Economy

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Robin Hood Tax?

While I continue to work on my post on the Australian election, I thought I’d post this quickie. I’ve previously proposed a similar idea to this, and now the concept of a so-called “Robin Hood tax” is gaining traction. Of course, many of the people who would have to pay such a tax say it is “naïve” and “damaging”, but I really don’t think a tax as tiny as the one proposed (0.05%!) would have any significant impact on legitimate trading. It would however limit the sort of speculative trading that led us into the global financial crisis, and it would generate more than enough revenue to pay for the Wall Street bailout. And what fairer way to pay for it? The fact that we don’t actually have such a tax—and there isn’t any indication from our governments that it is even being considered—suggests to me that not much has really changed since the GFC, and that big business is still above the law.

The case against carbon trading—but is it a fair assessment?

It seems the debate over carbon trading just won’t stay out of the headlines at the moment. The opposition party in Australia—in their usual blatant political opportunism—have decided this week to unveil an alternative climate change policy to carbon trading. However, in spite of calling carbon trading “a great big fat tax”, they have yet to specify how their own policy will be funded—and even worse, it will basically mean business as usual for big polluters anyway. So it’s basically a climate change policy for those who don’t believe in climate change, and for those who think profits for big business should always take precedence over everything else. They want to appear as though they are doing something without actually doing anything useful, while incurring costs to the consumer and pretending it won’t cost them anything. This is hardly surprising, given their present leadership. Read the rest of this entry »

Carbon Trading?

It seems my previous post has turned into a pretty heated discussion as to the merits or otherwise of carbon trading, so seeing as you want to talk about this issue, I thought I should devote a post to it, and move that discussion here (as it is off-topic for that thread). Although I am very certain we should take action on climate change, I am not sure whether carbon trading is the best way to go about it or not. I can certainly see enormous potential benefits to it (especially for the third world), but it is also very complex, and potentially susceptible to corruption and excessive bureaucracy. Anyway, as I’m not sure where I stand, let’s have everybody’s opinions so I can make up my mind. :-)

As to whether carbon trading is a conspiracy or not, I will be devoting a future post to our peculiar willingness to believe in conspiracies, which I suspect is related to our tendency to believe in God. I certainly do not think action on climate change generally is a conspiracy though, as it is very much against the short term interests (in other words, short-sighted greed) of big business. After all, they have always opposed it in the past—and with very good reason, as it hurts their short term profits.

It’s nice to post a good news story for a change! According to a group of scientists from Australia’s Antarctic Division, the ozone hole over Antarctica is now shrinking. This must surely to be a direct result of the Montreal Protocol to ban chlorofluorocarbons (CFCs), which caused the ozone hole in the first place. I think this clearly demonstrates two things: human activity can indeed have serious effects on the global climate, and human co-operation and positive action can solve those problems. Imagine if George W. Bush were the President at the time. Would the Montreal Protocol have been agreed to? I’ll bet it wouldn’t have—he would have said there was no proof that CFCs damaged the ozone layer, and that the Protocol would have a negative effect on business, jobs and the economy.

Which brings me to the next part of my good news story. At the recent G20 summit, the leaders of the top 20 economies in the world agreed to a very simple measure that I feel will have far reaching consequences—to end fossil fuel subsidies. I’ve always felt it was both extraordinary and ridiculous that—when we really need to encourage the development of alternative energy—the governments of the world are still subsidising fossil fuel production. I am also proud to say that Australia’s Prime Minister Kevin Rudd spearheaded these changes, even though our economy is currently very highly dependant on fossil fuel exports (particularly coal and gas). It’s hard to imagine that just a few short years ago, both Australia’s Prime Minister and the American President denied climate change, and refused to sign the Kyoto Protocol. Once again, if they were still in government, it is hard to imagine that the lifting of fossil fuel subsidies would ever have been agreed to (for the reasons cited above).

Of course, that isn’t the only good news to some out of the G20 summit: it is also good to see such widespread co-operation in dealing with the economic crisis (which already appears to have averted another great depression), and that they are taking affirmative action to try and prevent corporate greed from creating such a situation again (such as the measures to control executive salaries).

In the discussion of my previous post, the topic of universal health care came up, and as Obama’s attempts to bring it in in the US is very much in the news at the moment, I thought it might be worth a post to itself. Like gun control laws and legalised prostitution (something I will also be devoting a post to in the future), universal health care is the sort of thing that many (perhaps most) Americans consider to be very radical, but which is in fact already in place in most other first world countries. Read the rest of this entry »

Please Explain!

Although I’ve written about Twitter before, the recent rumour that Google was looking at buying them—after they’d already rejected an offer of $500 million from Facebook—has prompted me to write another article about the apparently insane market evaluations of these web 2.0 companies.

Now Google was supposed to be interested in Twitter because of their search capabilities, which apparently was the main reason they bought YouTube—Google just wants to control all the different ways people can search for things on the internet, even if they don’t make money in themselves. I guess there’s a logic to that. But in the case of Facebook, we have a massively popular web 2.0 darling that still can’t make money, wanting to buy another massively popular web 2.0 darling that doesn’t have any source of revenue at all, to the tune of $500 million! Yet even though they have no revenue (or even an actual business model), Twitter not only rejected Facebook’s offer, they also managed to raise another $35 million in venture capital!

Surely I can’t be the only person who looks at this and wonders what the hell is going on here? Isn’t the massive investment in these web 2.0 companies that haven’t found a way to make money yet just like the dot.com bubble all over again? And all this at a time when it is so hard for people to get capital for longstanding, legitimate businesses? Something just doesn’t add up here. Is there some rule of doing business on the internet that I’m missing here? If so, I’d really like to know what it is! Read the rest of this entry »

The Story of Stuff

I’ve been intending to write about environmental issues on my blog for some time now (in addition to the socio-political stuff I’ve already covered), but there’s just so much to write about, and so little time! Anyway, until I get around to writing a proper article on this issue, check out this clever site:

The Story of Stuff

Although there’s probably some exaggerations here and there, I certainly agree with the gist of what they’re trying to get across. I think it is especially important to examine these issues in light of the current economic crisis—many people seem to want to put the environment on the backburner until we get our finances in order, but not only can we not afford to do this, I see the destruction of the environment and the financial crisis as symptoms of the same problem: an economic model that is based on endless growth, and encourages ever increasing (over) consumption. We just cannot have limitless growth on a planet with finite resources—at some point, we need to reach an equilibrium with what our planet is capable of sustaining. Switching to renewable energy resources will help a lot, and is essential if we don’t want to face a resources crisis in the near future. Yet even then, we need to ask tough questions about population control and other difficult issues, if we are to survive.

A graph of US government revenue and spending vs. President since 1964—click for a larger view.

In my previous Why Does Anyone Vote Republican Any More? post, I exploded the commonly held myth that the Republicans are more fiscally responsible than the Democrats: indeed, with the rise of neo-conservatism since Reagan, they have been by far the most fiscally irresponsible governments in US history. Perhaps even more remarkable though is the fact that the Clinton administration was actually very fiscally responsible: by the end of his term, he had brought increases in debt down to almost zero (0.32%), and if the Democrats were elected for another term, we very likely would have seen the first decrease in national debt since 1961. But instead of course we got George W. Bush, who has brought debt up to such an astronomical level, that 10% of the US budget is now devoted to servicing it—one can only imagine what will happen if and when interest rates go up significantly.

In spite of these facts however, there is still a hard core of Republicans who will continue to vote for them, no matter what. I doubt there is anything anyone could do or say to turn these people around, but fortunately, they will not decide the outcome of the November 4 election. Nor for that matter will hard core Democrats. The people who will decide it are those in the middle: the swinging voters, and those who might vote independent or for a minor party. Amongst these, perhaps the most significant group are Libertarians. It seems they are basically made up of two types of people: disenchanted Republicans who are not happy with the extreme fiscal irresponsibility the neo-conservatives, and idealists looking for an alternative to the major parties, as they are disenchanted with both of them. Read the rest of this entry »

A graph of US national debt vs. President since World War II—click for a larger view.

In the final few days before the US Presidential election, I thought it might be prudent to ask the question: why does anyone vote Republican? After all, from an outsider’s point of view, the crimes against humanity, the US constitution and the economy by the Bush administration are just so outrageous, it is hard for any sane person to imagine why Americans would even consider voting Republican! So I thought I should take a look at the common answers to this important question.

One thing people keep saying is that Obama’s tax changes will bankrupt the US economy. It’s as if he has some kind of radical tax plan, the likes of which America has never seen before. But really, all he’s actually proposing is to restore the same kind of tax distribution we had under the previous Democrat (Clinton) administration. But hang on! We all know that Republicans are far more fiscally responsible than Democrats, right? So we can’t go back to the tax system we had under Clinton, right? In that case, I suggest you take a very good, long hard look at the image above—a graph of US national debt vs. President. And what better way to judge a government’s fiscal responsibility? Read the rest of this entry »

Before I do a flurry of election related posts in the run up to November 4th, I just wanted to do one more post in relation to the stock market, and the financial crisis they have created. In my previous Financial Crisis Raises Fundamental Questions post, I wrote about how we have to change the rules governing public companies, to give business executives more personal liability for the companies they run, so they are encouraged to follow the same common sense rules of business that private companies have to follow. However, as I also pointed out in that article, the reason so many public companies are so irresponsibly run nowadays is because they have to pander to the stock market. And these days, most stock traders tend not to buy and sell shares on the basis of sound business fundamentals (such as sustainable profits), but rather just on the basis of growth—even if it means running up huge debt (which fundamentally, is what has led to the current financial crisis, as well as previous “bubbles”). Even worse, speculators often deliberately manipulate the market to generate profit just for themselves, with disastrous results not only for the companies they’re supposed to be “investing” in, but even the community at large: witness the California electricity crisis for example. Read the rest of this entry »

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