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Hockey lets corporate tax avoiders off hook

Wednesday, December 17th, 2014

Tony Abbott and Joe Hockey, the prime minister and treasurer, had repeatedly announced (recently at the G20 meeting in Brisbane) that they would cut down on tax avoidance by large multinational companies. It now turns out that this was all cheap propaganda.

According to the Sydney Morning Herald 17.8.14., the government now announced that it would not proceed with legislating a package to combat tax minimisation introduced by the former Labor government under Julia Gillard, which would have brought in Aust.$ 600 million. Also according to that newspaper, “one of the loudest opponents of the plan to abolish deductions was liberal party donor Paul Ramsay…..”. At the same time, the treasury announced that job cuts to the public sector would be more severe (thousands more) than forecast, and the OECD “slams Australian budget as unsustainable”.

Any doubts left what this government stands for and that the budget lacks all fairness?

Climate change policy and economics

Friday, November 28th, 2014

Scientists almost unanimously agree that human induced climate change will have serious effects on humans. They agree that action to reduce emissions of greenhouse gases, especially CO2 is urgently needed. Why then is it so difficult to convince governments to take efficient steps to tackle the problem? The answers seem to be: 1) humans have evolved to react to short-term changes in the environment but not to changes that may happen in the distant future, where distant is defined as something exceeding a few years or perhaps decades (the prime minister of Australia, Tony Abbott, for example, recently declared that what happened in 16 years does not interest him), 2) governments (in particular conservative governments) argue that switching to renewable energies would have serious consequences for the economy, reducing the average income of the population. By doing this, they play on the greed of people, who, they believe, like themselves do not care about the future of their children and grandchildren sufficiently to sacrifice some of their income. To get their policies through, they ignore or ridicule the science of climate change, and propagate the falsehood that economics is a “science” whose mathematical equations give an unequivocal answer to what economic policies must be followed, and that alternatives do not exist. These policies include 1) keep the budget always balanced or in surplus, 2) keep taxes low, 3) don’t worry about inequality, because a “secret hand” will always make sure that the rich will invest their wealth in ways best for everybody, 4) private business can do things always better than state-owned ones, 5) in toto: don’t interfere with the workings of the “secret hand”. These extreme neo-liberal ideas are based on Milton Friedman. Any ethical considerations aimed at removing inequality, or intrusions of the state for example by stimulating the economy in economic crises, are disallowed. In Australia, for example, the former Labor government was ridiculed and accused of wasting public money by financing government programs to avoid a recession as experienced by several states during the recent financial crisis. And programs supporting renewable energy programs (such as wind- and solar power) were scaled back as soon as the Liberal/National government took over in September 2013, for the reason that the Prime-Minister and many of his ministers did not believe in the “crap” of climate change. Policies favouring renewable energies were claimed of being “socialism in disguise”.

How then can we set things right? Stuart Kauffman, well known for his work on self-organization in evolution (The Origins of Order, At Home in the Universe) has extended his important findings to economics (Stuart Kauffman: On Ethical and Intellectual Failures in Contemporary Economics, In: Entangled Political Economy, Advances in Austrian Economics 18, 259-282). I give a brief outline of his most important findings.

Stuart Kauffman refers to “contemporary Anglo-American Economics” (as opposed to “Austrian Economics”) and criticises two major points, 1) that economics “at least since Milton Friedman” is supposed to be a positive mathematizable science free of normative issues” (i.e. does not consider ethical questions), and 2) that it does not consider the most important factor responsible for economic growth, i.e., the enormous increase in “goods and production capacities”. Thus, whereas there may have been 1,000 to 10,000 of these 50,000 years ago, today there are “perhaps 10 billion”. Concerning the first point, Kauffman discusses the Edgeworth Box and the Contract Curve, pointing out that there is no economic theory which explains on which part of the latter we settle, and that prices cannot resolve the matter, because different points of the curve correspond to different prices. Kauffman uses game theory to show that “fairness” usually determines on which part of he Contract Curve we settle, provided we must not trade with each other. But fairness cannot be mathematized, it is determined by our evolution. We are social animals like monkeys and apes. Give each of a group of monkeys 10 grapes a day, and they are all peaceful and harmonious, but give one of them suddenly some bananas and the rest the usual grapes, the latter will become agitated and throw the grapes at you. They believe to be unfairly treated. More important perhaps is the second point. As in the evolution of the biosphere and unlike physics, no laws exist which “entail” the evolution of the “econosphere”. In other words, we cannot foresee (or decribe by laws/differential equations) how the economy will develop, how it will increase its diversity. Economic development, like biological evolution, creates its own unforeseeable opportunities. This is simply ignored by “Anglo American Economics”, but shows how important diversification is for economies (The Australian Prime Minister Abbott’s policy to invest even more in coal and actively reduce development of renewable energy sources, seen in this context, is extreme economic vandalism and stupidity).

His conclusion (I quote): “The failures above are likely to play major roles in the lapse to mere greed in our major financial institutions, and in our inadequate capacities to help drive growth in much of the povery-struck world”.

Important references
Kauffman, S. (1995). At home in the Uinverse. New York: Oxford University Press.
Kauffman, S. 2014. On ethical and intellectual failures in contemporary economics. In Entangled Political economy. Advances in Austrian Economics 18, 259-282.
Longo, G., Montevil, M. and Kauffman, S. (2012a). No entailing laws, but enablement in the evolution f life. Physics ArXiv posted
Longo, G., Montevil, M. and Kauffman, S. (2012b). No entailing laws, but enablement in the evolution of he biosphere. In Proceedings of the fourteenth international conference on genetic and evolutionary computation conference companion 1379-1392

The Impossibility of Growth Demands a New Economic System

Sunday, June 1st, 2014

George Monbiot, well known for his books “The Age of Consent: a manifesto for a new world order” and “Captive State: the corporate takeover of Britain” has published an important article in Common Dreams: “The Impossibility of Growth Demands a New Economic System. Why collapse and salvation are hard to distinguish from each other”. Some excerpts in the following, link to full article below.

“Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre”…….. and “that these possessions grew by 4.5% a year.” How big would that stash have been by the Battle of Actium in 30BC? ……..It’s 2.5 billion billion solar systems…….. ”
“It was neither capitalism nor communism that made possible the progress and the pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas”

“The trajectory of compound growth shows that the scouring of the planet has only just begun”

“The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence.”

A particularly interesting example from the article: the government of Ecuador has decided to go ahead with oil drilling in its high diversity Yasuni national park. It had offered to leave the oil in the ground if it could raise 3.6 billion Dollars from foreign donors, about half the value of the oil. It could just get 13 million. Ecuador is very poor, Australia is rich. For how much would Australia leave its coal, oil and gas in the ground, or protect its Tasmanian forests from logging?

Full article here:

United States will introduce an emission trading (cap-and-trade) scheme for controlling human induced climate change

Sunday, June 1st, 2014

In two previous posts drew attention of President Obama’s intention to do something about climate change, but that nothing yet had happened. It now seems that significant action will be taken in the USA by introducing an emission trading scheme as also supported by the Greens and Labor for Australia. See here:

“The rules……… will put America on course to meet its international climate goal, and put US diplomats in a better position to leverage climate commitments from big polluters such as China and India, Obama said in a speech to West Point graduates this week.

“I intend to make sure America is out front in a global framework to preserve our planet,” he said. “American influence is always stronger when we lead by example. We can not exempt ourselves from the rules that apply to everyone else.””

Is here hope that this might lead to change in attitude of the present Australian government? The outlook seems dim if one considers that Abbott had earlier referred to human induced climate change as “crap”, that among the first actions of the new Australian government were declarations that renewable energy targets would be reduced, that one of he first actions of the government after the election was removing the Climate Council, that investment in climate science at the CSIRO will be substantially reduced, and that even economically profitable renewable energy projects are targets for discontinuation. But miracles have happened before.

Thomas Piketty and David Harvey, a new look at what is wrong with our economic system

Thursday, May 29th, 2014

Two distinguished economists, Thomas Piketty and David Harvey, in two recent books, have critically examined the basic assumptions according to which economies are run today. Both arrive at the conclusion that an ever increasing inequality in income distribution is inherent in the capitalist system and needs to be urgently addressed.

For two reviews see here:


Piketty: “The Economist declared that Piketty’s book may “revolutionize the way people think about the economic history of the past two centuries” and the “British magazine Prospect added Piketty to its annual list of the most influential world thinkers.”
Piketty’s claims that “inequality is intrinsic to capitalism, and, if not forcefully combatted, is likely to increase—to levels that threaten our democracy and fail to sustain economic growth. “For much of modern history, he contends, the rate of return on capital has hovered between 4 and 5 percent, while the growth rate has been decisively lower, between 1 and 2 percent,” which means that “in a slow-growing economy, accumulated wealth grows faster than income from labor……. the rich….. will get richer, while those who depend mostly on income from their jobs, will be lucky to keep up with inflation.”
“……… Piketty’s remedy for inequality: a progressive global wealth tax on fortunes over 1-million euros.”

Harvey: Harvey’s argument is based on “the conflict between use values and exchange values, particularly in housing, and the way that people have been deprived of homes because real estate has become a speculative investment. “For this reason, many categories of use values that were hitherto supplied free of charge by the state have been privatized and commodified—housing, education, health care and public utilities have all gone in this direction in many parts of the world,” he writes. “The political choice is between a commodified system that serves …….. and a system that focuses on the production and democratic provision of use values for all without any mediations of the market.
“At some point……the system can’t continue. “The longer it goes on,” Harvey says …….. “the less I think that there is a possibility that it will be a peaceful transition.”

In Australia, the present government does not only not try to reduce inequality but does the opposite, the austerity measures (co-payment for visiting the doctor, deregulation of university fees, etc.) of the new budget increase the burden on the poor, whereas the rich are hardly affected. These measures will not put Australia’s economy back on a secure and sustainable footing, as claimed by the government, all they will do is make the rich richer and the poor poorer.

“It is no longer acceptable that coal and oil companies spend millions of dollars to defeat efforts to protect the planet.”

Sunday, May 11th, 2014

The new climate report (National Climate Assessment: of the US government is out.

See here for brief summary and comments:

Th future looks grim, if we don’t take urgent action.

Don’t let our children pay for our sins

Saturday, May 3rd, 2014

The Treasurer Joe Hockey, in a talk to the Australia-Israel Chamber of Commerce on 2.5.2014, stated that we have to get the budget back into surplus or at least reduce the debt. If we do not do it now, our children will have to pay, which nobody wants. “Australians born after 1965 will have to work until they are 70 before they are eligible for the age pension under changes announced by Joe Hockey, while the Treasurer has also warned there is “no such thing” as a free visit to a doctor or free welfare”. Expenditures for public service will also be cut (SMH 2.5.14). Very commendable not to burden our children, of course, but what about the environmental mess due to climate change, deforestation etc. we will leave behind if we don’t take urgent action on reducing human impact on the environment now? Lack of action will lead to a far greater burden for future generations than (according to leading economists) wildly overestimated debts.

Concerning climate change politics and deforestion, the position of the government is clear.

Not long after becoming Prime Minister, Tony Abbott expressed his intention to reduce renewable energy targets. Among other things, he declared that he wants to see another investigation on the health effects of wind-turbines (although one had just been completed and had found no such effects). And, according to SMH 3.-4.5.14, “Joe Hockey has attacked wind farms as “utterly offensive and “a blight on the landscape” in the latest sign that the Abbott government intends to cut back on renewable energy targets”.

Deforestation: in a talk in Tasmania before the state elections there, Tony Abbott declared that we really have too many national parks and that loggers are the best conservationists. Even the Indonesian government and the local authorities in Aceh are not so dumb as to claim that the large scale logging going on at this moment in Northern Sumatra, wiping out the few remaining habitats for Sumatran rhinoceros, orang utans and other endangered species, is done by loggers acting as good conservationists.

Climate change. Effects on small island states, and the view of the Australian Attorney-General

Thursday, April 17th, 2014

An article recently published in the Trinidad Express, a newspaper of a small Caribbean island state, deals with the latest climate assessment by the IPCC emphasizing the impact of climate change on food security, particulary in small island states:

“Climate change ……… has a direct bearing on food security……. the IPCC warned that all aspects of food security including availability of food, stability of food supply and utilisation of food, are potentially affected by climate change.”……. “our climate is warming at a pace unparalleled in the history of the planet and that we no longer have the luxury of pretending that climate change is not happening.”

“Small island developing states are particularly at risk because of their small size, their geographic location. Because of their low-lying nature, sea level rise will inundate coastal areas,”.

At the same time, George Brandis, the Australian Attorney General, has the following to say, in line with views expressed by several others in the Abbott government:

“George Brandis has compared himself to Voltaire and derided proponents of climate change action as “believers” who do not listen to opposing views and have reduced debate to a mediaeval and ignorant level.”

Full article here:

Barnaby Joyce, the leader of the Nationals and Minister for Agriculture in the Abbott government, has complained that the ABC does not give time (or sufficient time) to climate change “sceptics” (20 March 2014).

The end of capitalism? How to combat climate change.

Sunday, December 15th, 2013

We are rapidly approaching collapse of the present economic system, which cannot cope with the challenges of human induced climate change. An interesting article in Spiegel International deals with this problem: Harald Welzer, “Climate Summit Trap: Capitalism’s March toward Global Collapse”:

Some extracts:

Capitalism Triumphant

………. The primacy of economics has prevailed. It no longer seems to matter how we………. get through…….this century if the world grows warmer by three, four or five degrees Celsius. National economies require an ever-growing dose of energy if their business models are to continue functioning, and, in the face of this logic, all scientific objections to the contrary are just as powerless as the climate protest movements, ……..

Two approaches to escape from this trap have recently been developed:

1. ” ‘Economy for the Common Good’

Imagine, for example, what might happen if a large number of businesses make the improvement of the common good — instead of an increase in their profits — the goal of their commercial efforts.

There are ….. already more than 1,400 companies,…….. in German-speaking countries that have made a commitment to the concept of the “economy for the common good,” …….

In the medium term, the “economy for the common good” movement aims to make such accounting legally binding. The principle is that the more common-good “points” a business achieves, the more legal benefits it should enjoy.”

2. “The Argument for Divestment

Another, even more effective, instrument for creating this sort of change is the “Fossil Free” divestment campaign launched last year by American environmental activist Bill McKibben……… based on the simple idea that entire industries’ commercial foundation can be destroyed if funds are withdrawn from them.

Such initiatives are now active at nearly 400 American schools, colleges and universities. Four colleges and 10 cities, including Seattle and San Francisco, have made the decision to divest. The campaign has also spread to Europe, where University College London just joined the movement.”

Partners in Crime, Canada and Australia now Brethren in Arms on Climate Change Policy

Thursday, November 14th, 2013

The right-wing Canadian government (keen to sell Canada’s huge reserves of tar-sands oil, which is highly toxic and leads to high greenhouse gas emissions) has lauded Australia for abolishing its carbon tax. This may have serious consequences for global warming.

See here:

Recent developments in Australia, according to the Sydney Morning Herald (14.11.13): “Labor struggles to seal carbon deal……repeal legislation revealed funding of Australia’s $3 billion renewable energy agency would be slashed by $435 million……The independent agency was established to support renewable energy projects and research.”

So, do not only ignore research on climate change and ways to combat it, but gag it! All the way with big business supported by the right-wing (Murdoch and others) media!