Monday, July 08, 2019

Australia and its coffee-powered economy

Below is one of many current tales of doom about the Australian economy.  I don't buy it.  The symptom of doom that I mostly see is the record number of empty shops in shopping centres.  They certainly tell of financial pain for the people who once ran the businesses there.  But is that bad for the economy as a whole? 

The usual explanation is that more people are buying online and thus fatally shaving the margins of physical retailers. But whether that is the cause or not, surely it tells of increased efficiency in the retailing sector.  We may be down from 100,000 coffee shops to 80,000 but no-one is going short of coffee.  The same demand is being served by fewer people using less real estate.  A situation that looks bad may in fact be good.

And our new government is very much pro-business so that almost certainly will cause an uptick in the new ventures that the writer below correctly says we need

The writer below is perfectly correct in saying our government sector is too big and our real estate prices are too high but those are chronic problems, nothing new.  We have lived with them for a long time now without too much harm to our living standards so I think we will continue to do so.

While visiting the US recently, I was pressed on what Australia excelled at. My answer: coffee. After suffering with Starbucks for months, I’d become keenly aware of the superior quality of our flat whites — much nicer and far cheaper.

I went on to explain the importance of iron ore and coalmining, the huge fees we charge Asian students for university education, and how financial services make up a bigger chunk of our economy than any other developed country.

And, with the highest paid political class in the world, Canberra is overflowing with talent, producing reports, inquiries and ministerial talking points with a finesse hitherto unseen.

It was a bit worrying I couldn’t venture much else. Amid all the excitement this week about tax cuts and back-to-back interest rate cuts to record lows, it’s easy to overlook our dependence on the housing market for confidence in our economy. It’s easy to forget about the near absence of structural reform — if you exclude huge new spending programs with questionable benefits such as the National Broadband Network and National Disability Insurance Scheme — for almost 20 years.

Britain, Germany, the US and Japan — the latter widely (if wrongly) seen as economically dysfunctional — have each enjoyed higher economic growth per person than Australia since 2010, according to recent analysis by Oxford Economics. Our uninterrupted growth across 28 years is built on rapid population increase. If the US let most of Mexico move to Texas, its economy would be a lot bigger too.

We’re slowly falling down the global living standards league table. You feel it already when you go to buy something abroad or shop online at home. Our currency has sunk in value despite our major exports fetching the highest prices they have in years.

Productivity growth, the ultimate linchpin of our living standards, has slowed as the economy ossifies. The rate of entry of new firms into the economy has fallen more than 20 per cent since the 2000s, the Treasury pointed out last month. Similarly, workers’ “switching rate” between jobs has declined 17 per cent, suggesting workers are less willing to take risks. Adjusted for population, the economy has been shrinking.

Meanwhile, debt continues to mount. Home sales, prices and credit growth boomed for years until 2017, but regulators and government did little to stop it, belatedly introducing some caps on interest-only and investor loans which were hastily withdrawn when prices started to fall. Indeed, in the wake of a royal commission into financial services that highlighted irresponsible conduct, the banking regulator yesterday ­watered down responsible lending rules in place since 2014.

The combination of lower mortgage rates and weaker lending rules will almost certainly revive house prices and loan growth in coming months. We’re coming for you, Switzerland, the only other country with as high a share of household debt to gross domestic product.

Higher house prices boost confidence for a while. Borrowing from the future flatters economic growth statistics today, but it’s mathematically impossible for credit to grow faster than incomes forever. The Reserve Bank can pull the interest rate lever only one or two more times before it too must start creating money out of thin air to buy up assets — quantitative easing — in a bid to hold down interest rates.

The prospects for politically difficult reform aren’t great. The government is hailing the partial return of bracket creep in five years, legislated this week, as a major reform. It’s even getting away with telling everyone income tax won’t exceed 30 per cent by then, when the Medicare levy (an income tax with no relationship whatsoever with health costs) means the marginal rate most people pay will drop from 34 per cent to 32 per cent. The tax system in 2024 will have the same structure and complexity it had in 2001, taxing wages ever more heavily while land and inherited wealth remain relatively untaxed.

The Productivity Commission’s “to do” lists have been ignored, along with umpteen other reports that gather dust in ministerial offices. It’s easier to look to the Reserve Bank to cut interest rates than cut wasteful public spending or induce competition among the oligopolies that siphon billions out of household income.

That might not be so bad if monetary policy were effective. The Reserve Bank’s latest series of interest rate cuts reflect the failure of central banks to return their ­financial systems to “normal”. Interest rates plummeted after the ­financial crisis and, despite the US Federal Reserve’s short-lived efforts to lift them, look set to settle near zero. They reflect an emerging crisis of confidence in central banks’ economic models, which assume (with precious little evidence) a strong link between interest rates and inflation on the one hand and between the unemployment rate and wage growth on the other, when the past decade’s experience points to none.

The Reserve Bank worries about losing its credibility if it fails to achieve its inflation target of between 2 and 3 per cent. Never mind surveys showing people think inflation is 4 per cent a year, while few would know the RBA has an inflation target. Most households would see cheaper goods and services prices as a good thing.

It’s not even clear inflation is so low. The price of gold reached a record high this week, after the Reserve Bank cut interest rates for the second time in as many months. An ounce of gold in Australian dollars ticked up to almost $2040 — 19 per cent higher than a year ago — after the cash rate dropped to a new record low of 1 per cent. Clearly, not everyone thinks inflation is low. The stockmarket is about to burst through its record high, set back in 2007.

Including house prices in the consumer price index would have produced an annual average inflation rate around 0.6 percentage points higher since 1998, according to recent analysis by Commonwealth Bank economist Gareth Aird. In keeping with global practice the CPI excludes the cost of servicing a mortgage and the land component of buying a home (which is the bulk of the ­purchase).

The jobless rate may not be as low as politicians say it is, either. Market researcher Roy Morgan puts the jobless rate at 9.2 per cent — almost double the official 5.2 per cent rate — by including people who want work but haven’t applied for a job in recent weeks. And it says the underemployment rate — people who’d like to work more hours — is 9.4 per cent. If almost a fifth of the labour force wants to work more but can’t, no wonder wage growth is weak.

It’s hard to see how we shake off ultra-low rates without a global agreement among central banks or a crisis that dislodges the “inflation targeting” paradigm that generated low rates in the first place. But the newly elected government, seemingly with a working majority in parliament, has no excuse for avoiding tougher reform decisions. Great weather and nice coffee won’t be enough if China catches cold.


The elbowing out of Christianity in favour of the new religion of adoration for homosexuals

The loss of traditional vaues is often a loss of painfully acquired wisdom about ways to live

Unease is growing in Australia that something has changed for the worse in our live-and-let-live culture. The seismic shifts giving rise to this pervasive anxiety seem to have been coming in cumulative waves.

Free speech has given way to the drive to eliminate “hate speech”; bonds of trust have broken in commercial life — especially in our financial services sector; dying is becoming a medicalised event activated on ­demand by the individual, rather than the natural ending of life; and religion has become such a divisive issue that a new law is now being drafted to protect religious freedom.

Less than a generation ago, speakers with diverse political, ­social and religious views were ­invited to university campuses. But now, people with unacceptable views are “no-platformed” in order to protect the vulnerable.

Universities have compounded the problem by rejecting the traditional canon forming the foundation of Western civilisation and turning instead to what is often called “a coherence in pluralism and hybridity”.

Dissent from the prevailing new orthodoxies about gender and sexual orientation is virtually impossible without attracting opprobrium and venom — just ask Israel Folau.

All this has contributed to the sense that the common bonds of civility that help to build mutual trust in our society are under strain.

It provokes a persistent feeling among the more conservatively minded that the warp and weft of the cultural and social fabric have altered in discomfiting ways.

Defenders of such cultural change say the culture is not broken but simply responding to new sensitivities — just as it did in fixing behaviour that discriminated on the grounds of race or gender. However, many fear this cultural evolution has seen the weaponised assertion of rights as anti-discrimination laws are increasingly used to stifle the expression of conservative opinion rather than merely combat behaviour.

This tension at the heart of cultural shift is marked by two related features. The first is a move away from the communal — and with it, a diminishing civic readiness to live with difference — towards the individual, and a concomitant demand that threats posed by difference must be eradicated, so any behaviour deemed to harm individual dignity be proscribed by law. Scott Morrison’s proposed ­religious discrimination bill is one attempt to stem this tide and protect the freedom Australians need to have to live out their religion in both belief and practice.

The second feature of cultural shift is related to this emphasis on the sensitivities of the individual. As the priority of the communal, a notable feature of our social life in former generations, has given way to emphasising the primacy of the individual, so it has been accompanied by the eclipse of the moral language of virtue by the emotional language of values. And this evolution in our discourse is important because values language cannot successfully serve as a language of morals.

Virtues are objective moral norms that are both shared and personal. They are shared because there is general agreement about what a virtue such as justice is and what it represents; at the same time, virtues are personal because once an individual knows what, for example, the virtue of justice is, they can make a personal evaluation of about how they stand in relation to that particular virtue.

However, as morality became increasingly relativised and subjectified in the 20th century, the language of “virtues” — which ­asserts an important degree of ­objective authority based on a shared human nature and a shared conception of what common, ­social life entails — gave way to the language of “values” as a moral language.

Values, however, are simply emotional statements about personal beliefs, feelings or attitudes. They cannot be normative because it is impossible to erect any shared meaning on the foundation of something that is personal and subjective.

Reasoned thought, which draws upon agreed premises and the development of an argument grounded in formulated judgments, has given way to the exhibition of hurt feelings; and so we have come to the point where emotion, rather than reason, now serves as the basis on which claims against others are asserted.

Once values displace virtues, the idea of a shared morality soon loses any coherence or meaning — even in the face of authoritarian assertions that such a shared morality exists. When reason gives way to emotion, common standards of behaviour are quickly eroded, and the very language we use in civil and moral discourse begins to fragment — and soon enough it loses its meaning.

The fracturing of our culture can be accounted for, in large part, by the crisis of moral authority that confronts our society. The eclipse of virtue by values has led to a distorted view of morality that is no longer informed by principles of reason but by emotion. The communal norms of morality expressed by virtue have been displaced by a new primacy afforded to feelings.

However, while acknowledging the formative influence of religion on the development of Western moral thought, we ought not to pursue the restoration of any form of morality determined solely by the demands of theology or the institutions of religion — whether Christian, Muslim or Jewish. Liberal democracies need to be secular democracies.

But we ought to pursue a renewed understanding of culture as that which expresses a shared, common vision for our human and social flourishing — an understanding that is passed on in our traditions to future generations.

Human flourishing depends on the recognition and protection of fundamental human rights and freedoms — including the right to religious liberty, not as a subordinate right but as one right coexisting with other rights.

As such, the crisis of moral authority confronting our society must be addressed by, first of all, refusing to accept the equation of emotional claims with moral claims, and by calling for a reorientation from the personal to the communal.

The moral, social, and political health of our society — indeed, of our culture — depends on it


Australia runs concentration camps? You can’t be serious, Tom

Thomas Keneally is a good novelist but is also a hysterical Leftist with no sense of proportion.  That illegal immigrants housed in Australia's detention centres can get a free ticket home just by asking for it he fails to mention.  The inmates at Auschwitz had no such opportunity.  Some differences do matter

Most Australians appreciate the cut and thrust of the domestic political debate. However, when talking to foreigners all of us have a responsibility to be as factual as possible and to avoid hyperbole.

Bestselling author and Booker Prize winner Thomas Keneally did not meet this standard when interviewed by Zeinab Badawi on the BBC World Service’s Hardtalk program on June 18. The writer spoke sensibly in refuting the claim of US-based commentator John Oliver that Australia is a ­racist country.

But earlier in the interview, ­Keneally threw the switch to alienation when discussing the issue of refugees and asylum-seekers. Whatever anyone thinks about the policy of successive governments on this issue, the fact is that Australia, on a per capita basis, is one of the most generous nations in the world when it comes to settling refugees.

Settling refugees means accepting them as individuals who qualify for the free health and education available to Australians — along with access to a generous welfare system. And, in turn, refugees become eligible for residential status and eventually full citizenship. Some of Australia’s most successful citizens came here as refugees. But you would not know this from watching or hearing the Hardtalk interview.

Keneally told Badawi that Australia has failed the test of “national honour and honesty” with respect to asylum-seekers. He went on to accuse Australian governments of lying but did not specifically identify the (alleged) lies to which he was referring.

Keneally told Hardtalk: “We began by arguing that to save Australia from terror we had to keep these people in permanent detention. So we have what can only be called concentration camps in Australia … in which people are punished psychologically for having the ambition for being Australians.”

This is simply misleading. Keneally is a social democrat and a supporter of mainstream Labor governments. He should know that detention for asylum-seekers entering Australian territory ­unlawfully was an initiative of Paul Keating’s Labor government in 1992. It had nothing to do with the threat of international terrorism, which became a concern some time later.

Also, the reference to concentration camps is grossly inaccurate in this instance. Since the end of World War II, this term has been associated with the camps constructed by the Nazi Germany ­regime in the late 1930s and early 40s. Some were forced labour facilities, others were death camps. No one willingly entered these institutions.

Contrary to ­Keneally’s claim, no one is punished for having the ambition to become an Australian. Tens of thousands with such an ambition enter Australia as immigrants every year, as do thousands of refugees. Detention was established to restore Australian control of Australian borders. This became increasingly necessary as individuals arriving by boat destroyed their personal papers on the ­advice of people-smugglers. This means that authorities have no way of assessing the character of individuals arriving on Australian shores.

Keneally told Badawi that Australia has adopted a policy of “punishing people, not the people- smugglers”. This overlooks the fact that the only way to stop the people-smuggling trade is to cut their customer base. The Coali­tion governments led by John Howard, Tony Abbott, Malcolm Turnbull and Scott Morrison understood this.

So did Labor’s Kevin Rudd ­during his second term as prime minister. During Rudd’s first time as prime minister and in the early years of his successor, Julia Gillard, about 50,000 unlawful ­arrivals came to Australian shores and an estimated 1200 drowned at sea. At this time, Australia’s ­immigration system was effect­ively contracted out to people-smugglers.

It’s rare indeed for a BBC ­journalist to criticise an interview from the right. But that’s what ­Badawi felt compelled to do. She pointed out to Keneally that while he ­referred to concentration camps, others described them as detention centres. And she added that “you can’t allow unfettered numbers of asylum-seekers to come in”.

Quite so. Keneally’s proposal is to use the money saved from closing existing detention centres on Nauru and Papua New Guinea’s Manus Island to set up centres in Indonesia designed to process asylum-seekers for settlement in Australia.

However, it is not clear why asylum-seekers who make it to Indonesia or a nearby nation should get preference when it comes to settlement in Australia. There are tens of millions seeking asylum — in Africa, the Middle East, Asia, Latin America and elsewhere. There is no reason why Australia should give preference to individuals with the money to make it to our northern shores ahead of those who, say, may have been in a UN camp somewhere in Africa for 15 years.

Refugees and asylum-seekers in offshore detention are now free to leave if they wish. They are in no sense incarcerated in a concentration camp. Moreover, the Coali­tion has been successful in resettling some of these men, women and children in the US.

The sensible approach to an ­almost intractable problem is to put a red flag up the front and ­operate a green flag out the back. In other words, it makes sense for Australia to adopt a hard line ­towards people-smugglers and those who engage them while slowly and quietly resettling those on Nauru and Manus Island. In ­effect, this has been Australia’s policy for years.

Such a process is not assisted by exaggerated statements made by prominent Australians to international media outlets. If, as Ken­eally states, the Australian gov­ern­ment is an institutional liar and committed to maintaining concentration camps to punish people, then it is reasonable to come to the view that a majority of Australians will prevail against such ­deceit and injustice.

They won’t — as recent election results have indicated — ­because the view put by Keneally to the BBC is flawed.

These are the facts. Australia is a generous ­recipient of refugees compared with most other democracies, ­including New Zealand. Moreover, the present asylum-seeker problem worldwide is so great that no government or international body can resolve it in the short term. Despite what Keneally told the BBC.


South Australia to ban a range of single-use plastics under proposed legislation to be introduced to state parliament

Plastic cutlery, straws and drink stirrers will soon be a thing of the past in South Australia following its war on single-use plastics.

A taskforce will be established and draft legislation released for public discussion later this year as Environment Minister David Speirs acts on “overwhelming” public support for a ban.

It comes after he launched a discussion paper in January, gauging the publics interest on the matter.

According to the Adelaide Advertiser, almost 97 per cent of respondents to the paper replied that government action was needed to curb the amount of plastic littering the environment and waterways.

“SA is continuing to lead the nation and set the agenda in recyclables and waste management,” Mr Speirs told the publication.

It will be the first Australian state or territory to ban single-use plastic items, however no decision has been made yet on plastic bags, coffee cups and plastic takeaway containers.

“We led the way with our container-deposit scheme, we were ahead of the pack on plastic bag reform and now we will lead the country on single-use plastics,” Mr Speirs told the publication.

However, not everyone agrees with the Mr Speirs’ bold new move.

“This is so stupid! Have fun going back to the cave! How much energy will B wasted and expended on silverware … paper straws are archaic and get soggy … young, old and disabled will suffer!

So tired of this ineffective virtue signalling! I am buying more plastic straws and bags now!” a Twitter user vented in response to the ban.

“Plastic cutlery, plates & cups banned am all for it but recycled/washed straws. No thanks rather not use them at all,” added another.

Mr Speirs is hoping to introduce the new laws into state parliament by next year.

The state will later move to ban polystyrene cups and polystyrene takeaway containers.

According to the Adelaide Advertiser, the ACT Government has also released a discussion paper to gauge public support on banning items but is yet to take action.


The miserable ghost has another big whine

Dumped former prime minister Malcolm Turnbull has delivered an extraordinary outburst about the Liberal Party after being ousted from the country's top job.

Mr Turnbull, who was dropped in August last year, said members of the party's conservative right-wing faction 'essentially operate as terrorists'.

Speaking at a Friends of Wolper Jewish Hospital event on Thursday, Mr Turnbull touched on the moment he was ousted and claimed a 'group' are willing to throw the party into chaos, The Australian Jewish News reported.

'I'm not suggesting that they kill, but I'm being deadly serious here… they have regularly threatened to, and in fact, have been prepared to blow the government up,' he said.

Mr Turnbull said the conservative wing is one of the Liberal Party's 'fundamental problems'.

He recalled the events in the lead-up to the leadership spill in 2018 where he was overthrown as leader, and claimed Finance Minister Mathias Cormann had damaged the government.

Senator Cormann resigned and threw his support behind Peter Dutton during the leadership spill.

'The week went on and having so much treachery, so much destructiveness, the good thing was that I was able to ensure that Morrison was my successor and not Peter Dutton,' Mr Turnbull said.

He added that politics is a tough business, especially when your own blood is on the walls. 

The former leader also laid into his successor Prime Minister Scott Morrison's idea to move Australia's embassy in Israel to Jerusalem.

The suggestion was floated on the eve of the by-election in Wentworth, which was held to replace Mr Turnbull.

Mr Turnbull said moving the embassy was a 'really dumb thing' and claimed the timing was calculated to win support, showing 'a patronising insensitivity' to the Australian Jewish community.


 Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

1 comment:

Paul said...

You know, when I first posted with you I never thought I was destined to become a god on earth just because I like..... never mind, but there we are.

People can be made to fall for anything, especially if they think it makes them look clever and caring in front of everyone else, but with that said, White Western society will whither and die upon its own self-made altar of moral exhibitionism. Homosexuality will always exist, but to encourage and applaud it is suicidal to a society dependent on ongoing generational perpetuation.

And I am sick to death of women asking me if my partner and I are going to marry. My response usually surprises and disappoints them.