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Archive for the ‘Economics’ Category

It is becoming increasingly clear that there is no prospect of a Liberal party led by Malcom Turnbull ever returning to the party’s former core values of social conservatism, fiscal responsibility and personal integrity.

Being determined to win at any cost, and make any promises to do so, is not a win at all. Certainly not for the Australian people. Unless there are principles, there is no point.

Three years of Shorten and Plibersek is a ghastly prospect, with its certainty of increased energy costs and costs of doing business, higher unemployment and debt, and a reopening and refilling of detention centres.

But it is more and more likely that ordinary and loyal Liberal voters will see this as the only alternative to the destruction from within of conservatism in Australian politics.

Those of us who believe that social conservatism and economic libertarianism offer the best path for peace and justice and prosperity for Australia may well believe that this will only be achieved, and with it, a sound future for Australia, by sending a clear message that the Liberal Party needs to return to principled conservative leadership.

The real question is, how to do that without the horrendous cost to Australia of three years (at least) of Shorten and Plibersek?

There has already been a substantial member level backlash against elected members who voted to replace Tony Abbott with Malcolm Turnbull. Turnbull is simply not a conservative. He is a big spending, trendy issue, promise anything to get re-elected salesman. This is not what Liberal Party members, or ordinary Australians, want or need.

No conservative or traditional Liberal voter should feel guilty about giving first preference votes to other, conservative, candidates. In my electorate of Mayo, for example, Bruce Hicks of Family First will get my first preference. I know Bruce. He is a good guy; hard-working, a successful businessman in a very difficult industry (dairy farming) and a school principal. He knows about balancing budgets, and is a person of intelligence and integrity. He won’t be elected though. The seat will be retained by Jamie Briggs.

There is nothing much wrong with Jamie. The press has been monumentally unfair to him on occasion, but he has generally done a good job for his electorate. Apart from supporting an idiotic $20 million white elephant airport development on Kangaroo Island, so that airlines can run routes from capital cities other than Adelaide direct to Kingscote. Except that every major airline has already said they have no interest in such routes and no intention of flying them.

Then there is his refusal to get behind the Kangaroo Island water gap/ferry as part of the national highway network. This is the single change that would do more than anything else to boost the island’s economy, make KI the jewel of South Australian tourism, and help to reverse SA’s declining attractiveness to overseas and inter-state tourists. At the moment it is often cheaper to fly from Adelaide to Bali for the weekend, than to take a family and car from Adelaide to KI for the weekend. Absurd. Jamie’s reason for refusing to support making the ferry part of the highway network (thus equalising transport and freight costs) is that it would give an unfair advantage to Kangaroo Island producers. This is equally absurd. How does partially removing a substantial disadvantage suddenly amount to an unfair advantage?

In addition, Jamie has given his support to what is surely the biggest pork barrel project in Australia’s history; the construction of submarines in Adelaide. Never mind the fact that the contract is to build submarines that haven’t been designed yet, using software that hasn’t been written yet. Never mind that the planned subs will be so much slower than surface navy vessels they will be unable to carry out escort duties, or effective intercept and denial. Never mind that it will take fifty years to build a fleet that will be outdated before the first one hits the water. Never mind that we could lease fast and tested Virginia class submarines from the US and have a functional fleet in five years at half the cost. And please don’t tell me we can’t use them because they can’t be serviced in Australia. A fully equipped service centre could easily be set up in Adelaide, with the subs returning to the US every ten to twenty years for an RCOH (Refueling Complex Overhaul).

Of course every Australian should mind all these things. Our defence focus is rightly on our navy. Defence personnel take enough risks and make enough sacrifices without having to worry about slow, second rate equipment. Tax payers make enough sacrifices that they should not have to worry about paying an extra $20 billion for submarines, even second rate French submarines, just so they can be built in Adelaide. The argument is that this will create jobs in Australia.

The argument is hogwash. The wages and on-costs paid to those employees is money taken from other businesses and wage earners.  The government is simply vastly less efficient than private enterprise at almost everything. That costs money and productivity. Then there is the weight of tax collection and compliance costs, and layers of bureaucracy on top. Every job the government “creates” comes at a cost of 2.2 jobs in private enterprise.

What the “build the subs in Adelaide” boondoggle will do is create about 5,000 jobs in key marginal Liberal seats in Adelaide, at a cost of 12,000 jobs elsewhere. That is behaviour by government, which means the elected members, which should not be rewarded.

In the Senate, the options for conservatives are fairly clear. We need to give Turnbull and his cronies a good thump, while not risking a balance of power held by Xenophon or the Greens. Xenophon is a charismatic character with absolutely nothing to say. He is simply, like Malcolm, a principle-less, headline seeking, big-spending populist. No thanks. The Greens, well, if you could run steel factories on unicorn farts, the world would be a lovely place. Until then, we live in a real world, with real profits and losses and energy needs. So again, no thanks.

My advice would be, vote under the line. The Liberal Democrats, the Australian Liberty Alliance, Family First, are all thoughtful, well-rounded, principled conservative parties. They may get one candidate each in each state. Two would be brilliant. Then give the rest to the LNP. The result, fingers, arms and ankles crossed, should be a Senate where the balance of power is held by real conservatives, while still giving the LNP room to govern effectively.

So, pace Miranda, it is entirely possible to be a deliberate, delectable, delicious conservative, determined to deliver without delay while deleting de louses, and not be at all delusional.

In 2012 Stanford University’s Centre for Health Policy did the biggest comparison of organic and conventional foods and found no robust evidence for organics being more nutritious. A brand-new review has just repeated its finding: “Scientific studies do not show that organic products are more nutritious and safer than conventional foods.”

…  animals on organic farms are not generally healthier. A five year US study showed that organic “health outcomes are similar to conventional dairies”. The Norwegian Scientific Committee for Food Safety found “no difference in objective disease occurrence.” Organic pigs and poultry may enjoy better access to open areas, but this increases their load of parasites, pathogens and predators. Meanwhile the organic regulation against feeding bee colonies with pollen supplements in low-pollen periods along with regulation against proper disinfection leads to sharply lower bee welfare.

Organic farming is sold as good for the environment. This is correct for a single farm field: organic farming uses less energy, emits less greenhouse gasses, nitrous oxide and ammonia and causes less nitrogen leeching than a conventional field. But each organic field yields much, much less. So, to grow the same amount of wheat, spinach or strawberries, you need much more land. That means that average organic produce results in the emission of about as many greenhouse gasses as conventional produce; and about 10 per cent more nitrous oxide, ammonia and acidification. Worse, to produce equivalent quantities, organic farms need to occupy 84 per cent more land – land which can’t be used for forests and genuine nature reserves.

Bottom line: Organic farming costs lives and is far worse for the environment.

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Frost Strikes France’s Burgundy and Loire Wine Regions.

Freezing temperatures from Chablis to Côte Chalonnaise to Chinon and Montlouis damage young vine buds, threatening this year’s crop

Early reports from the Loire were not hopeful. “In the memory of vignerons, there are two major freezes: 1991 and 1994. This is on the level of 1994. It’s historic,” said Guillaume Lapaque, director of the federation of the Indre-Loire wines trade group and the Bourgueil wine syndicate. “It froze on three nights—April 18, April 25 and then April 27.”

Lapaque said he does not have exact estimates of damaged vines yet, but the early word is bad. “In Bourgueil and St.-Nicolas-de-Bourgueil it’s between 50 and 60 percent. In Chinon, it’s a little less, about half. In Montlouis, it’s very serious. And in Vouvray, happily it’s not too serious overall, although some vineyards have problems.”

More cold is in the forecast, but Lapaque adds that the damage has already been done. “You can’t set fire to a forest that has already burned. The lower vineyards froze, it doesn’t matter if they freeze again. The upper slope vineyards didn’t, and we don’t expect them to,” said Lapaque.

Well I was wrong about 4,000 new jobs in Adelaide at a cost of an additional $18 billion to build the subs here. Christopher Pyne says it’s 2,800 jobs. Let’s be generous and say 3,000.
 
That’s $6 million per job.
 
I have an idea. Why not let the Federal government pay 3,000 unemployed people in Adelaide $100,000 per year for ten years to sit around and do absolutely nothing. That’s a million dollars each. That would cost $3 billion.
 
Then we could get the subs built in France and save $15 billion, and Christopher Pyne would be so popular he would still get to save his seat.
 
Why not? Because it would be absolutely freaking ridiculous, that’s why not.
 
But nowhere near as freaking ridiculous as paying $18 billion for the same 3,000 make-work jobs.
Since the announcement that Australia’s new submarines were to be built in Adelaide by a French company, from the only poll that ever gets it right, punters:
 
• Labor closes in on the Coalition, odds cut into $3.25 to win the election.
 
• Coalition drifts from $1.25 out to $1.33.
 
• All the interest from punters this week has been for Labor to cause an election upset.
 
Labor, priced at $6.00 just over a month ago, has been cut from $3.50 into $3.25.
 
Punter interest in Labor has been strong over the past week, with Sportsbet taking five bets on Labor for every one bet on the Coalition.
 
People aren’t stupid. We could have had Japanese submarines with proven design and technology built in Japan for $20 billion. About $1,000 cost for every man, woman and child in Australia.
 
Instead we are going to have French subs, not yet designed, with software not yet written or costed, made in Adelaide, for $50 billion plus the extra cost to build them here, estimated at up to 30% more, so a total cost of nearly $70 billion. Over $3,000 cost for every man woman and child in Australia. That is $2000 less in the pocket of every member of your family to spend on what you want and need. To fund less than 4,000 jobs in key marginal seats in Adelaide.
 
That is not job creation. That $2000 less to spend in the pocket of every Australian means job destruction on a massive scale.

I cannot join in the general rejoicing about the subs being built in Adelaide.

Submarines and other defense requirements should be built so as to provide the best possible equipment for our defense personnel, at the best possible value for Australian taxpayers.

Building the subs in Adelaide will cost an additional $18 billion. That is, at a cost of approximately $15 million per new job in Adelaide.

$15 million per job in Adelaide in additional taxes which have to be extracted from businesses and workers. Which of course means $15 million per job that can no longer be used in private enterprise to employ people, to research and develop and provide new products and services.

To put this another way, each new job in Adelaide in the sub project will cost the jobs of approximately fifteen people employed elsewhere, because the money that would have been used to pay them will now be going in additional taxes to fund make-work in Adelaide.

This is not job creation; it is exactly the opposite.

Or of course, if we were willing to pay the taxes required to fund an extra $18 billion, that would have been enough to buy an extra four subs.

This decision is not good policy. It is economically illiterate, and very poor value for Australian tax-payers.

That is the subtitle of Paul Driessen’s powerful book describing how Western “green” restrictions on the cheap energy the West demands and takes for granted result in suffering and death in the world’s poorest nations:

It could just as well be the tile of Brendon Pearson’s article “Carefree ignore consequences of limiting supply of fossil fuels” in The Australian a few days ago. This is just a few paragraphs. Read the whole thing.

“The response from green advocates is that the emissions from coal and fossil fuels are different — they can be replaced by renewables. Let’s do the maths. Last year wind and solar ­energy produced the equivalent of nine days of global primary energy needs. Coal produced 109 days and fossil fuels combined produced 313 days of the world’s ­annual primary needs. Despite all these power sources, 1.3 billion people still missed out on electricity and a further 1.7 billion only had partial access.

To put this problem into context — the energy used by Christmas lights in the US in an average festive season is more than the ­national electricity consumption of many developing countries, such as El Salvador, Ethiopia, Tanzania, Nepal or Cambodia.

Halting or limiting coal or fossil fuels output will simply mean that those with no or partial access to electricity would have to wait much longer in the dark.

That is an uncomfortable but incontrovertible fact. If you limit something or make it more expensive to the poor then you are delaying or denying that access. Not just for weeks, months or years, but generations. Hundreds of millions of people will live shorter, more miserable lives as a result of the choices of the comfortable and warm.”

That is it exactly. The cost of cozy green self-righteousness is that hundreds of millions of people will live shorter, more miserable lives.

I don’t usually copy and paste entire articles, but this, by John Stossel on his hospital experience, is just too accurate to ignore:

I write this from the hospital. Seems I have lung cancer.

My doctors tell me my growth was caught early and I’ll be fine. Soon I will barely notice that a fifth of my lung is gone. I believe them. After all, I’m at New York-Presbyterian Hospital. U.S. News & World Report ranked it No. 1 in New York. I get excellent medical care here.

But as a consumer reporter, I have to say, the hospital’s customer service stinks. Doctors keep me waiting for hours, and no one bothers to call or email to say, “I’m running late.” Few doctors give out their email address. Patients can’t communicate using modern technology.

I get X-rays, EKG tests, echocardiograms, blood tests. Are all needed? I doubt it. But no one discusses that with me or mentions the cost. Why would they? The patient rarely pays directly. Government or insurance companies pay.

I fill out long medical history forms by hand and, in the next office, do it again. Same wording: name, address, insurance, etc.

I shouldn’t be surprised that hospitals are lousy at customer service. The Detroit Medical Center once bragged that it was one of America’s first hospitals to track medication with barcodes. Good! But wait — ordinary supermarkets did that decades before.

Customer service is sclerotic because hospitals are largely socialist bureaucracies. Instead of answering to consumers, which forces businesses to be nimble, hospitals report to government, lawyers and insurance companies.

Whenever there’s a mistake, politicians impose new rules: the Health Insurance Portability and Accountability Act paperwork, patient rights regulations, new layers of bureaucracy…

Nurses must follow state regulations that stipulate things like, “Notwithstanding subparagraph (i) of paragraph (a) of this subdivision, a nurse practitioner, certified under section sixty-nine hundred ten of this article and practicing for more than three thousand six hundred hours may comply with this paragraph in lieu of complying with the requirements of paragraph (a)…”

Try running a business with rules like that.

Adding to that is a fear of lawsuits. Nervous hospital lawyers pretend mistakes can be prevented with paper and procedure. Stressed hospital workers ignore common sense and follow rigid rules.

In the intensive care unit, night after night, machines beep, but often no one responds. Nurses say things like “old machines,” “bad batteries,” “we know it’s not an emergency.” Bureaucrats don’t care if you sleep. No one sues because he can’t sleep.

Some of my nurses were great — concerned about my comfort and stress — but other hospital workers were indifferent. When the customer doesn’t pay, customer service rarely matters.

The hospital does have “patient representatives” who tell me about “patient rights.” But it feels unnatural, like grafting wings onto a pig.

I’m as happy as the next guy to have government or my insurance company pay, but the result is that there’s practically no free market. Markets work when buyer and seller deal directly with each other. That doesn’t happen in hospitals.

You may ask, “How could it? Patients don’t know which treatments are needed or which seller is best. Medicine is too complex for consumers to negotiate.”

But cars, computers and airplane flights are complex, too, and the market still incentivizes sellers to discount and compete on service. It happens in medicine, too, when you get plastic surgery or Lasik surgery. Those doctors give patients their personal email addresses and cellphone numbers. They compete to please patients.

What’s different about those specialties? The patient pays the bill.

Leftists say the solution to such problems is government health care. But did they not notice what happened at Veterans Affairs? Bureaucrats let veterans die, waiting for care. When the scandal was exposed, they didn’t stop. USA Today reports that the abuse continues. Sometimes the VA’s suicide hotline goes to voicemail.

Patients will have a better experience only when more of us spend our own money for care. That’s what makes markets work.

This image has been floating around Facebook for the last few days:

veges

Prompting various responses:

response

Here’s the mind-blowing argument: “If we each grow a large crop of different food, we could all trade with each other and eat for practically free.”

Where to start?

Well, for one thing, growing your own food isn’t exactly “free,” not even “practically free.” As anyone who has his own vegetable garden knows, it requires seeds, fertilizer, irrigation, weeding, protection from insects and birds and animals, and a lot of work. The cost may not all be measured in monetary terms, but it isn’t free. In fact, it’s notoriously easy for a vegetable garden to end up costing more money than it saves, which is why most of us do it just as a hobby.

But let’s not pick this apart. Let’s take the idea seriously. Hey, what if we all became small farmers and traded with each other? As they say on the Internet: you’ll never guess what happened next.

Maybe instead of everybody growing the same things, we could all produce what we’re best at and trade with others for what we need. We could come up with a catchy name for this, like “division of labor.” And we would need somewhere to exchange these goods with each other, which we could call a “market.”

Maybe we could get even more specialized. Some people could devote themselves just to growing young plants in greenhouses in the spring for others to plant when the weather gets warmer. Or they could provide seeds for other people to use, or breed hybrids with better yields or other desirable characteristics.
Maybe some crops would grow better in different areas, or at different seasons.

And maybe some crops would grow better in different areas, or at different seasons. I’ll bet you can’t grow blackberries in the middle of winter, but there are other areas of the country, or of the world, where these things still grow even when they won’t grow in your front yard. Maybe you could trade with people who live in those places.

Still, crops come ripe at different times, so maybe we need a system where I can trade my spring harvest of peas for somebody else’s fall harvest of pumpkins. Maybe we could write this all down on little pieces of paper which we pass between us to make trades. Has anybody ever thought of that?

Go read the whole hilarious article at The Federalist.