Grumpy Again

But That Trick Never Works

That old rapscallion and former Howard Government chief of staff, Cabinet SecretaryArthur Sinodinos was on television today, pitching a corporate tax cut. He was saying yes, an income tax might stimulate the economy but a corporate tax cut would stimulate investment and that would stimulate the economy more. This seems to be the mantra of the big end of town which is thirsting for the corporate tax rate cut.

"At least 50 per cent of the impact of cutting company taxes goes in higher wages for workers and higher employment," Senator Sinodinos said. 

"Putting money into the hands of consumers obviously encourages more spending and disposable income and has good incentive effects. But cutting company taxes also has good effects.

"It can encourage investment, it can encourage higher productivity, it can encourage more investment from overseas."

Would that if it were so, Mr. Sinodinos. Earlier in the month there was a report about that sort of thinking which, in a nutshell claimed that it was tried in Canada already and had no such desired effect. 

The Canadian federal government implemented three successive federal corporate tax reductions over the last generation. (Provincial governments also levy their own corporate taxes, averaging around 10 per cent, added to federal levies.) The first stage occurred in the late 1980s: the statutory rate was reduced from 36 per cent to 28 per cent, but various loopholes and deductions were closed in the process. The second reform occurred early this century: the general rate fell to 21 per cent, and preferences for manufacturing and resources were eliminated. The latest cuts were implemented beginning in 2007 by former Conservative Prime Minister Stephen Harper (defeated in last year’s election): he cut the base rate to 15 per cent, and eliminated a 1.1 per cent CIT surtax. Those last reductions alone still cost the federal government over $15 billion (Canadian Dollars) in foregone revenue each year. 

Together, these successive cuts reduced combined Canadian corporate taxes (including provincial rates, which also fell in several provinces) from near 50 per cent of pre-tax income in the early 1980s, to 26 per cent today. In theory, the resulting boost to profits should have stimulated a strong response in business investment. Unfortunately, hopes for this “jobs and growth” dividend have been repeatedly dashed.

Hence, for all this talk about how cutting taxes for businesses would spur investment, I think we need to take that with a dump truck load of salt. The big end of town is simply going to pocket that difference and probably won't even pass it on as a dividend. In the absence of things to invest in, investments tend not to be made. Given that the Australian economy post-Commodity Supercycle is distinctly looking like a services-based economy, there really isn't a whole lot of places investments can be made. There's a great deal of non-incentive (as opposed to an active disincentive) for capital investment to take place. This is why the government ought to be pushing for infrastructure investment and not trying to run back to surplus by cutting budgets for everything. 

As for the claim that would make wages go higher, that's a bit fanciful too because the big end of town has spent the post-GFC years pocketing all the productivity gains and not let wages rise. It's hard to see how money saved on top by these companies would translate into a burst of higher wages, or for those imaginary higher wages to go into the economy as spending when the most likely scenario is for that money to be spent on paying down mortgages - and then the bank sits on that money not investing it in things. I understand the Coalition government wants to help the big end of town but really, this is not going to have any effect. Arthur Sinodinos is simply wrong, working off ideologically driven bad advice. 

Why The Government Fighting For A Surplus Now Is A Bad Idea

This one's a few weeks old, but worth dredging up because of Arthur Sinodinos above. 

Here’s a little thought experiment to check the familiar argument that Abbott gave for the need to get to surplus: “Governments, like households and businesses, have to live within their means.”

Imagine that there is an economy where the money supply consists of a single dollar, which is exchanged 100 times per year among this economy’s inhabitants — thus generating a GDP of $100 per year. Then imagine that the government in this economy sets itself the target of running a surplus equivalent to 1 per cent of GDP. If the government achieves its objective, what will GDP be the following year?
Zero. And, if the government debt ratio was more than 1 per cent beforehand, it will be infinite afterwards. 

Why? Because the economy had only one dollar of money in existence, and the government’s surplus took that $1 out of circulation, leaving the economy with precisely zero dollars for commerce the following year. The government budget affects GDP by changing the amount of money in circulation in the economy, and a government surplus effectively destroys money. 

This is utterly unlike a household. Household saving does not destroy money, nor does it materially affect the household’s own income, since a single household is such a small part of the national economy (even if we’re talking James Packer’s household).

Got it? 

If, - like Worst-Treasuerer-Ever Joe Hockey did, - you go around telling important people from around the globe at things like the Brisbane G-20 that what the world needs now is economic growth and lots of it, the last thing you should be doing is busily taking money out of the economy - i.e. don't go around cutting the budget in the hopes of getting back to a surplus. It's akin to saying you want your car to go farther because that's what is needed, and then busily syphoning out fuel from the tank. It's self-defeating and self-contradictory. 

I bring this up, just in case you were wondering why WTE Joe really was WTE, and why Tony Abbott really deserved the tag 'Stupidity' in every post I made about his government. You can lie your way into office, but you can't work out of the office without facing up to facts. And logic. 

You wonder about the education these men failed to get in their fancy-pants private school.

The Devil And Hillary Clinton

Here's something from Pleiades that you might find interesting. 

Donald Trump is as frightening as his opinions are poorly considered. His life has been lived around people whose livelihoods depend on not telling him to shut the fuck up. His nominal constituency by-and-large has no context for this— what to them appears as ‘speaking truth to power’ is in fact a privileged bully enamored with the sound of his own voice. Mr. Trump was born into the class that establishment Democrats and Republicans have spent the last four decades making so wealthy that it separates them from the consequences of their socially destructive actions. Donald Trump is an inheritance-baby insider who plays an outsider on television. It is hardly an accident then that Mr. Trump and Hillary Clinton have been friends for over twenty years.

The Democratic establishment is in the process of shoving Bernie Sanders out of the way to put Hillary Clinton forward as the candidate to beat Donald Trump. The term too-clever-by-half comes to mind. The ‘missed opportunities’ of the last seven years are in the process of asserting themselves. Mrs. Clinton is a war-monger, free-trade-agreement loving friend of Wall Street at a time when a fair portion of the conscious public would just as soon burn the whole mess to the ground with Mr. Trump. The question for those who would vote for Mrs. Clinton to ‘stop’ Donald trump is: who are you going to vote for to stop Hillary Clinton?

It's not like it's even a surprising call. 

As the years go by, the Bill Clinton presidency seems more and more like one big wasted opportunity. The number of things they botched up in the process has been a parade of negative consequences both intended and unintended. For all the popularity he had, Bill Clinton never really did the things for his constituents that made their lives better. He and his wife Hillary did things for their Wall Street friends first and foremost. The America we see today that puts Donald Trump as the Republican frontrunner is a result of the Clinton Presidency as much as both Bushes. It's hard to understand why the Black leadership really want to go around the block again with the Clinton election machine. After 24 years, you'd think it was obvious that they don't get out of it nearly as much as the Clintons do. 

News That's Fit To Punt - 04/08/09

Is This Going To Be Futile Or What?

Former US President Bill Clinton is on a surprise trip to North Korea. Team America would probably warn him not to listen to Kim Jong-Il when he says, "Step a Rittre to your reft Prease!"

His mission, which he chose to accept, was trying to free a couple journalists who have been detained by the said regime, one of the axis of evil.

Former president Bill Clinton made a surprise trip to North Korea on Tuesday to try to bring home two jailed US reporters, in what was the highest-profile visit by an American to Pyongyang for nearly a decade.
The hardline communist state sent two senior officials and a schoolgirl with a floral bouquet to greet him at the capital's Sunan airport.
Analysts said the reception may indicate Pyongyang is seeking better relations with its arch enemy Washington, after months of high tensions sparked by the North's nuclear and missile tests and subsequent UN sanctions.
A US official travelling separately with the former president's wife, Secretary of State Hillary Clinton, confirmed he would seek the release of the female reporters detained during an assignment along the China border in March.
"Our interest is the successful completion of this issue and to confirm the safe return of the two journalists," the official told reporters on condition of anonymity.
South Korea's Yonhap news agency, quoting sources, said Clinton was expected to meet leader Kim Jong-Il later Tuesday and fly back on Wednesday with the journalists.

If this plan works, then they should send him to Tehran on the next leg to free those idiot American backpackers who wandered into Iran from Iraq and got captured.

UPDATE: And amazingly, Bill Clinton gets it done.

[caption id="attachment_2558" align="aligncenter" width="420" caption="Herro-o-o!"][/caption]

Bill Clinton brought some unusual strengths to a round of diplomacy that won the release of two US journalists on Tuesday: the cachet of a two-term presidency, a keen understanding of Asia, a history of North Korean outreach and smackdowns, and a gift for gab. Not to mention a wife who is secretary of state.

His drawbacks - that short fuse and oversized ego - were unlikely to be risks in this episode. In high-stakes diplomacy, some things are decided before anything is negotiated, and it was all but certain going in that Clinton would not be empty-handed coming out.

Old entanglements were in play. Clinton negotiated on behalf of journalists employed by Al Gore, his former vice president, in a media enterprise Gore started after losing a presidential election he might have won absent Clinton's impeachment scandal.

He negotiated for the benefit of President Barack Obama, the man who dashed his wife's White House hopes.

Clinton succeeded in the mission at hand: pardons for journalists sentenced to 12 years of hard labor for illegally entering North Korea. Clinton's spokesman said on Wednesday the former president left North Korea with two American journalists who had been held hostage.

I don't know what to make of 'The Kim' in his sudden benevolence. What is that? You can never tell in this world. Optimism springs eternal.

I think they should send him to Tehran too.

"Who Let Them Into The Country?" They'll Ask

A terrorist plot has allegedly been foiled by the erstwhile AFP and state cops in NSW and Victoria.

El Sayed is charged with conspiring to do acts in preparation for a terrorist act, namely an armed attack on the Australian Army Base at Holsworthy, south-west of Sydney.

Earlier, the court heard that the suspected terrorists arrested today allegedly intended to become martyrs in an attack on the base.

The court heard police believed there was a conspiracy to use weapons to fire upon Australian military personnel.

Prosecutor Nick Robinson, SC, alleged the men intended to keep shooting until they were killed or arrested.

Mr Robinson agreed with the magistrate that their intention was to become martyrs.

The court heard only one man had been charged with terrorism-related offences while three other men remained in custody without charge.

Investigators are seeking a court order to extend their questioning of the men for eight hours.

One of the men, Saney Aweys, appeared in court handcuffed and flanked by two federal agents. He denied any connection with the men mentioned in court by Mr Robinson.

Aweys, who has not been charged and who was unrepresented, said he was a boilermaker and needed sleep after being awake for the past 30 hours.

He said the police had put him in a "small room [and] when I told them of my fatigue and tiredness they told me to have a nap with the lights on".

"I want it to stop now,’’ he said. "I want to have a rest.’’

Ah, the good ol terror laws. Glad to see them in action, doing some evil. I ask, "but is the torture really necessary?" I guess they'll get Dick Cheney on the line and ask his opinion.

Turnbull's Regrets Over Utegate


KRuddie and Wayne Swann have been cleared.

"The variability in Treasury's response did not reflect any instruction on the part of the Prime Minister or his office, the Treasurer or his office, or senior Treasury management that some representations were to receive more favourable treatment than others," the report, from the Australian National Audit Office, said.

Godwin Grech has 'fessed up to the fact that he made up the fake e-mail. Malcolm Turnbull is running in the other direction from Grech's psych ward as fast as he can, but he did express his deep regret today.

"It is very regrettable that in doing so Mr Grech misled the Opposition, the Parliament and the Australian people," Mr Turnbull told reporters in Sydney.

"At all times the Opposition acted in good faith."

Mr Turnbull countered suggestions in The Australian that Mr Grech was pressured by the Opposition to provide details, saying the public servant approached Senate deputy leader Eric Abetz.

"Mr Grech proposed a detailed list of questions be put to him relating to OzCar, including questions concerning Mr Grant and representations made on his behalf."

Mr Turnbull has been under Government pressure to explain his role in the OzCar affair and his relationship with Mr Grech.

He faces accusations he met Mr Grech prior to the official giving evidence to a Senate inquiry linking Mr Rudd and Treasurer Wayne Swan to a request for special treatment be given to the car dealer seeking help under the $2 billion taxpayer-funded OzCar scheme.

The Auditor-General, in a report tabled today, has cleared both Mr Rudd and Mr Swan of making any inappropriate representations on behalf of the dealer.

Mr Turnbull rejected Mr Grech's suggestions he wanted to co-operate with the Coalition to stop it from blocking the Government's financing scheme for car dealerships.

"The suggestion that the Opposition was considering blocking the OzCar legislation is false," he said.

"The legislation had the full support of the Opposition and this was publicly known long before Mr Grech drew Mr Grant to the attention of the Opposition.''

So that would make Godwin Grech the patsy. He'll never eat lunch in Canberra again, so to speak.

I don't think all this reflects well on the Leader of the Opposition. I'm still inclined to think this thing with Godwin Grech and the fake e-mail is going to keep yapping at his heel, making him far less effective.  in the long run, I suspect it's going to kill Turnbull's career in politics.

Bill Clinton Weighs In

And We're Not Talking About His Weight

Former Presidents tend to just shut up and try to fade away like Old Soldiers. In most part, this is a good thing, but sometimes it becomes necessary to speak your mind. And so Former President Bill Clinton has spoken his mind on the execution of the War in Iraq. I think this is the point at which we realise the thing has been going on too long without the resolution that has been promised.

The next day, Mr Clinton weighed in from the Middle East, saying the war as it unfolded was "a big mistake". It was a good thing Saddam Hussein had gone, the former president said, "but I don't agree with what was done". The administration underestimated "how easy it would be to overthrow Saddam and how hard it would be to unite the country".

He said President George Bush had made "several errors, including the total dismantlement of the authority structure of Iraq". He added: "We never sent enough troops and didn't have enough troops to control or seal the borders." Across those porous borders, "the terrorists came in. That was the central mistake, and we're still living with that".

As passions have run higher here this week, the venerable traditions that foreign policy arguments "stopped at the water's edge", seems to have been conclusively discarded. The most recent Democratic president was in Dubai, in the heart of the Arab world, when he delivered his verdict on the war that was launched by his successor in the White House.

On Tuesday, US senators voted 79-19 to endorse a Republican amendment demanding a regular accounting for the war from the Bush administration. Not only was it a bilateral statement that things could not go on as they were, it came at the moment Mr Bush was in Asia, thanking Japan, South Korea and Mongolia for their contributions to coalition forces in Iraq.

Ideally, we should get out, but getting out is not going to be easy. The day we decide to leave is the day the insurgents will celebrate saying, "we won". And indeed that may be the case; that we must swallow the bitter pill of defeat in order to get out of this misadventure altogether. However before we come to wiping the Iraq Campaign slate clean we have to look at what possible outcomes we can salvage from Iraq.

In a nutshell the COTW (Coalition Of The Willing) really should go back to an intel-driven war rather than this tank, helicopter gunship and white phosphorous thing they're doing. That stuff is okay for a short war as proven in both gulf-wars, but this thing is getting protracted. The classic way they used to fight wars like this was to send in CIA agents to set up proxies to do the fighting. Haven't they seen 'Spy Games'?

One of the issues seems to be that the current Bush Administration don't like the CIA and are therefore not inclined to follow the advice of those people. Indeed, the model for fighting these wars have been practiced in Afghanistan, and having US troops on the ground has not added much except mobile fire-power. It's costly and thee money is better spent on the CIA nursing the situation along rather than the military rupturing the situation with gunfire at every turn. It draws less attention too.
The least the COTW can do is to manage these things a lot better.

No Rugby World Cup For You!


It must be a day for former leaders to speak up. Former Japanese PM Yoshiro Mori was speaking up on behalf of the globalisation of Rugby, now that Japan was not awarded the Rugby World Cup for 2011. Instead, that honour goes to New Zealand who took it away with a surprise win. Moe accurately, he is whining and griping, but his whine and gripe is not totally without merit. After all. NZ has already hosted a Rugby World Cup. What gives?

The Japanese had stronger words. "Our tender was much better than those of the other two," said Yoshiro Mori, president of the Japanese RFU, and the former prime minister of Japan. "Everybody thought it would be of great value to the game to stage the Rugby World Cup in Asia. We had public support and there is a feeling that the game needs to be globalised.

"It looks as if this was a sympathy vote for New Zealand because they couldn't stage the World Cup in 2003. Maybe it was the old boys network of the IRB at work."

Aah. Mr. Mori, was famous for debating and Rugby from his days at Waseda University. He's also famous for this true anecdote:

Mr. Clinton is coming to Japan for the G8 summit. His underlings brief him on how to greet Mr. Clinton:
"First you say, 'How Are You?' He'll probably say 'fine thank you'. then you say 'Me Too'."
So Bill Clinton arrives. Mr. mori opens his mouth and says: "Who are you?"
Thinking it's a joke, Bill Clinton replies with his riff: "I'm Hilary's Husband."
Mr. Mori says: "Me Too."
Everybody in the room died of embarrassment.
But hey, he's still 'Former Prime Minister of Japan'!

Capital Punishment Is Not A Good Thing
Neither is haggling over sentences of another country. The best that could be said for the on-going Nguyen saga is that the Australian government seems to be doing its best to avert the impending execution of Mr. Nguyen. That is he way the government should be; not exporting people from which it has removed citizenship.
Meanwhile the tone of journalism kind of stinks here

It struck me as we pressed Prime Minister Lee on the issue this morning, how well he defended the indefensible. He spoke not about the fact that this was a first offence. He didn’t focus on Nguyen Tuong Van at all. Instead he spoke of the quantity of heroin at issue — almost 400 grams — and the suffering that could cause. He spoke in soft, measured tones and emphasised the gravity of putting a human being to death.

When pressed on the question of when the execution would take place, he showed sensitivity, suggesting the family needed to know first and so he wasn’t saying any more. And notably, he applauded Prime Minister Howard for resisting 'megaphone diplomacy'; that is trying to embarrass the Singapore government by speaking out on the issue. By the end of his six minutes, Prime Minister Lee had impressed me and I suspect many in the Australian press pack. In fact, tonight it appears what we were watching was a diplomatic stuff-up — big enough to ruffle the typically unruffled John Howard.

The suffering caused by 400grams on heroin are policy things under which laws are writ. Heroin is one of the best anaesthetic tools that have been removed from the hands of doctors because of USA drugs policy. There a re a lot of ins and outs to this issue alone; but in the mean time, the Singaporeans think it is important enough to execute somebody who is carrying this much heroin. No matter which way you slice it, it's their law that you're trying to disrespect.

That said, Mr. Nguyen made this trip to paay off debts. Debts incurred to lawyers who worked on trials defending Mr. Nguyen's brother who trafficked drugs. What kind of hell kind of family is this? Presumably, the third brother will have to mule some heroin to pay off two big legal bills now. Okay, bad joke.

The execution is scheduled for 2. December. I don't agree with capital punishment. That said, I don't think we'll dissuade Singapore from carrying out what its judges have decided, just on the say-so of ethnocentric journalists like this Tim Lester fellow.

Yanks Retain Hideki Matsui

It's a total non-news moment when the Yankees retain a stalwart player with a multi-year contract. Hideki Matsui agreed to stay on for 4 more years with the Yankees.

“I’m most very happy to be able to come back again and wear the pinstripes again and play in that uniform,” Matsui said at a news conference yesterday. “My first desire was to play here.”
Matsui’s agent, Arn Tellem, and Yankees general manager Brian Cashman met the Nov. 15 deadline contained in Matsui’s first contract with the team. That deal stated that if there was no agreement by then, New York would have to place the outfielder on unconditional release waivers, which would have prevented the Yankees from re-signing him until May 15.

“I know Hideki is relieved. This is where he always wanted to be,” Tellem said after reaching the agreement Tuesday night. “His hope is to finish his career as a Yankee and help the Yankees win the World Series.”
Matsui is to earn $13 million in each of the next four seasons and gets a no-trade clause. He was coming off a $21 million, three-year contract in which he earned an additional $1.5 million in performance bonuses.
“This was obviously the No. 1 priority to get him wrapped up,” Yankees manager Joe Torre said. “He’s such an important player.”

The teeth-gnashing you hear from Boston is that the 52million dollar price tag puts Johnny Damon at a higher price for the Bosox who want to retain their Center Fielder. Rumours persist that Scot Boras is trying to get 7 years and 84 million for his client Damon.

And that is all the bullshit that is fit to post.