Know your Global Warming Facts #2

Atmospheric Carbon Dioxide

Carbon Dioxide is a "Greenhouse Gas". This means that, when the sun's rays hit our atmosphere, visible light passes through but infrared light is absorbed by some of the gases therein. Any Greenhouse gas that absorbs this light essentially absorbs its energy, which means, in simple terms, the gas gets hotter.

There are a number of different sorts of Greenhouse gas, but the most common one is Carbon Dioxide. Of course, Carbon Dioxide is an integral part of our atmosphere and is essential to the development of life on our planet. As we all know, the process of photosynthesis in plants turns sunlight and carbon dioxide into energy for the plant to grow. A byproduct of photosynthesis is the production of oxygen.

The argument of modern climate scientists is that the increase in carbon dioxide in our atmosphere will result in higher global temperatures. The reason for this is both scientific and historical.

In terms of science, an increase in carbon dioxide into the atmosphere will result in more infrared radiation from the sun being stored in the atmosphere - which essentially means that the atmosphere gets hotter. Moreover, as light reflects from earth, greenhouses gases (including CO2) help to reduce our planet's albedo (the ability to reflect light and not absorb it).

Here in Australia, a lot of us drive white cars. One reason we do is because white reflects the sunlight better and makes cars cooler than those painted darker colours. If Greenhouse gases in our atmosphere increase, it is like having a darker paint on your car.

This is backed up by historical data. Ice core samples taken from places like Greenland and Antarctica give us a "snapshot" of what atmospheric conditions were like up to 400 thousand years ago. What it shows us is that during periods where the earth was relatively warm, CO2 levels were correspondingly high, while when earth was cool, the CO2 levels were quite low.

Moreover, these same studies indicated that CO2 levels ranged between 180 - 210 ppm (parts per million) during cold periods, and between 280 - 300 ppm during warm periods.

According to historical data measured at Mauna Loa, Hawaii, for the past 40 years or so, CO2 levels around the world have been increasing steadily for some time. Presently, CO2 levels are 384ppm - substantially higher than at any time in the last 400 thousand years. The Mauna Loa figures date back to 1957, but other CO2 measurements around the world since that time have validated these figures, which show a marked increase in atmospheric CO2. Moreover, the ice core samples I spoke of earlier contain much evidence from the last few centuries, and not just the last 400 thousand years. What these samples show is that CO2 levels around the world began to increase in the early-mid 19th century - the period known as the "Industrial Revolution".

While the specifics of Global Warming are yet to be determined, the broad implications are clear - recent measurements clearly indicating global warming have their basis in increased levels of Carbon Dioxide in the atmosphere which, in turn, have their basis in human activity for the past 200 years. The burning of oil and coal and other fossil fuels to produce energy is beginning to heat up the atmosphere.

Bad procedures bedevil ICC

Despite my own chaotic system of doing things (you should see the mess in this room as I type), I am a big fan of the entire process of Quality Assurance. QA is essentially a set of guidelines that companies have that outline correct procedure.

Of course every company is different, and each company's procedures differ, but the fact that procedures exist is the point.

The International Cricket Council (ICC) appears to be an organisation in disarray. The recent complaints against Indian player Harbhajan Singh and the way Australian players behaved before and after his allegedly racist comments is bad enough. What is reprehensible is that correct procedures did not exist to ensure a fair hearing, with the result that the entire case was thrown out because of a botch-up in the way it was originally handled.

The sort of thing that has happened would be forgiveable, even understandable, in an amateur cricket system like the one that I have played in, the Newcastle City and Suburban Cricket Association. I remember one game a few years ago when an opposition player came onto the field as umpire (which is quite normal at that level of cricket), and then make a complete hash of a run out appeal because he was blind drunk at the time. Of course the NCSCA has rules governing that sort of thing (player expulsion, team points loss, etc), but our team decided to let the matter go because we won the match easily and we were on reasonably good terms with the other side anyway.

But in the case of professional sport - especially for a sport which tends to encourage nationalism (as cricket does in both Australia and India) - there needs to be clear, precise guidelines whenever something as bad as the Harbhajan incident occurs. Moreover, these procedures must be transparent and above reproach and never be bent or waived because someone in the background is "pulling strings" as it were.

The ICC is often seen by players and fans as being an inefficient, out-of-touch organisation. Member countries like Australia and India should expect more professionalism and tighter procedures from such an important organisation.

Edwards out. Kossacks rush to support Obama

Edwards calls it quits:
The surprise announcement by Mr Edwards, a former North Carolina senator who was his party's vice-presidential nominee four years ago, left former first lady Hillary Clinton facing Illinois Senator Barack Obama for the Democratic nomination in what seemed likely to be an long, bruising struggle.
Kossacks, who had supported Edwards by a country mile, have now rushed to support Barack Obama. Hillary is not liked by Kossacks (members of Daily Kos, a progressive political blog site) but they will grudgingly support her if she ends up being the Democratic candidate.

Slow demolition of US economy

GDP growth slowed to 0.6% in Q4 2007:
The U.S. economy braked sharply last autumn, pulling growth for all of 2007 to its lowest speed in five years as the housing slump took a heavy toll.

Gross domestic product rose at a seasonally adjusted 0.6% annual rate October through December, the Commerce Department said Wednesday in the first estimate of fourth-quarter GDP.

Aside from the housing slump, slowing consumer spending, inventory liquidation and lower overseas sales restrained the economy. The 0.6% pace wasn't only much slower than the third-quarter's racing 4.9%, it was far below expectations on Wall Street. The median estimate of economists surveyed by Dow Jones Newswires was 1.2% GDP growth during the autumn months.

Inflation gauges within Wednesday's GDP data indicated acceleration in prices. The economy grew 2.2% in 2007, the lowest rate since 1.6% in 2002. GDP in 2006 had increased 2.9%.
Fed cuts interest rates again - this time by 50 basis points to 3.0%:
The Federal Reserve lowered its benchmark interest rate by half a point to 3 percent, the second cut in nine days, and indicated its willingness to do so again to prevent a U.S. recession.

``Downside risks to growth remain,'' the Federal Open Market Committee said in a statement after meeting today in Washington. In a reference to the volatility of the past five months, the Fed added that ``financial markets remain under considerable stress and credit has tightened further for some businesses and households.''

The dollar tumbled and Treasury notes weakened after the decision as traders anticipated another reduction at the Fed's March meeting, if not before. The cumulative reduction in rates since Jan. 22 is the fastest easing of monetary policy since 1990.
GDP data often gets revised and I think that in the months to come, we'll see that Q4 2007 actually saw an economic decline. (update from 29-Feb-08. Growth still positive but low at 0.6%) (update from 31-Jul-08. Revised downwards to -0.2%)

The Fed's rate cutting is almost blind panic. The forex markets dumped the US dollar as soon as Bernanke made the announcement. At issue here is whether or not the contraction of the US economy will have a substantial deflationary effect. All economic contractions result in some form of deflation. Yet the long-term decline in the US dollar (which is now, yet again, within spitting distance of a record low) has an inflationary effect. When the two are combined - contractionary deflation added to inflationary devaluation - what will the net result be?

My bet is that the net result will not just be inflationary, but painfully inflationary. I use as my basis here the experiences of other nations throughout economic history who have suffered currency devaluations and were forced to go through painful recessions that were accompanied by high inflation. I don't believe that the US is somehow different to other nations in this regard.

What I am therefore predicting in 2008 is a period of painful stagflation for America - a combination of economic contraction and inflation which will only be solved when the Fed raises rates and plunges the economy into a double-dip recession.


This photoshopped image has been shamelessly stolen from Something Awful.

Paul McGuinness is trapped in a previous business model

From the department of Paul-stupid-Paul-don't-sit -at-the-table-until-you're-able-to:
The long-time manager of rock band U2 has lashed out at internet providers for resisting calls by the music industry to pull the plug on users who illegally download songs.

At a music industry conference in France, Paul McGuinness said internet service providers (ISPs) and technology companies had "enjoyed a bonanza" in the last few years by accepting fees from illegal downloaders while doing nothing to prevent them from stealing music.

"Their snouts have been at our trough feeding free for too long," said McGuinness, who has managed U2 for 30 years and is a highly respected industry figure.

"It is time for them to share that with artists and content owners."

In Australia, and more recently overseas, ISPs have resisted growing pressure from the music industry to send warning notices to customers who have been identified as illegal downloaders, and disconnect the services of repeat offenders.
Technology has changed the music industry. The old business models are out, the new ones are coming in. File sharing has made recorded music virtually free to copy, and there is precious little the industry can do any more to reverse this situation.

Bands like Radiohead and The Charlatans have begun to utilise an entirely new business model whereby their recorded music is made available for free. This may seem a strange unprofitable practice, but it has increased the popularity of some new bands, who are then able to use this popularity to increase the amount of live shows they perform and in the CDs they sell.

Back in the 60s when bands like The Beatles, The Rolling Stones and The Who were around, bands had to play upwards of 5 gigs per week in order to make money. As these bands became more popular, they began to play in bigger and bigger venues and could even afford to play less gigs. It was these conditions which helped to create the musical and financial basis of the music business. With file sharing now widespread, the conditions are quite ripe for a new type of music industry.

An example is my own experience. I recently downloaded the album Methodrone by The Brian Jonestown Massacre. I was able to do this at the band's own website - all their albums can be downloaded for free. I enjoyed what I was listening to. However the bitrate of the music files was only 60kbps, and I could discern a slight loss of quality. Having sampled this album I have since decided to purchase it in order to have my own "hard" copy which I can then use for my own use and listen to in its original high-quality format. In other words, making this entire album free to download has meant that I have handed over money to buy it.

Another example is that I have recently been listening to Last.fm, and have had the opportunity to download free tracks from two bands called The Dark Angels and The Warlocks. This has led to me again purchase their albums.

Sadly I sort of expected more from U2. We need to remember that it is Paul McGuiness - the band's manager - that is being a jerk here rather than Bono and the lads. Nevertheless I would have thought that the members of U2 would appreciate this new musical direction. If U2 released its entire music collection as free downloads they would gain a great deal more popularity and kudos as a result, not to mention packed concerts. They would probably lose more money than they gained from doing such a thing, but it's not as though the lads need extra cash to ease them into retirement.

Put simply, McGuinness is trapped in a previous business model. His entire life has been spent making money from a model that is now under threat. Rather than embracing change and the flexibility that comes with free downloads, McGuinness has essentially sided with big business. He wants a virtual Garda Síochána chasing down and prosecuting violators while the world passes him by. Very sad.

Sorry Day coming up

From the department of it's-a-good-beginning:
The Federal Government has set the date for a formal apology to the members of the Stolen Generation.

The apology will be the first item of business for the new Federal Parliament.

It will be delivered by Prime Minister Kevin Rudd on February 13.

Indigenous Affairs Minister Jenny Macklin says the apology is on behalf of the Australian Government and will not be attributing guilt to the current generation of Australians.

Ms Macklin says the content of the apology is still subject to widespread consultation, but she says it will form a necessary step to move forward.

A traditional Welcome to Country will be held as part of the Parliament's opening ceremony by members of the Ngunnawal people.
It will be interesting to hear what Rudd has to say. I'm hoping that his "formal apology" is neither trite nor overbearing, but simple, heartfelt and to the point. Obviously, though, I am hoping for actual, measurable changes rather than just mere words - but at least it's a start.

Indigenous Australians are this country's poorest people. How they fare under the Rudd government over the next few years will help define whether this new government is a success or a failure in the eyes of history. After 11 years of Coalition rule, history will not be kind to John Howard when it comes to his dealings with Aboriginal people.


This photoshopped image has been shamelessly stolen from Something Awful.

Shaun Tait quits cricket

From the department of what-the:
Australian fast bowler Shaun Tait has quit cricket indefinitely, citing emotional and physical exhaustion.

Tait said his love for the game had diminished and he would not play cricket at any level for an indefinite period. "This is a very difficult situation for me to be in at this time," Tait said today in a statement.

"This is not an overnight decision but something that I've been struggling with for sometime.

"A break from professional cricket will hopefully give me a clear mind and a chance for my body to rest and recover.

"My love and enjoyment of the game is struggling due to these issues and if I continue to go on, it will be unfair on my team mates and support staff of both the Australian and South Australian cricket teams - and most importantly my family and close friends."

The World Cup star struggled in his one Test appearance of the summer - the third Test against India in Perth - after a long battle to regain fitness following elbow surgery.
I wouldn't be surprised if the guy has depression, just like Marcus Trescothick. I hope someone can convince him that people with depression can still be successful professional sports people.

My position on Abortion

As an Evangelical I believe the bible. I believe that it was written by God, whose Holy Spirit ensured that its human writers were able to write what was correct and true. I'm also fairly strong on the issue of Sola Scriptura - the belief that the Bible is the sole authority that believers should turn to to discern what to believe and how to live. This is not to say that I worship the Bible (I don't) - but what it does mean is that I believe that the Holy Spirit lives and works in us whenever we read and study the text of Scripture (which includes private study, small group bible studies and preaching from pastors / teachers / presbyters / overseers). If we are to listen to God, then we are to listen to Him speak through the Bible, in the way that He has written it.

The practice of Abortion is not mentioned in the Bible. Nevertheless, we can discern from scripture that an unborn baby in whatever form it takes is considered a living human being by God. Bible references for this include Psalm 139 and Exodus 21.22-25 but include many others.

Given that this is the case, the only true attitude that Christians should have towards abortion is that it is the deliberate killing of a human life. As part of our ministry in the world, which includes the preaching of the Gospel, must be the clear proclamation of God's ethical standards. Moreover, Christians should take steps to protect the weak and unsupported - it was, may I point out, Christians who were the most vocal opponents of slavery in the 18th and 19th centuries.

So. Abortion is wrong and Christians should do something about it. But what?

Ever since Roe vs Wade in the United States essentially legalised abortion, Christians have been at the forefront of fighting against it. The effect of Roe vs Wade has not just been to legalise abortion, but to also legitimise it in society. Since the early 1970s, our society has become increasingly tolerant of abortion. In Australia, a Roy Morgan Poll in 2006 indicated that about 65% of Australians supported abortion, while 22% were opposed with 13% unsure. Polling in the US shows a similar trend.

Of course, ethics and morals are sourced from God, not public opinion. The fact that a supermajority of people in Australia and the US support abortion means nothing when it comes to determining right and wrong.

Nevertheless, the sheer amount of people who support abortion should give Christians pause to think. Ever since the first protests against abortion were made by Christians in the 1970s, the focus has been solely upon prohibition - making abortion illegal. Moreover, this focus has meant that politicians have been able to use the issue as a way to get people's votes. This is very much the case in the United States, where Republican politicians are more likely to indicate a pro-life stance than their Democrat colleagues. Along with attitudes towards homosexuality, the Republicans in the United States have become the party which Christians want to vote for. Here in Australia, none of the three major parties (Liberal, National, Labor) welcomes an anti-abortion message, though the more conservative parties (Liberal, National, Family First, Christian Democrat) are more likely to have pro-life people active in them.

The problem (the "elephant in the room" as Craig Schwarze would put it) is that the pro-life movement has failed - completely and spectacularly. Despite 30 years of protests, political action and even violence (albeit from a militant minority), western society has embraced abortion. Despite the efforts of the pro-life movement, support for abortion has increased since the early 1970s. While pro-life people argue and agitate to make abortion illegal, a considerable majority of people wish to keep it legal. Moreover, voting for politicians who support the pro-life camp has resulted in absolutely no change at all in abortion laws. For example, from 1994 until 2006, the US congress was controlled by conservative Republicans who had been voted in by the American people to enact conservative legislation - which included support from pro-life groups. Despite 12 years of congressional control (of which 6 years were spent under a conservative president who would not veto conservative legislation), Roe vs Wade was never repealed, abortions were not reduced and public opinion of abortion did not swing enough towards the pro-life position (if it swung at all). So much for political agitation.

So while I believe that abortion laws have resulted in the deaths of millions of unborn infants over the years, I cannot support the current pro-life strategy. Barring a revival in Western Countries and a subsequent acceptance of biblical ethics, a substantial majority of people in our society will support abortion and prevent any attempt to make it illegal. The efforts of the pro-life movement are essentially in vain - their strategy ensures that they will lose.

And that is, of course, the tragedy. While pro-lifers jump up and down and protest, unborn babies are still being aborted. By focusing upon prohibition, pro-lifers are failing to protect the innocent and are failing to stop abortions. Not only are their efforts in vain, their efforts are actually encouraging abortion by not taking an alternative stance. This is because pro-lifers have not examined any alternative strategies.

The best sort of strategy is the one which will result in the best outcome. I am a fan of measurable outcomes, which is why the pro-life movement does not impress me - the outcome of their efforts is worse than when they started out. If pro-life people really want to make an impact, they need to adopt a strategy that will result in the best outcome.

And what is the best outcome? Is it the prohibition of abortion (making it illegal)? No. Believe it or not, that is the wrong objective to have. The correct objective, when taking the biblical evidence in hand, is for abortion rates to reach zero. The best outcome is zero abortion, and that can be achieved without focusing upon prohibition making it illegal.

To understand where I am coming from, pro-life people need to step into the shoes of pro-choice advocates. No matter what we think of them, the fact is that pro-choice people do not see themselves as evil, fascist, demon possessed servants of Satan. Instead, they see themselves as defenders of personal liberty, which is why they call themselves "pro-choice", rather than "pro-abortion". You see, this is because pro-choice people focus upon the freedom for a person to choose between keeping a baby or aborting it. Regardless of the theological and ethical problems of this attitude, pro-life people MUST understand that the issue for pro-choice people is choice.

I have spoken to pro-choice people over the years, both on the internet and in person. I have read their statements of values and their arguments. Pro-choice people do not think abortion is a wonderful experience that every woman should go through. Pro-choice people know that complications sometimes do occur after abortions which may prevent conception and child-bearing later on. Pro-choice people do know that abortion is a surgical procedure that has risks. And, most important of all, pro-choice people have no problem with declining abortion rates since they know that preventing unwanted pregnancies is better than abortion.

You see, pro-choice people are more concerned about a woman's choice to have an abortion than they are about the procedure itself. All pro-choice people believe that preventing unwanted pregnancies is an essential feature of woman's health, but, if an unwanted pregnancy does occur, they would argue that abortion should be a legal and safe option for the woman to consider. Moreover, they would support a woman's choice to keep her baby if that is what she wants - it is the choice that is important to pro-choice people, not the abortion procedure.

And this is where both pro-life people and pro-choice people can have some level of commonality. If pro-life people want zero abortions, and pro-choice people want safe and legal access to abortions, then surely there is common ground. But where?

Well, imagine a country in which abortions are safe and legal and where no abortions occur. Is it possible? Certainly. If women have the freedom to choose between keeping their baby or aborting it, and then all choose to keep them, then we have a situation in which both sides are happy. But is this possible?

A 1999 study by Henshaw, Singh and Haas examined the incidence of abortion throughout the world. What it discovered is that abortion numbers varied widely from country to country. Australia, for example, had an abortion rate of 22.2 (abortions per 1000 women) in 1995-96. The United States had a rate of 22.9. Germany, however, managed an abortion rate of 7.6. Other low rates include Belgium at 6.8, Finland at 10.0, Netherlands at 6.5 and Switzerland at 8.4. Spain and Italy, two very Roman Catholic countries, have abortion rates of 5.7 and 11.4. Countries that have large abortion rates include Bulgaria (51.3), Belarus (67.5), China (26.1), Romania (78.0) and Vietnam (83.3).

There are some rather important lessons to learn from this 1999 study. First of all, abortion rates in western countries are much lower than in developing countries. Second of all, countries which legalise abortion have lower abortion rates than countries where it is illegal.

Now I realise that might go against certain assumptions - yet it is clear that low abortion rates and legalised abortion do actually go hand in hand. For those who wish to make abortion illegal, it seems logical (though hard to accept) to assume that making it illegal will actually increase it.

But why so much disparity between countries? Why do secular Western European nations have lower abortion rates than conservative Christian America? Why are abortion rates lower in countries where abortion is accepted, and higher in countries where it is illegal or at least controversial (as in America)?

The key, I believe, is that legalised abortion in western nations has gone hand-in-hand with higher rates of prevention - that is, women in countries with legalised abortion are more likely to prevent conception from occurring in the first place. When women prevent unwanted conceptions, they are less likely to seek abortions.

And this is where I believe that both pro-life and pro-choice people have an area of commonality - the desire to prevent unwanted pregnancies from occurring in the first place. If pregnancies can be prevented, it means less abortions can take place. That would please the pro-life person because it would mean less deaths, and it should please the pro-choice person because women are choosing to prevent pregnancies.

So, what practical steps should happen?

Well, it means that new pro-life groups in Western countries need to form with the express purpose of reducing abortion to zero but without demanding that abortion be illegal. In other words, these pro-life groups would accept that abortion be legal so long as steps are taken to prevent unwanted pregnancies to ensure that abortion rates reach zero.

It would also mean that research needs to be done into why it is that abortion rates are so low in certain nations and so high in others. Why is abortion so low in Germany? Is it the culture? Is it due to government funded public education programmes? Are school sex education curriculums partly responsible? Rather than making an ideological choice (eg "government programs can never work"), the choice needs to be made based upon evidence and pragmatism. I suspect that much of the reason why Western European nations have such low abortion rates is because women in these countries are better educated in sexual health and prevent conception - and the education has come from publicly funded sources. If this has worked in these nations then it should be tried in places like America and Australia - and these new pro-life groups should be at the forefront of lobbying government to act.

Reducing abortion to zero through education and changes in public attitudes will take time - but it will happen. Every year we can expect abortion rates to drop. But if pro-life groups continue to take a hardline stance and demand that abortion be illegal, then we can expect little to occur and for abortion rates to continue as they are. I would rather real, measurable outcomes (a drop in abortion rates) rather than hardline rhetoric that solves nothing.

As Christians, we can assume that sin will continue to rule our society. Abortions may continue in our lifetime regardless of what we try to do. Moreover, despite the solutions I have offered in this paper, I am not trying to argue that some form of "utopia" can exist on earth whereby government laws prevent us from sinning. The only thing that truly saves us is the Gospel, and that is what Christians should be trying to achieve. God's ultimate solution to sin is the message of the cross. The solutions I have offered here may reduce abortion to zero in countries that practice them, yet this will not let people into heaven.

In other words, Christians should preach the Gospel first and foremost, while praying for a society that looks after those who cannot look after themselves.


This photoshopped image has been shamelessly stolen from Something Awful.

Prayer Request from Beamer

My wife took a fall this afternoon. We were out for a walk, and she slipped on a patch of ice that was in the shade. She is bruised and sore, and she seems to have wrenched her back. She is uncomfortably resting at home now.

Could I ask for prayer? Please pray that there is no serious injury, and that she will recover quickly.
If you're reading this, pray this:

Dear Heavenly Father,

We pray for Beamer's wife, Mrs B. We ask that, in this time of pain and injury, you will help her to heal. We pray for the nurses, doctors and other health workers who may be assisting her, that you give them compassion, professionalism and knowledge as they deal with her condition. We pray that the injury not be serious, and that she will heal quickly. In all things we pray that both Beamer and his wife continue to trust in your all-powerful nature, that they may accept whatever befall and use this experience to grow closer to You, God.


(Beamer is one of my American readers who hails from Washington (the state) and who regularly comments on this blog)

The Australian Republic

Malcolm Turnbull and the Australian Republic Movement are at it again:
The architect of 1999's failed republican referendum says the Queen would have to die or abdicate before Australians would vote out the monarchy forever.

Malcolm Turnbull, who is now Opposition treasury spokesman, said today the Queen's departure from the throne would be a "watershed event that would galvanise the population" into debating what type of head of state they wanted.

"I said at the time of the 1999 referendum that if we voted 'no' it would mean 'no' for a very long time," Mr Turnbull said on the Australia Day holiday.

Asked when a new vote would be held, Mr Turnbull said: "My own judgment is that the next time when you would have your best prospects is at the end of the Queen's reign - when she dies or when she abdicates.

"We have got to have a very serious discussion about what we want our head of state to do," he said.
Like many Aussies I think Australia should have its own Head of State. We should have some form of president rather than leaving executive duties in the hands of an English Monarch (and his/her appointed lackey). Like a minority of Australians, I voted "yes" in the 1999 referendum, confident that, once a Republic was underway, we could change it to suit our needs more. Republicans who voted "no" during the 1999 debate - who argued that the model presented wasn't the one they wanted - essentially prevented Australia from being a Republic. Moreover, by voting "no", they indicated that they preferred an English Monarch over a flawed but fixable Republican model.

Having said all that, I must give my 2 cents regarding this current little debate. Changing Australia from a Constitutional Monarchy into a Republic is a major deal. Once a decision has been made, it is foolish to keep "flogging a dead horse" until at least some time has gone by. The 1999 referendum seems an age ago but it was only 9 years. Australia needs to progress for another generation before any changes get voted on again.

I therefore support another referendum on the Republic - but 25 years after the previous one. I'm happy for a Republic referendum to go ahead in 2024 but not in 2008 or 2009 or any years in between. The fact is that in 1999 we voted to remain as we are and it seems ridiculous to think that the opinions of Aussies have changed much in 9 years.


Cool Summer

As many of you know I complain about Summer. I get heat rash and sweaty and hate getting suncream on me. I also prefer foods known for their Winter styling.

Well, this Summer has been reasonably cool. I think it may have something to do with La Nina, but the extra rainy days we've had here on the East coast of Oz have kept temperatures down below 30 for most of this month and last month. Usually at this time of year we start having things like bushfires and heat waves and fire restrictions - but not this year. We're now over half-way through Summer and so far, I'm quite happy with the way things have been going.

But I need to remember one thing - January may be the hottest month of the year, but February is the second hottest. So all these things I've written may come back to haunt me at some point.

It's good, though, being able to sleep well at night without tossing and turning in the heat. The worst is when temperatures never get below about 25°C (77°F) at night, and the fan acts like a hair-drier. I remember one day a few summers ago when it reached around 44°C (111°F) and it was still around 35°C (95°F) at 10pm. Whew!

But this month has seen night-time temps dropping to around 14°C (57°F) on occasion, which has been great in cooling down the house from the warm day and allowing us to actually use blankets.

Well, I'd love to keep writing, but I haven't finished the washing up and I'm already covered in sweat from washing up the first half. Washing dishes in Summer is a real bummer.

Happy Australia Day

Today is Australia Day. For non-Australian readers you might think this includes Australians waving around little Australian flags, attending patriotic street parades and pledging our lives for the country. No. Doesn't work like that here.

It's a Saturday, so the shops are still open and we'll be doing some shopping today. People who live near the coast will probably have a swim. There's no family get-togethers (no more than normal), no air shows (although an F/A-18 might fly over Sydney to impress the small crowd of people there).

It was 220 years ago that a group of British Settlers and a whole bunch of convicts turned up in Port Jackson to begin modern Australia. Australia has never had a war of independence and we have never had a civil war (though that was touch and go in the early 19th century).

Australia day is traditionally the end of Australia's holiday season. January is the hottest time of year and the Christmas and New Year holidays basically merge with the extended Summer School Holidays. Australia Day marks the end of this holiday season. On Tuesday or Wednesday next week Aiden will go back to school (he'll be in year 2) which means that pretty much everyone will be going back to work.

Perhaps the most important annual celebration Australia has - and one which does sort of rally us as a nation - is ANZAC Day. On that day (25 April), Australia (and New Zealand) celebrate the first time our nation went to war (The invasion of Gallipoli in 1915). For some reason, this day is more important - far more important that January 26th and more important even than Federation Day (January 1st). ANZAC day is the day of the year where we honour our previous and current members of the military, and is the closest thing we get to American style patriotic ceremonies.

But today is Oz day. Our family is doing nothing special. Anna is walking down to the shops to buy a few things, and I'll be driving out later to get some prescriptions for ourselves and for my Mother in Law. If Anna is feeling good (she has a bad back) we might go down the beach this arvo. In other words, today is no different to any other lazy summer day we have spent in the last 3 weeks. I'm certain the vast majority of Australians have similar lazy plans.

What does GOP stand for?

"George Orwell's Prediction"
"Gag our Press"
"Going Off to Prison"
"Gospel of Privilege"
"Gay Obsesses Psychos"
"Grotesque Orwellian Parody"

See here.

(For my non-American readers who may not be in the know, "GOP" is another name for the Republican Party and stands for the "Grand Old Party")


This photoshopped image has been shamelessly stolen from Something Awful.



From here. It was the Democrats who created this so there's obviously some bias in the figures (especially in what has NOT been quantified on this list, or what assumptions are made, like the 1.07 Euros per dollar figure which was a gross overvaluation at the time, or just basic changes over time like college tuition fees). Yet I'm convinced that it represents some very important information about how much America has changed since 2001.

Paying students to learn

This is an old idea of mine that I have somehow forgotten to publish. It's good to know that someone out there had the same idea and is actually doing something about it:
A high school in the southern US state of Georgia is offering students who are weak in maths and science $US8 ($9) per hour to go to study hall and review their pet peeve subjects.

"We started on Tuesday - the kids are very enthusiastic," Mike Robinson, the principal of Creekside High School in Fairburn, near Atlanta, said.

Forty students - 20 from middle school and 20 high-schoolers - were selected on the basis of their poor grades in the two subjects and invited to attend two-hour remedial classes twice a week in exchange for money, which is provided by a private foundation.

Everyone who was selected was present at the first session, Mr Robinson said.

At the end of the 15-week experiment, a student who attended every session would be $US550 richer and able to do the calculation to work that out.

Those who maintain a 'B' grade average or better in math or science after finishing the course will be eligible for a bonus of $US143, leaving them potentially $US692 better off in total.

"You know, in our community, you have to be really creative to get some students interested," Mr Robinson said.

"I think this incentive is going to work."
Oftentimes when I was teaching, I would ask students - especially those in underperforming classes - what would happen if I paid them to do well in tests and exams. They all responded enthusiastically, as they would, since it offers them an extrinsic motivation to perform well.


Heath Ledger was working on a Terry Gilliam film when he died. The film has now been canned.

Terry Gilliam is my favourite director, so Ledger's death robs him of yet another film.


Zero Tax II

Gavin Putland, a research officer for Prosper Australia, has picked up on my Zero Tax proposal and published a critique of it. It would be good for you to read his blog article before progressing any further, as much of what I write here will be in answer to his critique.

I need to point out before starting that I had emailed Putland with my proposal and asked him for his response. The reason is that Putland himself has created a theoretical economic system that does away with tax as well. I won't be critiquing his approach since I need more time to understand it, but I would certainly encourage anyone reading this to check out Putland's theory for themselves.

One of the common criticisms of my original proposal is that, in order to keep government funds being created by seigniorage without inflation, the Reserve requirement would have to keep increasing until it reached 100%. This was pointed out by "Leonard" at Megan McArdle's blog. Yet if you read McArdle's blog, you'll see that "Leonard" also advocated the complete abolishment of the fractional banking system, which sort of skews his understanding of how fractional banking works and how my system fits into it. Then again, I'm the one with this crazy idea to abolish all taxes so I suppose we're even in that regard!

The thing about fractional reserve banking is that the amount of money it can produce is infinite. In order to understand it, I suggest readers familiarise themselves with this practical example available at Wikipedia. If the reserve requirement of an economy is set at zero (as it is in Australia) then there is no limit to how much money can actually be created through the money multiplier. Increasing this reserve requirement will result in substantial amounts of money NOT being created as it is multiplied.

This is important to understand. I think Putland (and others) have it in their mind that there is a direct relationship between the money supply and the rate of inflation. In other words, if the money supply is increasing, then so is inflation. If the money supply is decreasing, then deflation results. This is not so.

Inflation and deflation are both monetary phenomena but they are not determined by whether or not the money supply increases or decreases. Rather, they depend upon market forces - namely the market's valuation of money itself. In other words, it is quite possible to have both deflation and an increase in the money supply, just as it is possible to have both inflation and a decrease in the money supply.

The reason is that supply is always balanced by demand. If the demand for money is greater than its supply, then money will become more valuable - and deflation will result. If the demand for money is less than its supply, then money will become less valuable - and inflation will result.

In my zero tax system, I do away with all forms of taxation and replace them with that most horrendous of government sins - the printing of money. Yet rather than create an inflationary spiral, the increase of the reserve rate will remove money from the money supply, thus balancing it out and removing any hyperinflationary effect. Putland and "Leonard" would argue that the increasing reserve requirement would eventually reach untenable levels (100%), this making this system, well, stupid.

My argument is, obviously, that this will not happen. The reserve requirement will be quite high but it is highly unlikely to reach even beyond 50%. The reason for this is obvious - money, by being infinitely fungible, can be easily created and destroyed through monetary policy, of which the reserve requirement has been a part of over time.

How high can interest rates go? Here in Australia at present, the Reserve Bank has a cash target rate of 6.75%. What would happen if the RBA increased rates to, say 10%. What about 20%. Why not 100%?

Of course the RBA isn't going to raise rates that high just for the sake of experimentation. Nevertheless we can make reasonable extrapolations as to what might happen. If the RBA raised rates to 20% all of a sudden, the result would be a severe economic downturn accompanied by a major bout of deflation. The reason for this is simple, by raising rates the RBA has acted to reduce the money supply, and, with demand exceeding supply, money becomes very valuable indeed, which means that the price of goods and services decline in relation to it, which is deflation.

The fact is that the RBA's use of monetary policy can be deflationary if it wants to be. Any central bank, from the Bank of England to the European Central Bank to the United States Federal Reserve, has this power at its fingertips if it wishes to.

It seems ridiculous, therefore, to argue that central banks can't create a deflationary environment. That is, in essence, what Putland and "Leonard" are arguing. The reason I am pointing this out is that, in my zero tax proposal, with the money from seigniorage (money printing) entering the money supply and creating an inflationary environment, it seems illogical to assume that central banks could NOT somehow create a deflationary action that balances it out.

I think that the reason for Putland's critique is that he probably does not understand how fractional reserve banking works. Understanding the money multiplier effect in the context of an economy in which money is bought and sold is essential. My eventual understanding of this effect is the reason why I was able to pull this proposal from the shelf and publish it - previous to that I had no faith that it would work since I had a less than rudimentary understanding of the fractional system.

Moreover, I don't think Putland understands how to describe the problems of my system correctly. For example, he states:
If the tax burden were indeed simply replaced by higher interest, this would be bad enough, because it would encourage hoarding of money and deter productive investment.
Putland avoids the use of the word "deflation" here. Why? What he has described - the hoarding of money - is a classic result of deflation. So, in other words, he is arguing that my proposal would be deflationary. Yet he doesn't use the word.

Notice also this paragraph:
Even in the absence of taxes, such a huge interest margin would be ruinous to depositors and borrowers. Both parties would need to "cut out the middleman", but this would be illegal because the "middleman" also happens to be the tax collector. So the only source of credit would be the underground economy, and life would be "solitary, poore, nasty, brutish, and short."
What Putland describes here is a system in which banks have such control over our deposits that it would be "ruinous" to place our money into such institutions. But what is he inferring here? Is he saying that, by increasing the reserve requirement so high that people would be unable to access their money if they so desire? Since the reserve requirement is a hidden "tax", would that mean that people would be forbidden to take money out of the bank?

If this is Putland's thinking, then he certainly doesn't understand fractional reserve banking. The fact is that, even in today's environment, if everybody went to the bank to withdraw their money the result would be complete disaster. It is called a bank run.

Yet why would people under my system be worse off? I have said nothing about the rights of people to withdraw their money from the bank, nor did I say anything about preventing this from occurring. The reserve requirement only applies to money that the bank has in its deposits. If a bank has $10bn in deposits, and if the reserve requirement is 10%, then $1bn has to be held in reserve. If the bank loses a lot of customers and deposits fall to $9bn, then only $900 million should be held in reserve.

If Putland has a theoretical problem - what would happen if people wanted to remove their money from banks whose reserve requirement exists as a deflationary measure to balance out government seigniorage - then he should be worried about our current system. Yet in our system people have money in bank deposits and are happy to have them. The fact that a high reserve requirement exists or not is not the issue.

Moreover, Putland fails to understand that, with the natural increase in market interest rates that would result in my proposal, households and businesses would actually see bank deposits and other savings accounts to be quite attractive. As interest rates go up, the entire economic system rewards those who save, which means that many people would increase their rate of savings (insofar as inflation is controlled; higher inflation would lead to less savings). All in all, households and businesses would not view banks and their deposits any differently under my system as they do now.

Next, Putland quotes "Jeff", a commenter at the Angry Bear web page which discussed my proposal:
If you make the banks sit on more and more cash each month that they are not allowed to use it is the same thing as a tax.

Basically you have created a source of money in your money printing to fund the government, and you have created a sink for money with the reserve requirement. It is the same as if that money the banks are not allowed to touch had gone to the government, and the government had not printed money. So if such a system could ever balance you would have simply replaced the current tax system with an effective tax on bank deposits.
There is much in Jeff's statement that is true. My zero-tax economic system is not a free lunch. Government spending has to be paid somehow. I am not proposing a magic tax-free utopia. What I have done is, according to Putland, is a "tax/interest trade-off". All I have done is replace taxes with higher interest rates. Yes, that is what I have done. Guilty as charged. Yet I would still argue that my proposal is fairer because it affects the entire market (and thus affects the rich more than the poor, which means that its effect is essentially progressive rather than regressive) and is more efficient because it does away with an entire section of the economy dedicated to tax collection and avoidance (government tax departments, tax accountants, tax laws, tax lawyers, etc). Moreover, the resulting increase in money supply and reserve requirement will need far less resources to achieve than the current tax system.

It needs to be pointed out that in the system I am proposing, the entire government is funded by seigniorage (money printing). There are no other forms of revenue. The reserve requirement cannot be considered a tax because it is not spent. Instead, it is held at the central bank. But then, of course, there is the problem of whether or not such reserves can be sustained - what would happen if people wanted to take out their deposits and thus remove these reserves? Again, the problem is simply identical to a bank run and the same question could be asked of our current economy today. What I am pointing out is that the behaviour of depositors and lenders is not going to suddenly take a peculiar turn if this system is enacted.

Another problem with Putland's critique is that he has not taken into account the effects of zero tax upon the economy. He says, for example:
the burden of the tax on bank deposits would be passed on to customers in the interest margin — that is, the margin by which the interest paid by borrowers exceeds that paid to depositors.
Of course my proposal has negative effects. High market interest rates would be a natural result. Yet he is unable to realise that, even with such negative effects, there are positive ones. With no taxes to pay, households have more money to spend. A person may owe more money, but they also have more money. Certainly interest margins, which occur naturally in banks, will be affected. Yet Putland does not take note of the changed financial circumstances of households and businesses - namely, that they have more money as a result of zero income tax. To be sure, this increase in income sounds inflationary, but the increase in interest rates will ensure that the majority of this extra money will go into savings rather than spending, with the increased size of bank deposits being affected by the increased reserve requirement to the point where the money multiplier results in price stability.

If this system is used in a real economy, I am certain that an ever-increasing reserve requirement will not be needed. Nor will the system result in hyperinflation or deflation, assuming that the reserve requirement is set at a level whereby monetary supply meets monetary demand.

Public Broadcasting stupidity

I'm a big fan of public broadcasting. I think it provides better news and current affairs than commercial channels and that the entertainment that it does produce can be quite influential in how commercial channels adjust their programming.

But where does public broadcasting get its funds? Here in Australia, the ABC is funded directly by tax revenue, and the amount given is determined by the federal government. In the US, PBS is funded by a combination of advertisers, government funding and viewer donations.

But by far the most weird way of funding is to be found in Britain. The BBC is funded by what are called "Television Licences". If a person wants to watch TV in Britain, they need to buy a licence. Those licence fees then go towards paying for the BBC's content. It's a novel way of doing things, but, I have to say, it is crazy.

Britain is (as far as I know) the only country in the world where you can be arrested for watching TV. If you haven't paid your licence, government heavies can get you taken to the police. Fines and even imprisonment can occur if you haven't paid your licence fee.

Ah, you may ask, but how would they know? Simple. "They" (ie the BBC) know exactly which residences don't have licences. So what they do is get a "TV detector van" to patrol the streets and nab people for watching TV without a licence.

Of course, owning a TV and only watching DVDs or videos is completely legal in Britain. It's when you start watching broadcasts without paying the licence that you get in trouble.

I have to say, the whole idea is obsolete and inefficient. Here in Oz we just buy a TV and start watching. No licences, no TV detector vans patrolling the streets, no threats mailed to you by the BBC.

To see just how ridiculous this system is, read this website. In it, a person has collected over two years worth of letters he has received since he stopped paying his licence fees. He is treated as though he were a criminal. Moreover, as the letters continue to arrive, he begins to discover bogus statistics and even three different signatures from the same person. Using FOI legislation, he is able to compare what his legal rights are to what he is told by the BBC. It's amusing and very annoying.

Letter to the Herald today

I forgot about it - just remembered:
If Australian households are to save more money, then the best incentive is for money to become more valuable. This means not just fighting inflation but killing it off. It also means creating greater returns over a longer period.

If Kevin Rudd wants us to save more he should encourage the Reserve Bank to raise interest rates.

Raising rates will hurt us in the short term, but help us in the long term. This is because people will be more likely to park their funds in interest-bearing savings accounts and term deposits than to spend them on LCD televisions from China.

Encouraging national saving will result in a lower current account deficit and make our economy stronger. It can't come from Mr Rudd's tinkering but it can come from higher interest rates.

Neil Cameron Waratah

Another prediction

This is what I have just written over at Economist's View:

I'm very unhappy with the rate cut. Like Fred, I think Higher interest rates are needed but the reason I have is the incipient inflationary pressure building up because of the low dollar.

Of course, there is the question of whether or not the deflationary effects of a potential recession will counteract the inflationary effects of a lower dollar. History has shown us that nations with plummeting currencies end up having both a recession and an outbreak of inflation at the same time. It happened in South America and it happened in Asia and it happened in Russia.

The difference between the regions just mentioned and the situation in America as its stands is that the devaluing of currencies was essentially what caused their recessions. In America's case, however, a recession was already brewing. The plummeting dollar results from this problem, and will exacerbate it.

At some point in the next three months, inflation indicators will begin to get quite loud. At that point everyone will be confused and say "why do we have inflation AND a recession"? Of course Americans are not used to the inflationary effects of a plummeting currency, which means that analysis has been blinkered. American analysts and economists, unused to experiencing inflationary conditions, have completely factored out the inflationary effect of the Fed's rate cut. When it is realised that America is actually no different to the rest of the world and that the basic laws of economic activity actually DO apply to America as well, there will be a clamour of activity arguing that higher inflation is justified in order to keep the markets running and people in jobs. A minority of economists and commentators will invoke Paul Volcker and the rate increases of the early 1980s as evidence that inflation needs to be conquered first, but then the pro-inflation majority will probably argue that the fundamental laws of economics has changed and blah blah blah.

Now that the Fed has acted accordingly, there is a good possibility that America will see out 2008 with comparatively high inflation. Presidential candidates will stutter in their solutions, many simply blaming Bush and Greenspan and occasionally Bernanke. A stimulus plan from congress will go ahead but will actually do little in stopping the recession and will have an inflationary effect. At some point after the election, Bernanke will either resign or be sacked.

I also predict that at some point the Fed will realise what is happening and increase rates to kill off inflation. This will cause a double-dip recession.

So, that is my prediction. If I get it right, will someone out there in the world of business reward my prescience? Online Kudos is one thing. Cold hard cash is another.

Heath Ledger found dead

Australian actor Heath Ledger is dead.

New York City police have confirmed the 28-year-old Perth-born was found dead in his Manhattan apartment on Tuesday.

"He was found unconscious at the apartment and pronounced dead," a police spokeswoman said.

Celebrity website TMZ.com reports that Ledger was found by his housekeeper at 3:35pm (7:35am AEDT).

Ledger has a two-year-old daughter with former fiancee Michelle Williams.

He was set to play the Joker in the upcoming Batman film The Dark Knight.


US Rate Cut will stoke inflation

Helicopter Ben delivers:
It appears United States markets have responded positively to the Federal Reserve's decision to cut its key interest rate by 0.75 per cent.

Share prices fell by almost 3 per cent when the New York Stock Exchange opened this morning but at 2am AEDT were only down by 1 per cent.

The Federal Reserve is hoping its biggest single rate cut since 1982 will increase market confidence and help stave off a recession.

Markets in London and Paris also recovered from big losses in early trading, closing almost 3 per cent higher.

Most Asian markets suffered heavy losses, closing before the Federal Reserve announced its rate cut.

It is the first emergency rate cut since September 11 2001, and the biggest single cut since 1982.

Some analysts say the move smells of panic, but the Federal Reserve hopes the surprise cut will increase market confidence and help stave off a recession.

The drastic action to try and calm the financial markets and growing fears of worldwide recession appears to have had a positive effect on world markets.
A 75 basis-point cut is exactly what the markets wanted and it is exactly what they didn't need. It doesn't surprise me in the least that Wall Street jumped up and down in ecstasy in the knowledge that a financial utopia has been delivered just in time.

The effect on the foreign exchange markets was immediate - as soon as Ben's Helicopter dropped the 75 basis point cut, the US Dollar began to devalue again. The reason is simple: more money = cheap money. One of the indices I keep an eye on is the NYBOT, which values the US Dollar against a bunch of other currencies and is the best way of valuing how the Dollar is performing. The US Dollar lost about 1.3% of its value as a result of Ben's Helicopter and more devaluing is likely to occur.

The US has not had inflationary problems since the early 1980s and the US Dollar has remained quite high since that period. But now, with the Dollar tanking over the long term, inflationary expectations are very high. Whenever a currency devalues in the way the US Dollar has, the inevitable result is high inflation.

A 75 basis point cut is something that probably would have worked 4-5 years ago when the US Dollar was strong. With low inflation and a valuable currency, there was plenty of room for error. Indeed, Ben's predecessor, the erstwhile Allan Greenspan, was able to cut rates significantly in early 2001 as the economy moved into recession. There is no margin of error these days, yet the 75 basis point cut (the biggest rate cut since 1982) was still enacted. This will inevitably stoke inflation.

At some point in the next 2-3 months, inflation will rear its ugly head in America. Some commentators will try to downplay its significance but others won't be too sanguine. In any case, the Fed will have only two choices - either raise interest rates to kill inflation, which will be deadly in the midst of a recession, or do nothing, which will convince investors that the Fed is not interested in protecting the dollar. Either way the confidence that the market has in the Fed will be completely shot through, if it hasn't been done already.

And that's a prediction.


$100bn Lost

From the department of if-you-find- it-please-return-it-to-the-ASX:
It has been a day of carnage on the Australian share market, with investors wiping nearly $100 billion off the value of local stocks.

The market has closed down 7.3 per cent - its worst one-day fall since 1989.

Today, investors took their cue from Asia and Europe, where the FTSE fell more than 5.5 per cent.

Wall Street was closed for a public holiday, and there are fears about what is to come when it reopens tonight.

The plunges comes on the back of new fears the US economic slowdown is spreading across the world.

The All Ordinaries dived 409 points to 5,222 and the ASX 200 slumped 394 points to 5,187.

No sectors have been secure from the hammering.

The miners have been deeply in the red on lower base metals prices. Rio Tinto shed 11.6 per cent to $101.

BHP Billiton dropped 6.9 per cent to $31.

As for the financial sector, the ANZ suffered a 7.1 per cent loss to $24.35.

It has been such a volatile day that the website of Australia's largest online sharebroker CommSec crashed after being overloaded with an unprecedented number of trades on the site as the market opened.
I am looking forward in all my supervillain glee to the response from Wall Street. A 7% drop? Not likely. Somewhere between 3-4% is my guess. And that's not a prediction.

Kevin Rudd wants us to save more

From the department of ho-hum:
Householders could be offered incentives to cut spending and save more of their income as part of the Federal Government's drive to control inflation.

Mapping out a five-point plan to fight inflation yesterday, Kevin Rudd said he wanted to build a national savings culture to help reduce demand pressures which were pushing up prices.

"Providing attractive incentives to save can help take the pressure off inflation, help people save for their future and help lift national savings," the Prime Minister said.

While he did not give details, measures likely to be examined include encouraging higher superannuation contributions and tax breaks for savings.

Mr Rudd also promised to increase the budget surplus to around $18 billion next financial year and to speed up policies to train more skilled workers and get more people into the workforce.
Kev's been in power for a short amount of time. It's too early to judge him for his performances but, I have to say, I'm not impressed as yet.

Rudd wants Australian households to save more money. That's an admirable goal. It's an important goal as well since a) Saving instead of spending will reduce inflation, and b) Australia's household savings rate is not as strong as it should be. As the figures show, Australian Households have been on a borrowing and spending binge for a number of years, and have only in the last 12-18 months begun to reverse that trend. Servicing debt now accounts for about 12% of gross disposable income.

Rudd's solutions, though, are not going to work terribly well. In order for Australian households to increase their savings rate, they need to value money more. In other words, the value of money has to increase in relation to all the goods and services it can buy. This means that inflation has to not just be fought against, it has to be defeated.

A person with money has a choice - they can either spend their money or save it. How each individual makes this choice differs from person to person as some will save more than others while another will spend more than others. This is how markets work, in all their flawed glory. Yet this behaviour will only continue so long as things remain equal - change the equations and the market will change its behaviour.

If the Reserve Bank increased interest rates, it would make money more valuable. That change in the equation will lead a significant amount of net spenders to become net savers. The reason is simple - these people will choose to save their money to increase their personal wealth rather than spend the money on goods and services.

As I have argued many times before, any form of price instability is going to hurt the economy over the long term. Keeping inflation between 2-3% may seem to be the Reserve Bank's prerogative, but any form of inflation will result in cumulative levels of overspending and over-borrowing. If the Reserve Bank increased rates and aimed at keeping the price of money absolutely stable, the result will be a) a slowing economy initially, b) a decrease in the current account deficit, c) increased personal saving rates and d) a more sustainable economy over the long term.

Economics is about balance. A country's government should neither be in huge debt nor be a huge saver; A country's current account should neither be in continual surplus or in continual deficit; Prices should neither drop nor rise.

Of course, Rudd and the Reserve Bank do not consider Absolute Price Stability to be a worthwhile policy, mainly because they are probably completely unaware of it (and probably because I am the only person in the world who seems to champion it). Nevertheless, it is to Rudd's detriment that he does not link high household savings with higher interest rates.

Stockmarket crash occurring now

Australian shares plunged a massive 5 per cent before noon as panic selling set in amongst investors over an expected slowdown in global growth.

The benchmark S&P/ASX 200 share index had shed more than 5 per cent before noon, down 282.1 points to 5298.3 points - its lowest since November 2006 - placing the market on course for a record 12th day of declines. - SMH

This photoshopped image has been shamelessly stolen from Something Awful.


This photoshopped image has been shamelessly stolen from Something Awful.


OSO Weather

Yesterday it reached 33.3°C (92°F) and was stiflingly hot and humid. Then the change came through and it hasn't stopped raining. It's currently 20.0°C (68°F), cloudy and rainy - the perfect antidote for the previous day's heat and suffering.

Brett Lee breaks the 30 barrier

As I type this, Brett Lee's career bowling average is 29.98. Of course, when he resumes bowling again in Perth this afternoon (OSO time) the chances are that he will go above the 30 average again. The fact that he has broken this barrier, though, is important.

As many know, Lee is not my favourite cricketer. He is damn fast and he takes lots of wickets but he has been too expensive. He is, in fact, the most expensive Australian bowler who has taken over 20 wickets in his test career, having an average of 3.52 runs per over taken off him since he debuted in December 1999. He has taken 263 wickets in that time, and all the other bowlers who have taken similar amounts of Test wickets for Australia in that time have had lower averages and have been less expensive (in terms of runs per over).

Lee has, nevertheless, improved in the last 2 years. His bowling since the Australian tour of South Africa in 2006 has been very useful, which is reflected in his cumulative career statistics, which show a steady downward pressure on his bowling average and economy rate for the last few years.

If Lee can continue this performance I'll be happy to change my mind about him, although doubts will certainly remain.


Pakistani troops guarding wheat supplies

From the department of what-is-going-on-here?
Authorities in Pakistan have deployed paramilitary troops to guard wheat supplies around the country amid fears of a huge shortfall.

The Government has blamed hoarders and smugglers for the problem.

Pakistan's national disaster management authority has deployed thousands of paramilitary troops at wheat stores to ensure that store owners do not sell more than allowed by the Government.

However, President Pervez Musharraf says there is enough grain to feed everyone and the crisis has been engineered.
There seems to be enough evidence that food is becoming scarcer. The Economist commodity-price index has noted that the price of food has increased by 49% in the last 12 months. Moreover, The Economist had a recent edition entitled The End of Cheap Food which said:
Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005. No doubt farmers will meet higher prices with investment and more production, but dearer food is likely to persist for years.
Why are prices so high? Part of it has to do with the US Dollar which is used to measure the price of food internationally - with a reduction in value of the US Dollar, food prices will go up normally in response. Yet it seems to be more than that - what is going on? The Economist argues that it is a result of government interference in the food market. That sort of argument is commonly wheeled out in regards to the price and availability of oil.

There is one reason which The Economist has not picked up on: maybe prices are so high because there are food shortages. Maybe global warming has gotten to the point where it has begun to disrupt food production on a global scale.

It is, however, a maybe. I'm not going to run with this argument until I see all the facts, namely reputable sources that outline worldwide grain production. If there is a trend of lower grain production over the years, I would begin to support the "global warming is causing it" theory.

There is one thing that makes me concerned - the fact that the Economist food price index has jumped to historical highs. This either means that food production has slowed or it means that there's some sort of speculation occurring. In the latter case, this will mean high food prices but also increasingly large stocks of food going unsold. If a bubble is forming in the grain market then an oversupply of grain will naturally be the result.

The good news from Australia - one of the world's largest grain exporters - is that our drought is coming to an end. The La Nina weather pattern has resulted in increased rainfall in Australia's South East and, so long as it lasts, it means that our grain growers will be able to produce a bumper crop over the next few years.

Still, there's something scary about soldiers in Pakistan guarding grain supplies.

The Economist has some interesting stats:
Yet what is most remarkable about the present bout of “agflation” is that record prices are being achieved at a time not of scarcity but of abundance. According to the International Grains Council, a trade body based in London, this year's total cereals crop will be 1.66 billion tonnes, the largest on record and 89m tonnes more than last year's harvest, another bumper crop. That the biggest grain harvest the world has ever seen is not enough to forestall scarcity prices tells you that something fundamental is affecting the world's demand for cereals.

Interesting, but not accurate. I've just downloaded the latest report that the Economist uses for its figures. It is available here. Yes the estimation is 1.66 billion tonnes which is probably a record. Yes it is 89 million tonnes more than last years harvest, but last year's harvest was not a "bumper crop". The International Grains Council reports that last year's figures were 1570 tonnes, the year before was 1602 tonnes and the year before that was 1649 tonnes. What this indicates is that grain production has been declining since 2003 - although the IGC is probably right when it says that this year's crop will be a record. In other words, international grain production has dropped for about 3 years in a row before the bumper crop this year. What is missing is the cause for this drop. I wish The Economist was accurate in its reporting here.

The Church of Dunbar

In the past I liked big churches. The bigger the better thought I. Large amounts of people both bring in the cash as well as provide more opportunities for efficient use of resources. I once attended a large church (700-800 people) for some ten years.

Now I don't like big churches, and the reason is biblical. The pastor of a church needs to have a relationship with those he ministers to - and by that I mean some level of relationship whereby a person has had a one-to-one conversation. The larger the church, the less likely it is that he can minister to them effectively at this level.

Titus 2.7-8 says Show yourself in all respects to be a model of good works, and in your teaching show integrity, dignity and sound speech that cannot be condemned.... These words were written about church leaders, and the idea of modelling godliness is something which is integral to those who would be pastors. If there are people in your church that you cannot "model" your godliness to, then that is a problem. Pastors therefore have a dual role in teaching - they teach in word as they preach, and they teach in action as they relate to people.

The problem is that the bigger the church (in terms of numbers of people), the less chance the pastor has in relating to people. Moreover, in modern churches there exists a "bureaucracy" of leadership whereby lower level leaders have the opportunity to "relate" to the ordinary church-goer while all the pastor needs to do is to "relate" to his staff and lay leaders. This is dangerous because it means that, firstly, the pastor does not understand or relate to ordinary church members, and, secondly, that those he does relate to are those who depend upon him for their position. In other words, the larger the church and the bigger the leadership bureaucracy, the less likely it is for the pastor to model good works and the more likely it is for ungodly leadership to develop.

Big churches also pose a problem in terms of relationships. The bigger the church, the more potential relationships develop. Moreover, this increase in relationships is exponential. The amount of relationships that can occur is determined by the formula r = P x (P-1), whereby P = the amount of people. So, in a group of 5 people, a total of 20 relationships can be formed. In a church of 50 people, 2450 relationships are possible. In a church of 100 people, 9900 relationships are possible.

Of course, what all of this indicates is that the greater the amount of people, the more difficult it is for people to maintain the relationships they have and the harder it is to initiate new relationships. Bigger churches thus allow people to come along and be anonymous - in other words, relationships between people become more difficult the more people there are.

And this is where Dunbar's number comes into play:
Dunbar's number, which is 150, represents a theorized cognitive limit to the number of individuals with whom any one person can maintain stable social relationships, the kind of relationships that goes with knowing who each person is and how each person relates socially to every other person. Group sizes larger than this generally require more restricted rules, laws, and enforced policies and regulations to maintain a stable cohesion. Dunbar's number is a significant value in sociology and anthropology. Proposed by British anthropologist Robin Dunbar, it indicates the "cognitive limit to the number of individuals with whom any one person can maintain stable relationships". Dunbar theorizes that "this limit is a direct function of relative neocortex size, and that this in turn limits group size ... the limit imposed by neocortical processing capacity is simply on the number of individuals with whom a stable inter-personal relationship can be maintained." On the periphery, the number 150 also includes past colleagues and high school friends that a person would want to reacquaint themselves with if they met again.
This quote (from Wikipedia) basically points out what we know in practice - that relationships become more difficult the bigger the group becomes.

I have two sorts of relationships - I have relationships with those at church and relationships with those who don't go to my church. It would be very strange if a person's circle of relationships were limited to church members (although this is probably common practice amongst cults).

We need to remember that a church is a community. Moreover, we need to remember that there are physical limits to the amount of relationships individuals can effectively maintain. If a church becomes big, the sheer amount of people will actually hinder the natural love that can be fostered within the group.

If we take Dunbar's number as being correct, and if we understand that each person has a web of relationships that exist outside the church, and if we understand the need to welcome newcomers properly into our midst, then what do we come up with?

Dunbar's number is not a biblically determined number. Even Dunbar himself would have argued that the 150 number is merely arbitrary and that other determinants like culture and age might influence it.

What Dunbar's number confirms for us is that large churches are not as good for the gospel as we might wish to believe. While tiny churches have problems of their own, we probably need to recognise that churches become ineffective at developing quality relationships once it goes beyond a certain size. Moreover, because relationships become less effective as the church grows larger, you could also argue that the church's ability to communicate the gospel to unbelievers is similarly affected.

Why is it that McDonalds doesn't have a regional restaurant? Why not have a mega McDonalds rather than one very few suburbs as they do now? I would probably hazard a guess that the strategy McDonalds has has worked out that smaller restaurants spread across many suburbs is more profitable than having one large regional restaurant - even if the large regional restaurant is impressive in and of itself.

In the same way we also need to realise that churches should have an "upper limit" that is not just determined by building size, but also by human relationships. The way the New Testament shows us is that pastors need to have positive relationships with church members in order for them to model godliness. While the NT doesn't give us Dunbar's number as a clear line not to cross, it is clear that anything which hinders both the pastor's natural relationships with his church members, and the church member's ability to relate to one another, would constitute a direction in which the biblical commands would be harder to keep.

In other words, the larger a church becomes, the harder it is for a church to maintain itself in a godly way. Churches should therefore seriously consider planting new churches once they reach a certain size, rather than moving into bigger buildings.

Ray informs me that my maths is wrong and he should know since he is a maths teacher. The formula should be r=(p x (p-1) ) / 2.

Daily Kos and the Democrats

Daily Kos was not always my favourite left-wing blog site. The main reason was that they were partisan - they were supporters of the Democratic party. Since I consider myself an independent centre-leftist who hates political parties, Daily Kos always seemed too pro-Democrat for me.

These days, however, I quite like Daily Kos. Like many leftist blogs, Daily Kos spends a lot of time complaining about the state of the nation under the incompetent Republicans. But what I like about Kos is that they also wish to reform their own party and are not unwilling to criticise the Dems for corruption or fecklessness. They are also good at using the political process to change the party:
Let me lay out the brutal reality for you guys:

Few people in DC care what we think.

Yeah, yeah, big shock, what with one Democratic capitulation after another last year. That was pretty much the tip-off.

But the bottom line is that we can't buy them off with lobbyists. And let's face it, we're not going to vote Republican or even stay home on election night. And given that they're in their nicely entrenched gerrymandered districts, they have little fear of electoral repercussions from the other side.

Pretty bleak, huh?

But we have one tool available at our disposal -- the primary system. Nothing screams "pay attention!" than the thought that their actions might cost them their seat. In the past, such primary challenges were rare. The party establishment takes care of its own (witness Nancy Pelosi fundraising for the corrupt Al Wynn). But we're starting to build the infrastructure to seriously give bad Democrats a run for their money. And while we must focus on election more Democrats in November, we also have to begin the process of getting rid of the bad Democrats.
Of course, what Kos is actually doing is trying to unseat a Democrat in congress they don't like (Dan Lipinski) with a Democrat they do like (Mark Pera). According to the rest of the article (link provided above) Lipinski is politically conservative but also rather corrupt. Kos has targeted Lipinski's congressional seat (IL-03) and is asking Kossacks to support the primary process to ensure that Lipinski is kicked out while Pera becomes the official Democratic candidate.

It's all very unpleasant but at least they are doing it transparently and within the realms of the political system. As Kos said, they don't have the money to buy people off with lobbyists (which is a good thing).

Kos, and other liberal blogs, are progressive, and they see the Democratic party as the best current place for progressive politics to be in. They could try to set up their own political party, but working within the Democratic party ensures that they can have small, incremental steps towards progressivism.