Missing Link Friday – Tax, Twitter, meritocracy and other topics

Lending is the right model for ebooks: Joshua Gans asks "If lending is the appropriate mode for books, then how would the business of publishing look if it is built around lending rather than ownership?"

Why journalists need Twitter : Often maligned as quick chat for empty headed gossips, Twitter can play a valuable role in news gathering and reporting writes Alan Knight.

The surplus fetish: The "notion that we will be eternally damned in the fires of fiscal hell unless government revenues exceed spending by even a dollar" is a ridiculous idea, says Mr Denmore. But by trying to look like a fiscal tough guy, Wayne Swan has boxed himself into a corner.

Bob Carr is wrong about welfare: Australia’s means-tested welfare system keeps spending down and allows governments to retire debt, says Bob Carr. But Carr is confused says Matt Cowgill. "The ability to pay down debt is obviously a function of both spending and taxes".

A linguistic tax: English is fast becoming Europe’s dominant language says Philippe Van Parijs. In his new book Linguistic Justice for Europe and for the World, he argues that native English speakers share the benefits of a common language without having to meet the costs. A tax on Anglophone countries would reduce this unfairness. Ingrid Robeyns has started an online reading group at Spongia.

Occupy and the mirage of democratic consensus: "The intransigence of the Occupy movement suggests an unwillingness among its numbers to take seriously the fact of pluralism, and the corollary impossibility of consensus, which makes majoritarian democratic procedures necessary in the first place." Will Wilkinson.

Better schools won’t save the American Dream: Early childhood not schooling holds the key reducing the academic achievement gap, writes Sean Reardon in the Boston Review. The article is part of series: Occupy the Future, that includes contributions from Kenneth Arrow, Rob Reich and others.

The meaning of merit : A meritocracy rewards the hardworking and the virtuous writes Luigi Zingales. But at the Monkey Cage Andrew Gelman disagrees: "In a meritocracy, you can be as hardworking as John Kruk or as virtuous as Kobe Bryant and you’ll still get ahead—-if you have the talent and achievement. Throwing in ‘hardworking’ and ‘virtuous’ seems to me to an attempt (unconscious, I expect) to retroactively assign moral standing to the winners in an economic race."

Poking fun at mummy blogs: Parodies of mummy blogs make Blue Milk laugh, but …

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13 Responses to Missing Link Friday – Tax, Twitter, meritocracy and other topics

  1. Dan says:

    Re: surplus fetish – p1 of the Fin today. Penny and the gummint finally talk sense on possible responses to GFCII.

  2. Pedro says:

    That education article is interesting, but there doesn’t seem to be any mention of attitude. The message seems to be that if only more money was funnelled to the poor for home and education they’d catch up to the rich. I reckon that is wishful thinking. My sister taught grade 1-2 in a lower class area for many years and was struck often about the level of parental indifference to school.

    Dan, I agree that the surplus is a fetish to a degree, but I also think there is value in the attitude that we really really want to not grow the State debt. You might have noticed that not fetishising deficits has caused problems for a few countries.

  3. KB Keynes says:

    Fetishing about deficits means they ignored Keynes at their peril.

    Actually the problem at present seems more to be self fulfilling negative bond bubbles

  4. Dan says:


    The trick is to be austere in the good times. Like Keynes said. Brilliant, but hardly rocket science.

  5. Tel says:

    For a man who likes to lambast journalists for not doing their job, Mr Denmore sure knows how to strategically tell only half the story.

    Or to put it in numbers that most of us connect with, it’s like a household on a $150,000 annual income earning $750 more than it spends over 12 months. Oh, jackpot.

    The ALP has been increasing Australia’s debt by more than $40 billion each year for the last three years running (check the E10 series, government securities on issue) so “to put it in numbers that most of us connect with,” it’s like a household on a $150,000 annual income spending $20,000 more than it earns each year for three years (ending up with $60k of additional accumulated debt) and then thinking about how they are going to bring this under control.

    Is anyone taking bets on whether we will see a surplus before the next election?

  6. Mr Denmore says:


    You’re talking about gross government bond and bill issuance. A good deal of that is rolling over of existing maturities. You need to look at net debt, which takes into account financial assets as well. Otherwise, it’s like judging your personal financial situation by the size of your mortgage only (and not taking account your home, super, savings and other assets.)

    So as your rightly point out, the face value of Commonwealth government securities on issue this financial year is about $200 billion. But NET issuance is about $30 billion. Total net debt is around 7 percent of GDP, or around $22 billion. In proportional terms, that’s a 10th the size of the average of the other advanced economies.

    As to my example of the family on $150K, that’s correct. You need to distinguish between the size of your debt and your ability to service it. That’s why JGBs are yielding around 1 percent despite the Japanese government have a debt 10 times the size of ours in proportional terms.

  7. Tel says:

    Nett debt, you mean like where they offset $5 billion worth of “Intangibles” and $9 billion worth of “cultural assets” against actual borrowed cash? Gonna be hard to pay back those loans with “Intangibles”. Mind you, it’s a good trick, can I use that to pay my mortgage? I’m sure I can find heaps of “Intangibles” laying around the place.

    You need to distinguish between the size of your debt and your ability to service it.

    And you need to compare your current position as against the position that you would like to be in… that’s what a comparison is all about, and that’s why you only tell half the story.

  8. Ken Parish says:

    Game set and match to Mr D on my reading.

  9. Tel says:


    When analyzing a balance sheet, you should generally ignore the amount assigned to intangible assets. These intangible assets may be worth a huge amount in real life (Coca-Cola’s brand name is priceless), but it is the income statement, not the balance sheet, that gives investors insight into the value of these intangible items.

  10. Pedro says:

    Homer, it’s a bond bubble is it. No concerns about default risk driving those problems? I wonder if people have any reason to think that some of the PIIGS might default?

    It seems to me they can have the austerity they manage or the austerity the market forces on them. What does not exist in the future is a keynesian turn around through the PIIGS borrowing more.

    Assuming a depression, do you think we can just keep spending through borrowing until the depression ends. Or do we get to a point where the deficit spending starts to really compound the problem?

  11. blue milk says:

    Thanks for the link love – and your link round-ups are always so interesting so it’s nice to be included.

  12. KB Keynes says:

    No the countires except Greece won’t default.

    There is no rational reason why Italy and Spain were targeted.

    That is why it is a self fulfilling bond bubble.

    Austerity made debt worse. so not only was it self fulfilling but incredibly stupid.

    no country can avoid spending through a depression because of automatic stabilisers.

    Even when you cut welfare payments etc they still go up as Ireland shows.

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