Friday, February 24, 2006

Stay at home and watch the ABC instead

The last two movies I had paid to see were Cinderella Man and Munich. Both were quality films, easily in my top ten of all time. So my following rant on the snore that was Brokeback Mountain may reflect me my affinity for boxing and the cold blooded slaying of Palestinian terrorists.

I was never meant to like it right? It was a story of unrequited homosexual love. Bigotry and ignorance stood between the steadfast bonds between two horny men that knew each other for all of three seconds.

For the record, I was opposed to seeing it. The film’s tagline (courtesy of the IMDB) was “Love is a force of nature.” The Godfather, Blackhawk Down, Coach Carter, Gandhi, A Beautiful Mind (damn you Denzel and damn you Academy), Top Gun and a movie “based on the E. Annie Proulx story about forbidden and secretive relationship between two cowboys and their lives over the years” seems like a likely collection of favorite films.

I’m not homophobic. I don’t have any gay friends per se, but that’s more a product of statistical likelihood than a conscious effort. My understanding of homosexuals stems completely from their affectionate portrayal on Sex and the City, Oz and when I mistakenly flick onto Queer as Folk for those unfortunate 0.3 milliseconds. Why would I be scared of homosexuals (except for, understandably, the ones on Oz), most of them are a size 6. A story about the “forbidden and secretive relationship between two” anythings (with the exception of perhaps space pirates) would have turned me well off. But I went and saw nonetheless.

Independently of the gay element, the movie is a snore, its slow, too long, predictable, uninteresting and an outright bore. The characters are detestable, and the story has been told and retold time and time again.

Adding gay to the hype, adds nothing to the story, but has admittedly put bums on seats and will probably score it an Oscar. (I’m writing about gays, and have just used “bums,” “score” and a guy’s name in the same sentence without making a joke. I’m above that.) The story has been done with heterosexual couples who are “too young and too old,” white and black, white and Hispanic, white and Asian, and between Yankee and Mets fans. A and B want to be together, but society, stigma or responsibility keeps them apart. The only difference in Brokeback is that A and B are Adam and Bob.

The two main characters, played by Heath Ledger and some guy from Jarhead, come from miserable unloving families. They grow up in poverty in an era before the Sopranos, and suffer from extensive emotional abuse. This all happens before they hit their mid-twenties, and realize that they’re both gay. While camping, and with the sheep all rustled up, they kill the time by, to quote from the film: “stemming the rose.” Because they live in the backward-redneck-hick-Christian-non-Hollywood-states of Texas and Wyoming, they are doomed to live a life misery and unhappiness.

When the two met, Heath’s character had, by his own admission, barely spoken a word in a year, and guy from Jarhead had suffered from one too many Rodeo-induced head traumas. You can hardly say that the counterfactual for them living in a tolerate society with queer norms and a population growth problem would have meant that these two would have ended up happy and fulfilled.

Granted, there was (and is) an unfortunate amount of intolerance suffered by the gays. I can’t for example write this simple blog without mentioning the phrase “Velvet Mafia” (phew- I was wondering on how to work that in). But the movie comes across as a little (a lot) preachy and surprise surpise, anti-South. What first and foremost keeps these two apart, is not the anti-gay rednecks of the South, but their own responsibilities to their families. Heath’s character has a wife and two young girls. Guy form Jarhead has a son (who should have been in the film so much more) and a wife of his own. For them to run off to a ranch on their own, would mean breaking up both families, leaving them to fend for themselves. Secondly, they’re both unlikable miserable jerks anyways. Thirdly, their relationship was based on nothing but boredom (how ironic, that this is the premise for their relationship when the movie is so exciting).

You think instead of turning to each other for warmth on that cold winter’s night up the mountain, they had just taken another look at one of the sheep, then they’d be happy?

True, without family commitments, with personalities and a foundation for their relationship, they’d probably be killed, if not further isolated from their communities. But that in itself is systemic of the era the movie was set, not necessarily its Southern location. Instead, we’re left with the impression, that they’d be happy if it weren’t for just the Southern rednecks.

I’m not surprised that the critics who dumped on the equally-boring Passion of the Christ loved this film. I guess then, if you want to watch a movie that unnecessarily picks on the South and don’t mind a little gay lovin’, then this film is for you. Personally, I’d say save your $15 and just turn on the ABC.

Wednesday, February 22, 2006

How to rort a hurricane

In the aftermath of one of the worst hurricanes to hit the United States last year, politicians came under intense pressure to compensate for their initial slow reaction and provide significant assistance to the victims. The politicians didn't take too long to notice which way the wind was blowin' and in an orgy of welfare, promised so much money that it felt like election time.

We are talking about the government here, so invariably some of that money was going to be wasted. However, it now looks like that Katrina will not only now go down as one of the worst natural disasters in history but also as a supreme example of government waste and incompetence.

In the immediate aftermath, the main priority was to provide housing for the many who had lost their homes. So the US government decided to commission 26 000 mobile homes at the cost of $900m. Only 1200 of these homes are currently in use and some 11 000 of these homes are now in sinking in the mud in Hope, Arkansas (since regulations restrict the use of mobile homes in a flood plain). Isn't that a shame: government regulations thwarting government welfare.

In addition to the housing, FEMA (the body responsible for coordinating disaster relief), fast-tracked the payment of assistance (including no-questions asked $2000 debit cards or cheques). The Government Accountability Office has uncovered gross examples of fraud involving this assistance:
  • It was able to recieve multiple $2000 cheques using bogus names and addresses via telephone. (It was possible to receive such money even if they had been rejected on the net using the same bogus names and addresses.)
  • It visited a sample of 200 properties that claimants had listed as damaged; 80 of these were bogus, including some which were vacant lots or nonexistent apartments.
  • A group of 17 used 36 different social security numbers to claim $103 000 in assistance. Thirteen of the addresses they used were in the same apartment building. The best evidence also suggests that they weren't living in the area at the time of Katrina.
  • Another individual used 15 different social security numbers to claim only $41 000 in assistance (obviously a bludger compared to the above group). He used 3 different addresses, one of which was a post office box.
  • The computer system automatically flagged applications using multiple social security numbers but FEMA largely did not review these and did not prevent payment from proceeding.
  • Of the 11 000 debit cards issued, 5000 of these were duplicate payments.
  • Some of the more 'essential' products that the debit cards helped finance included a .45 caliber pistol (worth $1300), $1200 of services at a Gentlemen's club, $400 of services at a massage parlour (that had previously been busted for prostitution), a $450 tattoo and $150 at 'Condoms to Go'. (See picture for more.) As the GAO understated, some of these items "do not appear to be items or services that are essential to satisfy disaster related essential needs."
In all some 900 000 of the 2.5 million who received assistance are thought to have engaged in fraud. In addition, to the FEMA rorting, the GAO has busted others for taking excess emergency food supplies (or military 'meals-ready-to-eat') and selling them on ebay.

You can only some it up as 'what a waste!' The only assistance measures that don't seem to have attracted criticism are the private schemes, such as Wal-Mart and Starbuck's quick delivering of water bottles and other supplies. What a shock: private money is more effective than public money (or in other words money that noone has responsibility for).

The only reason some of this waste has been uncovered is because debit cards were able to track purchases. It might be a nice experiment for the dole and the baby bonus to be paid by similar means. Somehow I don't think we'd get different results though.

Friday, February 17, 2006

I’m not allowed to have an opinion on abortion

“We never think about the results of our actions because we can’t, being so dim as we are. We love washing machines, running water and frozen food because they make our lives so much easier – therefore it follows that we will all be racing to the doctor the minute we know we are pregnant, and taking a pill to cure the problem… We used to head off in the mornings to our girly, waiting-to-get-married jobs – as business managers, lawyers, doctors, airline pilots – work out we were pregnant, file our nails until lunch, and then pop into casualty to have an abortion. And we got back to work in time to have a cup of tea and a biscuit before going home.”

Obviously, Harriet Veitch is being facetious. She’s misguidedly complaining, here in her op-ed for the SMH, about what she thinks the abortion debate is all about. She seems to think its about men keeping women at home. I’ve been told this personally: I have no say on this issue, because I’m a man.

She’s not alone either. Liberal Senator Judith Troeth: “…if women don’t go out and fight for the rights they have, we will regress backwards.” And Democrats Senator (they still have them?) Lyn Allison: “It is galling listening to the men, and it is mostly men, who have such contempt for women who terminate unwanted pregnancies…”

And that seems to be the defined debate for the pro-abortion case. What?

Clearly the defined debate should be that Australia is “aborting ourselves almost out of existence” and we’ll become “a Muslim nation in 50 years’ time.” I’m just kidding, but former Minister Danna Vale’s comments have to be repeated at every opportunity.

But seriously, the case of the pro-abortion case is about “women’s liberty.” They argue, that they are no pro-abortion per se, but will defend to the tooth and nail, the choice of having the option. Any one who disagrees with this “right” is an oppressor of women everywhere and a dinosaur from the 1950s.

Wrong. It’s about relative values. 100 per cent, I agree, this debate involves the restriction of a woman’s personal liberty. What the pro-abortion case fails to acknowledge is the infringement of the rights of the unborn child when it’s killed. And that’s the fight right there. Whose liberty should be more highly valued: mother or child? This incidentally is the grounds of the secular opposition to abortion. And neither the secular or religious objection to abortion is sourced from a misogynistic bigotry against women.

Lyn Allison touches on this issue inadvertently: “…we will act on our own set of values and can be trusted to make reproductive health decisions for ourselves…” Act on our own set of values. That can be read: we will allow individuals to decide whose liberties are more important.

If the question at hand were the infringement of one person’s liberty by another (tax, censorship, regulation, racism) then as a general rule I’m obviously opposed to it. But abortion is not analogous to slavery. In the case of abortion we must engage in a form of moral relativism, and consequently as a society we must choose between which is more important: a woman’s choice and baby’s life.

The decision to have an abortion, for 90 per cent of women is economics. And that’s probably a conservative estimate. “I’m too young,” “I’m too old,” “not at this point in my career,” “the father has run off,” “I just am not ready.” These are all economic decisions, they are choices between future outcomes. And personally, I think the “convenience” argument certainly does not cut it. We must live with the choices we make, and if that means we can’t realize all of our goals and dreams, then so be it too bad, its not enough to impose the greatest infringement of liberty: life.

Thursday, February 16, 2006

Leunig gets virgin for Anti-Semitic Cartoon?

Cartoonist Michael Leunig found himself in a tight spot when his best anti-Semitic cartoon was selected for the Iranian ‘payback’ free speech cartoon competition. At stake in the inter-continental cartoon slag-off contest were gold coins, supplied by a lovely Iranian philanthropist.

Leunig’s cartoon was entered by a lovely Australian larrikin – Richard Cooke. It was another case of one of the Chaser crew making trouble (yet again).

Leunig complains that it’s unfair he will get picked on just because his cartoon was picked for the finalists by the Mad Mullahs. Now, should we go easy on Leunig because of his misfortune? There is no doubt that the cartoon was attractive to them because they though it had been submitted by a high profile Author

However, there is no getting away from the fact that it was the creation of a high profile Author. And there is no getting away from the fact that it was a highly dubious cartoon.

This kind of puts the anti-Iraq thing in perspective, doesn’t it. Who’s thinking ‘cookie-cut-left-wing, pro-Arab, anti-Semitic, Fairfax reading, tosser’?

Your bed Michael, you can lay in it. Perhaps the philanthropist might send you a few virgins for your show of solidarity – even if the blow up was accidental.

Wednesday, February 15, 2006

Perfect one day ...

Although I must confess that I put very little effort into Valentine's Day this year (I bought my better half a caramel sundae from Macca's) no doubt others spent a lot of time and money on the occasion.

It's strange though that so much is invested in pleasing our partners on one (or maybe a few, including anniversaries and birthdays) particular days of the year. Assuming that lovers (like the rest of society) exhibit concave utility functions, then a suitor would please his partner more by spreading the love more evenly over the 365 days of the year. This is because presumably girls get a lot of enjoyment out of getting a rose but probably get, on a marginal basis, less from the 11th and 12th roses. Better then to give one a week, rather than a bunch on only a few isolated days.

However, the concentration of expressions of love is a long-standing practice and if there were a strategy that would trump such behavior it should have already emerged. This would be especially true in a competitive market, which the market for lovers appears to be (although there are some increasing returns to scale issues, I have been reliably informed it's not all about size).

This makes me think that such arrangements are a response to some defect in the market, most likely an information asymmetry. I know how I feel about my wife but she obviously has a disadvantage in matching my knowledge on my feelings, and vice versa. To fill this gap, it's probably necessary to reaffirm the relative strength of my feelings occasionally (hence the caramel sundae).

In this way, Valentine's day is like renewing a contract. If I was instead to give a rose a week then this would be equivalent to a spot market where I could easily transfer relationships from week to week. At the beginning of each week the cost of continuing is just that of a rose.

Yet, if I instead had to buy a bunch of roses before continuing the relationship, this act would reveal more to my partner than what I intend to do over the next week. Of course, after I've given the roses they're are a sunk cost and if I change my mind I'd be best to leave without considering the costs of the roses. But the extent of the Valentine's Day gift will at least reveal to my partner my long-term intentions on Valentine's eve and in this way it is an important solution to the information asymmetry.

This explanation may also uncover why married people tend to celebrate such days with less intensity. Being married I've already signed a contract and there are more ramifications than just wasted roses if I break that contract. So, there is no need for elaborate expressions of love (again, hence the caramel sundae).

Saturday, February 11, 2006

Let the eye fit the tooth

An eye for an eye, a tooth for a tooth; let the punishment fit the crime; let the cliché fit the occasion! Questions of crime and punishment, and law and order, are always hot topics: presently within the rubric of the Muslim response to the (infamous) Danish/Mohammad cartoons. Rather than rake these hot coals, I want to consider a more general point of view.

In addition to commentary about the Muslim Mayhem, two (synchronistic) low-key media events raised questions of offence/punishment at the more general level this past week. First, Phillip Adams spoke with philosopher Ted Honderich about the morality of punishment (Ted's homepage is here). Next, the Australian ran the headline: Doubling jail time would cut burglary ; which was mostly a re-hash of a NSW Bureau of Crime Statistics press release.

Ted was spruiking the re-release of his 1969 book, Punishment. He believes that punishment can only be justified by its effects; though because he doesn’t believe in the utilitarian theory of justice – he wheeled out the familiar Holocaust critique: would it have been OK if it maximized utility? – he doesn’t much believe in punishment. He views property relations as a political construct, and therefore doubts the argument for their enforcement.

The criminologists found that the doubling the incarceration rate for convicted burglars would reduce the direct loss associated with burglary by about $156m, or that doubling the sentence length for the current proportion of convicted burglars would cut the cost by $104m per annum. Annual cost of the present prison population is $78m per annum, resulting in an annual net benefit of (approximately) $78m from locking more of them up, and $26m from getting tougher on the worst ones. These are static estimates, and my guess is that the benefit would be greater still, as some criminals would probably be put off by a doubling of the probability of punishment, or the severity of punishment.

So I guess we should both goal more of them, and goal them for longer: it seems like a pretty good deal – if you’re not a communist philosopher who’s squeamish about imposing your politically derived system of property relations on the criminals.

Before going on, I should declare a prejudice: I find it difficult to come to terms with a man whose thinking leads to conclusions such as: ‘ I think it gives the Palestinians a moral right to their terrorism ’. Notwithstanding this, he’s very clever, and his comments demand attention, as they are the product of rational inquiry. A way into the limits of his brand of moral philosophy is suggested by the bottom line of his controversial 2002 tome After the Terror: he concludes that ‘We [the west] can be held partly responsible for the 3,000 deaths at the twin towers and at the Pentagon’. Why? I hear you ask: because are complicit in the impoverishment of the third world via the American-backed globalization policies on the part of the World Bank, the International Monetary Fund, and the World Trade Organization.

My punt is that Prof Honderich doesn’t get economics.

It’s not capitalism’s fault they’re poor: except in so far as the cold war is concerned. And while we may bear some responsibility for electing Government’s that supported corrupt middle eastern oppressors (but hey, we won the cold war, and prevented a nuclear holocaust!), it’s not capitalism’s fault – so the twin towers were not a morally acceptable target.

Similarly, he doesn’t appreciate that the wealth we enjoy is the product of our system of economic relations. Refusing to punish property crime would erode property rights, and reduce wealth in both capitalist and developing countries … thereby creating more terrorists? It’s strange that Prof H, who seems to think that unpunished property theft – by corrupt mid-east governments – went a long way toward getting us in this mess in the first place, would support a policy that essentially amounts to more of the same.

Well functioning, wealth creating, capitalism requires clearly defined and enforced property rights. To the extent that poverty and corruption explains Islamofascism, it's more punishment of property crime that we need.

Friday, February 10, 2006

Where are Radical Islam’s apologists now?

The left excuses radical Islam for its campaign of terror against the West as “responding to American imperialism.” They excuse the plights of the Palestinian terror campaign (against school children on buses) in Israel, the Muslim rioters in France, the Iraqi “insurgents,” the Taliban remnants in Afghanistan and the latest Middle Eastern nation (Iran) to seek ultimate destruction of everything Western. Whether it is massacring Coalition troops or Israeli school children, the left gives radical Islam a free pass. From the Age (via the SMH): “Their community is besieged by hostility and suspicion, which helps explain why they want to make their hurt felt [through terror]…”

“What do you expect?” “The Americans have it coming!” “Of course we’ll be next!” These cries you hear all the time. Walk around a university campus and you’ll find it easier to get directions to a hate mongering Socialist Alliance meeting then you will the library or the Uni bar. There are signs on campus now advertising seminars on “Why the Australian flag is racist” and “Let Iran pursue its Nukes!” Wait a minute? I thought the left was against nuclear bombs? I guess that’s only true if they’re not being used to attack the United “Great Satan” States.

When the “race riots” were rampaging through Cronulla, the liberal media had a field day. It was as if all their Jesus free Christmases had come at once. (Read the Age’s “An Insular Peninsular” from December 17. In a highly representative account of the “whites” in Cronulla with their “phony patriotism,” the Age quotes a 62 year old local, and his conspiracy theories of Lakemba’s al-Qaeda links, after mentioning a local “Lebanese Muslim family from Lakemba arrived in a van with plates of food, baklava and assorted Middle Eastern treats, for police.) (Also, I have to include this gem of a NY Times headline: Australian mobs attack believed to be of Arab descent.” I wonder after such a PC headline if there was any room left for the text of the article?!)

But the left have been pretty quiet regarding the cartoon induce riots in Denmark, Finland, France, Holland, Iran, Lebanon, Syria, Yemen, Iraq, Afghanistan, Somalia, Turkey, Indonesia, Thailand, Singapore and Malaysia. It has also been pretty quiet about the torching of several embassies, and the growing number of deaths that have resulted. Where are the apologists now? Where are the “poor oppressed Islam” journo’s defending everything Islamic? Come on Tony Jones, show your true colours!

The left’s response to the shameful acts by these protestors is to stay quiet and keep low. They are thanking their stars that RU486 is being debated on the hill, otherwise someone might notice their lack of opinion about the “cartoon intifada.” Look at the SMH and Age columnists who have kept their head down over this. Julia Baird, Alan Ramsey, Shaun Carey and Michelle Gratton wrote op-ed pieces either the day after, or the subsequent week that followed the Cronulla riots. But none of these authors have any opinion to offer when the tables are reversed? They wouldn’t have to even go to too much effort, just replace white with Arab, Lebanese with white and Cronulla with everywhere.

Maybe recent events are too much for even left to stomach? While Bankstown Sheik’s comments that rape victims “have no one to blame but themselves” for wearing strapless tops and tight jeans weren’t enough, maybe this latest batch of thuggery is.

Check out

Show some guts

I think the Australian media has been gutless in not publishing the Danish cartoons (the Courier Mail and the Rockhampton Morning Bulletin excepted). Basically, there are two reasons why the cartoons deserve to be published.
  • an example of the complete ineptness of Danish cartoonists
  • demonstrating how disproportionate and overblown the reactions of radical Muslims are
For the record all the cartoons can be seen here .

Now the first reason is of course no great excuse and Frank Devine in today’s Australian does a good job in demonstrating why the cartoons aren’t very humorous. (Although I’d have to disagree with him on the cartoon published above.)

However, he does not tackle the more important rationale that the cartoons should be published to demonstrate the absurdity of the response and the hypocrisy of certain Muslims. The cartoons themselves are completely innocuous. The bomb cartoon has Muhammad looking like a Tsar rather than religious leader. And, compared to some of the cartoons published Arab media they are all rather tame.

Further, there have been reports that fabricated, more vulgar cartoons have been distributed by some wishing to ferment a violent uprising. Surely, it is important therefore to publish the real cartoons so as to demonstrate the complete tameness of their content.

The end result of publishing may lead to some violent actions in this country but since when should we use the threats of hypocrites and fundamentalists as a yardstick for our actions. There is an obvious demand for these cartoons and the mainstream media is abrogating on its responsibility by not publishing them.

Monday, February 06, 2006

Bad taste and worse Taste

OK, I’ll be honest. I think that the cartoons are funny. However, I can see what people mean when they say they are in bad taste. I don't much fancy piss-Christ; I understand where they're coming from. I’ve not, however, burnt down any buildings in rage. Which would be in still-worse taste.

So why is it that they don't understand that Western freedoms include the right to publish nasty / funny cartoons such at this one?

The problem may be that Islam is structurally in tension with secular democracy. Muslims cannot seperate out church and state - so everything is religious, and therefore political. It seems that Western secular democracy is not compatible with the religion. Paradise will arrive when the world is ruled by an islamic theocrat - so they work for an islamic theocracy, and against Western Democracy.

When Jesus comes again, we will be living under something approaching military dictatorship. Therefore, the logic seems to go, we'll work towards the islamic military dictatorship and let the second coming sort itself out.

I'm not making this up - here are two of the major pre-conditions for the resurrection of Muslims at the end time:

1. "Al-Mahdi will come at the time of Al-Dajjal. He will call to the true Islam, and will be a military leader. His name will be exactly like that of the Prophet: Muhammad ibn Abd-Allah, and his father's name will match the Prophet's father's name also. He will be descended from Fatima, the daughter of the Prophet."

2. "Isa (Jesus) will come at the time of Al-Dajjal and al-Mahdi as well. He will descend at the time of Fajr prayer on a masjid in Damascus, the capital of Syria. He is of medium height, red-faced, and his hair is as if he just took a shower. He will call people back to Islam, but he will also be a military leader. The People of the Book will revert to Islam, and wealth will be super-abundant. Isa will break the cross, kill the swine, and personally slay Al-Dajjal. He will stay on Earth for a long time thereafter, and then die."

Also of interest, is that the Muslim political system is expected to go from Prophetic leadership to a just Khilafah to a 'biting' authority to an oppressive authority and finally back to a just Khilafah.

Just a Khilafah... depending on which branch of Islam you follow, this means being ruled by a temporal leader who merely enforces Islamic law, or being ruled by an Islamic leader who is the arbiter or judge of Islamic law, as well as the enforcer - as were Mohammad, Abu Bakr, Umar ibn al-Khattab, Uthman ibn Affan, and Ali ibn Abi Talib.

This leads us back to the problem with the bomb-Cartoon. It's against Islamic law to depict Mohammed under any circumstances – it’s a form of idolatry. Satire on the topic isn’t just bad taste, it’s literally blasphemous or sacrilegious.

In Sharia law, the punishment for blasphemy is death; the punishment for idolatry is death. So these are the punishments they seek to impose. In the Islamisc system of values, depicting big Mo with a bomb in his turban is worse than peddling the protocols of the elders of zion, or denying the holocaust - because the Quran condems those who diss Mo, and is (at best) silent on Jew-hating.

And so, intimidated, and wishing to lead a peaceful life - rather than take one in the chest like Dutch film maker Theo van Geogh - we self-censor. By doing so, we edge closer to de facto Sharia law.

No thanks!

Thankfully, there are plenty who refuse to be cowed; they are now going to have to kill heaps of people - everyone's doing it. The site draw mohammad contains a gallery of the best - and worst.

Sunday, February 05, 2006

On the US free trade agreement

The Australia-US Free Trade agreement gave a lot of people the shits. It gave economists the shits, because the important issues got lost beneath ass lickers and a politician licked for his deployment of dangerous metaphors. It gave US haters the shits because we gave preferential treatment to the nation that they think is most undeserving. And it had the Australian media shitting itself, because it threatened to offer Australian consumers the option to switch onto superior US entertainment.

The important thing to remember from the debate is that no respected economist said the deal would make Australia worse off. There was a lot of argument about the size of the benefit, but no respected economist said that it was a bad deal. It could be added that, given the rise of US protectionism, the deal also had some extra value as it set down minimum standards for Australia’s access to the US market.

The trade numbers for the first ten months of the AUSFTA gave some satisfaction to the deal haters – where credible economists could/would not. They showed that Australian exports to the US had fallen, and that Australian imports from the US had increased. Haters were quick to conclude that the trade deal had proven itself to have been a bad idea (here).

Full year data takes some of the sting out of the criticism. A pick up in Aussie exports in the final quarter has reduced the gap between 2004 and 2005 exports to 3%, from 3.8%. Because trade tends to be heavy in Q4, the Australian deficit with the US looks worse for the full year than for the first three quarters – it is A$1159m larger than 2004, whereas it was A$913m after the first three quarters. However, in percentage terms, the AU/US deficit is now 10.6% larger than in 2004, whereas it was 11% larger after the first three quarters.

So what are the facts?

1. Australia’s trade deficit with the US was A$12.1bn in 2005. This is a little larger than the average for the previous 5 years, which is A$11.1bn.
2. Exports to the US were A$9.3bn in 2005, 3% less than in 2004, and 13.4% less than the average for the previous 5 years. The US took 6.7% of Australia’s exports in 2005, down from an average of 9.2% for the previous 5 years.
3. Imports from the US were A$21.4bn in 2005, 4.3% more than in 2004, but 1.6% less than average for the previous 5 years. The US provided 13.7% of Australia’s imports in 2005, down from an average of 17.2% during the previous 5 years.
4. On both the import and (especially the) export side, the US is becoming a less important trade partner. The proportion of Australian exports headed for the US has declined in each of the past five years - from 10% in 2000 to 6.7% in 2005. The proportion of imports arriving from the US has also fallen each year since 2000 – from 19.8% in 2000 to 13.7% in 2005.
5. In 2005, the US was the largest source of Australian imports – though China was a close second, and will almost certainly take first place in 2006. The US was our 4th largest export market, after Japan, China and South Korea, in that order.
6. In 2005, the Australian dollar was 3.4% stronger against the US dollar than in 2004 – making Australian exports more expensive, and hence less attractive in US dollar terms. The flip-side is that US imports are cheaper, and hence more attractive to Australians. The Aussie dollar is 25.5% stronger against the US dollar than the average for the past five years.
7. As Australia buys significantly more from the US than it sells to the US, all things being equal, the US has to grow faster than Australia to keep the trade deficit from increasing. Since 2000, real Australian GDP has grown by 17.8%, 4.2 percentage points more that US GDP, suggesting that the deficit should be widening. Remarkably, the trade deficit in 2005 was unchanged from that in 2000 (12.1bn); however as noted in point 1, the 2005 deficit is 1bn larger than the average for this period.
8. Australian imports from the US are mostly capital and intermediate goods. Data for the last 7 months of 2005 show that 34% of imports were capital goods, another 20% were parts for these capitals goods, and another 25% were other intermediate imports such as industrial supplies. The boom in investment has increased the demand for these goods, and the US, as the world’s leading manufacturer has supplied them.

While trade is a complex game, something a little more interesting can be said about trade flows with the aid of a simple (or naïve) trade model that controls for exchange rates and the level of GDP. Broadly speaking, in 2005 Australia did better than could be expected, given the relative strength of the US and Australian economies, and the strong Aussie dollar. Once we control for GDP and the currency, some interesting observations emerge:

1. Imports from the US are about A$1.7bn less than could be expected.
2. Exports to the US are about 300m more than could be expected.
3. As a result, the trade deficit for 2005 is almost A$2bn better than could be expected.

It follows that the trade deficit with the US might get wider due to the ‘natural’ forces of trade, as Australia’s run of good (trade) fortune comes to an end and a more normal state of affairs is restored. It is therefore highly speculative, and dubious, to argue that an increase in the trade deficit is proof that the free trade agreement is a bad deal for Australia, simply because the deficit is getting wider. The strength of the Australian economy and currency suggests that we should be exporting less to the US, and importing more from the US.

I do not, however, expect that the trade balance is going to get worse in the near term. Leading capex surveys suggest that investment will slow or decline in 2006, so imports of capital equipment will probably also decline. If this happens, Australia will probably import less from the US, and the deficit will close.

The free trade agreement may, however, make the trade deficit with the US worse – if it increases investment. Economists agreed that one of the most beneficial elements of the deal was the scaling back of the foreign investment review board’s oversight of US investment in Australia. This was expected to significantly increase US investment in Australia. Increased investment will require increased capital imports, which will no doubt come from the US, and make the trade deficit wider than it otherwise would’ve been. An increase in the deficit as a result of this sort of investment is not, however, a bad deal for Australia.

Friday, February 03, 2006

Labour Market Regulation Sucks

There is a flyer advertising the upcoming HR Nicholls Society's Conference in March. The flyer has nothing “offensive” on it whatsoever. But this is a university, so I guess mentioning Liberal Senator Nick Minchin’s name as the keynote speaker is a hanging offence.

The HR Nicholls society is a collection of industry leaders, businessmen and academics who are united by their pursuit of industrial relations reform. Unlike, say the Socialist Alliance, Amnesty International or the ABC, who come together to pursue an ideology, the Society members are bound by experience. The Society seems to collect those that have lost jobs, contracts, time and money, because of excessive, paternalistic, union and or government play. Its members are annoyed employers (the givers of jobs), who have had to jump through hoops to get someone on the payroll.

For the past 20 years the Society has advocated (successfully) for industrial relations reform throughout the States and Commonwealth.

The flyer, was grafittied by the School’s resident Marxist. Exercising his respect of everyone’s right to free speech (as the Left often does), he wrote “sucks” next to where the Society’s name appears in the title. Juvenile.

The next day, I walk past the flyer again. Someone, and I think I know who, wrote “labour market regulation” above the word “sucks.” It now reads: “labour market regulation sucks.” I agree. Score one for the good guys.

Day three. Our resident Marxist continues this high level debate and writes “de” next to the day old “regulation.” But adds to this, “Wanker” next to the good senator’s name. Tell me why is it that the left feel so threatened and inferior, that in the pursuit of any argument, at any level, they feel it is necessary to resort to a) personal abuses; and b) violence. As far as I can tell, the resident non-me right winger has taken the higher moral ground (the right road) and ceased bothering.

I have three labour market stories I want to share. All have occurred in the last month.

  1. G applies for a inter-departmental job opportunity, wanting to move from one federal department to another. He applied for the position in September. A low end job designed for a second year public servant. After the selection process moved along at its sluggish pace and all proper consideration is given to minorities, disabilities, women and the indigenous, G received an offer in December. He then has to wait until January for the position to be “gazetted” in the Commonwealth Gazette, and then must wait three weeks before he can start his new job. Can you imagine if this were a transfer from the NAB to ANZ? It’d take an hour.
  1. N and C apply for jobs as assistant nurses within the Canberra aged care system. Because C has a TAFE diploma in Health Science, he is ineligible – too overqualified – to apply. N dropped out from a Certificate III in photography. Lucky she cleared this up, because initially she to was deemed overqualified. The government wanted to keep the market open to only those with no skills. Warning to public: do not put you folks in public nursing homes because they think someone with no experience and a semester of photography is overqualified to look after your Nan.
  1. B, with no work history, and an illness which has kept him near bed ridden for three years, applies on Thursday for a job with a private firm. He is interviewed on Monday and began work on Tuesday.

I’m not that well versed in Union stories. Mostly, this is because Unions have been in mass decline since I’ve been working. If only government would follow suit.

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