Argentina’s Economic Malaise

Argentina’s economic malaise is almost entirely due to blindly accepting prepared economic prescriptions, rather than finding its own way forward. It started with socialism and then accepting Ricardo’s theory about Comparative Advantage, leading to the collapse of a once thriving economy.

Argentina is in the unique position as a country that had achieved advanced development in the early 20th century but experienced a reversal. This has inspired an enormous wealth of literature and diverse analysis on the causes of this decline, but there is little evidence that this analysis has come close to discovering the reason for Argentina’s economic malaise.

Argentina’s Economic Malaise & comparative advantage

The history of Argentina’s economic health is littered with pointers to the unhealthy consequences of the “advice” of economists.

Economic historians point out the Argentina’s economic advantages, placing it squarely in the real of Ricardo’s “comparative advantage.” Here is a summary presented in Wikipedia:

Argentina possesses definite comparative advantages in agriculture, as the country is endowed with a vast amount of highly fertile land. Between 1860 and 1930, exploitation of the rich land of the pampas strongly pushed economic growth. During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income. By 1913, Argentina was the world’s 10th wealthiest state per capita.

Ignoring the economists’ mantra that each country should concentrate of its own comparative advantage, from 1930 to 1976, the various governments of successfully diversified the nation’s economy by engaging in a process of industrialization, behind a protective tariff regime.

To the amazement of economists and economic historians, “Despite this [Argentina’s protectionist regime], up until 1962 the Argentine per capita GDP was higher than of Austria, Italy, Japan and of its former colonial master, Spain.” So one economic historian amazingly concluded, “Beginning in the 1930s, however, the Argentine economy deteriorated notably.

So one can see, even though economic policies that do not respect Ricardo’s theory can serve a country very well, most economists are so blind they cannot see what stares them in the face.

What they cannot or will not see is that no country is better off in the long term by concentrating only on their strengths. Only a diverse economy can work for everyone, not just those who are occupied in the “advantaged field.”

Argentina’s Economic Malaise – Peronism

Part of coup that seized power in 1943, Juan Perón became Minister of Labour. Campaigning among workers with promises of land, higher wages, and social security, he won a decisive victory in the 1946 presidential elections. Under Perón, the number of unionized workers expanded as he helped to establish the powerful General Confederation of Labor.  This sowed the seeds for the later humiliation of Argentina’s economy.

Beginning in 1947, Perón took a leftward shift in economic policy, first breaking up with the “Catholic nationalism” movement. This led to gradual state control of the economy, reflected in the increase in state-owned property,  control of rents and prices. The expansive macroeconomic policy, which aimed at the redistribution of wealth and the increase of spending to finance populist policies, led to inflation.[95]

Thus it is with socialism everywhere! The Whitlam experiment is Australia’s practical demonstration, with unsustainable higher wages, out of control inflation, and leading (socialist) economists saying, “There is nothing to see here – all is OK.”

In the 1950s and part of the 1960s, the country had a slow rate of growth in line with most Latin American countries. Stagnation prevailed during this period, and the economy often found itself contracting, mostly the result of union strife.[50]  Is this not the story of Australia after Whitlam, until Labor’s Hawke and Keating brought it to an end?

The story of Argentina’s economic malaise can be repeated, with a varied story line in many countries.

Argentina’s Economic Malaise – After Peron

Arturo Frondizi won the 1958 presidential election in a landslide. He failed to restore prosperity to the nation. He was replaced in another coup in 1966, which sought to restore national prosperity, beginning with more state control of money, wages and prices.

After 1966, in a radical departure from past policies, no doubt encouraged by the “smartest economic minds,” the Ministry of Economy announced a programme to reduce rising inflation while promoting competition, efficiency, and foreign investment. The anti-inflation programme focused on controlling nominal wages and salaries. It had striking benefits, with inflation decreasing sharply, decreasing from an annual rate of about 30% in 1965–67 to 7.6% in 1969. Unemployment remained low, but real wages fell, as they always will once Comparative Advantage theory is allowed to take control of economic thinking.

By 1970, the authorities were no longer capable of maintaining wage restraints, leading to a wage-price spiral. The lower real wages that are inevitable under the new economic orthodoxy are completely unacceptable to the majority of the people. In a democracy there can be only one outcome – an change of government.

Despair over the incompetent economic management of the post-Peronist period led to the election of the Peronist, Hector Cámpora in 1973 and then Perón himself soon after. When he died in 1974, he was succeeded by his wife, until she was deposed in a military coup in 1976.

The new Perónist regime was characterized by an expansive monetary policy, which resulted in an uncontrolled rise in the level of inflation. Here we have the same problems being repeated again – when will socialists ever learn?

Comparative Advantage – Continuing Problems

The dominance of the economic theory of Comparative Advantage led to a process of continuous decline. Just how the Argentinian economists thought that Argentina could compete with the USA with its own comparative advantages, which are numerous, is incomprehensible. Holding up manufacturing firms via state support just was not an effective band-aid solution. Argentina’s industrialization fell to levels maintained in the 1940. So much for a diversified economy, full employment, high wages, and political stability.

Argentina’s Economic Malaise – Today

The socialists were thrown out in 2015 and Mauricio Macri became president. At least Macri rejected socialist lies, but nothing would be fixed since he had swallowed economists’ Free Trade Lies. When he tried to implement the economists’ prescription to get Argentina back on its feet, he failed and Argentina’s Economic malaise continues today.

Yet economists still think that the solution to Argentina’s economic problems is more of the same, with the Financial Times completely perplexed that Macri’s presidency has not solved Argentina’s problems.

Argentina has embraced economic orthodoxy before, only to be blindsided by financial markets. This week’s mounting panic, which has seen the peso plummet and prompted the central bank to raise interest rates to 60 per cent, is just the latest example, prompting many to wonder: what has President Mauricio Macri got wrong?

The Financial Times cannot accept that the problem is in the economic model that it pushes every day of the week. Instead, it comes up with the lame excuse that one answer is “poor communication.” Actually, it is the only answer that it is willing to offer.

The same article cites an Argentinian economist, who says that there is no explanation for the current crisis.

“There is no logical explanation for what is happening,” said Christian Buteler, an Argentine economist, who called on the authorities to explain this “alarming” situation that is “completely out of control”.

The article concludes with argument from another Argentinian (capitalist) economist, reminiscent of arguments that I heard from (socialist) economists during the Whitlam era, “There is nothing to see here – all is OK.”

“[The problem is small] compared to the size of the market fear,” he says, arguing that the financing gap was small for Argentina’s $545bn economy.

Capitalist economists seem to think that ordinary workers in developed nations should accept ever falling wages and less secure employment. If challenged, they say that automation is the problem and will be increasingly the problem. Yet this is another lie. National states coped with the automation of industrial processes, but they will never be able to cope the with automation of other process if the real economic levels are handed over to global corporations in a fit of ideological blindness.

Poverty in Africa can be Fixed

Poverty in Africa can only be fixed by African governments taking control of their own economies; welfare and aid will only ameliorate poverty: it will not fix it.

President Macron’s Prescription

As reported in The Times, President Macron said that Europe’s migrant crisis can only be solved in Africa, as he called on leaders from both Europe and Africa to find new ways to stop the flow of people to the Mediterranean.

“We need more Africans to succeed in Africa,” Mr Macron told a crowd in Lagos. Too many people were leaving peaceful countries such as Senegal, Ivory Coast and Nigeria because of “a lack of hope, a lack of opportunities”, he said. “These people, given the magnitude of this wave, cannot be accepted, at least, not all of them.”

Africa Needs More Than Just Talk

Of course only Africans can solve their own economic problems, but Macron’s devotion to Elite Capitalism will not help them.

We can use the world’s prosperity to lift nations out of poverty, via trade, but we have to do it differently. It is no good just using our prosperity to lift the incomes of the top 20% of the people of African nations, as has been happening for the last 30 years.

While increased trade has resulted in some improvement in living standards in some developing nations, in general the gap between the developing world and the rest has not narrowed very much, especially if you leave China, Taiwan and South Korea out of the picture. The difference in those places is that the leaders of these nations didn’t believe the more trade would be enough: they also decided to control the situation more tightly.

The government of each African nation has to realise that trade will not be sufficient to lift their people out of poverty. To lift a people out of poverty it is necessary to increase the income the people receive, either from their farms, or by making things for each other. Forget about a “leg-up” from global corporations; they must always first look after themselves.

An economy that does not make most of its own goods and supply its own services is in a very fragile situation. This is a change in thinking. It requires African nations to increase tariffs, with the explicit objective of increasing the incomes of businesses. Higher local prices will eventually mean higher wages. Less imports means more local work.

Increasing tariffs on luxury goods should keep more money at home, with those with money looking to invest locally as profitability of local businesses improve, rather than spending on expensive luxury cars and other obvious signs of wealth and individual prosperity.

Abundant jobs, not the lowest possible prices, are the key to economic prosperity for every nation.

 

Trudeau Supports EU Folly at G7

Justin Trudeau has said that the US President won’t be allowed to kick Canada around. He believes that the US should give up its strategic investment in iron and aluminium in order to keep the “rules-based trade regime” in place. He seems to think that Canada’s war efforts deserve that sacrifice by US workers.

Trudeau’s Trade Rules

In Trudeau’s world, a quota system for dairy imports, plus a 300% tariff on non-quota imports is “rules-based.” I wonder what rule is being invoked here.

Yet it is only natural that Canada doesn’t want to surrender its dairy industry to that in the milder climate US industry. So also in the USA, the steel and aluminium industries are being destroyed by cheaper imports.

Apparently, Trudeau is not sharp enough, nor are his advisers, to see the parallel between dairy and the US aluminium and steel industries. One could say that Trump doesn’t want to surrender his aluminium industry just because Canada has cheaper electricity (due to more plentiful supply of hydro-electric power in  Canada.)

EU’s Trade Rules

EU has a tariff of 10% on the import of motor cars. USA has a 2.5% tariff on the import of motor cars. I have not seen any suggestion from the EU that they would prefer a US 10% tariff on their car exports.

Rather, it would appear that the G6’s “rules-based-order” is intended to keep the EU’s tariff advantage unchanged.

Claiming the high ground when you are actually crawling around in the gutter makes interesting reading. If the press were not so obsessed with its anti-Trump bias it would quickly see the hypocrisy. However, it is hard for a hypocrite to see the hypocrisy in a fellow “pretender.”

A new Rules-Based-Order?

What no-one will consider is whether a new “rules-based-order” mandating a fixed 20% tariff on all goods & services will actually work more effectively than the current WTO aim of zero tariffs. Try answering this proposition without the usual “tariffs are bad” mantra, if anyone dares. I am still waiting for a mature response from an economic leader or advocate for more free trade, or even a humble academic.

Zero tariffs are loved by economists, since they believe in the creative destruction of any “weak” segment of the economy. I don’t think too many ordinary workers will agree with them in any country that is actually a democracy (once they realise that they have been dudded by their “friends”).

On the other hand, the economists’ “creative destruction” would not be accepted in China, which is growing at 5% per year.

Bring on Trump’s so-called trade war. Even though the excuses for its likely economic success will be deafening, I reckon the voters won’t care.

Sea-level Rise Nonsense

A new article, predicting the likely level of sea-level rise, is an example of academic nonsense on climate change, since it fails to deal with China’s opaque COP21 “commitment” and the fallacy of predictions based on IPCC’s deliberate obscurity.

Sea-Level Rise nonsense

The article in Nature Communications includes two significant misstatements, which together give rise to my charge of “Sea-Level Rise nonsense.”

  1. It assumes that CO2 emissions will not peak until 2020, when actual observations indicate that CO2 emissions effectively peaked in 2013. Since the impact of CO2 emissions on CO2 atmospheric levels is incremental this is not an insignificant misstatement. What makes this mistake even more egregious is the fact that the report makes much of the importance of cutting CO2 emissions earlier rather than later.
  2. The article makes no indication of the climate sensitivity implied in their report. Since the IPCC includes a range of climate sensitivity estimates from 1.5C to 4.5C, this is not an insignificant omission. One suspects that the report is using the top of the range estimate. Yet the only hint that they are using the highest level of climate sensitivity estimates is given in the wording “high warming.” The use of the 4.5C estimate seems to be assumed in the prediction that sea-level rise will continue until 2300 under all scenarios. The lack of clarity in outlining the assumptions adopted is common in most “scholarly” reports on climate change, even though providing clarity on the assumptions adopted is a necessary element in all articles with the implied claim of being “scholarly.”

COP21

The Paris conference on Climate Change, tagged COP21, did not define the level of climate sensitivity implicitly adopted. Yet this was necessary at a meeting that must represent a political compromise. However, it is clear from the wording of the conference that the 192 nations that endorsed its decision implicitly accepted a climate sensitivity estimate of 2.0C, not the 4.5C at the upper end of the IPCC range, and not the lower end of 1.5C. Since the predicted sea-level rise is directly related to the assumed climate sensitivity, this is not an irrelevancy.

On the other hand, it was acknowledged that the action agreed at that time was not sufficient to cap global warming at 2.0C, and that future action would be required beyond that agreed at the significant meeting. For the authors of this article to fail to acknowledge that fact exposes their intention to write a report which is not strictly scientific, but rather is deliberately intended to be the advocacy of the particular viewpoint they are promoting. It is not even intended to spark debate of the matters at issue.

China’s Opaque COP21 “Commitment”

The only obvious difficulty with COP21 relates to China’s “promise” to keep increasing emissions until 2030. If they deliver on this promise we are all sunk, since it will result in CO2 atmospheric levels that suggest a very bad outcome for world weather, even with climate sensitivity of 2.0C.

Fortunately, China seem to be reducing CO2 emission levels, not increasing them.

However, the opacity of China’s “commitment” makes it extremely difficult to conduct a rational discussion of the action required to mitigate the impact of increasing levels of CO2 in the atmosphere on global average temperature.

We need more articles on this theme, and not obvious beat-ups, like this article in Nature Communications, which for me is another example of Sea-Level rise nonsense.

Globalised Capitalism will kill Democracy

Globalised Capitalism will kill Democracy. This could not be clearer in the United Kingdom, where a majority of young people between 18 and 24 put capitalism at the centre of their public policy concerns, and communism at the bottom.

18-24 years olds in UK worry about Capitalism

Globalised Capitalism

The underlying reason for these concerns is obvious. Governments around the world have surrendered economic control of their nations to the ideal of globalised capitalism and its free trade handmaiden. They have forgotten that governments are elected to look after the interests of their own people, and that trans-national corporations can NEVER do that job.

In a sense, this transformation in thinking is a tremendous victory for UK economists. They have taught the doctrine of comparative advantage for 200 years. Now everyone believes them, despite the fact that getting some goods 20% cheaper means widespread under-employment, lower wages for ordinary workers, and a major loss in economic diversity for each nation!

The world of democratic capitalism is already beginning to be weakened by this economic ideology. Governments no longer feel that they can protect the jobs of their own people, but they must change their own economy to be able to compete on a level playing field with everyone else’s economy. The fact that $20 hour will never be able to compete with $20 a day never seems to enter their collective (ideologically blinded) heads.

The arrogance behind this economic thinking knows no bounds. Those promoting this ideology seem to think that those trained and inculcated in the West are so much smarter than those in low-income countries that, of course, the West will have the “smarter and well paid jobs” and the more ordinary jobs can be done by “lesser mortals.” Grow up! The world has changed! The West has always had its own share of “lesser mortals.” They represent the majority of the population of every country. They also represent the majority of voters, and if something is not done, capitalism will be thrown out at the ballot box by those who are willing to clutch at the straw of socialism and even communism.

As recently reported in The Times, an historian warned about the growing influence of communist thinking in British universities:

A leading historian has warned against the moral relativism promoted at some universities after a Marxist student claimed on the BBC that communism only failed in the Soviet Union because it did not have the “chance to develop”.

The article goes on to say that communism is a poison for the people, not its salvation:

Most historians accept that tens of millions of people died in forced collectivisations and famines during the decades after the Russian communists took power in 1917. Stalin’s Great Purge in the late 1930s is thought to have claimed more than a million lives.

On the other hand, one could say that globalised capitalism is poison for most developing nations. Making cheap goods for the West is not the way to develop the economy. At best, it will make a few capitalists in these countries rich, but they are unlikely to spend their new-found wealth in their own country. What is needed is a way to create a new middle class who will spend their money in their own country. This can best be done by ensuring new small businesses can thrive and make profits.

Only protectionism can help developing countries to truly develop. They may need protection from nations which already have a first-mover-advantage for the rest of the 21st century.  So what? If more people are locally employed, why quibble about imported goods being 20% dearer?

Alternatives to Globalised Capitalism

There are only two viable alternatives to the current dominant model of Globalised Capitalism:

  1. Communism of the Chinese style, which exploits the free trade policies of the rest of the world, while protecting and enhancing its own businesses and trade. This brings with it the “thought-control” of communist ideology and the inevitable excesses from not having a democratic government.
  2. Democratic Capitalism, where the interests of the citizens of each nation are put ahead of ideological principles, whether those of communism, socialism or the poison of unrestrained free trade.

Muslim Immigration

Understanding the place of Muslim immigration into liberal democratic states must begin with the recognition that the Koran has no place for a democratic government. Also, one needs to realise that it is not the place for Western governments and liberal thinkers to provide a way for Muslims to accommodate themselves to a democratic system of government: this is the role that Muslim leaders must discover for themselves, or as if often the case, to reject!

It is natural for Muslims to reject liberal democracy. Islam seeks to impose norms of behaviour on all members of its community via rules and conditions. It is a theocratic rule-based system at its very heart. Democracy, on the other hand, reflects the thinking of both the elite and ordinary people in a democratic society. Some of those ideas are informed by religiously determined norms, whereas others reject those norms. It represents a untidy consensus of numerous disparate ways of thinking. This consensus is arrived at via argument and more importantly, experience.

Muslim Immigation

Yet, as Jennifer Oriel, The Australian 1/1/2018, writes, “Opposition to liberal democracy is imported into the West by mass immigration programs that do not require adherence to Western values as a condition of citizenship. During the past decade, numerous surveys have found that between 20 and 50 per cent of Muslims living in Western countries want to be governed by sharia.”

She goes on to say, “The Pew ­Research Centre found that after a decade of US and ­coalition military action against terrorism in ­Afghanistan, 99 per cent of Muslims favoured making sharia the official law in their country. In Iraq, the figure was 91 per cent.”

Sharia primarily represents rules based on the 7th century Koran as interpreted by Muslim scholars in the years after that. Since Muslims believe that the Koran was dictated to Muhummad by Angel Gabriel, it can appear to modern non-Muslims that Islam is stuck in a prison of 7th century ideas. Part of this framework is sharia.

One could say that sharia is incompatible with a liberal democratic system of government, yet to ask all Muslims seeking to immigrate into a liberal democratic country to formally reject sharia is to effectively ban Muslim immigration.

Legal Reforms

Muslims seeking to immigrate into a liberal democratic society, and those who wish to bring in relatives via a family-reunion programme, can be required to declare their allegiance to certain fundamentals of such a society. These should include:

  1. Commitment to the rule of law, with these laws being established by democratically elected governments.
  2. Tolerance towards people of other faiths, or of no faith, and towards those who change their core belief system.
  3. Willingness to pay taxes as determined by democratically elected governments.

In addition, the family-reunion programme could be changed so that it is only open to those sponsors who naturally are, or who have formally become, citizens of the host nation.

Bjorn Lomborg – Climate Change nonsense

In the Saturday Australian, Bjorn Lomborg set out his climate change manifesto. He asserts that the efforts coming out of COP21 to reduce global warming are a waste of money! Yet he uses IPCC nonsense to make up his own nonsense.

IPCC

Using or misusing IPCC reports, Bjorn Lomborg makes the extraordinary claim that “Achieving the 1.5C target would require ending the use of every single fossil fuel in less than four years.” If this claim has any basis in an IPCC report it would be by taking the upper estimate of the impact of greenhouse gases on global temperatures, and treating this as the final and likely result.

The IPCC provides some sensible and some “silly” estimates of the impact of greenhouse gases. One of these “silly” estimates means that at around 450 ppm of atmospheric CO2 the average global temperature will increase by 4.5C over pre-industrial averages. However, that is the upper level of their estimates. The bottom of the range shows that at around 450 ppm of atmospheric CO2 the global average temperature will increase by only 1.5C. This lower number is actually based on the empirically observed level – the IPCC only included that bottom element of the range because the evidence pointed so strongly to this fact. (Protests followed immediately upon the release of the 2016 IPCC report (the latest), arguing that the authors had conceded too much to the empirical evidence and their “hotter models” still held up satisfactorily.)

IPCC upper level forecast can’t be trusted

Bjorn Lomborg seems to have taken the IPCC’s bogus upper range “prediction” and used it as a linchpin for his proposition. (He should retire from pretending to contribute to scientific debate and start writing fiction. They same fate should await the IPCC if they can’t get their act together and start dealing with the evidence in a meaningful way.)

A rational argument from the latest IPCC report is that the world should at least be targeting a limit on atmospheric CO2 of 450 ppm. This is a feasibly achievable level, and one that was implicitly accepted in the Paris Climate Change conference of 2016 – COP21.

COP21

Bjorn Lomborg claims that the “Paris Agreement doesn’t stand scrutiny.” It seems to be that the COP21 agreement can withstand closer scrutiny than his wild assertions.

In Paris, the EU, USA and other developed nations, including Australia pledged to cut emissions by around 1% a year from now until 2030. The missing element was China, which pledged to keep increasing CO2 emissions until 2030 despite being the world’s largest emitter of CO2. In this, President Xi was supported by President Obama, despite the obvious disastrous consequences for the world climate if China delivered on its “promise,” and despite the political odium it has brought to his side of politics.

China’s political games (and Obama’s folly) are annoying and do not contribute constructively to the dialogue. Yet the evidence currently points to China actually cutting its coal usage, so all is not lost, despite the failure of Bjorn Lomborg to notice this development. In fact, there have been strong indications that China has been cutting its CO2 emissions since late 2013, when they appear to have reached their peak. However, on this the jury must still remain out, since China operates in an excessively opaque manner.

COP21 did not deliver the final solution to the problem of CO2 and N2O emissions, but it set in place a framework for further such emissions to be achieved. A “final solution” is still awaiting a new realistic technical and financially viable solution, assuming that a wider uptake of uranium-based nuclear power remains unacceptable in most democratic nations.

Just because a “final solution” has not been developed, there is a good case can be made that the nations of the world should do much as they can reasonably do in the meantime. This is because once CO2 is pushed into the atmosphere it remains in the CO2 cyclic bank, and unless a way of removing it naturally or technologically can be developed, it will continue its warming influence.

It was neither rational nor honest for Bjorn Lomborg to characterise COP21 as a failure. It was in fact the most successful such meeting to date, and points the way to a successful resolution of currently very difficult problem of growing atmospheric levels of CO2. Although it was an “interim solution” it was a useful one, and one that fits in with his own emphasis on finding a technological solution to energy creation. It does this without unnecessarily adding to the “atmospheric carbon bank.”

Likely CO2 vs. IPCC
Likely CO2 vs. IPCC “representative concentration pathways”

Journal Nature

Bjorn Lomborg also retreats into the sophistry produced by the prestigious journal Nature, which he cites as saying, “No major country is on track to meet its pledges.”

This journal is on a path to beat up climate change as its new reason to exist. Their claim is the kind of nonsense that Bjorn Lomborg seems to like, since in his citation there is no acknowledgement of the technological changes that are being continually developed. Even in Australia, moves have been made to make intermittent wind power more viable by introducing storage via its Snowy Mountains mark 2.0 proposal. This will make a very significant contribution, despite the scepticism shown by those who don’t understand either variable electrical demand or pricing theory.

Despite concluding his article with a plea for money to be spent on research on developing more effective low-carbon electricity generating facilities, in his role as an advocate for his own position, he did not think it worthwhile to debunk Nature‘s misleading claim, based on his own work, but rather misused it for his own advocacy.

When, oh when, will climate change debate be more mature? Propositions are put up in prestigious journals that should not appear in this naked and misleading form, and university professors write misleading articles. These are matters that should be able to be considered and rejected even at undergraduate level, but the lecturers and researchers are not providing their students with the tools that are required. Instead we have serious scientists and students marching “for science” to defend propositions that are easily debunked.

In the france24 piece cited earlier, Scott Pruitt, the head of the US EPA, was debunked for saying the quantum of the impact of greenhouse gases on the global warming is still being debated. Of course it is, even though the presenter thought he was talking nonsense! The IPCC has a range for “climate sensitivity” which goes from (an empirical) 1.5C to a modelled 4.5C. That means, for a CO2 level of 450 ppm (plus other greenhouses), the expected increase in global temperature since industrialisation could be in the range of +1.5C to +4.5C. Of course the impact of greenhouse gases on the environment is being debated! Scott Pruitt wants a debate on climate change. He does not meekly accept the bullying tactics of so-called “progressives,” who are always saying “accept the evidence,” when these same progressives do not understand the evidence themselves.

China is important

In 2015, China used 1,793,000 kt of coal for electricity generation, and it generated 5449 TWh of electricity. This works out to be 329 kg coal per MWh.

In 2015, USA currently consumes 656,000 kt of coal for electricity generation, and it generated 4128 TWh of electricity. This works out to be 159 kg coal per MWh. If the USA is able to achieve only a 20% cut in coal usage by 2030, that would bring down the average to 127 kg per MWh. It can be expected to do much more than that.

Obviously China and the USA have a different mix of generating infrastructures, but it is clear that China has a long way to go in reducing thermal coal consumption in order to achieve parity with the USA. In this sense, China has a bigger “legacy problem” from its existing facilities than the USA.

Even if China just achieved parity with the USA on coal usage at 127 kg per MWh by 2030, and its electricity consumption rose to 11900 TWh, that would still represent a net reduction its total coal consumption. Of course, it can do much better than that!

The next step for China is to acknowledge that it too can make a realistic contribution to the COP21 pledges, and drop its promise to keep increasing CO2 emissions out to 2030.

Pumped Hydro can’t be ignored

In writing an article for an Australian newspaper, Bjorn Lomborg has not given any consideration to the potential for pumped hydro to resolve the generation / dispatch issue associated with wind power. Yet the Australian government has commenced a major project, Snowy Mountains 2.0, to utilise the capacity of existing water storage facilities for “electricity storage.” Even if Bjorn Lomborg has ignored pumped hydro because he rejects its ability to help to solve the dispatch issue with wind power, he should have explained his objections rather than ignoring it.

Instead, he writes, “When there is no sun or wind, we must still pay for back-up fossil fuels, which now cost more because they are used less.” An omission of this significance surely vitiates his entire article, even if it were the only omission and misstatement. But it is not alone, as I have already explained.

Global Governance is not required

Bjorn Lomborg cites an early advocate of action on global warming, Jim Hanson, who is quoted as saying, “Suggesting that renewables will let us phase rapidly off fossil fuels in United States, China, India or the world as whole is almost the equivalent of believing in the Easter bunny and tooth fairy.”

It is not clear from this what Hanson thought was necessary to achieve the objective for which he aimed, but we know that the IPCC is now committed to the idea of global governance, as explained by an IPCC representative at the end of this video on France24. Apparently, the IPCC does not believe that democratic governments are up to the challenge, despite the fact the democratic governments have done more to manage emissions than non-democratic governments. As a rather wild example, India’s CO2 emissions are 1.58 tonnes per person, whereas China’s CO2 emissions have grown from 1.83 tonnes per person in 1990 to 6.58 in 2015. On the other hand, USA’s CO2 emissions have fallen from 19.20 tonnes per person in 1990 to 15.53 tonnes per person in 2015. They will continue to fall as new approaches become available and viable, as one would expect in a democratic and capitalist nation.

The success of COP21 in charting a path forward for action of climate change has not been welcomed by some climate change activists, as well as being debunked by Bjorn Lomborg. Each side has its own agenda.

Welfare Spending is a diversion

Bjorn Lomborg’s own “think tank,” the Copenhagen Consensus advocates stopping spending on CO2 emission reductions, concentrating on welfare spending and research and development. He writes, “Analysis by the Copenhagen Consensus has highlighted many phenomenal development investments where a fraction of the Paris treaty’s budget would help vulnerable communities much more today than carbon cuts would in 100 years: things such as stepping up investment in combating tuberculosis, nutritional investments for young children, vaccinations and achieving universal access to family planning.”

All of this is “more aid” gobbildy-gook, which will just keep poor nations impoverished. A realignment of trade that sees each nation becoming more self-sufficient will do more for “vulnerable communities” in every nation than the Copenhagen Consensus’ diversion of funds from fixing the problem of growing CO2 atmospheric levels.

“No Action:” big downside & little upside

If CO2 emissions were allowed to continue at the current level right up to 2100, as Bjorn Lomborg seems to prefer (if technology doesn’t come to the rescue), the CO2 in the atmosphere will increase from the current 405 ppm by 2 ppm each year for the next 80 years. That will bring the level of atmospheric CO2 up to 565 ppm. We might get better crops, but the cost of this is unpredictable.

Even if the impact does no more than reflect the historical relationship between the increases in greenhouse gas atmospheric levels and the global average temperature, this will result in the global average temperatures rising by 2.3C. If, in addition, only half the worse result of the IPCC’s models is realised, they will increase by 4.6C! What a potential legacy to leave to our grandchildren!

Bjorn Lomborg is willing to accept the view that “climate change will cause hurricanes to become somewhat stronger but also less frequent.” He offsets this by arguing that since nations are becoming wealthier they can repair the damage more easily. However, this is a nice argument for Denmark, but I am not so convinced it works for Haiti, San Marie and the Dominican Republic, or even for the poorer parts of the United States.

COP21 was a fair result and a good model. If China would come on board, it will be a really good result. Bjorn Lomborg is not helping!

Trump’s ideal healthcare model

Donald Trump campaigned on getting rid of Obama’s insurance healthcare model, and replacing it with a healthcare scheme that “everyone would love.”

An ideal healthcare model cannot be based on insurance. The problem with such a scheme is that there is no upper limit to the cost of an insurance based scheme. So, in the USA, healthcare is running at 17% of GDP.

The problem with an insurance-based healthcare scheme is that there is no direct connection between the cost of the service provided and the payment for the service. Insurance companies may try to limit their payments, but are clearly failing to do an adequate job.

Healthcare Funding

Healthcare funding is inherently difficult. Everyone wants the best healthcare that can be provided, but not everyone can pay the price. In fact, no country can actually pay for every healthcare need or demand of its people. A rational approach to rationing healthcare spending is required. This should target to meet, at least, fundable critical needs from a general pool.

Doctors are the key

There are many doctors who have entered the health profession primarily to serve the public, not to make $1 million dollars a year in fees.

Such doctors would be prepared to provide services to patients on a government-set fee for service. Those doctors who accept this arrangement would be legally blocked from charging their clients anything in addition to the government-set fee.

The fee should be set to provide a generous return to the doctor, taking into account a proper return for the years of study, expertise and work involved. Where there is a shortage of available GPs and specialists, an increased fee will be provided while this shortage exists.

A scheme like this would provide for a government funded fee for service for GPs and supported in-hospital medical procedures. Such a scheme is likely to be much cheaper to the US economy than the current insurance-based scheme.

This scheme could be funded by a fixed Federal levy on gross personal income and “net business turnover” (turnover less wages cost) in the USA. It should be set prudently at a high enough level to meet the cost. If this levy was reasonably set at less than 17% it would represent a net saving to the US economy. Based on this funding model, healthcare cost is likely to be less than 10% of personal income and net business turnover.

State-funded hospital care

State-funding of hospital functions on a fixed fee for service arrangement is a viable method that has been used elsewhere.

Non-profit hospitals could opt to be state-funded, and new state-owned hospitals could be commenced. Those hospitals that accepted this arrangement would be legally blocked from charging their clients anything in addition to the government-set fee for the nominated procedures.

This scheme should also be funded out of the Federal levy.

Medicaid Healthcare Funding

No further Medicaid funding would be required, and any other Federal subsidies for medical care would end.

Private Healthcare Insurance

For those who prefer to be privately insured, and to use current fee-for-service arrangements, this can be accommodated within this system.

In this case, the insurer would be required to make a claim for a percentage of the fixed fee (say 80%) from the Federal government, based on the same fee-for-service scheme, for supported services, used by doctors and hospitals .

Political Policies in Australia

Political Parties need coherent political policies. The recent elections in Australia, UK and USA prove that personalities do not matter as much as believable political policies.

Here are a range of policies that non-socialist Australian political parties could forward believably to the Australian electorate, and which would be appealing to a majority of voters.

Employment and Business:

  • Our primary goal is “a job for everyone who wants one.”
  • We consider that jobs are more important than “low prices for everything!”
  • To create jobs, the nation needs business investment.
  • Investment and profit from investments is a necessary part of a successful economy.
  • Improving the profitability of Australian businesses is a key goal of our party.
  • Improved profitability allows businesses to employ more people and to pay better wages
  • We believe improving profitability is more important than reducing business taxes.
  • To achieve these things, we will:
    • Encourage export activities where Australia has a relative comparative advantage, or where an Australian-driven innovation gives a particular business an advantage.
    • Fund the CSIRO to continue to do fundamental research that the organisation believes to be in Australia’s interests. The CSIRO will report annually to the Parliament on the previous year’s activities, demonstrating the relevance to Australia’s prosperity of the focus of their work.
    • Introduce a base-level 15% tariff on all inwards goods and services. We will also a support higher tariffs on goods and services where these are imported from countries which are judged by Australia to be unnecessarily allowing their own people’s wages to be set too low.
    • We will not require tariffs to be applied to high value equipment imports. Instead, we will support any local manufacturing of these via a subsidy.
  • We believe Australia should be active in reforming WTO rules, which are currently out of touch with the current economic environment. The WTO will not be permitted to frustrate our legitimate national ambitions.
  • The Productivity Commission will be required to assess the employment consequences of their recommendations, including assessing the real alternative employment prospects for displaced workers.

Monetary policy:

  • We believe that Australian businesses can have access to the necessary local financial resources to fund most of their own development, and should not be overly dependent on overseas cash flows into the nation. Therefore:
    • The Reserve Bank will be required to restrict the over-valuation of the Australia dollar, with appropriate interest rate policies, and by offsetting speculative currency flows into Australia.
    • The Foreign Investment Review Board will be required to assess and report on the non-financial benefits and costs of intending foreign purchases of existing very large Australian businesses and assets.

Budget repair:

  • We will establish a route towards a small “situation normal” budget surplus by 2021.
  • We will require new superannuation contributions to fully-fund individual pension needs, until the individual’s new superannuation money runs out.
  • Medical insurance will no longer be subsidised. Instead, all doctors will be encouraged to bulk-bill, including for hospital work. Medicare rebates will be lifted to provide a level of income for GP and specialists that is judged to be appropriate given the training, skill and risk involved in this work.
  • We will closely monitor and eliminate all attempts to use government funded programmes in a way that exploits too-easy government funding.
  • Tied grants to the States for state responsibilities will be eliminated.
  • Any significant new funding commitments will be met by increasing taxes, and will not proceed without appropriate funding (no more unfunded NDIS-type and Gonski-type commitments).

National Government

  • We support a federal model of government for Australia, with clearly defined responsibilities for the Federal and State arms of government.
  • We will work towards the goal of State Governments being self-funding.
  • We support fixed 3 years terms for the Federal Government, with the caveat that the Governor-General (G-G) be empowered to call an election where the G-G believes that it is in the nation’s interests. The G-G must formally advise the Parliament and the public of the substantive reason for calling an early election: it cannot include reference to advice from the Prime Minister, but must explain the substantive reasons for the G-G’s decision in relation to the nation’s interests.
  • We support the appointment of a Governor-General by a majority of the members of the House of Representatives. This will happen three months after returns are finalised for each general election, and otherwise only if the office is vacated by the G-G due to death, resignation, or a Full High Court determination of incapacity.

Industrial relations:

  • We will work towards establishing and maintaining fair working conditions for both employees and employers.
  • We will support workers’ wages with policies that encourage private sector employment at fair wages.
  • The Fair-work Commission will set the minimum wages for each work category, replacing union-based awards.
  • The Fair-work Commission will be required to set penalty rates for weekend work and overtime to reflect community standards and to ensure that small businesses are not disadvantaged in comparison with large businesses.
  • Unions that seek to intimidate workers or businesses will be closed and funds confiscated. Such confiscated monies to be returned to members on the basis of member contributions over the previous 5 years. Any funds deemed to be illegally obtained by the union will be retained by the relevant government body and used for general expenditure purposes.

Agriculture:

  • We support a strong agricultural sector, both for export and local consumption.
  • We believe that, wherever possible, each nation should aim to be self-sufficient in agricultural staples. Therefore:
    • We see a role for large-scale agriculture in being a swing producer in the world market for grains and similar staples. We support on-farm storage of grains and we are willing to provide financial support for farmers carrying large stocks of these goods from season to season.
    • We support modest Australian tariffs for high-labour-cost products, such as citrus fruits and market gardens.
  • We support the export trade in livestock, as well as developing more regional abattoirs.

Resources

  • We support a strong state-based resources sector.
  • We confirm that states should charge royalties as they see fit.
  • We will not support any “Super Tax on Ordinary Profits,” charged at a federal level, irrespective of its configuration.

Superannuation

  • We will ensure that, in future, the Superannuation Guarantee Levy actually does its work of reducing the reliance of ordinary workers on a government-funded pension.
  • Existing Superannuation funds that are not set aside for a pension replacement income stream will be taxed at a reduced rate, but will no longer be tax free.
  • We support allowing access to accrued Superannuation money to fund the purchase of a first home. (A home is both a lifestyle asset, and an asset that is useful in retirement: it is a good use of Superannuation money.)
  • We are pledged to review the Superannuation Guarantee Levy over time with a view to reducing it, or giving employees earlier access to their own money by other means.
  • Australian governments to provide public-servant-run superannuation funds, each with a different profile, including an investment focus on Australian infrastructure and companies. Low fees will be a feature of all these funds.

Commonwealth-state relations:

  • States will be treated as adults, responsible to their own voters for how they spend their money, whether raised independently or from the GST.
  • GST will be spread per state on per-capita basis, but with a re-instated federally-funded Grants Commission (with a fixed annual budget).
  • We will establish clear definitions of federal/state responsibilities for funding and service provision, so that Federal / state duplications can be removed completely.

Indigenous Affairs:

  • We support the idea of innovative self-funding and self-governing indigenous communities.
  • We believe that all remote indigenous communities should be encouraged to provide most of their own services for themselves.
  • Therefore:
    • Where there is a clearly expressed desire for this to happen, we support indigenous communities being able to elect their own representive councils.
    • Such indigenous councils to raise their own rates, and to spend the money in ways that benefit their own communities.
    • As a starting incentive, federal government subsidies to be provided to such councils on a $1 for each $1 raised, with a plan to progressively reduce this assistance over a number of years.
    • Indigenous communities to be encouraged to have their own indigenous plumbers, carpenters and other relevant trades, living in their own communities.
  • As far as is possible, all services to indigenous communities to be provided locally, even where this is perceived not to be the cheapest way of providing these services. Federal funding will only be used locally and only used to pay wages to members of that indigenous community at the current Fair Work wage rates for work certified to be completed.
  • We will support moves towards state-based negotiations for a treaty with the descendants of First Australians. We will not support a federal treaty. We believe that a treaty is a regional issue, affecting every “mob” differently.
  • We will not support a change to the Australian Constitution to recognise the descendants of First Australians, unless there is a clear indication that an overwhelming majority of these descendants want this to happen.

Climate change:

  • We will target for a cap of 2.5 tonnes CO2 emissions per person per year by 2040 (current emissions are 15 tonnes per person).
  • We will argue in international forums for a target maximum CO2 level of 450 ppm (currently CO2 level is around 405 ppm, and growing by 2 ppm per year).
  • Preference and funding will be given to measures that will physically reduce emissions, rather than concentrating on failed economic schemes designed to achieved that effect.
  • Initially, stability will be returned to the Australian electricity market by mandating that no RET subsidy will be paid for electricity generated when it is not required. The RET targets will be adjusted accordingly. Furthermore, the current RET scheme will be capped at the legislated levels (adjusted as above), and not changed, up or down.
  • Renewables, beyond current RET scheme provisions, will be required to stand on their own, and not receive further subsidies.
  • We do not expect that this will cause any difficulties in achieving the above ambitious CO2 reduction target.

Education:

  • We support basic education standards being set federally, but states and schools being able to set curriculum within those standards.
  • We support state management of state-government schools. We propose federal oversight of non-government schools.
  • We will support 80% of all school funding being federally provided, based on Gonski 2.0 funding calculations.
  • We believe that education should be linked to students’ abilities and aspirations; not every student wants to go to university, but the vast majority of students want education to lead to meaningful employment.
  • We will enforce strict rules on HELP-funded technical education providers to ensure that they provide value for money.
  • We will work to provide an environment where state-based TAFE colleges can thrive.

Hospitals:

  • We propose federal funding of doctors’ fees in hospitals based on a fixed payment per procedure.
  • We propose that the states continue to fund all other costs in state hospitals.
  • We support state management of state government hospitals and propose federal oversight of non-government hospitals.

NDIS:

  • Operation of NDIS scheme will be closely examined and fine-tuned in order to keep funding and expenditure within community expectations, while taking into account community willingness to contribute to its funding.

Immigration:

  • An active immigration program will be supported, with a mix of humanitarian immigration and business-driven immigration.
  • In humanitarian immigration, preference will be given to those who are at high risk of systemic persecution and those who have a very good prospect of integration into Australian society.

Environment:

  • We will protect the environment in accordance with the best science and in line with community expectations.
  • We will examine whether increased water storage facilities can be built economically and sustainably.
  • We will work towards the reduction of the usage of plastic bags and packaging.

ABC and SBS:

  • ABC and SBS will be required to demonstrate that they are meeting community expectations across all communities.
  • Funding of these organisations will be reduced if they cannot demonstrate this to Parliament’s satisfaction.
  • There will no further funding of SBS’ Viceland service.

Global governance – the IPCC objective

Why will IPCC go to any lengths to push their position on Climate Change?

Global Governance

Today, I learned why from France24. The IPCC is 100% committed to global governance. This also helps me to understand Angela Merkel’s irrational and undiplomatic attack on Donald Trump. It is because he won’t join in the Europeans’ global governance party.

So Scott Pruitt said the unthinkable: there is too much debate on the impact of global warming: he claimed that it is far from resolved. He is correct!

Let us look at the facts. The IPCC has published estimates of climate sensitivity of between 1.5 °C and 4.5 °C, but are unable to provide guidance on the likely actual level, whether it is in the middle of this range, or at either extreme. Is this science? No it is not, especially when the empirical evidence is that climate sensitivity is around 1.5 °C.

So people marched for science, against those who don’t accept the IPCC’s alarmist scenarios. Yet that is not science, it is just advocacy. Those marching for science have become unwitting pawns in the IPCC’s global governance push.

It is not surprising that climate change advocates are not happy with COP21. A voluntary agreement doesn’t meet their idea that only global governance can fix this problem. They are wrong. A voluntary agreement is exactly what is needed.

It also explains why the Grattan Institute in Australia is not rejoicing over the government’s plan to increase the Snowy Mountains Scheme pumped hydro capacity, bleating that it doesn’t fix the short-term problem caused by the precipitate closing of the Hazelwood brown-coal generators. The reason for this bizarre response is that increasing the Snowy Mountains pumped hydro capacity it will undermine the pressure for a global governance solution for climate change. In other words, the favoured socialist solution to the world’s problems is likely to miss its moment. Time to rack up the pressure, eh?

Just today, France24 reported on Nature Climate Change peer reviewed report. This report took the IPCC’s RCP 8.5 at face value. Now anyone who has done any research on this matter knows that CO2 emissions are falling, not increasing, and certainly not increasing in line with the entirely unrealistic RCP 8.5. Yet has any scientist called this journal to account? I am yet to see it and don’t expect to do so. The climate lobby is totally committed to the IPCC global governance agenda, and any false news will do if it supports the cause.

Likely CO2 vs. IPCC
Likely CO2 vs. IPCC “representative concentration pathways”