On Friday night I was the guest of Radio Roundup‘s Rusty Nails and Ben Boyang where we spent an hour talking about money. We covered a lot of territory including money creation, interest rates, real estate prices, quantitative easing and the political power of the financial industry.
You can listen to the program here.
If Joe Hockey’s first budget wasn’t enough to convince people that the government was going into bat for the nation’s wealthy, then Joe himself has surely confirmed this with his recent suggestions that the rich have already done their share of heavy lifting. But as Warwick Smith reports, Mr Hockey certainly isn’t playing with a straight bat.
Recent reports show that the government knew beforehand that the federal budget would hit lowest income earners hardest. Treasury modelling predicted that low income earners would lose $844 and high income earners lose $517 per year. Treasurer Joe Hockey’s response demonstrates that he thinks the rich are doing too much of the heavy lifting and are unfairly burdened by the tax and transfer system.
Hockey has criticised the Fairfax reporting and claimed that the figures from the Treasury modelling don’t give a complete picture. Here is a breakdown of some of his statements in support of that claim:
“It doesn’t take into account the fact that higher income households pay half their income in tax.”
For a start, the factual basis of Hockey’s statement is false. If you’re on $180,000 per year (often cited as the threshold to be considered high income) and you make no deduction claims you pay less than one third of your income in tax. Now, if your taxable income is $20 million per year, you do in fact pay close to half your income in tax. The reality though is that people who earn that much use complicated financial and accounting arrangements which result in them paying much less than the marginal tax rate of 47%. The genuinely wealthy don’t pay much income tax, that’s largely reserved for wage earners.
So, factually what Joe says here is just plain wrong. Make no mistake, he knows it’s not true. He may not be the best Treasurer we’ve ever had but I’m fairly confident he knows the difference between marginal tax rates and average tax rates. Now, onto the relevance of the remark for the point he’s trying to make. The assertion is that the budget measures hit low income earners hardest. The response is that high income earners pay lots of tax and low income earners pay little. The Treasurer’s response has no bearing whatsoever on the assertion he is trying to refute.
I think we should make logic classes mandatory for politicians. See, what Hockey says can be true (though the specifics are certainly false) and the reported Treasury modelling figures and Fairfax’s comments about them can be true. This means that what Hockey has said is not a refutation of the figures, it’s just an unrelated assertion.
OK, Hockey’s refutation of the Fairfax story continues:
“Every dollar that lower income households receive comes from higher income households”.
I don’t want to spend too long repeating myself but, once again, what Hockey says here is both factually incorrect and irrelevant to the question at hand. Welfare payments and funding for concessions come from consolidated revenue, of which a bit less than half comes from individual income tax. So, only every second dollar comes from higher income households. Again, Hockey knows that but he’s not one to let facts get in the way of a good argument – or, in this case, a bad argument. Does the fact that high income earners support low income earners refute the validity of the claim that low income earners suffer more under the budget measures? No, of course not. Again, it’s just another unrelated assertion meant to serve as distraction.
I could go on citing and refuting Hockey’s statements but I think the point has been made.
Hockey failed to meaningfully respond to the Treasury modelling. What he does say though is very revealing. His response is a continuation of his “lifters and leaners” narrative of the budget. He’s effectively saying that low income earners deserve to suffer more than high income earners because the high income earners are already suffering so much. Their suffering is caused by the tax office taking from them to give handouts to the bludgers at the bottom of the social pile. This is the only possible interpretation of Hockey’s words that I can come up with. He’s saying that the budget measures are not unfair, they’re just correcting a little bit of the unfair burden that the rich already bear.
I think it’s important that we see these statements for what they really are. Joe Hockey wants the poor to be largely left to fend for themselves so as not to be a burden on his wealthy mates and campaign contributors. He either doesn’t understand or doesn’t care about the mountain of evidence that shows that the country as a whole will be much worse off if we allow wealth and income inequality to grow.
Warwick Smith is a research economist and social commentator. He blogs at reconstructingeconomics.com and tweets @RecoEco.
By Warwick Smith
The bizarre and gratuitously violent, soon-to-be-cult movie that is Snowpiercer is in a long tradition of film and fiction writing that casts radical judgment on its audience. The teenage cult sensation The Hunger Games sits in powerful company with Snowpiercer. Both Snowpiercer and The Hunger Games are stories of class conflict; about cheering for the underdog. However, the jarring reality that most viewers dare not face is that in real life we, the viewers, are not on the side of the underdog heroines and heroes; we are the enemy.
In Snowpiercer, a film where the last vestiges of humanity are all travelling together on a huge, high tech train, the carriages appear to represent the current geographical distribution of the world’s people. The poor are contained within their grimy ramshackle carriages at the back of the train by armed border guards and sophisticated locked doors whereas the elite may move up and down the train at will. The wealthy can pop into the poor carriages and pluck out people who fit some need that they have, while leaving the rest in squalor. The parallels with the relationship between rich countries and poor countries are unmistakable.
This relationship is something that most of us shy away from. I’m no exception. I just sat watching the second Hunger Games film in a comfortable heated room with a glass of expensive whisky by my side. I was curious to see what all the fuss was about. As it turns out, it was about me and my expensive whisky.
We sit here entwined in our socially fabricated struggles with justifications galore about why we are doing it tough. Real estate prices create mortgages that vacuum our apparent opulence away. Still, we have the luxury to sit back on a Friday or Saturday night, have a good meal and watch a film. Who could begrudge us that after a hard week?
How can any of what we have be morally reconciled with the life of serious abject poverty or profound physical insecurity that so many in the world face? Most of the time this is too much to contemplate so we choose not to really engage.
While being entertained we can experience truth that we otherwise couldn’t relate to. Both The Hunger Games and Snowpiercer have us identify with protagonists who, if we were in their world, would consider us the enemy. It’s a class struggle and we (almost anyone in the western world) are the powerful and wealthy elite. The bourgeoisie. Our opulent consumption is at the cost of their survival or, at the very least, their dignity as human beings.
“We, in our culture of commodities, are living our crisis; the rest of the world are living theirs. Our crisis is that we no longer believe in a future. Their crisis is us. The most we want is to hang on to what we’ve got. They want the means to live.”
John Berger
For a couple of hours, when we watch Snowpiercer, we identify with the Afghan refugee, walking, wide-eyed through the opulence of a western city. For a couple of hours, we are the slave, mining coltan in the Congo for smart phones and computers. Few come out of the cinema owning that experience but, like the beginnings of all powerful change, the effect is in the margins.
As a society, we’re so determined not to have our opulence interrupted by those from another class (i.e. from a poor country) that we endorse the maintenance of heavily armed borders and inhumane policies to punish any who try to come here to live without our invitation or permission.
What’s to be done? Do we take the red pill or the blue pill? If you’ve somehow dodged that Matrix reference I’ll spell it out for you: you can either forget what’s written here and wake up tomorrow as normal, in your soft and comfy bed, or you can digest what’s here and the implications and do something. Do you want to be the indoctrinating school teacher in Snowpiercer? Do you want to be one of the adoring fans in The Hunger Games, cheering while poor people kill each other? Is that something you can consciously accept?
The writers and directors of these films and books are telling us something and it’s about more than cheering for the underdog. While we are watching these films we’re cheering against ourselves. After you acknowledge that’s what you’re doing you can never quite go back to how you were, even if you do take the blue pill.
Warwick Smith is an economist, philosopher and social commentator. He blogs at reconstructingeconomics.com and tweets @RecoEco.
Issue # 5 of New Philosopher is out today and in it is my piece about what we can learn from Nietzsche about modern political economy and climate change. For those of you who don’t know it, New Philosopher magazine is a great new publication that brings philosophy to bear on a new topic in each issue. It’s for general audiences and is jargon free (or at least very low jargon) and really well produced. No, this isn’t a paid ad, I just like the mag.
The editors of New Philosopher cut the first three paragraphs from my original piece. It’s my opinion that it was better with them but that’s their call to make. Here’s the start of the original as it flows into the print version. I won’t reproduce the whole thing here until after Issue #6 of New Philosopher comes out (in Nov) but I encourage you to go and buy the magazine cos it’s great.
Edit (5 Dec 14): This piece has since been republished in it’s longer form at The Conversation and is free to read.
By Warwick Smith
Nietzsche’s much quoted line “God is dead” was not, as it is often presented, a statement of triumphant atheism but was a warning and a call to action. We had killed God with rationalism and science. With God had gone our moral compass and our sense of purpose and we had nothing to replace them with but science and logic.
This is an existential problem because, as David Hume famously proved, you can’t argue from ‘is’ to ‘should.’ We may be able to use science to help us get what we want but we cannot use science to tell us what to want nor to tell others what they should want.
This is where the field of economics has stepped in. Freedom, according to mainstream neoclassical economics, is fundamentally about the expression of individual preferences. The more money we have the more preferences we can express and, therefore, the freer and happier we are. Boom, Nietzsche’s existential problem solved.
“Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do.”
Jeremy Bentham – An Introduction to the Principles of Morals and Legislation
The utilitarianism that underpins neoclassical economics simply equates money with choice and choice with the freedom to pursue pleasure and avoid pain. The freedom to buy.
Economists tell us that economic growth is, therefore, the key to progress. Growing the economic pie gives more people more options and that is the goal of society. It’s a technocratic system where we believe any problem can be solved by better application of theory.
This technocratic focus on economic growth has brought unprecedented material prosperity to the western world. As a result, major political parties around the world have ceded authority to the technocrats. The utilitarian calculus that sits beneath our economic system is never questioned. Instead, political debate centres on how to balance the trade-offs and whether to compensate the losers in the race to gain wealth and consume.
“I’m very fond of boats myself. I like the way they’re contained. You don’t have to worry about which way to go, or whether to go at all – the question doesn’t arise, because you’re on a boat aren’t you?”
Tom Stoppard – Rosencrantz and Guildenstern are dead
What’s missing, of course, is any basis on which to evaluate the direction that society, or indeed humanity as a whole, is taking. We’re on a giant cruise ship and we are completely free to explore and enjoy. However, there is nobody identifiable at the helm.
. . . .
Please go and buy a copy of New Philosopher (from most good newsagents and many bookstores) to finish reading the article.
Edit (5 Dec 14): This piece has since been republished in it’s longer form at The Conversation and is free to read.
Originally published in The Guardian. Please go here to read the original.
Economists are refuting the three big picture claims made by the government: 1) We have a budget emergency 2) We have a debt crisis and 3) The carbon tax was ruining the economy
There’s a joke about economists: if you ask five economists the same question you’ll get six different answers. Granted, it’s not a very good joke, but it’s a fair call. Ours is a complex field, and a growing number of economists are acknowledging that the theory sitting behind mainstream economics is mostly rubbish. As a result, it’s very difficult to find consensus on real world events.
But that’s where Abbott and Hockey have achieved what many thought impossible: a true consensus. Unfortunately for the coalition government, the consensus is entirely against them. The Abbott government’s agenda has been driven by three major claims, all of them economic in nature. Let’s see how economists view these three themes:
Number of economists who agree: zero
Number of economists who agree: zero
Number of economists who agree: zero
The above represents a very slight exaggeration. You can find people with some economics qualifications who agree with the government but, without exception, they either work for the Coalition or for some entity with ideological motives (like the IPA or News Corp).
While most would agree that there are serious structural problems with the budget, none would call it an emergency. Chris Richardson, economist and partner at Deloitte Access Economics, said:
We don’t need a surplus tomorrow, we don’t even necessarily need it in five years’ time. I’m more than happy with us getting back to sustainable fiscal finances over the long term. The politics would tend to suggest moving earlier rather than later but on the economics there’s no rush.
Saul Eslake, chief economist at Bank of America Merrill Lynch, said that to call the Australian debt situation a crisis was “to abuse the English language.”
Similarly, Nobel prize winning US economist Joseph Stiglitz used terms such as “absurd”, “crazy” and “a crime” to describe some of Hockey’s budget measures, and dismissed the perceived debt and deficit problems, noting that any Australian who worries about debt “must be out of their mind.” Richard Holden, professor of economics at the Australian School of Business, put it this way: “First, Australia does not have a debt crisis. Or, to put it another way, Australia does not have a debt crisis.”
It doesn’t stop here. The Age recently conducted its annual economics survey of 25 prominent economists. They select economists from a broad range of backgrounds across the spectrum of economics and their views vary widely on almost all issues. None of them agreed with the government on any of the above three topics.
This unique consensus among economists makes it clear that the entire government agenda is based on false premises. How has this exposure affected the Coalition’s agenda or their messaging? Not at all. Not one bit. Not one iota. Let’s be clear about this. We know they’re not being honest about their real motives for policy. They know we know, too. They don’t care.
As I’ve explained previously, the Abbott and Hockey budget, if fully implemented, would have taken us a long way towards the free market social and economic model of the US, and away from the social democracy model of much of Europe. But the question remains as to why they would do this. Who benefits from a US style free market system where government minimises its involvement?
The answer of course is the wealthy and those who already wield power. The greatest beneficiaries of Abbott and Hockey’s policies are their largest financial backers, including the financial industry, the mining and energy industries, gambling interests and real estate companies.
For all the talk about this being the most ideologically driven government in living memory, the reality is something much simpler and more familiar. This government is simply delivering to big money what big money wants.
One of the clearest examples of this is the winding back of the Labor government’s Future of Financial Advice (FoFA) reforms. We know that many financial advisors have been preying on their clients. They make use of clients’ lack of understanding of complex investing and other financial options to direct them to financial products that are not in their interest, but rather in the interests of the advisor. This has been costing consumers huge sums of money, which primarily flow into the hands of the banks.
Labor’s reforms were aimed at making such conflicts of interest for advisors illegal in order to address this complex problem. The Coalition have wound back Labor’s changes and have provided not one defensible reason for doing so. Compliance costs and red tape have actually increased, so that cannot be used as the excuse. Meanwhile, we allow the banks to continue to profit from ripping off their customers.
The same is at play when you examine climate policy. You can’t find an independent economist who thinks the government’s “direct action” plan for tackling climate change is more efficient or effective than a carbon tax or trading scheme. Who likes direct action? The polluters of course. Instead of paying to pollute, they get payed not to pollute. Here’s the real con: one argument we are given is that the carbon tax was too big a burden on consumers. Who’s going to pay the polluters to reduce pollution? The government. Where do they get the money? From all of us. Consumers pay anyway.
The clarity of these examples reveals the sad reality of this government. They are not ideologues, they are just puppets dancing to the tune of those pulling their strings.
By Warwick Smith
Originally published at Independent Australia
The Abbott government appears intent on dismantling the small but vibrant renewable energy industry in Australia. At the very moment when the rest of the world is coming to their senses about the need to wean themselves from coal, Abbott is spruiking coal’s future, claiming that leaving it in the ground is one of the most damaging things this country could do. The coalition government’s attitudes towards coal and renewables are likely to be extremely damaging to our economy in the medium to long term.
The combination of weak global coal prices and climate action announced by the US and China have been cited as reasons for the cancellation of the massive Dudgeon Point coal export facility. This won’t be the last coal project in Australia that gets cancelled because of climate change action. In fact, I think it’s reasonable to say that eventually virtually all coal projects will be cancelled due to climate action (I leave some room for coal mining for carbon fibre production). However, the coal industry, and those who stand to make a lot of money from the coal industry, including the banks, are trying to make hay before the sun sets.
Renewable energy is the future of energy. Anybody who says otherwise doesn’t understand the inexorable march that renewables are on and the slow but steady acceptance of climate science. The big unknown is how long it will take for renewables to replace fossil fuels and how much damage we will do to the climate in the meantime.
The coal industry is in the same place tobacco was in the 1960s. They know the gig is up but the longer they can muddy the waters and cast doubt on the science the more money they can make. The history of the tobacco industry, and many others besides, shows us that people really do make decisions in the name of profit that they know will cost many lives. It’s happening in board rooms all across the world right now.
There are fortunes to be made by those who ride the renewable energy wave and fortunes to be lost by those who invest too much trying to hold back the tide by continuing to back fossil fuel electricity generation.
Mining is an expensive activity and these companies don’t want to lose too much money when the coal industry inevitably shuts down. This is where they need politicians like Abbott and Hockey to keep providing them with the subsidies, incentives and infrastructure and to protect them from competition and regulation for as long as possible. The miners and fossil fuel generators want governments to shoulder the risks associated with coal while they privatise the last dregs of the profits. State governments are on side too, spending nearly $3 billion dollars every year directly subsidizing mining companies.
In the early days of the Abbott government I labelled them as fairly radical free market ideologues. I quickly realised this was inaccurate as they are not interested in small government or free markets when it comes to benefits for the wealthy. The most parsimonious explanation for their policies is plain old capture by vested interests. Abbott and Hockey are either in the pockets of the mining, energy and financial industries or they are doing favours for mates who are in those industries. Nothing they have done is inconsistent with that conclusion.
The Abbott government want this country stuck with 20th century power infrastructure and they are throwing everything at an effort to keep our economy dependent on a fossil fuel future. The result in the medium to long term will be extremely damaging for this country as the world passes us by on the way to renewable energy (or climate catastrophe, either way we don’t do well). As this happens, more and more of Abbott’s precious coal and coal infrastructure will be stranded with no buyers. If he has his way and manages to destroy the country’s renewable energy sector, not only will we suffer from the stranded coal assets, but we will be totally reliant on importing expertise and equipment from overseas in order to replace our fossil fuel infrastructure.
Now is the time for the Australian economy to be diversifying if we’re not to become an economic backwater. We can’t be world’s quarry forever, particularly in a carbon constrained global economy. This sort of longer term economic planning requires government leadership. Removing subsidies for fossil fuel industries would be a good start but it can’t end there. For the long run benefit of the country we should be prioritising investment in education, infrastructure, productivity and R&D. This early part of the 21st century is a time of massive economic, ecological and social change. Our society and economy must be diverse and robust if we are to thrive in this new environment and we will require more than bloated mining and financial sectors.
Warwick Smith is a research economist at the University of Melbourne. He blogs at reconstructingeconomics.com and tweets @RecoEco.
By Warwick Smith
Originally published at the Australian Independent Media Network
In this article Warwick Smith reports why the decision by the Australian Bureau of Statistics to discontinue many programs including the Measures of Australia’s Progress due to budgetary demands, is an appalling development. Even though the ABS doesn’t have the public profile of the ABC and Medicare, its work is just as critical to the nation.
Measures of Australia’s Progress (MAP) is a ‘dashboard’ approach to measuring how well we are doing as a nation. Its development was an acknowledgement of the fact that the usual economic measures of progress are not enough on their own when it comes to understanding changes that affect well-being in Australia. MAP reports on a broad range of statistics from four categories; society, environment, economy and governance.
The Australian Bureau of Statistics (ABS) have just announced that they have been forced to discontinue MAP (along with a lot of other programs) due to insufficient funding (Budget cuts: how ASIC, the ABS and the ATO are turning off the lights, Peter Martin, The Sydney Morning Herald June 8 2014). It would be a huge loss if this program is not rescued from the dustbin.
The reason we tend to use economic growth (GDP growth) as a measure of progress is, at least in part, because it’s supposed to be a proxy for well-being. The more money people have the more choices they have and the better off they are – that’s the rhetoric. It’s true that increases in income make a big difference to the well-being of very poor people. However, as you go up the income scale, increases in income have a diminishing impact on well-being.
As I’ve written elsewhere, GDP growth is of extremely limited value if you want to know about national movements in many things that really matter to people’s lives such as relationships with family and friends, community, health, environment, trust in government, job security and effective services and infrastructure like transport and communication. MAP collects data and produces reports on most of the things in that list.
Things that increase GDP can have a negative impact on our well-being. Natural disasters can increase GDP due to the cleanup and reconstruction efforts. Shipping iron ore overseas adds to GDP despite the fact that it’s actually a public asset sale and depletes our stocks.
Sometimes, providing the things people want and need has a negative impact on economic growth (like preserving a forest that miners want to bulldoze). While this is acknowledged in various pieces of legislation, like environmental protection laws, workplace safety laws etc., we have no framework for making these judgment calls in any systematic way. We should be moving towards having meaningful calculators of well-being that can be assessed alongside economic benefit in order to better inform our decision making. Cost-benefit analyses of public policy should calculate the net impact on well-being with financial costs and benefits being just one set of inputs.
If we are using GDP as a measure of progress because it is a proxy for well-being and we know it’s a flawed proxy, then it would be better to measure things that have a more direct impact on well-being. This is what MAP is trying to do.
If meaningful calculations were done, wealthy countries would often find that sacrificing some economic growth for improvements in other areas that directly improve well-being is often worthwhile.
However, in order to make these calculations and to reach this level of policy enlightenment, we need to have the data.
This is why the cuts announced by the ABS are particularly devastating even though most people would never have heard of the programs being cut. The continued collection and reporting of these measures is vitally important if we are to find a notion of progress other than the endless mouse wheel of greater and greater consumption and greater and greater environmental destruction.
The alternative is to leave intact the status quo where money is our measure and where the things we really care about are steamrolled beneath the endless drive for economic growth.
Those of you who care about where this country is heading should be up in arms about this. The ABS might not have the public profile of Medicare, the ABC or Australia Post but it’s just as important – in some ways more important. Without reporting and commentary on how our nation is doing across a broad range of indicators, we truly are flying blind and are required to put a great deal of trust in our political leaders. Trust that I’m afraid they do not deserve.
Warwick Smith is a research economist at the University of Melbourne. He blogs at reconstructingeconomics.com and tweets @RecoEco.
By Warwick Smith
As the recent news from Iraq refocuses our attention on the basket case that we, the invaders, left behind, it’s an appropriate time to re-examine our decision to invade in 2003. In any kind of objective examination of the lead up to the invasion it’s difficult to avoid the conclusion that it was a war of aggression, the greatest of all crimes under international law. However, this remains an opinion because it has never been seriously investigated as a war crime. In fact, none of the leaders of the countries who invaded Iraq have faced any serious consequences for leading their countries to war using false justifications.
Here in Australia, the Prime Minister at the time, John Howard, has never had to front any serious inquiry nor been obliged to answer any probing questions about his decision to wage a war of aggression. It’s time that he did. If war crimes by the strong are never prosecuted then international law is not an instrument of justice but one of coercion and domination.
“To initiate a war of aggression, therefore, is not only an international crime, it is the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole.”
Nuremberg Tribunal – October 1, 1946
A quick recap to explain why I believe the invasion of Iraq was a war of aggression, the greatest crime possible under international law. In the lead up to the war our leaders claimed that the regime of Saddam Hussein possessed weapons of mass destruction (WMD) including chemical and biological weapons and that they were attempting to make nuclear weapons. For the most part, demands for evidence for these allegations were resisted. Instead the would-be invaders relied on Iraqi non-compliance with Security Council resolutions as a kind of negative proof. The narrative was along these lines: “Iraq will not fully cooperate with weapons inspectors therefore they must have WMD and must be about to give them to al Qaida to kill westerners. Therefore we have no choice but to invade in self-defence.”
This narrative used to justify invasion never, at any point, stood up to serious scrutiny. Not before the invasion and certainly not after. That’s why there were public protests of unprecedented scale against the invasion.
The doomed push for UN authorisation for the invasion culminated in the US finally agreeing to reveal their evidence of Iraqi WMD. The now infamous speech delivered by Colin Powell at the United Nations presented a series of blurry satellite photos and questionable testimonies from ex-pat Iraqi’s who had serious vested interests in a western intervention. Much of what Colin Powell said that day was immediately refuted by people who had been on the ground in Iraq with the international inspection teams and what was left was at best speculation and at worst lies and exaggerations. Colin Powell’s close advisor and aid, Lawrence Wilkerson, later stated that this speech at the UN speech was the lowest moment in his life, all but admitting he believed at the time that the intelligence was flawed. Powell himself calls it a “blot on his career”.
So, even before the war began we knew that the justification for the invasion was flawed and was a fig leaf for something else. After the invasion all of this was confirmed and more. There were no WMD in Iraq and there had been no threat to the invading nations.
The invaders quickly changed the justification of the invasion from WMD to spreading democracy, not a beat was missed. When the issue of WMD was brought up they were quick to blame the intelligence agencies. Then we discover that Donald Rumsfeld had been applying intense pressure to his intelligence agencies to come up with evidence that would justify and invasion. They tried and tried and tried and the best they could do was the deeply flawed presentation given by Powell at the UN.
The intelligence clearly wasn’t enough to justify war so, when it came to convincing their own population, the US administration relied on bald-faced lies. Along with the lies, another strategy was to constantly mention 9-11 and Iraq or Saddam Hussein in the same sentence. They never directly said that Saddam was involved in the terrorist attacks in 2001 but the constant association between the two meant that by the time of the invasion 45% of Americans thought that there were Iraqis on the flights on September 11 2001 (there were not) and 44% thought that Saddam Hussein was involved in the terrorist plot. Quite a propaganda accomplishment.
The story from Tony Blair, the UK Prime Minister at the time of the invasion, was even worse. He released “the dossier” which supposedly contained the evidence of Iraq’s WMD programs and it turned out to contain plagiarised sections from a 12 year old PhD thesis, unsubstantiated speculation and cherry picked information designed to justify an invasion.
All that is important context and demonstrates that the war of aggression was not waged for the reasons that we were given. However, the most damning argument comes from what results if we assume everything that was said before the war was true and assume that those saying it really believed it. The simple fact is that it would still have been a war of aggression and therefore a war crime. Even if Saddam had massive stockpiles of WMD, it would not be justification for the use of force without UN Security Council authorisation. Such force is only justified when it is used to prevent an imminent attack. Not only was there no evidence of such an attack, any kind of aggression by Saddam Hussein against the west would have been suicidal on his part given the scale and ferocity of the retaliation. Saddam may have been a megalomaniac monster but he was a survivor, not the type to commit ideologically driven suicide.
Some made the claim that Saddam would give his WMD to al Qaida to use to attack the US. Such a claim could only be believed by people who knew virtually nothing about Saddam Hussein and al Qaida. Saddam was listed among the infidel leaders in Arab lands who al Qaida had sworn to topple. Not exactly the brothers in arms that Donald Rumsfeld, Paul Wolfowitz and others tried make them out to be.
The validity of international law has been seriously compromised by the perpetration of war crimes by the US, UK and Australia. Russia can quite legitimately point to the invasion of Iraq as demonstration of hypocrisy when the US and UK try to rebuke them for their activities in Georgia. Why should any country, particularly those who have permanent membership on the UN Security Council, pay attention to international law if the US, UK and Australia do not?
There is a group here in Australia currently calling for an independent inquiry into Australia’s decision to go to war in Iraq. I fully support this cause. There are several critical principles at stake. The first is the integrity of international law, as mentioned above. The second is the role of democracy in state violence. There was massive public opposition to our involvement in the invasion of Iraq, as there was in the UK. Our politicians lied and exaggerated their way to war and have never been held accountable for it. What claims can we make about being a civilised nation that believes in the rule of law when things like this can happen with no consequences for the perpetrators?
Yes, there should be an independent inquiry into the decision to go to war. That inquiry should also forward its findings to The Hague for use in investigating possible war crimes committed by our political leaders. If laws are to be meaningful they must apply to the strong as well as the weak.
Warwick Smith is an economist, writer and commentator. He blogs at reconstructingeconomics.com and tweets @RecoEco
By Warwick Smith
Despite once infamously stating that the science behind human induced climate change was “absolute crap”, Tony Abbott has since publicly accepted that climate change really is happening and that he wants to do something about it.
Last week, while in the United States, Tony Abbott declared himself a conservationist:
“I regard myself as a conservationist. Frankly, we should rest lightly on the planet and I’m determined to ensure that we do our duty by the future here.”
Tony Abbott – Interview with James Glenday on ABC Radio National
However, he has also said that he doesn’t believe in harming economic growth in order to protect the environment. Abbott’s claim to be a conservationist should be carefully examined in light of his stance on climate change and on other environmental issues and his prioritisation of the economy over all else. I have spent more than ten years as a conservation biologist and am now an economist. That puts me in a pretty good position to discuss Tony Abbott – the conservationist.
Just as there is virtually no meaningful dissent among climate scientists against the reality of human induced climate change, there is virtually no meaningful dissent among economists to the notion that putting a price on carbon is the most effective and efficient way to reduce carbon emissions.
Much of Abbott’s time as opposition leader was defined by his opposition to Australia’s current carbon price. He claimed the carbon tax would put a “wrecking ball” through the economy, costing jobs and destroying industries. As it turns out, the Australian carbon price is working very effectively to reduce our emissions and Australia is currently experiencing very strong economic growth with an economy that is the envy of the developed world. None of this has prompted even the slightest pause in the Abbott government’s plans to scrap the carbon price despite disproving virtually all of the arguments against it. When the stated reasons for a policy evaporate but the policy remains, we should start to look for the real reasons.
Tony Abbott wants us to believe that he accepts the science of climate change while also supporting the coal industry and its role for decades to come.
“It’s particularly important that we do not demonise the coal industry and if there was one fundamental problem, above all else, with the carbon tax was that it said to our people, it said to the wider world, that a commodity which in many years is our biggest single export, somehow should be left in the ground and not sold. Well really and truly, I can think of few things more damaging to our future.”
Tony Abbott – Address to the Minerals Week 2014 Annual Minerals Industry Parliamentary Dinner
Abbott would have us believe we can have our cake and eat it too. He thinks leaving our coal in the ground is the most damaging thing possible for our future while our climate scientists believe that not leaving it in the ground is the most damaging thing possible for our future. Surely when it comes to something with such monumental consequences as climate change we should stand with the scientists.
Given Abbott’s overall stance on climate change I think it’s very reasonable to conclude he still thinks that the science behind climate change is absolute crap but he believes he has to hide that to maintain credibility. As Barack Obama recently said, denying climate change is like saying the moon is made out of cheese. Claiming you want to act to prevent climate change but you also support the coal industry for decades to come is just as logically flawed as saying that you believe in human rights while you arbitrarily detain people for an indefinite period.
When you put Tony Abbott’s stance on climate change together with his other notable environmental statements and activities and you get a clear picture of Tony Abbott the conservationist.
“We have quite enough national parks. We have quite enough locked up forests already. In fact, in an important respect, we have too much locked up forest.”
Tony Abbott – Address to the 2014 ForestWorks Dinner, Canberra
The simple reality is that Abbott’s stance on the environment is entirely consistent with unquestioning support for mining and energy companies. This is also consistent with his government’s budget which asks normal wage earners and welfare recipients to do the heavy lifting to save us from the invented crises of a budget emergency and unsustainable welfare dependence. Abbott’s actions consistently favour his wealthy backers and other economic elites. He believes in sound economic management – except if it’s against the interests of big mining companies. He believes in ending the age of entitlement – except when it comes to handouts to the wealthy. He believes in conservation – except where it gets in the way of big business. Consistency counts for something I guess.
This hard to find short essay by John Locke is very surprising in its brief yet sophisticated thinking with respect to market prices and morality. I put it here mostly as a reference for others who may struggle to find it online.
Venditio (1695)
Upon demand what is the measure that ought to regulate the price for which anyone sells so as to keep it within the bounds of equity and justice, I suppose it in short to be this: the market price at the place where he sells. Whosoever keeps to that in whatever he sells I think is free from cheat, extortion and oppression, or any guilt in whatever he sells, supposing no fallacy in his wares.
To explain this a little: A man will not sell the same wheat this year under 10 S(hillings) per bushel which the last year he sold for 5S. This is no extortion by the above said rule, because it is this year the market price, and if he should sell under that rate he would not do a beneficial thing to the consumers, because others then would buy up his corn at this low rate and sell it again to others at the market rate, and so they make profit off his weakness and share a part of his money. If to prevent this he will sell his wheat only to the poor at this under rate, this indeed is charity, but not what strict justice requires. For that only requires that we should sell to all buyers at the same market rate, for if it be unjust to sell it to a poor man at 10S per bushel it is also unjust to sell it to the rich for 10S, for justice has but one measure for all men. If you think him bound to sell it to the rich too, who is the consumer, under the market rate, but not to a jobber or engrosser, to this I answer he cannot know whether the rich buyer will not sell it again and so gain the money which he loses. But if it be said ’tis unlawful to sell the same corn for 10S this week which I sold the last year for week for 5s because it is worth no more now than it was then, having no new qualities put into it to make it better, I answer it is worth no more, ’tis true, in its natural value, because it will not feed more men nor better feed them than it did last year, but yet it is worth more in its political or marchand value, as I may so call it which lies in the proportion of the quantity of wheat to the proportion of money in that place and the need of one and the other. This same market rate governs too in things sold in shops or private houses, and is known by this, that a man sells not dearer to one than he would to another. He that makes use of another’s ignorance, fancy, or necessity to sell ribbon or cloth, etc. dearer to him than to another man at the same time, cheats him. But in things that a man does not set to sale, this market price is not regulated by that of the next market, but by the value that the owner puts on it himself: v.g. α has an horse that pleases him and is for his turn; this β would buy of him; α tells him he has no mind to sell; β presses him to set him a price, and thereupon α demands and takes £4o for his horse, which in a market or fair would not yield above twenty. But supposing β refusing to give £40, γ comes the next day and desires to buy this horse, having such a necessity to have it that if he should fail of it, it would make him lose a business of much greater consequence, and thus necessity α knows. If in this case he make γ pay £50 for the horse which he would have sold to β for £40, he oppresses him and is guilty of extortion whereby he robs him of £10, because he does not sell the horse to him, as he would to another, at his own market rate, which was£40, but makes use of γ‘s necessity to extort £10 from him above what in his own account was the just value, the one man’s money being as good as the other’s. But yet he had done no injury to β in taking his £40 for an horse which at the next market would not have yielded above £20 because he sold it at the market rate of the place where the horse was sold, viz. his own house, where he would not have sold it to any other at a cheaper rate than he did to β. For if by any artifice he had raised β’s longing for that horse, or because of his great fancy sold it dearer to him than he would to another man, he had cheated him too. But what anyone has he may value at what rate he will, and transgresses not against justice if he sells it at any price, provided he makes no distinction of buyers, but parts with it as cheap to this as he would to any other buyer. I say he transgresses not against justice. What he may do against charity is another case.
To have a fuller view of this matter, let us suppose a merchant of Danzig sends two ships laden with corn, whereof the one puts into Dunkirk, where there is almost a famine for want of corn, and there he sells his wheat for 20S a bushel, whilst the other ship sells his at Ostend just by for 5s. Here it will be demanded whether it be not oppression and injustice to make such an advantage of their necessity at Dunkirk as to sell to them the same commodity at 20s per bushel which he sells for a quarter the price but twenty miles off? I answer no, because he sells at the market rate at the place where he is, but sells there no dearer to Thomas than he would to Richard. And if there he should sell for less than his corn would yield, he would only throw his profit into other men’s hands, who buying of him under the market rate would sell it again to others at the full rate it would yield. Besides, as there can be no other measure set to a merchant’s gain but the market price where he comes, so if there were any other measure, as 5 or 10 per cent as the utmost justifiable profit, there would be no commerce in the world, and mankind would be deprived of the supply of foreign mutual conveniences of life. For the buyer, not knowing what the commodity cost the merchant to purchase and bring thither, could be under no tie of giving him the profit of 5 or 10 per cent, and so can have no other rule but of buying as cheap as he can, which turning often to the merchant’s downright loss when he comes to a bad market, if he has not the liberty on his side to sell as dear as he can when he comes to a good market. This obligation to certain loss often, without any certainty of reparation, will quickly put an end to merchandising. The measure that is common to buyer and seller is just that if one should buy as cheap as he could in the market, the other should sell as dear as he could there, everyone running his venture and taking his chance, which by the mutual and perpetually changing wants of money and commodities in buyer and seller comes to a pretty equal and fair account.
But though he that sells his corn a town pressed with famine at the utmost rate he can get for it does no injustice against the common rule of traffic, yet if he carry it away unless they will give him more than they are able, or extorts so much from their present necessity as not to leave them the means of subsistence afterwards, he offends against the common rule of charity as a man, and if they perish any of them by reason of his extortion is no doubt guilty of murder. For though all the selling merchant’s gain arises only from the advantage he makes of the buyer’s want, whether it be a want of necessity or fancy that’s all one, yet he must not make use of his necessity to his destruction, and enrich himself so as to make another perish. He is so far from being permitted to gain to that degree, that he is bound to be at some loss, and impart of his own to save another from perishing.
Dunkirk is the market which the English merchant has carried his corn, and by reason of their necessity it proves a good one, and there he may sell his corn as it will yield at the market rate, for 20s per bushel. But if a Dunkirker should at the same time come to England to buy corn, not to sell to him at the market rate, but to make him, because of the necessity of his country, pay 10S per bushel when you sold to others for five, would be extortion.
A ship at sea that has an anchor to spare meets another which has lost all her anchors. What here shall be the just price that she shall sell her anchor to the distressed ship? To this I answer the same price that she would sell the same anchor to a ship that was not in that distress. For that still is the market rate for which one would part with anything to anybody who was not in distress and absolute want of it. And in this case the master of the vessel must make his estimate by the length of his voyage, the season and seas he sails in, and so what risk he shall run himself by parting with his anchor, which all put together perhaps he would not part with it at any rate, but if he would, he must then take no more for it from a ship in distress than he would from any other. And here we see, the price which the anchor cost him, which is the market price at another place, makes no part of the measure of the price which he fairly sells it for at sea. And therefore I put in ‘the place where the thing is sold’: i.e. the measure of rating anything in selling is the market price where the thing is sold. Whereby it is evident that a thing may be lawfully sold for 10, 20, nay cent per cent, and ten times more in one place than is the market price in another place perhaps not far off. These are my extemporary thouht[s] concerning this matter.
Reconstructing Economics 