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A simple explanation of global warming and climate change - in less than 100 words!

It is greenhouse gases that keep the Earth some 30 degrees warmer than the moon.  As we have continued to produce more of those gases the planet has become warmer.  That warming causes the oceans to rise through thermal expansion and the melting of land based ice.  The warmer planet also increases evaporation from the land causing longer droughts.  That same evaporation puts more moisture into the air, which then leads to heavier rain falls and heavier snow falls.  Finally, the increased temperature and the increased moisture supercharges our atmosphere giving us more powerful storms. 

We have crap public services because the government simply does not have enough cash

I have commented before on how Australia is one of the lowest taxed countries in the developed world.  Here is more evidence, from my favourite reading material – The Economist magazine.  An excellent special report on the size of governments around the world is here - http://www.economist.com/node/18359920?story_id=18359920

This chart show total government spending as a %age of GDP.  Most of these figures are higher than total taxes as a %age of GDP.  The difference between the two is made up primarily by increased government borrowings.   The Economists’ heading is ‘It can’t go on’.  Which is partly true.  Increased government spending that is matched by taxes raised or for infrastructure borrowings that will increase productivity for repayment in the future is fine.  Increased government spending through borrowings for day to day expenses clearly cannot go on.

For reasons I don’t understand, The Economist rarely includes Australia’s data.  But these are the figures for Australia from the same source – The International Monetary Fund.

 

	1990	2000	2005	2009
Australia	30.0%	34.6%	33.9%	37.4%

To give these percentages some meaning, our government is currently spending A$120 Billion a year LESS than the average!  Wouldn’t that fix some of our problems, whether for renewable energy, improved public services or increased welfare.

It is appalling that employee entitlements are not protected in a business insolvency

I still find it hard to believe that a developed country like Australia has no protection in place for money owed to employees when a company goes broke.  In most of the rest of the developed world, employee entititlements are paid out in priority to almost everyone else.  When business's are short of cash the first thing they do is tap into any money put aside for holiday pay, long service leave and sick leave.  Then they stop paying super contributions and any other deductions that they take from their employees pay packet.   The money that is taken from their entitlements then goes to - you guessed it, the banks! 

There is also a strong argument that  very small business should also have some priority.  Many businesses now pay their workers as sub contractors rather than employees.  So often you see very small businesses going to the wall  through little fault of their own, when big companies go broke.  That doesn't sound fair to me.

How dumb are some of our corporate leaders?

It does amaze me how dumb so many of the highly educated and highly remunerated leaders of the corporate world are.  Too many just cannot see beyond the end of their quarterly forecast.   US carmakers continuing to churn out gas guzzlers and kyboshing their electric car projects in a world that’s running out of oil.  Aussie car makers dropping small car manufacture and instead putting millions into developing yet more ‘Big 6s’ and V8s- just as oil hits $150 a barrel.  Banks not seeing the pyramid schemes underlying their derivatives trading.   Retailers not seeing the threat from on line sales.  Coal industry blindly assuming we can continue pumping out greenhouse gases for ever despite 150 years of science to draw on.  Now we have bookshops who could not see the threat from Amazon and ebooks.

Come on guys!  Get your heads out of your MBAs and get your egos out of your big salary packages.  Get out of your high rise offices, get onto the street.  Throw away your Financial Times and stop going to corporate love ins where you all reinforce your belief in your own propaganda.  The world is changing.  Adopt and adapt and stop clinging to a marketing and production mindset that has hardly changed since the 19^th Century.

You have the brains.  You have the education.  You are just lacking a touch of humility and a dose of common sense.

Tax rates are a minimal factor for business when it comes to location.

Every week commentators whinge about business taxes.  How payroll taxes are stopping investment in NSW.  How windfall taxes on miners will drive them overseas.  How a 2% drop in corporation tax will transform overseas investment in Australia.  But what is the reality?

The reality, my fellow Green-Capitalists, is that business taxes have minimal impact on investment decisions.  There are dozens of criteria that any business will take into consideration when deciding where to open a factory, base a head office or open a call centre. 

The key ones are logistic.  Where are the customers, where are their key suppliers, where are the transport links, is their a good pool of labour to draw on,  how reliable is the key infrastructure - water, power, telecommunications.  Second comes total investment cost.  How much are land and construction costs.  What will the equipment cost.  How much to link into the rest of the business operating systems.  Then they look at running costs. What are salary levels, what about energy costs, how high are rents.  Then external factors.  Will the location attract good staff.  What is the security like.  How strong are government institutions.  How corrupt is the country or state. 

Finally, right at the very end, they will plug in a company tax figure and whether that tax rate is 20% or 40% really makes very little difference compared to all the other criteria.   Total business taxes are a minor input in the overall decision making process.  There are occasional exceptions.  Ireland gave tax free holidays to attract business to their economy in the nineties - but every eligible business in the world did not suddenly uproot and move to Dublin, which is what you would expect if you listen to the propaganda.

Why the best public transport in the world was NOT developed by private companies.

Is it any coincidence that most of the best public transport systems in the world have been developed by the state and not by private enterprise?  The New York subway, the London Underground, Melbourne trams, Paris Metro, French railway network, Japanese bullet trains and anything that moves in Switzerland.

The reason is simple.  So many of the benefits from a world class public transport system accrue to those who do not use it.  Clean air, less traffic congestion, greater productivity for business, etc.  How could a corporation accrue those benefits to their bottom line?  They cannot.  Therefore the traditional Return on Investment calculation will never stack up.  That is why public transport should always be state owned.

Let’s stop looking to the USA as our economic role model.

I mean, who wants to live in an economy with almost 10%  unemployment and another 10% underemployed.  Where 8% of ‘home’ owners live in trailer parks.  Where over half of personal bankruptcies are caused by medical bills. Where public education is primarily funded by local government so that the best education is in the most expensive suburbs and where the gap between the have-mores and the have-nots gets bigger every year.

None of that is right, so why do we focus so much on their model?    One can understand the coalition, with their Darwinist philosophy of the strong triumphing over the weak, still clinging to the coat tails of Ronald Reagan, but Labor?

What happened to fairness and equality?  For protection of workers rights?  For income redistribution?  For quality social services from cradle to grave?

Instead, two decades of LibLab governments have pushed us closer and closer to the American model.  We have unaffordable housing and run down public health and education forcing people into the profit driven motives of the private sector.  And we have an every widening gap between our  own have-mores and our own have-nots. 

The only area where we score over the USA is in our employment figures, but that has come about from being the ‘lucky country’ where we can just bend down, scoop up a handful of dirt and sell it overseas.  If it wasn’t for our natural resources and our constantly increasing population we would have been in recession for the last decade or more.

Some sanity needs to return to our economic model.  Sadly, both Labor and the coalition seem to prefer the insanity of short term, back pocket politics with no vision and no guts to talk substantive change.

The Great Coal Mining Swindle

Are you sick of the constant claims by the coal industry that the NSW economy would collapse without them?

Let’s put those claims into perspective:

1. Very few people are employed in the coal industry – in fact, less than 0.2% of the working population of Australia are employed in all coal mining.
2. The coal industry (like all corporations, world wide) are experts at NOT paying tax. For example, Centennial Coal (which accounts for almost half the coal supplies to NSW power stations) paid total tax of $4.1 Million in 2010.  This was on sales of $800 million and a profit of $71 Million. – ref http://www.centennialcoal.com.au/index.php?option=com_content&view=article&id=468&Itemid=149
3. The coal industry also pay royalties, (3% of the NSW Government income comes from all royalties)  which are far more difficult to avoid,  but their bullying of the Federal government over the Mining Super Profits Tax means that these will soon be reduced or cancelled.
4. Their benefit to our exports is greatly exaggerated – they ‘forget’ to mention that virtually all of their equipment and operating costs, apart from wages, have to be imported, directly or indirectly, from overseas which offsets most of that export income.  Finally, do not forget that most of them are foreign owned (Centennial Coal was taken over by Banpu of Thailand in October last year), so their profits are then sent overseas further offsetting their export income

What is also never taken into account is the external costs that coal mining generates from its pollution and operations.  Increased health costs, costs of monitoring and repairing their environmental damage, rail and road costs (all paid for by taxpayers) for them to transport their coal, port infrastructure, etc.  Then there is the biggest ‘externality’ of all – the contribution to global warming that all those greenhouse gases produce.

Coal – the sooner we get rid of it, the better.

The Population Problem - 6,890,646,738 and increasing at 207,000 per day

No one can deny that a global population forecast to reach 9 Billion within the next 40 years is going to place an immense strain on our planet.  Every extra body adds to our waste and pollution and requires more food, more of our precious resources and more energy.

Yet controlling that global population growth is a very difficult task.  Even China, with its dictatorial one child policy for the last 30 years, still saw a 30% increase in its population over that time.  What chance is there of achieving any substantial reduction in the developed world with our individual rights and religious philosophies?

We can make little impact on reducing population growth, but we can make substantial impact on the way our economy is structured to minimise its impact on our planet.   We have the technology today for us to have 100% renewable energy.  Everything on the planet can be recycled.  Fish stocks can be managed.  Food distribution patterns changed.  

All it needs is political pressure being applied to the key governments of the world.  Preferably from all 6,890,646,738 of us!

Why is the New South Wales government selling off the family silver?

The latest in the NSW Government's monster garage sale is public land adjacent to schools, hospitals, transport hubs and anywhere else they reckon they can raise a dollar or two.  The question has to be, why?  It is clearly hard politics for them.  Local protests are happening almost every weekend somewhere in the state, protesting the selling off of taxpayers land, usually to property developers.

The politics may be hard for them but it is not as hard as the alternative - raising taxes or borrowing money.  And that is the reason we have 'The Great Big Sell Off' campaign.  For the last couple of decades the anglo celtic economies (US, UK, Aus and NZ) and one or two others, have been driven by a 'small government/zero debt' fetish.  The logic behind the fetish was that business was more efficient than government in providing services.  Leaving aside that assumption (which I will discuss at a later date), this led to tax cuts and paying down government debt.

The end result is that revenues available to the government have continued to reduce (as a percentage of the size of the economy) yet our demands for improved health, education, aged care and public transport has increased.  The government's attempts to privatise their expenditure through public private partnerships, etc, has not been very successful (that is also for another article) which has left them with similar expenditure levels but with less income.  Answer - sell off the family silver.

What have corporations done for us??

To paraphrase John Cleese, not as much as the Romans, despite their claims to the contrary.  Any business impacts our economy in only three ways.  They employ people, they pay taxes and they impact on the flow of currency between Australia and other countries - this is usually referred to as our 'terms of trade' or 'balance of payments'.

They employ people, directly and indirectly.  There are some 11.5 Million people employed in Australia at any one time.  Always bear that figure in mind when industries claim how many people they employ.  For example, black coal mining employs 25,000 throughout Australia.  That is 0.2% of total employment.  Industries also claim 'indirect' employment.  This varies from industry to industry and is always difficult to quantify.  Generally it is somewhere between 3 and 10 times the total people employed directly.  However, these indirect employees would only be affected if a business or an industry closed without there being another business or industry to take its place.  A good example is when BHP closed down their steel mill in Newcastle.  That steel mill provided between 5% and 10% of all employment in Newcastle, yet, with careful planning, staff were retrained, new businesses opened up and Newcastle handled the transition very well.

They pay taxes to the different levels of government.  Corporate tax to the Federal government, payroll taxes and resource taxes to State governments and Rates and charges to local governments.  Off setting these taxes paid are the costs that the government incurs in supporting a business.  Looking after the health of their employees, providing roads and rail to help them move their goods, water, sewage, power to enable them to operate day by day, etc.  Also offsetting those taxes paid are the 'externalities' that are a cost to the government.  The main externalities are pollution and waste.  The additional health costs from smoking, pollution of waterways from mining, increased greenhouse gases leading to climate change, etc.  The amount of tax paid and the offsetting costs vary greatly from industry to industry.  Farmers selling organic products to local people will have minimal offsetting costs.  The car industry, coal mining, etc have substantial offsetting costs.   Sadly these offsetting costs are rarely specifically quantified to individual industries.  Which is a shame because it could be quite telling on the true benefits received from those taxes that are paid.

Finally, every business impacts on our balance of payments.   The vast majority of businesses impact negatively.  That is, they have to import more than they export.  This is why, for many years now, our overseas debt continues to climb.  This primarily has an impact on our exchange rate - though no one fully understands how, nor do they fully understand the long term ramifications of continually increasing overseas debt.   The main industries that are beneficial to our balance of payments are in mining and agriculture.  But their figures do have to be taken in context.  The miners, in particular, are always going on about how much export income they bring into the country.  Some people think this export income goes directly to the government - and the way the miners portray it at times, you would think that it does!  Any export income that a company earns goes straight into their bank account.  But offsetting that income is the money they then have to pay overseas for their purchases.  Most of the operating costs of a mine, excluding labour and utilities, will be for manufactured product, and we all know what has happened to manufacturing in Australia over the last few decades.  Even when the miners purchase from local businesses, those businesses will also have to import product from overseas.  Then there will be further payments made overseas in the form of dividends to their overseas shareholders and interest paid to their overseas borrowings.  Sadly, there is no data identifying these outflows of our currency to specific companies or industries, however I would be surprised if less than 75% of their export income goes back overseas again, directly or indirectly.

Corporations are a long way behind the Romans when it comes to what they have done for society.  So let's keep it all in perspective.

If you want world class public services you have to pay for them

Over the last 10 years the Australian government's tax take has reduced from 34% of GDP to less than 30% of GDP and its borrowings have reduced from 30% of GDP to less than 10% of GDP.  In both cases they are one of the lowest in the OECD.  Compare to the US with total tax take slightly lower than ours but with horrendous debt, or with northern european countries who have tax takes approaching 50% of GDP but with low debt.  At the same time we are demanding more expensive medical care, smaller school class sizes, better public transport etc. You don't need to be a Harvard scholar to work out that the maths simply don't stack up.

Meanwhile our discretionary income has gone up 60%.  So, instead of having better hospitals, better schools, better aged care, better public transport, we have ......  flat screen TVs, iPads, more cars, bigger houses.   So next time you go out to buy your next gadget or a third car or an extension to your house, ask yourself - "Would I rather have this or would I rather have better schooling for my kids/better aged care for my parents/better trains, trams and buses?"  

What will the world be like for my new grandchild?

There are certain events in one's life that causes you to pause and consider the wonders of life, the universe and everything.  My wife and I were just marvelling at the wonders of modern medicine that has enabled another child to come safely into the world and the wonders of modern technology that enabled her photo to be flashed around the globe within minutes of being born.

There are so many wonderful advances in medicine and technology.  The first bionic eye has been developed.  Google have mixed voice recongnition software with translation software - producing the first, embryonic bablefish.  Around the world poverty is slowly reducing, health and education slowly improving.  We are entering a golden era of social development.

Yet this can all be undone by the insane deniers of the damage we are doing to our planet's climate.  Raving looneys like Lord Monckton, self serving mischief makers like Andrew Bolt, fossil fueled lobbyists like Mitch Hook and opportunist politicans like Tony Abbot do nothing to further society.  They just drag us back to  a selfish, short term, materialistic focus that places having the latest mobile phone in your pocket as being the be all and end all of life.

So what will the world be like for my beautiful granddaughter as she grows up?  It is hard at times to be positive.  The climate catastrophes around the world in the last 12 months are just a taste of her future unless sanity prevails and our politicians do what is right for the world for once.

Attempting to reduce population and consumption will not save us.

There is increasing concern over our over plundering and polluting of our planet.  The common response to this is that it is being caused by a combination of pointless consumption and over population.  There is no doubt that stopping buying new stuff and having less babies would  help, but those are really hard things to do.  It is  fine for us in the developed world to stop replacing our car every three years, our laptops every 2 years and our mobiles every time we change our underwear, but what of those billions that are crying out for the things we take for granted?   Like clean water, regular electricity, refrigerators, internet connections, some means of transport other than a rusty bicycle with buckled wheels.  They surely have every right to improve their lives.  Then what about babies?  Admitedly China has had some success in that area, but even with a draconian and dictatorial approach population has still increased.  And who amongst you is expecting to succeed against the power of those religions to whom procreation is a divine right.  (Not mentioning any names and not pointing to anyone in particular, your eminence!)   Also buying less stuff and having less babies would still not solve the problem.  It would just delay the day of reckoning a century or so at best.

If we take a step back, the only problems we need to address are to stop using non renewable resources and to stop polluting the planet.  If we can fix those two problems, the developed world can improve their lives and people can go on having babies ( I am leaving food out of this for now, as that is a different discussion).

And we can fix those two problems.  We have the technology now to produce 100% renewable energy in all its forms.  We are also able to recycle pretty well everything we produce - though sometimes it does take a lot of energy.  Then we could have limitless economic growth. 

You don't think that 100% renewable energy and 100% recycling is ever possible?  Well if that is the case they we really are stuffed, because eventually we will have to achieve that if we expect this planet to serve us for infinity and beyond - sorry, just watched Toy Story 3 with my daughter!

So dare I suggest we stop whinging about people having babies and our throw away society and get our bums into gear to move us to a fully sustainable economy.  The recylcing bit can wait for a while as most of our resources are OK for the next few decades - with the exception of course of oil.  What is urgent though is that we rapidly transition to renewable energy. 

Is it time for state insurance for property damage from fire and flood?

I friend of mine reminded me of the history of fire insurance.  It was originally offered by the early local fire brigades.  If you paid your premium, you were given a plaque to place on your property.  Then, if it caught fire, the fire brigade would put the fire out.  If you didn't have a plaque they would let it burn.

We have now gone full circle.  The people who insure their properties pay a loading for the fire brigade, but the firies will put out your fire, whether or not you are insured.   With more and more climate carnage coming our way is it now time for the state to provide fire and flood cover with an across the board levy on, say, our council rates bill?  That way, everyone would be insured and there would be clear financial disincentives for local councils to allow development in high bushfire risk areas and flood plains.   Too simple??

Will democracy survive climate change?

We have just witnessed a year of climate carnage around the world.  There is hardly a country that has not experienced one or more extreme climate events.  Yet whenever anyone tries to tie in all those deaths to our continued out pouring of greenhouse gases they are drowned out by the denialist movement.

It is clear that, no matter how many people are killed and how much the climate carnage costs us, those denialists will refuse to move from their position and continue to feed the press to sow seeds of doubt such that no action is taken.  The end result will, of course, be just more and more extreme climate events.  So where will this end?

Is there a point where extreme climate events become so bad that Western governments will declare states of emergency, muzzle their press and mobilise their armed forces to achieve rapid change? And will those governments then look at China with a longing for the certainty that their dictatorship gave them to manage their own change to a world of renewable energy?  Could this then put us on the slippery slide to less and less individual freedoms and the overriding of individual rights for the benefit of the community at large?  Why am I asking all these questions?? :-)
 

I love this map. It matches GDP and population of individual countries to US states

It gives you an idea of how big the US of A really is.  Australia's economy is approx. the same size as New York state.

Courtesy of The Economist.  There is interactive version here - http://www.economist.com/blogs/dailychart/2011/01/comparing_us_states_countries 

See - statistics can be sexy!

A great article in my favourite magazine, The Economist, on making statistical data look sexy with lots of videos of Han Rosling's presentations.  Not just good presentations but some interesting data being presented as well.  Check it out here http://www.economist.com/node/21013330

Australia - the really dumb country?

We are an arrogant bunch aren't we.  Constantly crowing our praises at our umpteen years of uninterupted economic growth and even avoiding the Global Financial Crisis.  But, just hold on a minute.  Almost half of that growth has simply come about through immigration. The bigger the population, the bigger the economy.  Is it suprising that governments love immigration?  As for the rest of our economic growth, that has primarily come from the fact that we happen to be very lucky to have so much stuff we can just dig out from the ground and ship overseas.   The real test of how smart a country is, productivity, is rarely mentioned by our pollies for the simple reason that it is pretty poor.  And it is productivity that primarily gives us a better life, not more population and not just digging stuff out of the ground.   As the Australian Bureau of Statistics says "In the long-term, (productivity) ... is the ultimate source of economic growth and higher living standards.  http://tinyurl.com/6jvm4ug.  So how are we doing in productivity.  Pretty poor it works out.   Australia's multi factor productivity for the last 10 years went backwards by 0.1% a year.  Not so smart after all, are we?