra tomorrow and ask them how long has fibre been in Pitt street Sydney.

  104. Yobbo says:

    Spare us the Gish gallop, Yobbo.

    Your internet runs on copper wire, installed by the federal government. Yes?

    It doesn’t run on wireless supplied by a private company, does it?

    Where does that leave your claim that private enterprise has supplied a perfectly functional internet connection?

    How is it so hard to understand, Sancho? Of course no private businesses installed copper lines in Australia. It was illegal for them to do so. Telecommunications were a government-owned monopoly. The government does not enjoy competition. That’s why government provided services are invariably expensive and inefficient.

    They did it in plenty of other countries in the world though, such as the US, where the entire telecommunications infrastructure was installed by private enterprise.

    That being said, Telstra hasn’t been owned by the government since 1997. So if you’ve ever had a broadband plan, it’s been provided by privately owned businesses.

  105. Dan says:

    JC, the current government are tripping themselves up on every bloody thing. Tony Abbott could run on a platform of annexing Mars and converting the little green natives to Opus Dei Catholicism and his polling numbers would probably still look okay.

  106. Yobbo says:

    So why are you carrying on about why they haven’t conducted one?

    I’m fully aware of why they haven’t conducted one – because they quite literally can not prove any benefits. They cannot predict the future.

    A prudent person in that situation would wait and see what was needed before spending $100 billion dollars. But governments are rarely prudent when spending other peoples’ money.

  107. JC says:

    You two guys are amusing (Sanchez and Dan). You’re both in denial. As I said Fibre O has been in existence in Australia for ages.

    Early History

    After privatisation, AUSSAT became Optus and its first offering to the general public was to offer long distance calls at cheaper rates than that of its competitor Telstra. The long distance calling rates on offer were initially available by consumers dialing 1 before the area code and phone number. Following this, a ballot process was conducted by then regulator AUSTEL, with customers choosing their default long distance carrier.[12] Customers who made no choice or refused to respond to the mailout campaign automatically remained as a Telstra long distance customer. Customers who remained with Telstra could dial the override code of 1456 before the area code and phone number to manually select Optus as the carrier for that single call. Since 1 July 1997, consumers have the choice of preselecting their preferred long distance carrier or dialling the override code before dialing a telephone number.

    The group began by building an interstate fibre optic cable and a series of exchanges between Optus’ interstate network and Telecom’s local network. It also laid fibre optics into major office buildings and industrial areas, and focused on high bandwidth local, (interstate) long distance, and interstate calls for business. In its early years, Optus was only able to offer local and long distance calls to residential customers connected to Telstra’s local phone network. Telstra would carry residential to residential calls to Optus’ exchanges, and then the calls would be switched to Optus’ long distance fibre optic network.

    As I said., I’ve had it in my home for 5 years too.

  108. Dan says:

    [email protected] – actually in 1997 the government was Telstra’s majority shareholder in the order of two-thirds.

    If you get basic facts like this wrong its no wonder your conclusions are erroneous.

  109. Sancho says:

    So the coalition isn’t running on a policy to reverse the tax?

    You need to push the chair back, look at your post, and figure out when you got so desperate that you would try to argue political polling numbers are based on a single issue at a time when the country is involved in two wars, running a debate about refugees, and is treading water in the biggest global financial disaster since the Great Depression.

    As for fibre-optic cable, that’s a terrible bluff. If it actually existed there would be dozens of links to confirm it. Sure, I’ll call Optus and Telstra to make sure that there’s no fibre-optic.

    Neo-luddites.

  110. JC says:

    JC, the current government are tripping themselves up on every bloody thing. Tony Abbott could run on a platform of annexing Mars and converting the little green natives to Opus Dei Catholicism and his polling numbers would probably still look okay.

    I don’t understand your point here. What are you trying to day Dan?

  111. Dan says:

    [email protected] – I haven’t said anything about fibre optic cable (I’m in inner Sydney), although if the NBN isn’t faster than the piece of sh*t connection I’m on now you can watch me munch humble pie.

  112. Yobbo says:

    Dan, you’ve basically gone from asking to repeatedly post links that you can easily google yourself, to resorting to semantics about the full extent of privatisation to get a “gotcha” on an irrelevant point.

    Do you have anything to contribute to this discussion except wasting my time? Because I’m not going to google or link anything else, or respond to you, because you have been wrong about everything so far but haven’t even stopped to pick up your jaw.

  113. Sancho says:

    Rein in the Gish gallop, Yobbo.

    1. You claimed that private enterprise has supplied internet services.

    It hasn’t. Everything is running on Telecom’s copper cable.

    2. The USA’s phone service was rolled out by federal government. Prove me wrong.

    Try patching up your mistakes before making more.

  114. Dan says:

    [email protected] – I’m saying that the proverbial drover’s dog could do just fine as opposition leader with a government who make as much of a shambles of selling policy as Gillard and co.

    Reminded of Hunter S. on Nixon: “…(s)he was able to crank almost every
    problem (s)he touched into a mindbending crisis.”

  115. JC says:

    Okay dan

    I thought you were agreeing with Sanchez that there is no fibre in the country other than what’s been laid by the NBN. My error.

  116. JC says:

    The USA’s phone service was rolled out by federal government. Prove me wrong.

    No it wasn’t.

  117. Sancho says:

    Ah, you’re right for the first time, JC.

    The US let Bell roll out the phone system.

  118. Sancho says:

    I thought you were agreeing with Sanchez that there is no fibre in the country other than what’s been laid by the NBN. My error.

    There isn’t. You’re trying to rush past the fact that there is no fibre-optic in Autralia, just copper hybrid.

  119. Dan says:

    [email protected]:

    From Wiki: “Telstra was privatised in three different stages informally known as T1 ($3.30), T2 ($7.40) and T3 ($3.60) in 1997, 1999 and 2006 respectively.[5][6] In T1, the government sold one third of its shares in Telstra for A$14 billion and publicly listed the company on the Australian Stock Exchange.[5] In 1999, a further 16% of Telstra shares were sold to the public, leaving the Australian government with 51% ownership.”

    The primary source is the Telstra website, which says:

    “1997: Following the opening of Australia’s telecommunications markets to full competition in July 1997, Telstra undergoes a partial privatisation (T1) in November 1997 under which the Commonwealth sells approximately 33 per cent of our issued shares to the public.”

    It’s not irrelevant; if you can’t do basic research, you can’t be relied upon to draw conclusions. Sorry. Get some basic intellectual rigour happening, is my advice.

  120. JC says:

    @ 118

    I disagree with you Dan. I think the government has done a decent job of selling it wares.

    They haven’t really put a foot wrong with the carbon tax for instance. There have of course been policy failures but as for the selling of their goodies, I think they have been okay.

    It’s just that the customer isn’t buying. Failing to convince the punter doesn’t mean the marketing effort is to blame.

  121. JC says:

    There isn’t. You’re trying to rush past the fact that there is no fibre-optic in Autralia, just copper hybrid.

    FFS… Here again I put it in bold for you.

    The group began by building an interstate fibre optic cable and a series of exchanges between Optus’ interstate network and Telecom’s local network.

    The CBD’s are swimming in Fibre.

  122. Yobbo says:

    It hasn’t. Everything is running on Telecom’s copper cable.

    Which is owned and maintained by a private company.

    The USA’s phone service was rolled out by federal government. Prove me wrong.

    It was rolled out by Bell Telephone, AT&T and Western Union.

    You’re wrong.

  123. Sancho says:

    Now we get to the point that Yobbo and JC have made so many false claims that they’re being left behind.

    Let’s sort this out:

    1. There is no fibre-optic cable commercially available in Australia.

    2. All Australian internet runs over the copper network installed by Telecom last century

    3. Despite privatisation of the telecommunications industry*, no Australian provider supplies a better service than Telecom did.

    3. Despite Yobbo’s persistent claims, no bookies are taking bets on the opposition to to a carbon price prior to the last election.

    * most of our telecom is owned by Singapore. Good work, conservative patriots!

  124. Dan says:

    [email protected]: Okay – that’s your interpretation, but it diverges from what the *Liberals* say – one unnamed senior source recently said: ‘They couldn’t sell ice to eskimoes.’

    I think the asylum seeker issue has been a particularly outstanding example of a serious of bad policy positions sold *appallingly*, but they flubbed the stimulus at the last election too. Stiglitz gave them the lines! I know you don’t agree with that policy response (and you know I do), but regardless: they *definitely* could have sold it way better.

  125. Dan says:

    *series, nor serious, heh – time for bed

  126. Sancho says:

    The CBD’s are swimming in Fibre.

    And yet you linked to Optus’ site, and they didn’t have it available. Do you think there’s a clue there?

  127. Yobbo says:

    Despite privatisation of the telecommunications industry*, no Australian provider supplies a better service than Telecom did.

    lol

  128. Sancho says:

    Are we communicating in lolspeak now?

  129. Yobbo says:

    Despite Yobbo’s persistent claims, no bookies are taking bets on the opposition to to a carbon price prior to the last election.

    Bookies don’t take bets on the results of polls that can be doctored, dumbass. They take bets on the results of elections.

    You’re honestly the biggest idiot I’ve seen here apart from Bird.

    I’m done with you two.

  130. JC says:

    There is no fibre-optic cable commercially available in Australia.

    Yes there is Sanchez. I have posted an example of Optus laying fibre twice now and you refuse to accept the quote.

    2. All Australian internet runs over the copper network installed by Telecom last century

    That’s not true. Most of it is, but not all.

    3. Despite privatisation of the telecommunications industry*, no Australian provider supplies a better service than Telecom did.

    And this point has been inserted for what reason exactly, as I don’t understand the significance.

    3. Despite Yobbo’s persistent claims, no bookies are taking bets on the opposition to to a carbon price prior to the last election.

    How would they format the bet Sanchez? You can ask them to set up a bet for that. It probably means no one has thought about it, because its a silly bet as its already imbedded in the party bet.

    * most of our telecom is owned by Singapore.

    It is?

    You’re very amusing.

  131. Dan says:

    Haha, but Yobbo, that’s what *you* claimed – bringing up the betting odds in response to the question about the popularity of the carbon tax.

    And with the name calling.

    And with the unwillingness to admit you were wrong on facts.

    Heavens, man.

  132. Sancho says:

    1.

    you refuse to accept the quote.

    I do! Because the quote is marketing. The reality is copper, as demonstrated by your link. Unless you’ve mastered alchemy, copper isn’t fibre-optic cable, despite what the ads say.

    2. Tell us which internet doesn’t.

    3. The point, JC, is that Yobbo is stuttering about the virtues of private enterprise, if only we’d give it a chance, while ignoring solid reality.

    4. Ask Yobbo. He’s the one that made the claim.

    It is?

    Oh, yes. Funny how little advocates of the free market actually know about how it affects our sovereignty.

    Time for bed. Be back in some hours.

  133. Dan says:

    The intellectual collapse of the right, indeed.

  134. JC says:

    I do! Because the quote is marketing.

    Sanchez, it’s a link from Wiki. there is nothing controversial in it. No one has edited the statement.

    Are you on some sort of denial pills? There is plenty of fiber in the country.

    I even told you I have it in my home.

  135. JC says:

    Here’s more evidence, Sanchez

    This is from a 2009 piece in Crikey.

    Around 9.30pm Tuesday night Subakette, a contractor for EnergyAustralia, was digging some “trial holes” near the corner of York and Erskine Streets. It’s part of a cable upgrade associated with a new electricity substation, in turn part of improvements to avoid the blackouts experienced earlier this year.

    Telstra cable ducts, encased in solid concrete, lie just 400mm below the surface. They can’t be deeper because it’s above the underground CityRail station at Wynyard.

    The digger went straight through them ?—?eight fibre optic cables, plus three major copper cables totalling 10,000 pairs of wire.

    “They’ve gone through the ducting and through the cables – some have been cut and gotten jackhammer marks all over them,” says Telstra spokesperson Craig Middleton.

    http://www.crikey.com.au/2009/09/17/crikey-clarifier-sydney-cbd%E2%80%99s-telstra-outage/

  136. Dan says:

    JC – re. my comment at 128 – it should have read: ‘They couldn’t sell fish to a starving Eskimo’ – it was bedtime, what can I say.

  137. Pedro says:

    Sancho, there is lots of optic cable between the cities. It’s why major law firms can run multiple offices of one server bank.

    As for the medical use Dan, that does not require fibre to the home, only to nodes, which was the previous policy. Sancho, the unserious bit of my earlier comment was the reference to the GPO. In the long run, the waste of money on fibre to the home will likely pale beside the creation of a new monopoly.

    I notice you can’t see the all the future uses for fibre, but you are convinced it is the only future for high-speed broadband.

  138. Pedro says:

    NG, completely agree that the goal is to try and limit job losses while things settle down. As I said, the argument is about the extent of the stimulus program and the quality of the management of it.

    I don’t think it is possible to say that they made baby bear’s porridge, but I will agree things could have been worse. Has anyone tried to calculate (not with a model) the number of jobs saved by actually looking back at the spend to see what happened?

  139. KB Keynes says:

    There is optic fibre around.

    Telstra began to use optic fibre to all new users sometime ago because the copper wire network was deteriorating badly and would need to be upgraded.
    It formed the major part of the agreement with the NBN.

    Current levels are no use to Medical organisations, Universities etc.

    They all have plans once ISPs offer new programs via the NBN which appear to be cheaper than Telstra offered previously.

  140. Dan says:

    [email protected]:

    The OECD reckons 150,000-200,000.

  141. TimT says:

    Hi Jim Belshaw at #52 – missed your comment there for a bit. ‘Right’ and ‘left’ are useful terms I think but you are right, they don’t encompass the entirety of the political debate – still, I think they serve as general descriptors, more useful than, say ‘Labor’ and ‘Liberal’ or ‘Republican’ and ‘Democrat’ as these party-specific labels differ from nation to nation and even state to state.

    If Sancho had wanted to do any research at all he could have simply gone to Catallaxy and followed a few of the links, or checked out the blogs of a few of their commenters.

    If I’d had more time I would have liked to have pointed out that the blogosphere now is less open than it was five years ago, when a lot of right-wingers would read left-wing blogs and vice versa. Now people tend to stick to their own social groups, and there are only two or three regular right-wing commenters on (say) Larvatus Prodeo, with a similar number of left-wing commenters on (say) Catallaxy. So it’s quite possible to have a blog these days, that is read by people of similar political philosophies, and be completely unaware of a large community of bloggers operating in parallel, with an alternative political philosophy. That’s a pity.

  142. Dan says:

    Re: the fibre optics – honest question: as someone who is completely ignorant of the nature of the infrastructure but has first-year physics: isn’t the transmission speed just bottlenecked by the lowest-capacity piece of infrastructure you have? If you have 1000km of fibreoptic and 5cm of copper wire, aren’t you limited to the capacity of that 5cm of copper?

  143. Dan says:

    Or I guess maybe the idea with the mixed network is that your fibre-optic i like your high-tensile lines – big ‘wholesale’ carrying capacity – and the copper is all that’s required to the node? What’s the speed difference for the average user between a network that’s totally fibre-optic and a system that’s a hybrid of f-o and copper?

  144. desipis says:

    Dan,

    Fiber to the Node (FTTN) which uses the old copper connection for the last mile doesn’t get you any ‘headline’ increase in speed over the current ADSL connections; it’s still ‘up to’ 24Mbps. However, because it significantly reduces the distance of the copper connection, the average connection speeds are going to be much closer to the 24Mbps than they currently are now. See here for an indication on how distance affects the speed for ADSL 2+. Wikipedia indicates that FTTN would typically see the distance reduced to less than 1.5km, which as per the graph would result in a significant increase in speeds compared to an average of 3km (that distance is off the top of my head).

    Fiber to the premises will allow for speeds up to whatever the end equipment supports. Notionally for the NBN that’s going to be 1Gbs. The speeds available to the user will depend on how much they choose to spend on equipment and ISP costs rather than which street or suburb they are in.

  145. Jim Belshaw says:

    [email protected]

    I think that you are probably right in saying that the blogosphere is less open than it was five years ago. There is a strong clustering tendency in comments and blogs. This came out in a 2010 attempt to map the bloggosphere – http://belshaw.blogspot.com/2010/10/mapping-australian-blogosphere.html

    This, the clustering, makes some of us very uncomfortable. Legal Eagle wrote in a comment at my place “Jim, as you know, I feel exactly the same. I turn out as left wing in surveys, yet I don’t fit in at LP or with many of my left wing colleagues.”

    If you take another example, in his blogging and tweeting, Paul Barratt ( http://twitter.com/#!/phbarratt) is clearly left/Green. Yet Paul and I come from the same New England populist tradition. Scratch us on certain issues and you get identical responses.

    On the question of the cross country usefulness of left/right identifiers, I have huge problems, especially where US comparisons are involved. This is an early example – http://belshaw.blogspot.com/2007/12/australias-culture-wars-uniquely.html

    Both the Australian left and right traditions were formed within a British Empire matrix and have to be understood in that context. US intrusions really only became significant during the 1970s. In my writing I have tried to trace some of these influences through This post – http://belshaw.blogspot.com/2011/08/saturday-morning-musings-software.html- will give you an entry point if you are interested.

    I think that many of us who are interested in the history of ideas as well as in things that might work are just plain frustrated by some of the current discussion.

  146. Dan says:

    Thanks – wow, that’s a huge difference – 40 times faster!

    So, insofar as depending on what we find we may wish to use the lines for in the future, we might need to replace FTTN anyway. So doing the NBN now may well represent a literal cost *saving* (leaving aside the benefits right now of faster internet).

  147. JC says:

    Thanks for the information on the website Nic. Really helpful. Lol

  148. Nicholas Gruen says:

    “Has anyone tried to calculate (not with a model) the number of jobs saved by actually looking back at the spend to see what happened?” Not sure what that means Pedro. We had a rough and ready go here. But anything you do will require some assumption about multipliers. And that’s a model, even if it isn’t called one.

  149. Pedro says:

    Dan, the FTN model includes having fibre into any substantial institution or business that wants it. FTN is way cheaper than FTH. The increase in speed to your home hardly justifies the huge expense and the anticompetitive restructing of the industry. It’s a travesty.

    I understand that a lot of the medical uses are already available, having watched a radiologist mate review some CT scans of a head injury sent from his practice in Ipswich while sitting on the footpath in Bangalow.

  150. desipis says:

    the anticompetitive restructing of the industry

    The last mile in telecommunications already is/was an uncompetitive environment; it’s a natural monopoly. The only way to fix the mess made by privatising the network, is to replace it all. Having a mixed network with the first half owned by NBN co and the bits from the node owned by Telstra would have just made a bigger mess and not solved all the problems. It’s not just the technical costs that would be saved by solving the issue in one go, there’s the commercial and political costs saved by not having a NBN round #2, 5 or 10 years down the track.

  151. Dan says:

    I agree – it’s a classic natural monopoly situation. John Quiggin has written on competition in Australia telecommunications policy, pointing out the duplication and waste that occurred with retailers owning the infrastructure.

  152. JC says:

    Dan

    We’ve had the duplication argument before. It’s been around since the soviet takeover of Russia. It’s basically fallacious in every single respect when it’s used to discuss delivery of goods and services to consumers.

  153. Tel says:

    The idea of wireless broadband being more efficient than cable is a fantasy. Not in any economic sense, but because the laws of physics don’t make it feasible.

    Which laws of physics would that be? Care to explain it? Hint: you are going to be wrong.

    At the point it exceeds the price of unnecessary wars of aggression, pointless middle-class welfare, punitive imprisonment of refugees to satisfy the media, and no longer continues to benefit the nation.

    OK, so the SMH calculates the war in Iraq as costing Australians approx $3 billion as per 2007, and the campaign for “A Just Australia” estimates the cost of offshore asylum seeker processing at approx $1 billion. Add them together and multiply by a whole order of magnitude and you get the minimum cost of the NBN. Yobbo’s $100 billion estimate is probably a bit on the high side, but I have no doubt it will blow out, I’m just not sure how much.

    http://www.smh.com.au/news/national/3b-and-rising-rapidly-cost-of-iraq-war/2007/03/20/1174153066804.html

    http://www.ajustaustralia.com/informationandresources_researchandpapers.php?act=papers&id=83

    As for “middle-class welfare” you might want to give some sort of definition of what makes a middle class family, but the median household income in Australia is just slightly under $70k per annum, so by all means show me a family earning $70k who get more money back from the government than what they pay in tax (even a theoretical family will do, invent some negatively geared investments if it helps).

    And “benefit of the nation” is just your opinion, and thus a general purpose sounds-good-means-nothing phrase that I’m going to ignore. Come up with something tangible.

  154. Tel says:

    … it’s a classic natural monopoly situation …

    How do you define a “natural monopoly” and what sort of profit margin would you expect it to make?

  155. Tel says:

    Fiber to the Node (FTTN) which uses the old copper connection for the last mile doesn’t get you any ‘headline’ increase in speed over the current ADSL connections; it’s still ‘up to’ 24Mbps.

    So that would explain how iiNet was able to ramp VDSL2 up over 80Mbps three years ago.

    http://broadbandguide.com.au/blogs/2008/12/iinet-vdsl2-trial-85mbps-speeds/

    What does control the bandwidth limit over twisted copper pairs? I keep forgetting so maybe you should remind me how these things work.

  156. Dan says:

    [email protected] – something for which the costs of having more than one supplier intrinsically outweigh the benefits; none.

  157. Dan says:

    (Should there be more than one parallel network of power lines?)

  158. Tel says:

    Good of you to use the power lines as an example.

    I buy electricity (in NSW for shame) at a price of a bit over 20c per kWh, and I know that the same electricity is generated at an average cost of around 5c per kWh (gross margin of 75%) so the markup is split between retail (i.e. printing bills, chasing bad debts, etc) and the maintenance of the cabling. But wait, I also get charged a separate fee for maintenance on the cables (yeah go figure).

    What was that you were saying? Profit = “none”?

    Oh please!

    Name one other industry that works with a gross margin of 75% or better… sure ain’t comms I can tell you that. I do know at least one other exists, but I won’t tell you the answer :-)

  159. desipis says:

    Tel,

    1) I’d imagine that the NBN will easily have an order of magnitude more significance than the Iraq war and asylum seeker processing to the Australian public.

    2) See wiki.

    “[a]n industry in which multiform production is more costly than production by a monopoly”

    It’s clearly more costly to provide two physical lines to a house than only one, and clearly inefficient to provide two if only one is in use.

    It is very expensive to build transmission networks (water/gas pipelines, electricity and telephone lines); therefore, it is unlikely that a potential competitor would be willing to make the capital investment needed to even enter the monopolist’s market.

    Thus there is little to no market pressure for a privately owned telecommunications network to upgrade from 20th century data transmission technology, hence the need for government intervention.

    3) I was referring to FTTN, which is a different technology to VDSL. However, it’s clear from that article that even with FTTN the benefits over ADSL2+ will be marginal (in comparison to FTTP) for the majority of customer in the coverage area:

    50 Mbit/s at 1 km after which it degrades much slower until it equals speeds of ADSL2+ at 1.6 kms.

  160. Tel says:

    It’s clearly more costly to provide two physical lines to a house than only one, and clearly inefficient to provide two if only one is in use.

    You do understand that Telstra have been putting TWO twisted pairs into every household as standard since, well as long as I’ve been alive? The reason is that a pair of pairs was always one standard cable (four wires), and laying the cable itself is the expensive bit. Oh wait, only a small fraction of those second pairs ever got used, but no matter, labour is more expensive than copper in Australia.

    Besides that, NBN is supposedly a “National” Broadband Network, so why exactly does laying fiber in Sydney, reduce costs in errr Melbourne, or Darwin? In other words, on what basis is there any justification for national coverage under the “natural monopoly” presumption?

    Thus there is little to no market pressure for a privately owned telecommunications network to upgrade from 20th century data transmission technology, hence the need for government intervention.

    Hmmm, so the AAPT fibers being rolled out for at least the last 5 years were a secret government project? And the Telstra fiber linking to mini-exchanges in the bottom of many city office blocks (hmmm, at least 10 years of rollout from memory) were also a secret government project (oh yeah, check the Telstsa/NBN agreement closely, note where they have keep a loophole open for their mini-exchanges)… and then there’s optus fiber, but that’s only the start.

    You probably don’t want to take my word for it, you probably would only trust good honest government-sponsored research on such an important matter (from 2009 before the NBN got started):

    Overall, the available information suggests that FTTP is currently being deployed in around 120 greenfield estates in Australia. These deployments are expected to connect approximately 150 000 homes. An estimated 7500 homes were connected at December 2008. There are more than 10 operators now installing FTTP in greenfield estates and a number of service providers using this infrastructure to offer services at the retail level.

    http://www.dbcde.gov.au/funding_and_programs/national_broadband_network/fibre_in_new_developments/Fibre_in_greenfields_consultation_paper.pdf

    Emphasis added by me, to encourage readers with short attention span.

    Thing is, with existing copper in the ground, and those existing copper pairs already delivering more than enough to satisfy market demand, there’s no value in trying to rip them up and replace them. That’s why fiber was so attractive in greenfield estates where it was not competing on price against existing copper.

    “Intellectual collapse” he says… I blame twitter, facebook, SMS and 140 character limit.

  161. desipis says:

    I know that the same electricity is generated at an average cost of around 5c per kWh

    That’s the cost of base load power. You’re not buying base load power; you’re buying market power at market rates, which means you’re paying the marginal cost (i.e. the cost of non base load power) even though the average cost could be much less. Aren’t markets grand.

    The connection cost isn’t the network cost, that’s probably closer to the retail cost (i.e. the cost of having you as a customer). The network cost (for wires, cables, substations, etc) is built into the kWh rate (basically the total network cost divided by total energy consumption). The network cost is probably roughly comparable to the generation cost.

  162. Tel says:

    50 Mbit/s at 1 km after which it degrades much slower until it equals speeds of ADSL2+ at 1.6 kms

    Good work. So we can forget about “it’s still ‘up to’ 24Mbps” and accept that link speed over twisted copper pair is proportional to the inverse of the length of the wire.

    So you have an area A covered by a single exchange today, and you deploy N FTTN nodes into that area. Each node must cover an area of A/N which is proportional to a radius of sqrt(A/N) but between you and me let’s just call that sqrt(A) / sqrt(N) which should be close enough to the same number.

    Now we are only interested in the overall ratio and sqrt(A) is a constant (land is neither created nor destroyed) so throw that away completely. That leaves us with distance is proportional to 1 / sqrt(N). Clear as mud I hope?

    The original premise was that speed worked on a reciprocal basis so take the reciprocal of a reciprocal and it comes around to the following:

    last mile link speed is proportional to sqrt( number of FTTN nodes ).

    There’s no upper limit, it just depends on how many nodes you want to build, and that number is determined by how much the local population would care to pay (remember that infrastructure in Sydney does not in any way help you deliver cheaper infrastructure in Melbourne or Darwin or anywhere else).

    But wait, there’s more… once you get beyond a critical density of FTTN nodes, they are more useful as jumping off points for wireless or short-haul fiber. How that pans out depends on the relative value of mobility, vs the value of high bandwidth, and that depends on the buyer’s preferences. There’s a perfectly valid cost justification for delivering fiber to some and copper to others. I point out that this is a last-mile equation, not a long-haul equation, but NBN is putting all their money into last-mile.

  163. Tel says:

    That’s the cost of base load power. You’re not buying base load power; you’re buying market power at market rates…

    Check the AEMO website, I’m talking about the average cost over the cycle (including market rates). Base load power is even lower.

    Aren’t markets grand.

    I pay a fixed price, it’s a contractual thing. Government regulation don’t you know, for my own good, yadda yadda.

  164. Tel says:

    The network cost (for wires, cables, substations, etc) is built into the kWh rate …

    I quote from my electricity bill, “System Access Charge” : 52 cents per day, PLUS “Off Peak Access Charge” ” 4 cents per day, to give a total of 56 cents per day, to which GST is added (at 10%) making a final total of 61.2 cents per day. Don’t like it? Neither do I mate.

    The network cost is probably roughly comparable to the generation cost.

    Give or take 75% gross markup. Ahhh take mostly.

  165. desipis says:

    Telstra have been putting TWO twisted pairs

    The point was about natural monopolies, thus the need is for two independently owned and operated connections. Two connections owned by the same operator provides no competition. The fact that the incumbent can install two connections and can afford to leave the second one idle (rather than offer them at marginal operating cost) just illustrates that there are strong monopoly forces in play.

    so why exactly does laying fiber in Sydney, reduce costs in errr Melbourne, or Darwin?

    Nothing. I don’t see what your point is. The point of laying fiber in Sydney is to provide high speed access to Sydney. By networking the whole nation you provide a much larger potential market for high bandwidth internet services, thus providing the opportunity for the market to create demand, rather than being stuck in a catch 22 (no high coverage broadband, no services; no services, no demand for high broadband coverage).

    Hmmm, so the AAPT fibers being rolled out for at least the last 5 years were a secret government project?

    Just because in some areas there was sufficient demand to overcome the natural monopoly factors, doesn’t mean that the same can be said for the whole country.

    There are more than 10 operators now installing FTTP in greenfield estates.

    That just proves my point that FTTP is the best solution going forward and the only thing keeping FTTP out of other areas is the monopoly position of the existing network.

    Thing is, with existing copper in the ground, and those existing copper pairs already delivering more than enough to satisfy market demand, there’s no value in trying to rip them up and replace them.

    That’s where you’re making your mistake. Just because it’s not more profitable for an individual company to install it doesn’t mean its not economically more efficient.

    last mile link speed is proportional to sqrt( number of FTTN nodes ).

    That’s nice. Can your provide an estimate of how much an FTTN would cost that can provide equivalent bandwidth to FTTP?

    that number is determined by how much the local population would care to pay

    As per my points above, I disagree that the nature of the market will allow this to happen in an efficient manner.

  166. JC says:

    Two connections owned by the same operator provides no competition.

    Really? So Jetstar is not Qan’s competitor?

    Look, for there not to be competition the separate firms (even if they share the same ownership) has to mean they have essentially identical balance sheets. If they don’t they will have to operate at different price points on the demand curve otherwise they are not maximizing profits. That’s one of the main reasons why the usual scare about monopolies is just that : a scare and nothing more.

    Firms cannot collude for any length of time when they have different balance sheet composition. That’s why, despite all the nonsense we saw about Dick Pratt’s firm colluding with that other firm, they were breaking the agreement almost from the next day. It can never work.

  167. Dan says:

    One twisted pair installed by Telstra has a different *balance sheet* sitting behind it than another twisted pair installed by Telstra. I’ll be – I’d never have though to think of it :P

  168. Dan says:

    [email protected]: you asked for a normative claim, so I made a normative claim. If you feel that you’re being ripped off, great – it torpedoes JC’s claim about how harmless monopolies are beautifully.

    As for the 75% profit margin thing, my guesses are:

    1) tobacco
    2) big pharma
    3) homeopathy

    ie. oligopolies for chumps.

  169. Pedro says:

    Wow, there are two cables to my house, one copper and one cat whatever that foxtel install. I’ve busted a natural monopoly.

    Clearly there are no natural monopoly arguments about the duplicated trunk infrastructure already in place for broadband.

    A discussion about us right-wing dummies has morphed into NBN policy, so what does NG think about it?

  170. Dan says:

    Pedro – excuse my ignorance, but are there two cables where one would suffice?

    If so, you haven’t busted a natural monopoly, you’ve been tooled on by one.

    If not, you haven’t busted a natural monopoly. You’ve got a one natural monopoly, then you got a subscription to Foxtel.

  171. Sancho says:

    Thanks for the technical note at #148, desipis.

    Does everyone remember how wiring came up? It was because Yobbo thought that his internet was completely wireless.

    It’s charmingly naive, but there are millions of Yobbos out there who are receptive to Malcolm Turnbull’s fantasies about wireless because they don’t actually understand how the internet works.

    This is “series of tubes” territory.

  172. desipis says:

    Given Telstra own a controlling share of Foxtel, I’m sure the competition is fierce.

    A discussion about us right-wing dummies has morphed into NBN policy, so what does NG think about it?

    I don’t know about NG, but I find the fact that some are denying a well established economic principle in order to support their argument quite interesting.

  173. Sancho says:

    The dominant belief that Australia will remain competitive on 20th century technology and that private enterprise can violate the laws of physics to if that’s what it takes for Labor to be wrong kind of suggests hostility to intellect, if not a collapse.

  174. Jim Belshaw says:

    [email protected] Your comment drew me. Leaving aside the laws of physics, one thing that I have tried to argue is that if you assume that market forces will best redistribute resources, you should not assume that this will be to Australia’s advantage.

    There is a strong mental lock-in to the idea of an Australian economy, with the rest of the world as an add-on. This holds on left and right. Life isn’t like that. In a global economy, there is no logical reason why Australia must or even can retain its relative position.

  175. Sancho says:

    Well, the manufacturing sector can attest to that.

  176. Pedro says:

    Dan and desi, the fact that foxtel, telstra and optus have different cables running by my house is a compelling argument againt any natural monopoly arguments for the NBN. Clearly the potential return from those cables was enough to justify their instalation, even though there are duplications of essentially the same thing (not quite when comparing cable to copper). Perhaps some well known economic principles don’t apply to broadband networks.

    Sancho, I guess you can pretty much believe anything about your opponents if your starting point is to completely misrepresent their position. But, I don’t know if there’s much intellect required to deceive yourself about the quality of your arguments. Pretty much all crazy people do it.

  177. Sancho says:

    And which position have I misrepresented?

  178. Pedro says:

    The one you expressed like this

    “The dominant belief that Australia will remain competitive on 20th century technology and that private enterprise can violate the laws of physics to if that’s what it takes for Labor to be wrong kind of suggests hostility to intellect, if not a collapse.”

    I credited you with realising it, but I guess not.

  179. Sancho says:

    So you’re upset that I pointed out the right’s belief that private enterprise isn’t limited by the laws of physics? Do you have an actual argument to counter that, or are you reliant on childish insults now?

    I’m particularly interested in the claim about “pretty much all crazy people”. Is this based on your knowledge of the DSM-IV, or some novel research of your own?

  180. Sancho says:

    I went ahead and Googled malcolm turnbull wireless “laws of physics”.

    These are the top three results.

    http://www.malcolmturnbull.com.au/homepage/dont-suspend-the-laws-of-economics-malcolm-turnbull-speaks-to-broadband-world-forum-paris-27-september-2011

    http://www.malcolmturnbull.com.au/blogs/next-gen-wireless-to-undermine-national-broadband-network/

    http://technologyspectator.com.au/nbn-buzz/conroy-must-acknowledge-wireless-threat-turnbull

    In each one, Turnbull mocks Labor’s fixation with obeying the laws of physics, then awkwardly segues into an economic argument for his wireless future without mentioning how he plans to overcome the forces that bind the universe together.

    Even the guy leading the Liberals on this has no answer, but apparently private enterprise will prove that Labor is wroooooong!

    Add “Dunnning-Kruger effect” to your collection, Pedro.

  181. desipis says:

    Pedro,

    Optus cable probably represents the only competition for last mile hard-line telecommunication service. However it only covers a minority of areas in three cities across the country. That means the rest of the country remains an effective monopoly under Telstra (or whoever owns the fibre in the greenfield estates). Even Howard realised this was the case and when it was privatised, Telstra was regulated up the wazoo to prevent it abusing it’s monopoly position. While minimum levels of service and social goals (pay phones, universal coverage) have been forced out of them, it seems the regulatory regime was unable to force them to upgrade the last mile infrastructure. Hence the NBN.

  182. Dan says:

    [email protected] – that’s my very favourite social psychology result, ever :)

    Incidentally Turnbull’s a smart, competent, proud guy, it most be galling for him to have to say things he knows are stupid merely for political mileage.

  183. Tel says:

    Sancho, you were the one who introduced the whole “violate the laws of physics” argument, so if you can’t back that argument up with something tangible then you are the one who comes off looking pretty darn silly. Obviously you lack the knowledge to put forward the details on your own (and Dunnning-Kruger has convinced you that only experts are entitled to an opinion on anything, but strangely not dampened your own opinion). If you want to debate by reference to experts then by all means link to an article (written by an expert) explaining the physics.

    All you have been able to find is Malcolm Turnbull making economic arguments, and even then the best counter-argument you can deliver is the gut-wrenching accusation that Turnbull “awkwardly segues”. This provides absolutely zero support for your earlier assertion that some fundamental law of physics prevents a wireless last-mile solution. If you want to read what the real experts are doing try:

    http://www.4gamericas.org/index.cfm?fuseaction=page&sectionid=352

    Note that LTE and 4G are already shipping today with speeds that surpass the minimum NBN specification, and on their roadmap they expect to be able to achieve gigabit speeds in less than a decade (perfectly adequate for all current network applications and everything that is likely to be invented in the next few decades). This initiative includes all the major communication companies so if you want to prove those guys wrong because your physics is better, then either put forward your theory, or post a link to someone who does have a theory or admit that you just make stuff up cos it sounds nice at the time.

    Turnbull’s a smart, competent, proud guy, it most be galling for him to have to say things he knows are stupid…

    State clearly what Turnbull said that was stupid and why it is stupid.

  184. Dan says:

    “The telecommunications version of Cuba” springs right to mind.

  185. KB Keynes says:

    tel,

    Wireless falls away if more ans more people use it.

    It is a bit like trying to make a phone-call on your mobile at the world cup final.

    There are problems.

    Fibre on the other hand can handle greater and greater speeds.

  186. desipis says:

    Tel, if wireless is a competitive replacement for fixed line broadband, why are the bandwidth limits on wireless plans so much more restrictive than those on fixed line plans? (At the upper end the bandwidth usage cost for wireless internet approaches two orders of magnitude higher than that of fixed line internet.)

  187. Tel says:

    [email protected]: you asked for a normative claim, so I made a normative claim. If you feel that you’re being ripped off, great – it torpedoes JC’s claim about how harmless monopolies are beautifully.

    No Dan, you cannot rewrite the history of the conversation when it is all clearly printed above.

    @158: I asked what sort of profit margin you would expect from a “natural monopoly”?

    @160: you replied “none”.

    @161: you brought up “power lines” as an example.

    @162: I pointed out that in NSW there’s a big fat profit margin in electricity distribution, thus demonstrating that the example of “power lines” demonstrates completely the opposite conclusion to your claim @160.

    @165: depsis made the claim: “The network cost is built into the kWh rate”.

    @166: I pointed out that the electricity company explicitly itemizes “System Access Charge” and if that’s not detailed enough, I’ll go one step further and link to their website — http://www.integral.com.au/wps/wcm/connect/IE/nsw/footer/common+questions/fees+and+charges/what+is+a+system+access+charge

    Now you want to carry on about “normative claims”, well to get you back on track again I’ll go right back to where I started and re-ask the question:

    “How do you define a “natural monopoly” and what sort of profit margin would you expect it to make?”

    So you have a second chance now to reconsider your answer, in the light of getting it wrong the first time.

    As for JC’s claim about harmless monopolies, I’ll leave him to defend his own position on that one. I suspect he is talking about the way suppliers will attempt to deliberately stratify a market in order to supply each tier at whatever price that tier is willing to bear… hence his example about Qantas and Jetstar. Personally I believe that Jetstar only exists because Virgin Blue shook up the industry. It’s probably a higher order of conversation than can be achieved with all the intellectually superior Progressives around.

  188. Sancho says:

    I agree, Dan. Turnbull deserves better than this, but unless he’s game to start his own party he’s just going to have to do what he can with a party that thinks the Flintstones is a documentary.

    Certainly, Tel. Here’s an article on the basics from Rod Tucker, and here’s one describing the trouble wireless has with that high-tech foe, rain. And here’s Mal completely failing to understand what the internet gets used for, which would make it easier to believe in fairytale bandwidth solutions.

    This one covers the basics some more. This one does too, but it involves maths and equations, so it’s probably some poisonous propaganda produced by the hated “experts”.

    The fact that Turnbull won’t discuss, in any way, the physical limitations of broadband should be a solid hint that he has no answers.

    To save you a few mouse clicks and some learning, here’s what it boils down to: wireless can’t accommodate enough users. Having a fibre cable to you home is like a 2-lane data highway just for your house, but wireless is like a 2-lane highway for everyone in your area to jockey and take turns at using. That’s what the laws of physics mean, no matter what the zesty entrepreneurs claim.

    By all means, spurn the NBN and take up a 4G provider. It’ll be like dial-up for the new millenium. Just you and North Korea enjoying a the internet museum.

    I have to say I cringed when you rolled out the old “expert opinions are still just opinions” line. It’s the argument conservatives have used against climate change, evolution, the cancer-tobacco link, the heliocentric universe and the spherical earth. It’s essentially a way of saying that the informed statements of people who are intimately familiar with a topic and aware of its facets are no more reliable than the claims of people who don’t know much about it, but really, really want their beliefs to be true.

  189. Tel says:

    desipis,
    the fixed line plans are cheap because they depend on copper pairs that are already in the ground and have little infrastructure cost to pay off (only the DSLAMS). The wireless 4G/LTE plans are paying for equipment that only just got purchased, and there’s currently only one 4G supplier in Australia (Telstra). It doesn’t make sense for Telstra to push their technology purchase right to the limit on day #1, so they will doubtless ramp it up as customers get interested.

    Copper pairs will beat ANY competition if the criteria is “cheap”, that’s because they were paid for a generation ago. The NBN knows this which is why they won’t allow competition on a head-to-head basis, and they are insisting the copper gets shut down. Of course fiber can beat copper on total bandwidth, but that’s not the point, the question remains whether there’s an economic justification for the expense of replacing copper pairs with fiber (i.e. would the customer be willing to pay for the better bandwidth on fiber given a choice). In order to beat NBN fiber, wireless only needs to provide:

    * roughly equivalent monthly price to fiber

    * sufficient quota for people to do the things they generally want to do

    * sufficient bandwidth that users perceive it as responsive

    * good coverage

    * mobility

    I’m confident that Telstra has pre-calculated a profit maximising strategy in this and they would have extensive market research into typical usage patterns.

    Anyone who knows the DSL market, also knows it is a highly price sensitive market at the household level (not so much at the business level). That’s why infrastructure investment is done a bit here and a bit there as opportunities show themselves. In those cases where genuine demand exists, we already have plenty of supply. The NBN was designed by people who don’t understand the technology and who have no familiarity with the market.

    iiNet recently came out with some quite attractive NBN prices, and also the NBN changed the rules on their CVC charges. It remains to be seen what’s viable but I can assure you that somewhere, someone will end up paying for all those fibers, and the taxpayer has already signed over $11 billion to Telstra. There are only three options available: the taxpayer, the end-user, or inflation.

  190. Sancho says:

    In order to beat NBN fiber, wireless only needs to provide:

    * roughly equivalent monthly price to fiber

    * sufficient quota for people to do the things they generally want to do

    * sufficient bandwidth that users perceive it as responsive

    * good coverage

    * mobility

    That’s a great solution – if times stands still.

    In future, when clients realise fibre is vastly outperforming their wireless, they’ll want it too.

    Here’s an exercise I’m not going to do for you, Tel: check out what rural internet users think about dial-up. They can read email and download a YouTube clip in a brisk hour, so by your reckoning they should have no desire for ADSL or a fibre line, right?

  191. Dan says:

    [email protected] – I misunderstood what you were asking; I thought you were saying, “What should be done in the event of a natural monopoly?”, to which the answer is, nationalise the thing and run it to recover costs (nominal profits are probably okay, but… it’s not really a business – it’s a public utility).

    If it’s not a normative question, it simply depends on demand. If you had a 10,000% markup on your power bill, you’d stop using power and/or become a revolutionary socialist.

  192. Sancho says:

    If you had a 10,000% markup on your power bill, you’d stop using power and/or become a revolutionary socialist.

    Actually, the history of western conservatism suggests that he’d think about and conclude that electricity was created by god to reward the wealthy for their hard work, and toil gratefully in the dark while shouting “freedom and democracy!”.

  193. Yobbo says:

    Does everyone remember how wiring came up? It was because Yobbo thought that his internet was completely wireless.

    Complete fabrication. Quote where I said that or I’ll report you to the headmaster.

    In future, when clients realise fibre is vastly outperforming their wireless, they’ll want it too.

    Many people would be happy with a $30/month wireless connection over a $180/month fibre connection.

  194. Sancho says:

    Complete fabrication. Quote where I said that or I’ll report you to the headmaster.

    Certainly, sir. Post #76, where you were quite certain that your internet was brought to your house by a private provider.

    Alternatively, were you grossly mistaken about who installed the landline, and attributing to a private business something that was provided by Telecom, thus contradicting pretty much everything you’ve said against the NBN?

    As for what internet people will be happy with, some very apt quotes:

    The Americans have need of the telephone, but we do not. We have plenty of messenger boys.

    – Sir William Preece, Chief Engineer of the British Post
    Office, 1876

    I think there is a world market for maybe five computers.

    – Thomas Watson’s, Chairman of IBM, 1943

  195. Yobbo says:

    No quote then?
    It’s ok to admit you were lying, people expect it from leftists.

    Alternatively, were you grossly mistaken about who installed the landline, and attributing to a private business something that was provided by Telecom, thus contradicting pretty much everything you’ve said against the NBN?

    I never said either of the things that you are saying I did. You are just outright being dishonest.

    Quote my post and then continue your claims, you fucking liar.

  196. Dan says:

    Yobbo – are you that adversarial and unpleasant in real life?

  197. Yobbo says:

    Dan, he’s making up things I didn’t say and using it as “proof” that I don’t know what I’m talking about. He’s a liar and a troll, and should be banned according to the commenting guidelines of this site.

  198. Dan says:

    So should you, technically, with the ad homs.

    How old are you – eleven!?

  199. Tel says:

    Wireless falls away if more ans more people use it.

    It is a bit like trying to make a phone-call on your mobile at the world cup final.

    There are problems.

    Sure, and so does everything. So does the GPON shared-fiber infrastructure, so do the upstream routers, so do the international links, so do the servers being accessed. This is merely a statement of the economic “Law of Scarcity” (in physics approximately equivalent to the “Laws of Thermodynamics”).

    There’s no free lunch.

    The fact that a bottleneck always exists somewhere in the system proves nothing. What matters is where the bottleneck exists, and which factor bites the hardest and bites first. I put it forward that with phased array antennae and MIMO designs, there’s no bottleneck in the physics of last-mile wireless, there is however equipment costs, but since infrastructure costs are a universal bugbear the question comes down to whether you want to spend money on buying high-tech base stations, or spend money getting guys to dig trenches and crawl into pits and ducts. The answer comes down to a three-way balance:

    * cost

    * total maximum bandwidth

    * mobility & convenience

    So the incumbent infrastructure always wins the “cost” battle, because it’s paid for (regardless of what that infrastructure might be, but in Australia that’s copper pairs). Fiber will win on total maximum bandwidth, but that’s useless if nothing else in the system works at equivalent speed, and even more useless if the market does not want to buy. Wireless wins on mobility & convenience, and comes a close second on bandwidth, limited not by any laws of physics, but by how many antennae you want to buy, how much spectrum you want to buy, and how much you want to invest in the latest advanced base-station infrastructure.

    When you can’t make a phonecall at peak periods, that’s because some provider calculated that they would spend enough money to provision 95% of demand but not enough to provision 100% of demand. You see the same thing happen on roads, or trains, and recently it’s been happening on the electricity networks as well. There are certain times of day you cannot get to the bank because the queues are too long. That’s not because the laws of physics prevent the bank from serving you, it’s because the laws of economics say that keeping a few people happy some tiny fraction of the time doesn’t deliver sufficient return to make it worth building another branch.

    FTTN is a compromise to incrementally leverage existing infrastructure while gradually rolling out fiber a piece at a time. It’s technically a good compromise, but politically difficult because it would require cooperation from Telstra to allow the cutting of existing copper pairs. FTTN keeps the costs down and allows selective upgrades. BTW the ALP don’t want selective upgrades, because it doesn’t suit their political base, and for that matter neither do the National Party.

    When you have particular business customers who have massive high bandwidth requirements, sure they buy fiber (although some buy Big Air fixed-dish microwave links instead) but they can get this right now, regardless of NBN, and they will probably still use non-NBN suppliers even after the NBN rollout if they are allowed to do so.

  200. Tel says:

    Dan,

    I thought you were saying, “What should be done in the event of a natural monopoly?”

    Fair enough, misunderstandings do happen, especially in a multi-way conversation.

    However, there’s absolutely no value in asking “What should be done in the event XYZ” until you have a reliable way to identify “the event of XYZ”. That’s why I was asking how you go about identifying those situations where using legislation to force a monopoly is a smart idea. Which criteria do you apply?

  201. Dan says:

    Tel – 203 is a good post.

    Re: criteria – well, I got mine from Stilwell. I don’t have the textbook on hand here but basically it’s saying, when barriers to entry are very high, but once you’ve jumped that hurdle the costs and benefits of servicing an extra customer are neither here nor there.

  202. Dan says:

    So – power lines, phone infrastructure, water/sewerage… lighthouses.

  203. Sancho says:

    Dan, he’s making up things I didn’t say and using it as “proof” that I don’t know what I’m talking about. He’s a liar and a troll, and should be banned according to the commenting guidelines of this site.

    Oh, my. Spare us the grandiosity.

    You can stop the tantrum and just tell us which it was: did you think your internet arrives through radio waves thanks to the awesome power of private enterprise, or did you truly have no idea that the only reason you get internet at all is because Telecom installed a line?

    Tel, the response to #88 has been in moderation for a couple pf hours.

  204. desipis says:

    So the incumbent infrastructure always wins the “cost” battle

    That’s kinda my point. Consider the following hypothetical (take values as averages):

    Copper line maintenance cost: $10
    Copper line value to consumer: $30
    Fibre amortised capital and maintenance cost: $20
    Fibre amortised capital and maintenance cost plus buying out copper lines: $30
    Fibre value to consumer: $35

    Time 0, copper line installed no competition.
    Copper line supplier can charge whatever the consumer will pay (i.e $30). They make $20 profit.

    Scenario 1, incumbent installs fibre.
    Result: Proportion of customers migrate to fibre, supplier’s margin falls to somewhere between $0 and $5 (costs $20+$10=$30, prices $30-35).
    Conclusion: Incumbent won’t install fibre.

    Scenario 2, competitor install fibre.
    Result: Copper supplier cuts price to $10.
    Scenario 2a fibre supply matches price ($10):
    Result: Fibre supplier operates at a loss and eventually goes out of business.
    Scenario 2b fibre supply keeps price to cover cost ($20).
    Result: Customers only value fibre $5 more than copper therefore few migrate, average costs blow out. Fibre supplier operates at a loss and eventually goes out of business.
    Conclusion: Competitors won’t install fibre.

    Scenario 3, government buys out copper lines and installs fibre.
    Result: Fibre sold at cost to low end users ($30), higher for higher end users ($35 or more)
    Conclusion: Fibre installation covers cost from revenue. Consumers get better value for the money. Even the former copper line supplier can’t be unhappy.

    Sure, the results might change depending on how the numbers look in reality, and the model is very simplistic. However the idea is to illustrate its quite possible for the NBN to have a positive result for consumers without a being burden to tax payers.

  205. JC says:

    As for JC’s claim about harmless monopolies, I’ll leave him to defend his own position on that one

    I never said anything about being “harmless”. Please don’t misrepresent what I said. I suggested that collusion in contestable markets are a figment of the imagination than anything else. And I also suggested that collusion is near impossible with firms that have different balance sheets in contestable markets.

    So that isn’t the case isn’t an argument.

    NBN will not be finished.

  206. Sancho says:

    I also suggested that collusion is near impossible with firms that have different balance sheets in contestable markets.

    Sure about that?

  207. JC says:

    Yep Sure as sure are eggs.

    It never worked. They both later admitted they were breaking the agreement a short while after they made it. So Pratt was essentially found guilty of a thought crime. I mentioned the Pratt case earlier Sanchez. There shouldn’t be reason to repeat. Please keep up.

  208. Sancho says:

    That’s not how probability works. That Pratt and co. got caught proves that collusion happens, not the opposite. You may as well claim that credit card fraud is impossible because some identity thieves get caught.

    The Visy case is just applying natural selection to the cartels and improving their performance.

  209. JC says:

    You analogy is simply appalling.

    Pratt was caught trying to collude when in actual fact it failed and failed miserably seeing the following week the two firms were breaking the agreement and essentially going their own way. There was never a case of price fixing as it never happened for longer than a couple of days as the price point was unsustainable for both firms.

    With collusion people are expected to believe that people will collude while ignoring profit maximization. In other words they are expected to behave irrationally.

    I don’t see there is anything more to say about this as you don’t understand enough about the subject to carry on a conversation after reading that dreadful analogy.

  210. Sancho says:

    Declare victory and retreat. The Henry Kissinger strategy.

    The Visy/Amcor deal proves that businesses will collude in the marketplace. Incredibly, you’re actually arguing that the existence of a cartel is proof that cartels don’t exist.

    Monopolies are common, and as we saw with the GFC, they’ll use their lobbying clout to pressure legislators into making blatant fraud perfectly legal. There is no reason to think otherwise.

    As for behaving irrationally, there is no idea in economics more thoroughly demolished than the idea that homo economicus exists.

  211. Yobbo says:

    You can stop the tantrum and just tell us which it was: did you think your internet arrives through radio waves thanks to the awesome power of private enterprise, or did you truly have no idea that the only reason you get internet at all is because Telecom installed a line?

    So basically what you are saying is that if any private company uses public infrastructure then they are not a private company any more.

    So all shipping companies, road transport companies, airlines, shops and whatever else would never have existed without government, because only governments are capable of building infrastructure. And the fact that they drive on roads that were built by governments means that they are in fact, government owned companies.

    That’s how stupid you sound, buddy.

    Yes, the Australian copper network was built by the government. Because the government wouldn’t let anyone else do it. In the US, it was built by private enterprise. But that doesn’t change the fact that most people’s internet connection is provided by private enterprise, in the same way that UPS and Fed Ex are private enterprises, despite using government roads to carry out their business.

    There are countless examples of roads, ports, airports, copper telephone lines – and whatever other infrastructure you can imagine – being built by private enterprise all around the world. The fact that it didn’t happen in Australia is just reflection of government policy, rather than any inability or unwillingness of private enterprise to do it.

  212. Sancho says:

    So basically what you are saying is that if any private company uses public infrastructure then they are not a private company any more.

    LOL. No, I wouldn’t say anything like that. That’s something you’d say to wriggle out of clarifying your statements.

    Here are your exact words:

    You have the internet already you say? Without the government building it for you?

    My point is not that we do not need the internet. My point is that we have a perfectly functioning one already provided by private enterprise, why waste $100b on building a new one that far outstrips what we actually need it for.

    What did private enterprise provide that the government is now building a new one of?

    You thought that your internet was completely wireless and run on private infrastructure, didn’t you?

  213. Yobbo says:

    You thought that your internet was completely wireless and run on private infrastructure, didn’t you?

    No, I did not.

  214. Sancho says:

    Then explain your post.

    What did private enterprise provide that the government is now building a new one of? This should be very simple for someone who isn’t trying to pretend they only just realised the cord running from their modem isn’t for electricity, and based an argument on the belief their internet was wireless.

  215. Yobbo says:

    An internet service.

    The NBN isn’t just cables. It’s also going to be wholesaling the service.

    Our current internet runs on copper wires that were built by the government, but the internet service itself is provided by private enterprise. They offered the first dialup connections, they installed a lot of the DSLAMS.

    Those same private companies wanted to build the FTTN network themselves, but were knocked back by the ACCC, in favour of a government owned, nationalised service.

    It’s going to be useless, expensive, and slow. Just like everything the government does.

  216. Sancho says:

    The government isn’t building any internet service. It’s building a fibre-optic network.

    Telstra is privatised and the other operators will also be using the NBN.

    Are you going to claim next that the government must be entering the motor vehicle manufacturing market because it’s building highways?

    Yobbo, what is the government building that private enterprise already provided? This is an extremely simple question that you’re having a terrible time answering. You phrased your post precisely as though you believe your internet has no connection to Telecom’s wire network.

    Once more: what has private enterprise provided that the government is building a new one of?

    And check out your link again. The participants dropped the independent network idea in favour of actively recruiting businesses to support the NBN.

    JC will also be interested: “the ACCC rejected the plan, due to a lack of incentives for providers of the service to compete”. But didn’t anyone tell the ACCC that collusion is impossible?

  217. Yobbo says:

    The government isn’t building any internet service. It’s building a fibre-optic network.

    Yes, it is.

  218. desipis says:

    It’s going to be useless, expensive, and slow. Just like everything the government does.

    And here we have the fundamental assumption that forms the anchor point of all these ‘right wing’ circular arguments about the NBN.

  219. JC says:

    And here we have the fundamental assumption that forms the anchor point of all these ‘right wing’ circular arguments about the NBN.

    Yep. that’s what it’s got to. The fact that the financials will never ever stack up, that it will likely cost $150 billion or more and never get built is just a circular argument by the right.

    Henry Ergas has put forward numbers reason why this turkey will be an unmitigated disaster, but of course Henry being from the right means he’s also participated in “the intellectual collapse of the right” just when the right looks like its in ascendency and at the point in time this becomes as clear as dog balls I’m sure you’ll be saying the gullible public were just taken in… But that of course won’t be circular.

  220. desipis says:

    This Henry Ergas?

    …in 2006 a Federal Court judge dismissed much of Ergas’s evidence in the Queensland Rail-Pacific National case, stating “In my view, Mr Ergas’s argument is pure economic theory unsupported by the facts of the case.”

    …the failure of his consulting business Concept Economics and the overt support for the Liberal Party of Australia.

    Doesn’t exactly sound like someone who would offer an unbiased opinion of a Labor Party policy.

  221. JC says:

    Ergas thinks the NBN is a turkey has nothing to do with what he thinks of the ALP. He thinks its a turkey because it is. The numbers don’t stack up and he’s ably demonstrated why.

    His firm failed because a client didn’t pay its fees during the GFC. He wound it up and paid what was due out of his own money. He did nothing wrong and is a stand up guy. Good effort attempting to damage his reputation as though what happened to the firm has anything to do with the argument. Does it, you think? (talk about the intellectual collapse of the right Lol)

  222. Pedro says:

    Unbelievable, still arguing as if the policy choice is between the NBN and the stone age. And desi, you’re quoting a judge in support of the claim that Ergas is a dud economist and shill. A judge!!

    But why not quote a bunch of prominent economists who are in favour of the NBN policy?

  223. jtfsoon says:

    desipis
    If you have served as an expert witness in trade practices case as long as Henry has in his very long career, you are bound to piss off some judges.

  224. KB Keynes says:

    Henry Ergas the modern day Bob Ansett who saw nothing contradictory in being the main academic ( and well paid) apologist for Telstra’s monopoly whilst also having a monopoly position in the retail market but then arguing there should be a completely competitive wholesale market now.

    A good example of how low the right has fallen. He rests easily at Catallaxy

  225. Sancho says:

    Yes, it is.

    Ah. So you’re moving past attempts at providing facts and straight into magical thinking.

    So there we have it. Pedro is upset that anyone might think it’s a sign of the right’s intellectual collapse that Malcolm Turnbull is leading Australian conservatives in believing that private enterprise can ignore the laws of physics and provide wireless broadband as efficient as cable, but he’s followed right in by Yobbo, who until a couple of days ago thought his ISP was providing all of his internet via radio, without any help from the evil government.

    It’s quaint when it’s just dear old Yobbo, but he’s representative of many other enthusiastically ignorant voters who believe that the laws of physics are optional when it conflicts with right-wing dogma.

    Just when the right began to grudgingly accept evolution (well, except where it can be shackled to climate change), some other verifiable fact about the universe comes up that must be denied in order for conservative ideology to work.

    If you’re still around Tel, my post came out of moderation limbo at #193

  226. Sancho says:

    [Ergas’] firm failed because a client didn’t pay its fees during the GFC

    You mean that Ergas should be considered a reliable authority on economics even though he couldn’t keep his own company afloat, because his company only collapsed because the neoliberal economics he advocates were put into practice?

  227. Mel says:

    I must congratulate Club Troppo on its Affirmative Action program which has helped so many promising young libertarians escape the Catallaxy Ghetto and enter the wider world. But I digress.

  228. Sancho says:

    You won’t find many libertarians at Catallaxy. Have a look at their post histories and you’ll notice that they’re libertarian right up to the point it conflicts with Liberal Party orthodoxy.

  229. Dan says:

    I’ve noticed that too – less radical, a lot less ideologically coherent and a lot more willing to make allowances for special interests than the libertarians I talk to elsewhere.

  230. Sancho says:

    “Libertarian” is a trendy name for old-school right-wing extremism.

    Trouble with “right-wing” and “conservative” is that they’re tied firmly to a history of being on the losing side of pretty much every major battle of ideas in recorded history, from the flat earth to slavery to evolution, and now climate change.

    It’s perfectly understandable that a new generation would want to pick up the same intellectual habits but give themselves a different name, although it must be galling for the tiny number of genuine libertarians out there.

  231. Dan says:

    The libertarians I know in my personal life are ideologues – no doubt about it – but are consistently on the side of liberty, privacy, and (they honestly think) non-coercion. They also readily accept the science on climate change.

    Basically where we begin to differ is that they see freedom generally as being pretty much the same thing as free markets, and furthermore they think that more freedom is always better (to the point that it becomes coercive, which, as I point out to them regularly, is pretty darn quick once intergenerational effects are taken into account).

  232. desipis says:

    JC,

    The numbers don’t stack up and he’s ably demonstrated why.

    Link?

  233. Dan says:

    George Carlin sums it up:

    ‘One of the more pretentious political self-descriptions is “Libertarian.” People think it puts them above the fray. It sounds fashionable, and to the uninitiated, faintly dangerous. Actually, it’s just one more bullshit political philosophy.’

  234. Nicholas Gruen says:

    For the record IMO, Henry is a first class economist. One of the best in the country. He’s also an excellent columnist. He’s so well read that there are always all sorts of things to learn from his columns. But (sadly) given my huge respect for him, I no longer go to his columns with any trust for his balance or judgement.

  235. KB Keynes says:

    Henry has got Taylor disease.

    For a first class economist he certainly gave a highly misleading piece on structural deficits.

    If JC is correct he didn’t understand the first law of business but then again it was probably the employees fault!!

  236. rog says:

    Just because Pratt and Cos cosy scheme failed doesn’t mean that they didn’t break the law, they intended to break the law and failed to achieve their goal. Like conspiracy to murder, hardly a “thought crime”.

  237. JC says:

    Homer

    You’re the last person to be attacking Ergas in your garden slippers at 11.30 in the morning. The phone isn’t exactly running red hot with job offers nor consultancies is it?

    Henry is a stand up guy. His firm failed because a client didn’t pay a big bill and he wound the firm up and paid everyone out of his pocket. If you think there’s something wrong with that then explain it.

  238. Dan says:

    That does indeed sound like an honourable and responsible course of action. Doesn’t mean the guy’s not a shill though.

    Who was the big client? (Just in the interest of an informed and therefore efficient market…)

  239. JC says:

    Just because Pratt and Cos cosy scheme failed doesn’t mean that they didn’t break the law, they intended to break the law and failed to achieve their goal. Like conspiracy to murder, hardly a “thought crime”.

    Interesting so agreeing to attempt to set set prices (which doesn’t even get off the ground) is a equal to a conspiracy to murder. LOl Quick someone tell FWA setting wage levels.

  240. desipis says:

    Ah, it wouldn’t be an internet discussion without wilful misinterpretation.

    With that logic we should be charging the ADF with mass murder, and those involved with the police and prison system with mass kidnapping.

  241. KB Keynes says:

    You have told the world JC Ergas didn’t understand the basics of business so its no wonder the company went belly up. you always had a big mouth and an ignorant one.

  242. Pedro says:

    “So there we have it. Pedro is upset that anyone might think it’s a sign of the right’s intellectual collapse that Malcolm Turnbull is leading Australian conservatives in believing that private enterprise can ignore the laws of physics”

    Yeah, that’s our problem with the NBN, they totally forgot to include a perpetual motion machine. Keep making a dick of yourself Sancho.

    Freedom is coercive Dan? I’ll have to ask Winston Smith how that works.

  243. Dan says:

    [email protected]: Duh. To take an excruciatingly obvious example, if we have the freedom to emit unlimited CO2 into the atmosphere, it impinges on the quality of life of my (and your) grandkids.

    It is the sort of complete myopia like that which you’ve displayed right here of the contemporary right that has consigned them to occupying the stupid, venal space in contemporary political debate that they presently do.

  244. Patrick says:

    I find the idea that the NBN could work to be mind-boggling.

    How can anyone even imagine that in 10 years time wireless communication, or for that matter wired communication, won’t be streets ahead of where it is now??

    Can any of you remember wireless ten years ago? Do you remember using wap to check the footy scores or infra-red to connect laptops?

  245. Dan says:

    Kicker is, you’ve just demonstrated basic ignorance of the fundament of the libertarian moral position, which is that freedom is great to the extent it doesn’t impinge on anyone else’s (ie. coerce them). eg. anyone who claims people should be free to own slaves is not a libertarian.

    You’ve also demonstrated that you’re not aware of the freedom from/freedom to distinction.

    Perhaps you should consider not being so glib on topics to which you’ve obviously given no thought whatsoever.

  246. Dan says:

    (250 was @Pedro)

  247. Pedro says:

    Strawman alert. Dan thinks libertarians want the freedom to own slaves.

  248. Sancho says:

    Yeah, that’s our problem with the NBN, they totally forgot to include a perpetual motion machine. Keep making a dick of yourself Sancho.

    Oh, Pedro. You’re deathly afraid of providing anything substantive to back your claims up, but so quick with the name-calling.

    To clarify, Pedro:

    1. The default position of the Australian right is the belief, held by Malcolm Turnbull and Yobbo, that the physical limitations of data transmission don’t apply when private enterprise is involved. Turnbull himself is conspicuously anxious to avoid addressing that question and instead glosses it over with unrelated economic arguments. Isn’t that true? Oh, and a McBain-style “nooooooo!” isn’t an answer, despite what Yobbo believes.

    2. Henry Ergas pushes the same economic sector deregulation that encourage the the GFC and killed his own business. Why should he be considered a reliable intellectual or an authority on economic matters?

    3. Cartels and business collusion happens, as the Visy/Amcor affair demonstrates. At post #220 Yobbo was even kind enough to provide a link that demonstrates the private sector angled for a cosy, non-competitive scheme to roll out the NBN. Why would anyone believe that private enterprise will be efficient and honest in providing internet services to the entire nation when its first instinct was to create a cartel?

  249. Dan says:

    [email protected]: wtf? I specifically said libertarians don’t want the freedom to own slaves, and believe that is a freedom that should be denied, because it impinges on others’ freedom (ie. the slaves’). This is an example that they regularly bring up.

    You’re no political philosopher, are you?

  250. Dan says:

    If you don’t find libertarianism convincing, I’m right with you – what I am not doing is misrepresenting their position. So cut it out with the misrepresentation of mine.

  251. rog says:

    Conspiring to commit a crime is a crime in itself and no amount of blather can escape the fact.

  252. desipis says:

    I find the idea that the NBN could work to be mind-boggling.

    1) NBN co spends money to install an FTTP network.
    2) They charge money for access.
    3) They use this revenue to pay of the debt from step 1.

    Mind-boggling?

    How can anyone even imagine that in 10 years time wireless communication, or for that matter wired communication, won’t be streets ahead of where it is now??

    Have you ever bought a computer, a car, or any piece of technology? Technology is always improving but that doesn’t mean you can put off investing in an upgrade indefinitely. We’ve been using the coper wire for communication for over a century, and optic fibre has been a technically superior option for decades. It’s not like we’re rushing into it.

  253. Dan says:

    [email protected]:

    I wonder if the blatherers themselves are actually convinced?

    This thread has really left me in awe of the stupidity and lack of intellectual rigour of the stupid party. I was kind of agnostic on the NBN a few days ago, but given the utter flimsiness of the objections raised by some of the hacks above, I’m much more convinced by it now.

  254. Sancho says:

    Strawman alert. Dan thinks libertarians want the freedom to own slaves.

    Now Pedro is the arbiter of what libertarians want? This should be good.

    Here’s a great clip from The Yes Men, where the producers bluffed their way into a free trade conference and spoke in favour of slavery, using free trade as a justification. The clip doesn’t cover the phase after his speech where he’s approached warmly by delegates asking for some more information on how to argue for re-introducing human trafficking.

  255. Pedro says:

    Dan, you said:
    “Basically where we begin to differ is that they see freedom generally as being pretty much the same thing as free markets, and furthermore they think that more freedom is always better (to the point that it becomes coercive, which, as I point out to them regularly, is pretty darn quick once intergenerational effects are taken into account).”

    The strawman is the idea that libertarians always think more freedom is better. Which is crap. Don’t join Sancho in tilting at windmills of your own construction. And don’t be so precious when a large portion of your comments are filled with your scorn for your opponents.

  256. Dan says:

    [email protected]: I don’t think that’s libertarianism – that’s just capitalism, unemcumbered by humanity or morality.

  257. KB Keynes says:

    another email for soony

  258. Sancho says:

    How can anyone even imagine that in 10 years time wireless communication, or for that matter wired communication, won’t be streets ahead of where it is now??

    Heh. Remember how in the sixties they thought we’d have flying cars by now? I wonder if there was a proto-Pedro arguing that all spending on roads should be ceased in preparation for the airborne revolution.

  259. Dan says:

    [email protected]: No, you’ve skipped over a crucial caveat in my characterisation of what libertarian political philosophy is; to wit:

    “…more freedom is always better (to the point that it becomes coercive…)”

    See, I can respect this position because it’s consistent. These are people who opposed the war in Iraq from day one, opposed the bank bailouts (not that I did myself, but I still think the public got diddled), etc. Utopian, yes. Myopic, rather. Dishonest? No.

    Whereas mainstream conservatives will dodge and weave incessantly in order to fully exercise their ability to be stupid.

  260. Sancho says:

    That raises a good question, Dan: what sort of morality does libertarianism contain that free-market capitalism doesn’t?

  261. Dan says:

    Non-coercion.

    (I’m yet to meet a vegetarian/vegan libertarian who works for an NGO, but I’m assured they exist. Of course, we all have our thresholds for hypocrisy.)

  262. Pedro says:

    Dan, I read your statement in brackets as your comment on the libertarian position. Did you mean to write that freedom is regarded as good provided that the freedom does not involve the coercion of others?

  263. Sancho says:

    Non-coercion.

    Hmm. Most genuine libertarians I’ve encountered can’t speak highly enough of the police and military, but as mentioned previously, every standard-issue militant conservative calls himself “libertarian” these days, so maybe it’s a sampling bias.

  264. Dan says:

    Yes, but that’s not my op-ed on the libertarian position; that’s a fundamental tenet of it.

    Or, expressed slightly differently: “freedom is regarded as good provided that it does not impinge on the freedom of others”.

  265. Dan says:

    269 was addressed to 267.

    Re: 268 – well, strictly enforced property rights are a pretty big deal for libertarians as well, so maybe that’s where they’re coming from.

  266. Pedro says:

    So Dan, you expressed something poorly, I responded to what you wrote and not what you intended, and you called me a dummy.

  267. Dan says:

    I accept that you misinterpreted me, although a passing knowledge of libertarian political philosophy would have obviated such a possibility.

  268. Dan says:

    You also claimed that I thought libertarians were in favour of slavery (252), which is unambiguously the exact opposite of what I said (250).

  269. Sancho says:

    Yes, but that’s not my op-ed on the libertarian position; that’s a fundamental tenet of it.

    Thanks for the distinction. If only there were enough actual libertarians around to make it regularly.

    I responded to what you wrote and not what you intended, and you called me a dummy

    You called me a dick earlier and still haven’t responded to what I wrote. How many more posts before you qualify as gutless?

  270. Pedro says:

    Sancho, I wasn’t bothering because you’ve constantly been arguing against a position I don’t hold. I said that the NBN is a waste of money and bad policy. You’re claiming that means I don’t understand the laws of physics. Arguing with the puerile is pretty pointless.

    I called you a dick because you proved it. Crapping on about how smart you are and how wicked and moronic people on the right are.

    Dan, I didn’t mispresent you, that would require a positive wrong on my part. It’s hardly my fault that you didn’t express yourself well. but I think a couple of our later comments crossed, esp on slavery.

  271. Dan says:

    No worries, Sancho.

    My opposition to libertarianism stems chiefly from:

    a) the unclear time horizon over which “non-coercion” should be considered
    b) the macro instability of unregulated (or deregulated) markets – see the Dot Com crash for an unambiguous example of this
    c) social cyclic and cumulative causation of the sort identified by Gunnar Myrdal (individual responsibility is easy if you’re born white/male/wealthy/heterosexual etc.).

    Most contemporary conservative thought, on the other hand, is simply irresponsible, fearful, and in fact exacerbates the problems that Myrdal identified.

  272. Dan says:

    [email protected] – Okay. I’ll try to write more clearly (thought I was doing okay, but of course it’s not always easy when one seeks to express nuance), and for your part of the bargain, you can give me the benefit of the doubt when my meaning is ambiguous.

  273. Sancho says:

    Sancho, I wasn’t bothering because you’ve constantly been arguing against a position I don’t hold. I said that the NBN is a waste of money and bad policy. You’re claiming that means I don’t understand the laws of physics. Arguing with the puerile is pretty pointless.

    I called you a dick because you proved it. Crapping on about how smart you are and how wicked and moronic people on the right are.

    Why are you begging to be treated like an idiot? I was having a look through your Catallaxy posts, and you’re clearly not a banal right-wing drone, but when your preconceptions are challenged you run away from debate like it’s fire.

    This thread is about the intellectual collapse of the right. Yobbo and Malcolm Turnbull have demonstrated that the mainstream right in this country is totally on-board with ignoring the laws of physics. If that’s not an intellectual collapse, what is?

    I’ve made no economic argument – that’s largely pointless when one side of a debate won’t even deal with reality – yet you seem to be conflating the private-enterprise-can-alter-physics position with an economic argument, when they’re actually separate.

    You’ve claimed that the writings of Henry Ergas should be respected, when there is ample evidence to the contrary, and that cartels are impossible, even though there is ample evidence in this thread alone that cartels and monopolisation exist and are actively sought by the private sector. Why are you so afraid of dealing with this?

    In a thread about the right’s intellectual collapse, you’re defending the right’s overt hostility to intellect, and doing it by refusing to engage in factual debate. What are you trying to achieve?

    If you have no answers to my points in post #253, just say so. The more you run in circles hurling insults and avoiding simple questions, the more you become living proof of the right’s intellectual collapse.

  274. Dan says:

    “Monopoly is a terrible thing, until you’ve got it” – Rupert Murdoch

  275. JC says:

    ….see the Dot Com crash for an unambiguous example of this

    Really. You would take the Dot com crash as the gold standard why capitalism doesn’t work.

    Perhaps you need to think about it a little more. The new technology was revolutionary possibly a once in two generations thing in terms of transformative powers. Markets understood the revolutionary nature of the technology but the future was largely unpredictable. How do you value such a technology? What are the expected future cash flows and what stock valuation to you place on it?

    There is a very good case that the market behaved quite rationally. At first allowing for very high valuations and then bringing it down once the wood could be seen for the trees.

    the unclear time horizon over which “non-coercion” should be considered

    I’m not sure what exactly that means. State based coercion should be reduced to as little as possible. 45% of GDP tax take by the state is far, far more coercive than 10%. Placing restrictions on the press is not a good thing. Creating largely fictitious group rights is another example.

    c) social cyclic and cumulative causation of the sort identified by Gunnar Myrdal (individual responsibility is easy if you’re born white/male/wealthy/heterosexual etc.).

    That’s just a shallow cop out.

  276. JC says:

    “Monopoly is a terrible thing, until you’ve got it” – Rupert Murdoch

    He must have been talking about his free to air TV licenses or something other than the print media. Print media is a contestable market, as we’ve seen with once mighty mast heads receiving valuations of $1. Newsweek was sold for $1 to Bloomberg when only a few decades ago it was the opinion maker in the US and around the world, along with Time Magazine. The newsstand is competitive and there are no government impediments (at this stage) to setting up a newspaper.. there hasn’t been in the Angle world for 400 years.

  277. Dan says:

    [email protected]:

    1) Yes, the Dot Com crash – a shining example of the free market in action! From the same playbook as other successes such as Tulip Mania and the South Sea Bubble.

    Speculative activity is a rational response to an irrational system. If, on the oter hand, the system is rational, you’re in the unenviable position of arguing that panics are rational. Enjoy.

    2) “I’m not sure what exactly that means.” Clearly, as my point has nothing to do with the public-private divide at all. I’m talking about whether an action now will have, or risk resulting in, coercive consequences down the line. If you were a proper libertarian with a bit of classical political economy and moral philosophy under your belt you’d be familiar with the issue. Embarrassing.

    3) Actually I think enabling people – especially the disadvantaged – to achieve their potential is the apex of the good society. But I like how you’re happy to say “cop out” to the work that won the guy the Nobel Prize in Economics the same year as Friedman.

  278. Pedro says:

    Ok Sancho, arguing against the NBN is not intellectual collapse because:
    1 we don’t need the govt’s scheme to get more than sufficient broadband at lower prices;
    2 it’s nothing to do with whether broadband is good;
    3 the Conroy scheme was a massive step up from the earlier FTTN proposal that was ALP policy;
    4 I’ve read Turnbull say lots of sensible things about the NBN policy and I’ve never seen any economic commentator in favour of it;
    5 the laws of physics are not broken by supporting a mix of FTTN, FTTP, wire and wireless as we have now;
    6 remote medicine does not need FTTH, only FTTD(octor) and even then I’ve watched remote medicine done on wireless.

    I maintain you are refusing to engage in a factual debate because you default position is that any argument against the NBN policy is anti-science. It is an economic argument, full stop. The question is whether it makes sense to spend all that money, and create a monopoly, so that lots of homes can have expensive optic fibre attached to their wall.

    I’ve said nothing about Ergas, but I think he’s pretty smart and his comments on the NBN seemed very sensible to me.

    Nor have I said anything about cartels, but I did criticize the creation of a new monopoly that is totally unnecessary.

    The whole intellectual collapse of the right idea is bunk and making stupid assumptions about your idealogical opponents is folly. Just because Krugman does it (often mendaciously) doesn’t make it clever.

  279. Dan says:

    [email protected] – remember when the Tele was 10c for a while a few years back? I’m not sure whether that worked or not, but its intent was clear.

  280. Sancho says:

    He must have been talking about his free to air TV licenses or something other than the print media

    Thank god someone is on hand to tell us what Murdoch means. For a moment there the Sun King’s statements were almost up for interpretation.

    Yes, the newstand is competitive. So competitive that Murdoch runs The Australian at a loss, subsidised by his television interests.

    Viva the free market! Where economic forces allow consumers to dictate what belongs in the marketplace without interference from centralised authorities.

  281. Patrick says:

    Sancho, does this reconcile with your mastery of physics?

    http://www.wired.com/epicenter/2011/06/perlman-holy-grail-wireless/

    If you think it is impossible, chances are that your imagination is limited not phsyics.

  282. desipis says:

    JC:

    45% of GDP tax take by the state is far, far more coercive than 10%.

    It’s quite possible that the relatives increase of the coercive forces of the market (or other parts of society) at 10% exceed the coercive forces of the government 45% for many people. Arguably that’s why we have such a level of government taxation and spending, people feel that democracy offers better protection from coercion than the market does for many aspects of life.

  283. Mel says:

    The downside of Club Troppo’s Affirmative Action plan for Catallaxian libertarians is that some threads here now resemble a Punch and Judy show. Oh crap, here comes another one with a rolling pin … Duck!!!

  284. Pedro says:

    Dan, the question is not whether the free market system is perfect, it is whether it is better than the alternatives. What’s your alternative to the occasional bubble? Everyone’s an editor, author it harder.

  285. JC says:

    ) Yes, the Dot Com crash – a shining example of the free market in action! From the same playbook as other successes such as Tulip Mania and the South Sea Bubble.

    Well yes, it was hugely successful for consumers of technology as high valuations induced people to think about new software and hardware thereby offering consumers better services. I don’t give a shit that Soros hedge fund lost billions as a result of speculating on the new technology. And why should be care as consumers if investors lost money?

    Speculative activity is a rational response to an irrational system. If, on the oter hand, the system is rational, you’re in the unenviable position of arguing that panics are rational. Enjoy.

    The activity that went on during the Dot com era was rational. The difficult was valuing the new technology and which ones were the winners.

    2) “I’m not sure what exactly that means.” Clearly, as my point has nothing to do with the public-private divide at all. I’m talking about whether an action now will have, or risk resulting in, coercive consequences down the line. If you were a proper libertarian with a bit of classical political economy and moral philosophy under your belt you’d be familiar with the issue. Embarrassing.

    You lost me at political economy.

    3) Actually I think enabling people – especially the disadvantaged – to achieve their potential is the apex of the good society. But I like how you’re happy to say “cop out” to the work that won the guy the Nobel Prize in Economics the same year as Friedman.

    And who is actually dis-enabling disadvantaged to achieve their potential? Why do you consider it obvious that if the government stopped providing the miserable services it does to these people that the well would suddenly dry up?

  286. Pedro says:

    Doh! “author is harder”

  287. JC says:

    is that some threads here now resemble a Punch and Judy show.

    Yea Mel, at least they don’t turn out into Mel’s Catholic hour when you spent your time accusing CL of being a child molester because of his religious beliefs.

    So please get off you soap box, In fact it’s not a soap box at all. It’s a toilet you’re standing on.

  288. JC says:

    Desipis:

    It’s quite possible that the relatives increase of the coercive forces of the market (or other parts of society) at 10% exceed the coercive forces of the government 45% for many people.

    yes, it would be possible Desipis. It would be possible if you got hold of the dictionary and redefined coercion to basically mean what you demand it to mean and then everyone accepted newspeak.

    Arguably that’s why we have such a level of government taxation and spending, people feel that democracy offers better protection from coercion than the market does for many aspects of life.

    Really. How odd and interesting at the same time. So next quarterly cheque I’m sending to the ATO in December I should be saying.. Thank god for the government taking my money under the threat of imprisonment because otherwise I would feel coerced by the shop owner down the road serving me coffee each day or when I call the travel agent for a cheap flight somewhere.

  289. Dan says:

    [email protected]: Social democracy – market processes civilised and counterbalanced by political, regulatory and moral ones.

    [email protected]:

    1) My point was merely to demonstrate the failure of the market to be efficient. If people weren’t sure which stocks would be winners but weren’t behaving speculatively, prices wouldn’t have gone gangbusters; there would have been a wait-and-see approach.

    2) Adam Smith was a classical political economist. As were Ricardo and Malthus. Those kooky lefties!

    3) Miserable services like universal health care. But I don’t think we’re going to reach a resolution on this.

  290. rog says:

    Well there you go, in one thread a hypothesis proved beyond reasonable doubt. Not only has the intellect of the right collapsed, evidence points to the right never having an intellect.

    Chuck us another cold one will ya gazza?

  291. Dan says:

    [email protected] – It’s true that you probably have less economic freedom in this society than in a laissez-faire one. That’s because on balance you’re a net beneficiary of the market and economic history (as am I). Other, more vulnerable, people than you are in precisely the opposite situation. Use your imagination.

  292. Sancho says:

    Ah, that’s more like it, Pedro!

    Okay:
    1. “Sufficient”? What’s “sufficient”? Isn’t that for consumers to decide, with all options available?

    It’s important that we puncture a myth about the NBN here: just because high speeds will be available doesn’t mean they’ll be free. ISPs will limit speed on the NBN according to price, and it’s then that we’ll find out what the market is calling for.

    If it’s left up to Yobbo and Pedro and Malcom Turnbull, Australian consumers will get to choose from a narrow range of backwater wi-fi internet plans according to what they judge is “sufficient”, while the NBN allows the market to decide how much the highest speed access is worth.

    Thanks, Pedro, but as a consumer I’ll make my own decisions about what is “sufficient”, without having informed technophiles like Yobbo dicate that for me.

    2. and…
    3. … make no sense. The question of whether broadband is “good” hasn’t entered this debate, but if you’d like to argue that dial-up is just fine, go ahead. And when did policy come into it?

    4. Please. Seriously, please provide some sensible commentary from Turnbull about the NBN. It’s excruciating to watch the man. It’s like watching a gay aboriginal highschool kid doing his best to argue against gay aboriginals because that’s what the debating team lumped him with.

    Err…just to clarify, you’re not saying that there’s a conspiracy to disagree with Turnbull, right?

    5. Ah, now this is what you should have been talking about a hundred posts ago.

    No, a mix is good – in the interim. Ultimately, all roads lead to fibre-optic cable. The NBN is simply knocking decades of market disputes on the head by cutting to the finish.

    If it was left up to private operators, we’d get what we have with phone services today: millions of people infuriated that no matter how much money they’re willing to pay, they still can’t get the quality of service that users in other countries take for granted.

    6. As much as your (reluctant) input is appreciated, unless you can demonstrate that you have some informed knowledge of what remote clinicians need from the NBN, your opinions don’t count for much.

    On a similar note, while rural medicine is commonly cited, it’s not the only remote service that benefits from data transmission. It doesn’t take much imagination to realise how many services that are mundane in urban centres become difficult in regional Australia.

    you are refusing to engage in a factual debate because you default position is that any argument against the NBN policy is anti-science

    There are numerous posts in this thread clearly demonstrating the anti-science basis of the right’s campaign against the NBN. You know that. Would you like me to reiterate?

    I’ve said nothing about Ergas, but I think he’s pretty smart and his comments on the NBN seemed very sensible to me.

    Post #227, but for the most part I’m mistaking your posts with JC’s. I retract.

    Nor have I said anything about cartels, but I did criticize the creation of a new monopoly that is totally unnecessary.

    Again, I’m confusing you with JC. My error.

  293. JC says:

    Social democracy – market processes civilised and counterbalanced by political, regulatory and moral ones.

    Ah yes social democracy. Working wondrously in Europe. A great idea until you run out of other people’s money.

    My point was merely to demonstrate the failure of the market to be efficient. If people weren’t sure which stocks would be winners but weren’t behaving speculatively, prices wouldn’t have gone gangbusters; there would have been a wait-and-see approach.

    The market was behaving very efficiently. However the market doesn’t have a space ship able to take people through time and view the winners. Hence why valuations were screwy/high. There’s is absolutely nothing wrong with the valuations it was presenting at the time even at 80- 100 times earnings as you often get new firms trading at extremely high multiples. People are trying to figure out where future earnings will be. It just so happened that entire sector was on fire as a result of revolutionary type technology being introduced. Traders/investors were simply trying to figure out the winners.

    Take a look at the valuations offered in bio tech presently traded in the market. They trade no differently to what was happening in the tech space at the time. 19 bio- tech companies will eventually burn through the cash while 1 is a startling winner. This stuff is happening right now. See what happens in biotech when a firms fails to reach clinicla trials. The stock could be down 70% in a day!

    2) Adam Smith was a classical political economist. As were Ricardo and Malthus. Those kooky lefties!

    The point being?

    3) Miserable services like universal health care. But I don’t think we’re going to reach a resolution on this.

    Like most people you are confusing universal healthcare with health insurance. These are two different things. And yes our soviet like government provision of healthcare is appalling. Ever gone inside a public hospital and used their services? It’s 4th rate.

    Better to have vouchers, privatize provisioning and allow people to buy their health insurance from the private markets.

  294. JC says:

    Rog, as usual offers absolutely nothing to a discussion and doing his best Debbie Downer impersonations I’ve seen for a while.

  295. Sancho says:

    Interesting link at #286, Patrick. I suggest you read the comments before getting too excited, though.

    It also highlights an important aspect of the right’s beliefs about data transmission technology.

    The technology highlighted in the article was non-existent when Turnbull began claiming that wireless would overtake cable. He was – and is – betting on a fantasy.

    Perlman’s wireless may be a revolution, but history suggests it won’t. Critics of government investment complain that the government shouldn’t be picking winners, but with the NBN the government has chosen the least volatile and most reliable form of technology foreseeable.

  296. Dan says:

    Re: 290 and JC’s impressive command of the history of economic ideas – having pride in one’s ignorance is really a QED moment for the whole thesis of this post/thread.

  297. desipis says:

    JC:

    yes, it would be possible Desipis. It would be possible if you got hold of the dictionary and redefined coercion to basically mean what you demand it to mean and then everyone accepted newspeak.

    From here:

    …to compel by force, intimidation, or authority, especially without regard for individual desire or volition … to bring about through the use of force or other forms of compulsionto dominate or control, especially by exploiting fear, anxiety, etc.

    The state’s monopoly on physical violence (as libertarians like to describe it) does not mean they have a monopoly on coercion. Sure, use of direct physical force or threats are the clearest example of coercion. However, many businesses use forms of compulsion and exploits fear and anxiety in order to gain an advantage. Not to mention economic actors in the market often have the ability to utilise the states coercive powers via property or other legal rights.

  298. Dan says:

    [email protected] – yeah, I’ve used public hospitals. Pretty good! Much better than I expected given all the harping. In NSW too, which if you read the Terriblegraph you’d think was hopeless.

  299. Dan says:

    [email protected] – it’s true – you saw the Pam Martens article in Cpunterpunch about Wall Street firms hiring cops? (Publicly indemnified, of course.)

  300. rog says:

    JC,the hypothesis is proved, you don’t have to reprove it.

    But of course you have to, because…l

  301. rog says:

    So who is “Debbie Downer” JC?

    Oh right, a fictional character.

    So your argument relies on fictional characters to be true.

    There is a flaw in your logic and it is beyond rescue.

  302. Jimmy-Jive says:

    “Nicholas Gruen said:
    “Has anyone tried to calculate (not with a model) the number of jobs saved by actually looking back at the spend to see what happened?” Not sure what that means Pedro. We had a rough and ready go here. But anything you do will require some assumption about multipliers. And that’s a model, even if it isn’t called one.”

    See now you are admitting that its all pulled out of thin air. In other words that its science fraud and lies. If you have to make assumptions about a multiplier that is inherently logically invalid, then you are making it all up.

  303. JC says:

    The state’s monopoly on physical violence (as libertarians like to describe it) does not mean they have a monopoly on coercion.

    Oh, how many Glock sidearms do you own, Desispis? I don’t often see Harvey Norman offering specials. However the State owns lots of them.

    Sure, use of direct physical force or threats are the clearest example of coercion.

    But….

    However, many businesses use forms of compulsion and exploits fear and anxiety in order to gain an advantage. Not to mention economic actors in the market often have the ability to utilise the states coercive powers via property or other legal rights.

    Yea, i know exactly what you mean.. The AFR travel section special they run each month showing pics of a Greek Island resort makes everyone feel coerced. Frightened in fact.

    What’s the last bit you’re talking about as I don’t quite get it? If you’re referring to rent seeking businesses demanding special treatment from the government you don’t get an argument from libertarians. It ought to be stopped.

    Presently, or recently you’re able to stick a useless plastic panel on your roof that was hugely subsidized/inefficient and then to screw over the punters that subsidized that crap even more you can then transmit the power into the grid at a huge premium, thereby sending everyone’s power bill sky high. So I can see where you’re coming from in regards to businesses and individuals using the government to coerce others.

  304. desipis says:

    The market was behaving very efficiently.

    Questions:

    a) How do you define or determine what efficient behaviour is?
    b) What empirical measurements and calculations have you relied on to come to that conclusion?

    Traders/investors were simply trying to figure out the winners.

    To what extent did they rely on the current market values or general market movements to project future values?

  305. Dan says:

    It really is selective blindness, isn’t it?

  306. Dan says:

    Y’all seen Daniel Kahneman’s recent articles on how there is no skill to speak of in trading *whatsoever*? Loved it :D

  307. JC says:

    No Desipis wrong around. You need to ask Dan here why the market behaved inefficiently, as he was the one making such a claim. I merely responded that his claim was nonsense and argued why. I also pointed out that we have specialized markets even now (Bio Tech) behaving in exactly the same way in terms of offering sky high valuations and then dropping like sudden onset of depression when adverse information hits a stock.

    His argument was simplistic in the extreme.

    To what extent did they rely on the current market values or general market movements to project future values?

    What a silly question. Traders and investors make their own individual decisions why they buy stocks. There are fundamental traders, technical traders, investors, day traders. Who the fuck would know.

  308. rog says:

    Most people buy and hold, it’s the 2% hyperactives that create the noise.

  309. JC says:

    You mean this comment from Kahneman, Dan.

    He demonstrated how human decisions may systematically depart from those predicted by standard economic theory. With Tversky, he formulated “prospect theory” as an alternative that better accounts for observed behavior. Kahneman also discovered how human judgment may take intuitive shortcuts that systematically depart from basic principles of probability. “His work has inspired a new generation of researchers in economics and finance to enrich economic theory using insights from cognitive psychology into intrinsic human motivation,” the Nobel citation said.

    He’s right.. and there possibly isn’t much skill to trading. In fact I think the right/wrong ratio would be great if it was 60/40. Great still at 70/30. However even with those win rates you could still lose your capital. In fact you have the best cards in a poker game and still eventually lose all your money.

    The skill is in money management and not being taking out in a stretcher if you’re wrong.

  310. Dan says:

    Hit John Quiggin’s takedown of the EMH in Zombie Economics – far better than anything I could manage :)

  311. JC says:

    Most people buy and hold, it’s the 2% hyperactives that create the noise.

    What time frame rog? The reason I ask is that most people say that, but most if not nearly all those people are bullshitting. Very few people buy and hold. In fact the only celebrated “buyer and holder” is Warren Buffet and there are very few people that would hold a stock or most of their portfolio for 50 years or so.

    As for noise…you don’t understand what you are talking about if you are referring to the current period as noise. The moves are perfectly rational as no one has any idea of how we discount future earnings from one year to the next.

    Six months ago prevailing wisdom was that the S&P would produce 105 bucks of eanings in 2012. Two months ago prevailing wisdom was that we could see 75 bucks. Now the market is suggesting it could be a little higher depending on Europe. How do you factor in the present global clusterfuck in forward earnings? That’s why the daily moves are enormous.

    The great moderation was a period when you could take 3.5% GDP growth to the bank year after year and assets traded accordingly. That isn’t possible now.

    Here’s my humble prediction. We will likely see 20,000 Dow in 2020 or so but you shouldn’t bet it because people won’t hang on.

  312. Sancho says:

    I’m stepping out for the evening, but I’m very keen to see Pedro’s response to #297.

    It’s also conspicuous that JC has stopped arguing against the existence of cartels in Australian business, when he himself has provided evidence of their existence.

    There are only so many topics one can reasonably address in a thread, of course, but it’s worth asking why JC would be so vocal about a particular point for much of the thread, then clam right up when it started going against him.

  313. JC says:

    Sanchez:

    I’d rather not engage with you as it’s impossible to. I think even you would admit it in a quiet moment. Discussing something with you is like trying to play chess and you use the bishops as queens making your own rules as you go along.

    You’re amusing reading, but that’s about as far as I would take it. You and Birdie have a lot in common.

  314. Patrick says:

    So to resume, the only consensus on this thread is that, whatever the economic merits of NBN may be, it just so happens that there is no economist of any standing willing to make the case for it.

  315. desipis says:

    No Desipis wrong around.

    Really? So when you said:

    The market was behaving very efficiently.

    You really meant was:

    The market might have been behaving efficiently, or it might have been behaving inefficiently. Claiming to know either way requires a rational argument based on evidence.

    Or, are you actually making a positive statement about market efficiency and claiming you don’t actually have to support your statement with evidence?

    You need to ask Dan here why the market behaved inefficiently

    Fair point. Dan, do you have answers to my questions at 309?

  316. Dan says:

    Desipis – see 315

  317. JC says:

    Okay dokey

    It seems Desi and Dan think the market was inefficient, as a result of the tech crash. You would have placed valuations much lower than they reached? Okay then show me all the trading chits you guys have or mention the stocks you shorted? If they were terribly high valuations you both must have made a fortune from the trades, right?

    Also if EMH is wrong why are there so few multibillionaires trading the markets compared the the countless people that play, lose money or break even.

    I honestly have no view on EMH to any large extent as I really don’t care. However I think the market is far more efficient than not. People may not like the result at times.

  318. Dan says:

    I was in high school.

  319. Nicholas Gruen said:

    it’s a pity how hard it is to be serious on the right these days. It’s not as if the right aren’t the custodians of an important strand of thinking about our society. But they’re not if they’re getting Lord Monckton to tell us how wicked the carbon and mining taxes are.

    The Right has become a caricature of its former self, mostly because it
    has lost its conservative ballast (I guess that this is the “important strand of thinking about our society” to which NG refers). Instead it has embraced the radical chic of its erstwhile ideological enemies.

    Once upon a time, from the mid-seventies through late-eighties, the Right’s critique of the mainstream consensus in general, and the Left in particular, was pertinent and valuable. So much so that by the early nineties the Right had won or got predominance in all the major ideological conflicts:

    Class War (bosses defeated union militancy),
    Cold War (Pentagon containment forced Kremlin capitulation) and
    Culture War (law and order put gangsta crime wave down)

    Since then the Right has become a victim of its own excesses, and indulged in catastrophic overreach, often justified by progressive rhetoric:
    Indebt the World in the Class War leading to the GFC meltdown
    Invade the World in the War on Terror leading to Iraq War WMD hoax;
    Invite the World in the Culture War, leading to Open Borders

    Perhaps the Right’s worst betrayal of conservatism is in the Climate Wars, where it has abandoned the old-style Right’s previous embrace of conservation and population control (eg Teddy Rooseveldt). Instead it has chased after the impossible dream of limitless material growth and indulged in rampant denialism of AGW.

    The only intellectual area where the Right might gain dominance is the Culture War. The Old Right’s race realism and religious conservatism, based on foundational principles of evolutionary anthropology, are obviously preferable to the Left’s post-modern liberalism and chronic dishonesty in this area. Yet the Right has lost the courage of its conservative convictions, they have more or less drunk Left-liberal politically correct Kool Aid in this domain, or at least been intimidated into uneasy silence.

    My impression is that the European Right is comfortable with the scientific consensus in both the Climate War and, of course, the Culture War. Plus it does not seem to be so much in the spell of Class Warring financial marketeers. So the European Right is probably a better bet in the long run.

    But the Anglosphere Right is pretty much beyond hope, at least since Howard left the field. If the Right won’t even defend its own timeless verities then what is it good for?

  320. Sally says:

    [email protected] – I’m out of my depth but I can’t help but babble. This is what I am. A babbler.

  321. Sally says:

    Dan, it’s true, public hospitals, at least the biggest ones in Australia, give better health care service than any private institutions and their service provision quality and standards in the main is superlative and incomparably good.

  322. Patrick says:

    there’s a European right?

  323. desipis says:

    JC,

    It seems Desi and Dan think the market was inefficient, as a result of the tech crash.

    The tech crash I’m not convinced either way. Technological change generated significant uncertainty about future economic conditions; i.e. it represent a real world economic change/shock. So its possible the majority of the losses were simply from bad luck. That said I have read about many cases of irrational exuberance on the part of investors, however haven’t seen any indication of how wide spread that behaviour was.

    The GFC however is another story. It was created within the financial system (i.e about as market as you can get); there was no real world shock it can be blamed on.

    Okay then show me all the trading chits you guys have or mention the stocks you shorted?

    I’m not claiming to have better judgement of value than the market. I’m not claiming any individual or company can have better judgement of value than the market. Thus your test is irrelevant. What I am arguing, is that a properly regulated market could have better judgement than an under or improperly regulated market.

  324. rog says:

    JC, a stranger to humility, says “here’s my humble prediction”

  325. JC says:

    The GFC however is another story. It was created within the financial system (i.e about as market as you can get); there was no real world shock it can be blamed on.

    Like what exactly? The GFC was caused by a sudden collapse in real estate values across the entire country, something people weren’t expecting, as it never happened before (since the 30s anyway). There had been localized, or regional falls but never an across the board sudden and precipitous fall like we saw. To suggest this was caused by unfettered capitalism, as I often read on leftie sites, is frankly amusing. It occurred in a market up to its neck in government intervention. There were the GSE’s leveraged 125: 1, the government demands to end red lining, various acts of Congress directing lending and the US banks, which are and were the most supervised commercial sector in the western world. Even the instruments (the securities) were a direct product of government intervention, as a result of the SEC both forcing the banks (and then enticing them) to securitize the asset side of their balance thereby obtaining beneficial capital haircuts. Lastly the banks couldn’t exist at the time without a certain belief the government would deem them too big to fail and intervene, thereby allowing the industry to operate on wafer thin capital. The average Tangible common equity level was around 5%!

    Everything about the GFC smacks of government intervention.

    But we’re not done yet as the sovereign debt issue is the second act. Forcing banks to own government securities as a liquidity preference has basically caused the European banking system to end up on its knees with $200 billion needed as a capital injection. But I guess getting zonked as a result of sovereign debt is nothing to cry over, as we never heara bout government failure. We only hear rumbling about private securities markets.

    We see the bloody paw print of the government making sure we blunder crisis to crisis blaming “unfettered” markets along the way.

    What I am arguing is that a properly regulated market could have better judgement than an under or improperly regulated market.

    Okay name the regulations? I’m deadly serious. Name exactly what regulations we need to prevent another melt down. You can impose as many regulations as you like, but when a banking system is operating on a 5 to 6% capital base (tangible common equity) and there is a sudden collapse in asset prices not even god in heaven will be able to prevent a collapse.

    That’s why the regulations being set in place like price controls etc are ill-intentioned and knee jerk. They will do nothing to stop another collapse. The only thing we can do is privatize the banking industry and if they fail let them go. But I think you would find the banking system would require higher capital requirement (TCE) in a private setting and that would also mean higher lending costs. You can’t have it both ways. You need to choose your poison.

  326. JC says:

    Patrick ask a serious question.. lol

    there’s a European right?

    Yes Patrick there is/was. However the last person to have a senior position in government that you or I would recognize as “right” was Alain Madelin. He led a free market party in France (true it actually existed).He was appointed Minister for Industry in the Chirac government and lasted 4 months before having “policy differences” with Chirac’s PM, Alain Juppe. That’s about it, I reckon :-)

  327. Dan says:

    I agree that the Dot Com bust is a more clear-cut case of inefficient and speculative market activity. As for the GFC – yeah, look – I think there’s a case to be made for more stringent lending standards, less leveraged banks, and a system of remuneration that doesn’t favour discounting the future.

    There were definitely crooks. I’d be happy to see people betting against assets that they were selling to be hung, drawn and quartered.

    I also agree with Marx (and Roubini!) that there are inherent fissures in capitalism.

    So, I don’t think the business cycle can be made to disappear, but I do think that it can be tamed substantially, not least through a comprehensive system of *social* (not financial) insurance.

  328. JC says:

    As for the GFC – yeah, look – I think there’s a case to be made for more stringent lending standards, less leveraged banks, and a system of remuneration that doesn’t favour discounting the future.

    How stringent? Serious question, because if you tighten up credit even more you will not only kill the shallow recovery in the US and Europe but could ratchet up unemployment to 20% or more. The Western economies are highly leveraged animals. If you want to impose higher lending standards then you should expect lower lending levels and a lower lending base will not support a healthy GDP growth rate. That also applies to raising capital requirements as the banks would demand higher lending spreads to compensate for that. Investors demand around 12 to 15% return on equity. If they see, as is happening now in the US as a result of Frank Dodd and other ill conceived ideas, that such a return is not available they will get out of banks stocks, sending them tumbling and this will reverberate right through the system eventual causing higher cost of funds for the banks. That means higher costs to the borrowers.

    As I said earlier you have to name your poison and also be able to know what it is… know exactly what you’re doing and why.

    There were definitely crooks. I’d be happy to see people betting against assets that they were selling to be hung, drawn and quartered.

    Yes, there were crooks and they should have gone to jail… it’s not over yet.

    I also agree with Marx (and Roubini!) that there are inherent fissures in capitalism.

    Roub has been calling a collapse since he was appointed at NYU and in between his weekend parties, which seem really good.

    So, I don’t think the business cycle can be made to disappear, but I do think that it can be tamed substantially, not least through a comprehensive system of *social* (not financial) insurance.

    We live with the business cycle and not get too carried away with trying to stop it nor thinking about it too hard.

    We have a hiccup and bad indigestion after a big meal. We eventually get better and its off to the races again.

  329. Dan says:

    JC:

    Obviously I don’t think this is a great time to tighten lending. But I think we need to be real about doing it at some point. Iceland is the case study here.

    Roub’s right – competition suppresses demand. Debt is a panacea but the more “successful” it is, the worse the crash is when it inevitably comes.

    The GFC is more than a hiccup and indigestion, friend. It’s mass unemployment, homelessness, and the squandering of many people’s lifes’ work. My Irish housemate could, at not too much of a stretch, be described as an economic refugee. I think it’s a cop-out to just say we have to put up with it – as did Keynes. Economists should aspire to, and should, do better than that.

  330. desipis says:

    Wikipedia has a page about the issue.

    Specifically it covers how the GSEs and the CRA did not play a major role in the crisis.

    It also identifies regulation that should have been kept:

    the repeal of the Glass–Steagall Act by the Gramm-Leach-Bliley Act of 1999 … The Commodity Futures Modernization Act of 2000 exempted derivatives from regulation, supervision, trading on established exchanges, and capital reserve requirements for major participants.

    While there may have been an issue with regulation of bank capital requirements, I’m pretty sure there was never a maximum capitalisation limit. It was the private decisions of the banks that lead them to low levels with risky assets of capitalisation.

    there is a sudden collapse in asset prices not even god in heaven will be able to prevent a collapse.

    But what pumped up the price bubble in the first place? It was the private lenders that loaned at unsustainable rates because the unregulated market over valued the derivatives created from such loans.

  331. JC says:

    Obviously I don’t think this is a great time to tighten lending. But I think we need to be real about doing it at some point.

    Why do we need to get real with tightening up on lending? The banks should sort their own problems and customers out. Regulators and governments are shit awful at it as they do the wrong thing at exactly the wrong time. The idiocracy in the US (regulators) are tightening up credit standards now. Now means in the recovery when asset quality and stuff has been put through the ringer and come out the other side. If you’re going to tamper with credit standards regulators should be loosening in a recovery and tightening in a boom. So the opposite of what should be happening is happening. That’s nothing new.

    There was a thread recently about the greatness of Elizabeth Warren. She’s primarily responsible why poor people can’t cash in their paychecks at banks any more and literately have to go to sharks that charge much higher rates. Good work Liz.

    Roub’s right – competition suppresses demand.

    WTF. I don’t think much of the Roub but I bet he never said that. No 1/2 way reasonable economist would.

    Debt is a panacea but the more “successful” it is, the worse the crash is when it inevitably comes.

    So the central bank should take away the punch bowl earlier.

    The GFC is more than a hiccup and indigestion, friend. It’s mass unemployment, homelessness, and the squandering of many people’s lifes’ work. My Irish housemate could, at not too much of a stretch, be described as an economic refugee. I think it’s a cop-out to just say we have to put up with it – as did Keynes. Economists should aspire to, and should, do better than that.

    Yea, its hard, but eventually we get over it. Human progress has always been fits and starts. We bungle shit up and then fix it, forget what happened many years ago and then another generation fucks up. It’s who we are. We’re not prefect yet.

  332. Dan says:

    “Why do we need to get real with tightening up on lending? The banks should sort their own problems and customers out.”

    Well, see, they’re not very good at that. They keep incentivising the short term. When I saw John Q. speak at the RBA recently I spoke to him after about how the part of the regulators’ job is to act as the market’s memory, because the market itself has, in John Ralston Saul’s words, about the mempry of a cat.

    “WTF. I don’t think much of the Roub but I bet he never said that. No 1/2 way reasonable economist would.”

    It’s a basic take-away point from Capital (and seriously brainy real-world economists like Michael Hudson, Steve Keen and Ben Fine) but I saw Roubini say it too. I’ll see if I can find the column.

    Your last point is essentially conceding defeat. I can’t go that way with you, sorry. I think we’re better at solving problems than that.

  333. JC says:

    Specifically it covers how the GSEs and the CRA did not play a major role in the crisis.

    Are they fucking serious? Fred and Fannie were leveraged at 125:1 in real estate loans and some doppler wrote in Wiki they weren’t a major player. Lol. Whoever wrote that swill should be arrested and handed to guards at Gitmo. Their freaking loans books were 100’s of billions. If they weren’t lending the boom would not have carried asset prices so high. They were front and centre of the storm.

    While there may have been an issue with regulation of bank capital requirements, I’m pretty sure there was never a maximum capitalisation limit. It was the private decisions of the banks that lead them to low levels with risky assets of capitalisation.

    No, not really, The Fed set capital requirements and I think the SEC did for the I-banks. There was a great deal of hubris at the regulators and the banks too I might add.

    But the SEC and later the Fed started the shit and it goes back to the early 90’s. having it’s genesis in the S&L crisis.

    After the S&L debacle the SEC figured that the bank asset side of the balance wasn’t liquid enough and that in order to make it liquid the banks and I-banks should securitize most assets on their books (loans). So they offered capital haircuts if loans were saleable or could be syndicated out or securitized. The figuring was that if a bank got into trouble it could easily sell assets if they liquid and saleable. It was a good idea but had consequences. That was in the early 90’s and we then saw securitization skyrocket as banks began to harvest loans and issue them as securities. I recall going to trading credit committee meetings. I mostly fell asleep, however I recall hearing the pressure the I-bank was in to securitize its lending portfolio going forward. The edict was coming from the Fed and the SEC.

    The reason this in important is because it later crated hubris at the regulators and the banks, but particualrly the regulators as they thought bank balance sheets were things of beauty…..Ever liquid and this created calls for higher leverage…. we know then story after that.

    But what pumped up the price bubble in the first place? It was the private lenders that loaned at unsustainable rates because the unregulated market over valued the derivatives created from such loans.

    I always had a different theory and Scott Sumner has more or less put it in academic economist terms. He’s articulated it well whereas I just had a hunch.

    Scott reckons the Fed tightened far too aggressively, not keeping an eye to nominal GDP. He reckons the Fed fucked around for far too long and loosened too late, but by that time the damage was done. It was only after the first quarter of 09 that the Fed finally righted itself. I reckon he’s dam right.

    I also think the Fed was far too loose in the early part of the decade as they were really really worried about a deflationary shock from the tech crash. But they had a right to be.

  334. Dan says:

    Here’s one example, but not the only one; paragraphs 4-7 are particularly relevant:

    http://www.project-syndicate.org/commentary/roubini43/English

  335. JC says:

    Thanks for the link Dan. Look, I think it’s wrong to simply ignore the concerns of people expressed through various venues. I think its wrong of the left to ignore the Tea party movement and I think it’s wrong of the right to ignore the exasperated sounds from the reasonable voices at these Occupy movements. There are obvious social stresses going on and it’s not a good thing.

    In the US, for example, slashing labor costs has sharply reduced the share of labor income in GDP. With credit exhausted, the effects on aggregate demand of decades of redistribution of income and wealth – from labor to capital, from wages to profits, from poor to rich, and from households to corporate firms – have become severe, owing to the lower marginal propensity of firms/capital owners/rich households to spend.

    How many economists look at the breakdown of the stats though in the various quintiles ask serious questions and do the hard yards research in terms of what is going on? All I keep seeing is that the the stats are telling us the incomes of the lower levels in the US have not grown much over the past 20 years.

    That’s obviously true. The stats are not lying. However I have yet to see any single researcher discuss the impact of 12 million illegal immigrants had in the lower income spectrum.

    There are just over 100 million workers in the US out a population of 300 million or so. Of those 12 million illegals I would guess at least 8 million or so are working. So the impact on the bottom 20 million is pretty freaking significant. But where the research rather than the laments?

    In fact it’s a credit to the US jobs machine that it has been able to cater for that many people. However it would have an impact on wage levels in the bottom strata like nothing else..

  336. Dan says:

    [email protected]: Sure – but as my Republican friend from Arizona, who plays in a Texan band points out, many illegal immigrants work jobs that no US-born American wants, at wages they don’t want, and furthermore they’re a particularly hard-working demographic.

  337. JC says:

    all good Dan. Believe every word, especially about the hard working illegals. However what happens to the wages of those not so hard working natives?

    I’m not anti-illegal immigration by the way in the sense that those people already should not be thrown out. However there is a reasonable call to secure the borders from here on and legitimize those that are there.

    Milt was right, that you can be for open borders but it’s problematic to be for open borders and a welfare state.

  338. Dan says:

    Well, precisely the same thing that happens when capital flows are globalised. But you knew that already, I think…?

  339. JC says:

    Well, precisely the same thing that happens when capital flows are globalised. But you knew that already, I think…?

    Not really. Capital sloshes around the world looking for the better marginal return. Capital inflow is a good thing as it imports other people’s savings to say our capital short ecomomy and has an expansionary effect. More capital = higher living standards.

  340. desipis says:

    JC,

    The causal chain that pumped the bubble pre crisis (as I understand it) goes:

    1) lenders make risky sub-prime loans
    2) bankers buy loans and make them into derivatives
    3) investors under estimates risk, over values derivatives
    4) bankers over value sub-prime loans
    5) lenders over produce sub-prime loans
    6) real estate values increase
    7) demand increases to match supply of sub-prime loans
    8) cycle repeats

    The key failure being step 3. At no step can I see regulation being a necessary causal factor. I also suspect there’s also a link between 3 and 7, in that the over valuation of derivatives were used (indirectly) as securities for further loans. This not only boost the cycle above but supplied funds to boost asset prices in other areas.

    The causal chain post crisis (as I understand it) goes:

    1) Minor economic hiccup
    2) real estate market peaks
    3) sub-prime loan defaults
    4) sub-prime derivative value drops
    5) institutions owning derivatives become bankruptcy risk
    6) creditors to those institutions become bankruptcy risk
    7) credit market freezes
    8) economy tanks

    There’s a side issue of:
    3b) sub-prime loan defaults
    4b) real estate market tanks
    5b) other real estate loans risk default

    If the market (or regulators) ensured the derivatives were properly understood by the buyers, they might not have been valued high enough to encourage the derivative market to expand enough to drive steps 4 to 6 (or 3b to 5b). The problem is the banks profited (selling derivatives) while externalised risks to the broader economy through the financial system (flooding the market with dodgy assets). The privatising the profits while socialising the losses aspects is in place before any bailouts occur. The bailouts are just the ransom we have to pay to prevent greater economic hardship.

    For what it’s worth I agree with your assessment of the Fed. It was too loose early on and possibly too tight during the crisis (although arguably the credit crunch isolated the Fed from the rest of the economy anyway). However it’s monetary policy only exacerbated the crisis once it was under-way, it didn’t cause it. A similar effect to that of Freddie and Fannie.

  341. Dan says:

    [email protected] – you’re downplaying the pressures of competition here, which is a nice change (usually it’s “they’re takin’ our jerrrbs” from the right). Frankly I think if people (individually or en masse) are generating more wealth than they’re drawing in wages, no macro problem – and that certainly seems to be the case with, say, Mexican illegal immigrants. As for micro, I start to show my intellectually elitist right-wing colours about now (“You were born white and male in a first-world country and couldn’t be f*cked to get a degree!?”) so I might censor myself here. Oh, I see the cat is out of the bag…

  342. Dan says:

    Incidentally JC what did you mean the other day when you referred to interest rates at zero but there still being scope for expansionary/stimulatory monetary policy? (Still can’t conceive of it as anything but a blunt instrument, but interested nonetheless…)

  343. JC says:

    Frankly I think if people (individually or en masse) are generating more wealth than they’re drawing in wages, no macro problem – and that certainly seems to be the case with, say, Mexican illegal immigrants.

    That’s actually quite true as the total factor income expanded in the US across all the strata. However if there is a sudden shock to one segment the effect will either be felt as unemployment or slower growth in real wages. That is if the capital to labor composition is also not growing at a healthy ratio. The fact is that aggregate income in each quintile grew and grew very healthily. I suspect though that the stagnant wages in the lower income groups have a lot to do with the labor supply shock experienced. That also happened before in the high immigration era in the US during the 1880’s to 1915(?) after which they clamped down on immigration until 1965 or so. Wages during that period were also quite slow despite steadily rising level of GDP.

  344. JC says:

    (Still can’t conceive of it as anything but a blunt instrument, but interested nonetheless…)

    Quantitative easing. Keynesians have an issue with zero bound as they believe the central bank is out of ammo at zero. However that simply is not true as the fed can buy instruments of its choosing and continue to do so to ratchet up nominal GDP.

    Milt explained why Zero bound isn’t a limitation.

    This is where I disagree with the right and why Milt’s passing has had an impact in terms of thinking about monetary policy and the various courses of action to take.

    Scott Sumner thinks Milt was the glue that held the right together.

    The right is correct as far, as I think in wanting to reduce the level of debt and the growth of continuing long term debt in the US. However they are deadly wrong in thinking that this can be achieved by holding up interest rates or preventing the Fed from taking quantitative easing while the fiscal de-leveraging is taking place. It would have disastrous consequences and take the economy back to the depression era in terms of unemployment levels. There is a lot of stupid talk from people like Perry and Paul against the Fed. FFS Bernanke was appointed by a GOP president. He’s an excellent Fed chairman. Without him the US economy would be dead. He certainly caused the deepening of the GFC, but he was also back on his feet and quickly understood the nature and severity of the problem. Ben has been one of the best Fed chairmen in the history of the Fed in so many ways.

  345. JC says:

    Desipis

    I’ll came back later to respond.

  346. Dan says:

    Oh – that’s all you meant, heh. I don’t think QE was dreadful or anything but it wasn’t sufficient to prop up to demand and thus employment. No point putting lots of liquidity into the system if no one’s lending and no one’s borrowing.

  347. KB Keynes says:

    on what Friedman would have made of QE.

    Here is a Q& A concerning Japan.

    David Laidler: Many commentators are claiming that, in Japan, with short interest rates essentially at zero, monetary policy is as expansionary as it can get, but has had no stimulative effect on the economy. Do you have a view on this issue?

    Milton Friedman: Yes, indeed. As far as Japan is concerned, the situation is very clear. And it’s a good example. I’m glad you brought it up, because it shows how unreliable interest rates can be as an indicator of appropriate monetary policy.

    During the 1970s, you had the bubble period. Monetary growth was very high. There was a so-called speculative bubble in the stock market. In 1989, the Bank of Japan stepped on the brakes very hard and brought money supply down to negative rates for a while. The stock market broke. The economy went into a recession, and it’s been in a state of quasi recession ever since. Monetary growth has been too low. Now, the Bank of Japan’s argument is, “Oh well, we’ve got the interest rate down to zero; what more can we do?”

    It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy.

    So both Milton and Bernanke the academic agreed on what needed to be done in Japan.

    such a shame Bernanke wimped it now.

  348. JC says:

    Homer

    Please place quotations around stuff as you don’t want to confuse people into thinking its yours.

    And what exactly is your point, Homer? You along with other Keynesians have always said monetary policy is ineffective at zero bound thereby showing again you don’t understand monetary policy or interest rates.

  349. KB Keynes says:

    My point is that Uncle Milt and Ben both said in print the way to revive Japan was print money and print plenty of it.

    nothing more and nothing less.

    QE didn’t work in Japan or now in the US.

    Only idiots would believe monetary is effective at present in the US

  350. Sancho says:

    Are they fucking serious? Fred and Fannie were leveraged at 125:1 in real estate loans and some doppler wrote in Wiki they weren’t a major player. Lol. Whoever wrote that swill should be arrested and handed to guards at Gitmo. Their freaking loans books were 100?s of billions. If they weren’t lending the boom would not have carried asset prices so high. They were front and centre of the storm.

    That “swill” is completely correct. Care to pitch your sources against the wiki page’s?

    I’d rather not engage with you as it’s impossible to. I think even you would admit it in a quiet moment. Discussing something with you is like trying to play chess and you use the bishops as queens making your own rules as you go along.

    Ha! Your cover-and-retreat in defeat routine is consistent, at least.

  351. Dan says:

    [email protected] – it may or may not be necessary, but it’s clearly not sufficient – but given your frankly nihilistic view on the business cycle anyway (#336), I’m not sure how seriously you’re taking your own advice.

  352. Pedro says:

    Sancho, I had to visit my sick mum, but to answer your question way back when, the NBN is not the only way to meet future broadband improvements. That is why discussion of the NBN is an economic question. If you think the NBN is an absolute good justifiable at any price, and for which there are no acceptable alternatives, then in truth it is not possible to sensibly discuss it with you.

    Dan, we already have social democracy, and have had for at least 50 years, it is not inconsistent with a free market. Various bubbles have come about during that time so obviously social democracy is not a solution to the problem of bubbles. Equally John quiggan can have all the funny he wants scoffing at the EMH, he doesn’t have a solution to bubbles. The most anyone can say is that if you keep hitting growth with a big stick, you’ll probably squish most of the likely bubbles, but is that a good idea?

  353. Pedro says:

    “Only idiots would believe monetary is effective at present in the US”

    Homer, I thought Krugman was your hero. He’ll be very upset you’ve called him an idiot.

  354. KB Keynes says:

    the lie that either CRA or the GSEs caused the GFC has been well and truly demolished <a href= "http://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/"here and by the Fed.

    Indeed the Fed paper is so overwhelming it shows up the intellectual collapse of the right on this issue.

    no evidence. Bad ideology so make up stuff and hope gullible souls will believe you. Very Very Goebbels.

    And we have proof right here it works

  355. KB Keynes says:

    really Pedro,

    That is why the US is staging a remarkably robust recovery.

    He is calling for fiscal policy to be utilised because the liquidity trap had made monetary policy ineffective.

    Estimates by the San Francisco Fed mean that QE3 would have to be 5 times that of QE2 to be effective! This is probably why Bernanke ( and those in Japan ) were so timid.) of course doing this is traitorous according to Republicans. ( more evidence)

    you may have been reading someone but not Krugman

  356. Jimmy-Jive says:

    “It’s very simple. They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy.

    So both Milton and Bernanke the academic agreed on what needed to be done in Japan.

    such a shame Bernanke wimped it now.”

    Yeah exactly. There was never a need to steal off the people and give it to the banks, or to go on these big government spending sprees. All that was needed was quantitative easing, and the follow-up reserve asset ratio to stop the banks pyramiding too much on the new cash. This is just undeniable. There is no evidence anywhere to suggest the stealing or the stimulus was helpful or necessary. None at all. Not ever, in any country, in any incident, at any time in history.

  357. Jimmy-Jive says:

    “The right is correct as far, as I think in wanting to reduce the level of debt and the growth of continuing long term debt in the US. However they are deadly wrong in thinking that this can be achieved by holding up interest rates or preventing the Fed from taking quantitative easing while the fiscal de-leveraging is taking place.”

    See you are on the right track but you just cannot seem to get it right, because you are still demanding bank subsidies. You must have a high interest rate policy. Because real investment resources are scarce. BUT YOU ARE RIGHT that the Austrians are flippant about the total level of spending. How much spending do you want? Quantitative easing coupled with a reserve asset ratio can give you any level of spending you want, whether it be contractionary, inflationary, or goldilocks just-right.

    You won’t admit that. Because you are coming from a thief’s point of view. You don’t want the interest rate subsidy to end. You don’t want the reserve asset ratio. So you have to continue with this public dishonesty because you won’t give up on being a welfare queen.

  358. Pedro says:

    Homer, do you really think I would have said that if I couldn’t quickly show you Krugman supporting QE for the US now? Lazy bugger.

  359. Jimmy-Jive says:

    There is a big problem with trying to get Nick to admit that his stimulus package was a disaster for his fellow Australians.

    “Personally, like I said above, I’m a respecter of right wing ideas. If the IPA sponsor a trip by Lord Monckton, then they blow any respect to which they were entitled. Further, in an earlier post I threw out a challenge. Can someone point me to a careful exposition of the case against the stimulus as a piece of macro-economics. I mean by that something I could read that I would consider makes reasonable counterarguments against the commonsense of a Keynesian response to the crisis”

    You see I can prove that the stimulus package unemployed people, and its more than easy to back this up with the empirical evidence. Nick has no empirical evidence to say that the stimulus created jobs, none whatsoever. Nor does he have a coherent theory of cause and effect to suggest that the stimulus OUGHT TO HAVE created jobs.

    We have a very clear cause and effect relationship between the stimulus, and the jobs that were destroyed. But Nick isn’t into Athenian cause and effect. You see Nick is from a different tradition. A darker tradition. A more mysterious tradition. A gnostic tradition. I think you all know what I’m talking about.

    Nicks economics is informed by such influences as Kabbalistic mysticism. One doesn’t want to get into a long treatise about the state of Nicks brain. But as shorthand we can say that Nick is a VOODOO-JEW. Nick is right into JEW-VOODOO. The economics that Nick believes in is basically Voodoo-Jew-ECONOMICS.

    Its going to be very hard to get Nick to own up to the damage he has done, seek repentance, and accept Jesus Christ as his personal saviour but we must as least try. Why it is so difficult to explain the bloody bleeding obvious to these people is that their anti-Athenian irrationality is enforced by these tag-team terrorists of the tabernacle everywhere you go.

    Go over to Sinclair Davidsons site, and there will be Sinclair. Nicks Synagogue-buddy. He will be pushing the same sort of Jew-Voodoo. The same breach between cause, on the one hand, and effect on the other. Sinclair went so far as to testify that there was a Keynesian multiplier and he cited another Synagogue-buddy (Mankiw) to make this lie sound plausible. He didn’t even argue the case, he just slipped it in in an off-handed way, as if these chosen race blockheads, just need to have a circle-jerk citing each other, and that is all the evidence the Goyim is ever going to need, or ever would have the right to ask for.

  360. Patrick says:

    What does it take to get banned these days??

  361. Jimmy-Jive says:

    “What does it take to get banned these days??”

    Potions, and spells Rabbi. As I think you know only too well.

  362. jc says:

    Patrick

    It’s bird. Pay no attention as it’s best to ignore him when he’s like this,
    .
    He’s presently on a the Jewish bankers hate surge and Jason Soon and I are also Jews to birdie… As though it’s a bad thing.

    He eventually gets over it and goes on to some other conspiracy.

    He also hates italians too by the way.

  363. Jimmy-Jive says:

    No actually I just hate you. I’m fine with Italians. All this wop this wop that for the last four years, has been just because you decided to turn coat and become a willing welfare queen. Italians are cool. Aquinas was an Italian. The reality is that you are a stealth-Jew. Thats where your moral-handicap lay the entire time.

  364. Pedro says:

    Still anti-semitism is pretty foul, even for the fowl. Ban the bugger.

  365. Jimmy-Jive says:

    That’s just the sort of black-balling attitude I’d expect from you Rabbi. The last time we met it was thunderbolts and smoke bombs conjured with the help of the testicles of castrated Christian minors.

    But your attempts to shut me down are unethical. Because Nick was part of a cabal that destroyed 40 billion dollars worth of capital resources in record time, for no reason at all. This was a disaster. It threw people out of work, it got us more in debt, it killed a bunch of kids, it lead to many houses been burnt down, it decimated the home insulation industry.

    And Nick has not repented for all this.

  366. jtfsoon says:

    You used to be deranged-funny, Bird. Now you’re just deranged and tasteless.

  367. KB Keynes says:

    Pedro,

    one can support QE without thinking it will encourage a robust recovery because of the liquidity trap

  368. Pedro says:

    But Homer, that is precisely the point of QE, stimulus in a liquidity trap.

    “As I see it — and as I suspect many people at the Fed see it — the basic point is that to gain traction in a liquidity trap you must either engage in huge quantitative easing, raise the expected rate of inflation, or both. Yet saying this is very hard; people treat expansion of the Fed’s balance sheet as horrible money-printing, and as for the virtues of inflation, well, wear your body armor.”

  369. Jimmy-Jive says:

    “jtfsoon said:
    You used to be deranged-funny, Bird. Now you’re just deranged and tasteless.

    Posted on 04-Nov-11 at 1:08 pm | Permalink”

    You are just in shock Rabbi-Soon. Or maybe you aren’t. Maybe the above is just some sort of disclaimer to satisfy your tabernacle terrorist masters.

  370. Jimmy-Jive says:

    We always pay twice when these people screw up.

    40 billion dollars of wasted resources is 40 billion dollars of other peoples time, is 40 billion dollars of other peoples lives.

    And on top of that we have 40 billion dollars more debt.

    Nick hasn’t justified this. Ken Henry is off getting directorships even though directorships are unjust enrichment and Stealth-Jew Ken Henry is a known idiot. Ken Henry hasn’t justified this. Stealth-Jew Andrew Leigh is now an MP. That is his reward for hurting his nation, and specific people within it. Lindsay Tanner is at the directorship trough as well, even though he too is a moron.

    So this is no good. Someone has to express regret for this total unmitigated disaster. We must start with Nick so that Nick will be the first to be punished and therefore the first redeemed.

  371. JC says:

    Pedro

    Still anti-semitism is pretty foul, even for the fowl. Ban the bugger.

    Of course it is and of course he has to go back to the birdcage permanently this time.

    Let me ask you Pedro, are you in the least surprised he’d end up in the last vestibule of conspiracy theories. I mean how long was it going to take from the magic water, laser beams causing earthquakes to rank antisemitism? There are only so many conspiracy theories on the web before you hit pay dirt…. the last one.

  372. Pedro says:

    I think all out expectations are low, but this is the worst I’ve seen. I kinda hope he’s on wacky juice or something else that might explain it.

    Homer, no comment on that quote? Lazy bugger. It’s candy from a baby.

  373. Jimmy-Jive says:

    Look stealth-Jew Cambria. No-one has taken responsibility for this total failure that we laughably call “the stimulus.” Everyone is in contempt of the public justifying this outrageous act of vandalism. They cannot justify it empirically, theoretically, or morally.

    Now this is not okay. We cannot survive when people are so unrepentant AND ACTUALLY REWARDED for massive screw-ups. If we went after RUDD first he’d just say he was going on what Nick and Andrew told him. So Nick is the first person to force into a backdown, a rethink, expressions of regret, and so forth.

  374. Jimmy-Jive says:

    Pedro. A lawyer. Therefore culturally a Jew.

  375. KB Keynes says:

    Pedro,

    Yes is is supporting doing QE2or3or4 BUT fiscal policy is a much more effective response.

    I doubt whether the FED is capable of doing the easing that would be needed.

    A balance sheet that is five to six times it has ever been.

    QE wasn’t all that effective and what’s more as in Japan as in the US now you would need the Fed to temporarily increase its inflation target.

  376. JC says:

    Homer:

    You’re over the shop as usual running from one incoherent cul de sac to another.

    You alluded to uncle Ben being too stingy with QE. This is what you quoted.

    such a shame Bernanke wimped it now.

    In subsequent comments you then suggest monetary policy doesn’t work.

    Do you ever listen to yourself? Ever. You have the mental consistency of a blowfly hit with a spray of mortein.

  377. Jimmy-Jive says:

    ““As I see it — and as I suspect many people at the Fed see it — the basic point is that to gain traction in a liquidity trap you must either engage in huge quantitative easing, raise the expected rate of inflation, or both. Yet saying this is very hard; people treat expansion of the Fed’s balance sheet as horrible money-printing, and as for the virtues of inflation, well, wear your body armour.”

    Now Pedro. Anti-Athenian that you are, and member of the profession of BAAL that you purport to be: Despite your handicaps you must understand that the above is complete rubbish.

    Lets go over it again. You can get to any level of spending you want, with a combination of new cash creation and the reserve asset ratio.

    One more time because I know you are stupid:

    “You can get to any level of spending you want, with a combination of new cash creation and the reserve asset ratio.”

    So the above is jam-packed with misinformation, because we already know EXACTLY what to do.

  378. KB Keynes says:

    birdy, I say this as nicely as possible, bugger off.

    JC,

    I would try to explain it to you but that would involve understanding economics.

    monetary policy will not get the US out of its present state but wimping on QEs simply makes it harder

  379. JC says:

    Homer

    QE2 worked. It worked really well. Asset prices went higher almost immediately as a result of expectations moving ahead and for the first time we saw jobs number coming in at 200,000 plus per month. It worked. No question about it.

    Some on the right were fuming about concerns with inflation, but the end result is that the TIPS market shows inflation expectations of around 1.5% or so for the next decade, so the scare appears to be bogus.

    Scott Sumner is right. It wasn’t enough and the Fed ought to go to a nominal GDP target and simply raise NGDP to around 5.5%.

    Sumner is also correct pointing out the The Fed is avoiding its dual mandate by not doing what it ought, which is the full employment angle.

  380. Jimmy-Jive says:

    “birdy, I say this as nicely as possible, bugger off.”

    You don’t have that sort of weight around here Rabbi Homer. Now get it through your thick Keynesian head. Either the following is true or it is not true:

    “You can get to any level of spending you want, with a combination of new cash creation and the reserve asset ratio.”

    DO YOU UNDERSTAND NOW RABBI HOMER?

    If the quote is true, and it is, then Keynesians are totally wrong. So just get your shit together Rabbi.

  381. Jimmy-Jive says:

    Nick cannot use mentally constipated people like Rabbi-Homer to evade responsibility here. Nick was part of a team that hurt our nation, and hurt specific people within it. We just don’t have a coherent explanation for why this vandalism was perpetrated upon us. We don’t have evidence that this wasn’t the hugely destructive disaster that we know it to be.

    Failure must be punished first, and forgiven second. Nick has to take a fall on this before he can come to us to be forgiven.

  382. Pedro says:

    Homer, don’t lecture me. Get on the blower to Krugman and set the idiot (your words) straight.

  383. Jimmy-Jive says:

    “QE2 worked. It worked really well. Asset prices went higher almost immediately as a result of expectations moving ahead and for the first time we saw jobs number coming in at 200,000 plus per month. It worked. No question about it.

    Some on the right were fuming about concerns with inflation, but the end result is that the TIPS market shows inflation expectations of around 1.5% or so for the next decade, so the scare appears to be bogus.

    Scott Sumner is right. It wasn’t enough and the Fed ought to go to a nominal GDP target and simply raise NGDP to around 5.5%.

    Sumner is also correct pointing out the The Fed is avoiding its dual mandate by not doing what it ought, which is the full employment angle.”

    With only one or two caveats this is all perfectly correct. I advise people to read this post from JC three or four times. Since this is the first time in a long while that stealth-Jew Cambria has gotten something pretty much totally correct for a change. So I thought I’d alert the media about it.

  384. JC says:

    Bird,

    You don’t deserve to be spoken to after this most recent brain spasm.

    You do realize that your nemesis, Goldman Sachs, support NGDP targeting, right? They’ve come out twice to their clients and supported this move.

    How does this make you feel now?

  385. Pedro says:

    Dont engage JC

  386. Jimmy-Jive says:

    Look they are Maffia. They’ll just support anything in public. I don’t support nominal GDP targeting, and I tried to explain to your synagogue-buddy why gross domestic revenue had to be the main metric …… and it just turned out to be no use talking to him, as you would expect.

    But the fundamental reasoning behind what Sumner says, and your post, was pretty sound, even if you get the main metric wrong.

  387. Jimmy-Jive says:

    “Pedro said:
    Dont engage JC

    Posted on 04-Nov-11 at 2:33 pm | Permalink”

    That is right Rabbi-Pedro. Just evade. Just run and hide. Never resolve anything. Never get anything right. Never acknowledge the truth. Never take responsibility.

    Thats your advice to Nick I take it. That would advice to most of your clients no doubt.

    Jerk.

    I know the answers you see. You ask me what the economics answer is and I can tell you. But you don’t want to know. You just go over to Mankiw or some other idiot, and the debate rolls on and on.

  388. Jimmy-Jive says:

    I’ve been campaigning for education in sound monetary-economics for six years. For longer than the stimulus package disaster has been around.

    And I’m systematically faded out, obstructed, tied down, wearied, abused, made fun of, and the one thing that never gets done is the economists NEVER FUCKING LEARN A FUCKING THING.

    And so I was there BEFORE the disaster of the stimulus package. And I am here after the disaster of the stimulus package. And I’ve been trying to reason with Nick and the others before and after. And there is just no capacity to learn, and do the right thing.

    Now this is not acceptable. 40 billion, capital resources, destroyed, by the people, who have taken the migrants in, helped educate them. This is not okay.

    You dropkicks may be here to shore up your pathetic social life in this mobius strip. But I’m trying to get something done here.

    Now learn the material for the love of stupid over-promoted Jews everywhere. Learn the material. And its way past time for Nick to repent.

  389. JC says:

    You’re right Pedro.

  390. Jimmy-Jive says:

    Yeah you tabernacle terrorists are always right. By definition. Its amazing how you find out what you always thought you knew, when you work backwards from the conclusion, to reality.

  391. Jimmy-Jive says:

    Banksters, lawyers, public sector parasites. No-one sees the need for someone to take responsibility for the utter disaster of the “stimulus” vandalisation. Its the parasites all holding hands.

  392. KB Keynes says:

    Pedro,

    Kruggers and I are in perfect agreement.

    QE2 didn’t work at all. It should have been about increasing economic activity and thereby inflation.
    The only thing it did well was reducing deflationary expectations.

    Interest rates should be around -5% on a forward looking Taylor rule. QE2 only reduced that to -1.5-2%

  393. Jimmy-Jive says:

    Good Lord. I’ve already refuted this bullshit rabbi-Homer. Why do you continue in error?

  394. Sancho says:

    Stealth-Jew

    So glad I popped back to see the nation’s brightest in action.

Comments are closed.