Qantas inflight news:
Qantas Executive Producer Inflight Entertainment Michael Freedman writes: Re. “Qantas: Big Brother or nanny jet?” (yesterday, item 22). Qantas provides news to our passengers in a range of formats. We load seven different daily newspapers and a range of news magazines in their entirety every day on our aircraft. The Nine Network produces 22 news bulletins for Qantas each week. The bulletins vary in length from 10 minutes to 25 minutes.
There is no specific agreement to reject any news story critical of Qantas and we generally accept content exactly as prepared by Nine for its own news programs. We do, however, reserve the right of editorial veto, which we believe is reasonable given our news is tailored towards a wide range of customers, from young children to older adults.
Qantas does not seek to influence Channel Nine’s on air content. We do exercise this right of veto for items we believe may distress or offend our passengers — for example, aircraft accidents or threats of aircraft related terrorism, regardless of which airline is involved. This is particularly important given that on a large number of our services, where the news is shown on the mainscreen for all passengers, they do not have the choice to change channels or leave the room!
Gavin R. Putland, Director, Land Values Research Group, Prosper Australia, writes: Re. “The little recession that couldn’t” (yesterday, item 1). In the latest National Accounts spreadsheet from the ABS , the column that everyone watches is headed “Gross domestic product: Chain volume measures – Percentage changes … Seasonally adjusted”, and declares that growth for the last two quarters was -0.6% and +0.4%.
Two steps to the right is a column headed “GDP market sector: Chain volume measures – Percentage changes … Seasonally adjusted”, in which the figures for the corresponding quarters are -0.3% and -1.4%.
That represents not only two consecutive quarterly contractions, but a YEAR-ON-YEAR contraction of 1.1%. This column presumably should, and usually does, roughly agree with the first one. But the discrepancy for the March quarter is 1.8 percentage points — the biggest since December 1982, i.e. since the recession that finished Malcolm Fraser.
A further six columns to the right, we find changes in GDP at current prices. If we adjust these for the CPI (ABS 6401.0), the results for the last two quarters are +0.1% and -0.7%. That’s an expansion followed by a contraction, whereas the first column has it the other way around.
My point? In these exceptional times, official statistics are too noisy for anyone to say with confidence whether GDP contracted in two consecutive quarters. Concerning that “two consecutive quarters” definition, suffice it to say that if the “official” GDP had been 0.5% higher in Q4 of 2008, it would have shrunk 0.1% in each of the last two quarters, and the headlines would be screaming “Recession confirmed” although the economy would have performed better than it did!
In short, I have not seen anything to change my view that (a) the economy is sick because property prices have fallen from absurd heights, (b) prices have further to fall, and (c) the various stimulus measures to date have merely delayed the inevitable.
Thomas Finney writes: Re. “Ask the economists: we’re ahead of the curve” (yesterday, item 2). I’m absolutely dumbfounded with Steve Keen’s assessment of the national accounts. He not only has his facts wrong, he also doesn’t understand something quite fundamental: the difference between nominal (measured in dollars) and real quantities (nominal adjusted for changes in prices).
First of all, in nominal and real terms, public gross fixed capital formation (government investment) fell (seasonally adjusted). He argued that government investment was a factor in boosting the growth numbers, in fact, it was the opposite. Most of this investment probably won’t affect the national accounts until the June quarter at the earliest.
Secondly, while he does correctly refer to some trade data, they are in nominal values. Most undergraduate economics students are taught that nominal values can fall even if real production rises. The difference is a larger fall in prices for the goods and services produced. This is exactly what happened with exports. The nominal value of exports fell, but this was due to a large fall in prices (reflected in commodity prices and as a result we experienced a large fall in our terms-of-trade). In fact, our volume of exports rose, which is somewhat remarkable in this global economic environment. In fact, prices did exactly what you would hope they would do in well functioning markets.
Steve Keen’s understanding of economics is most likely surpassed by some of the better undergraduate economics students in the country. I think it is about time the media realise that Steve Keen is not a real economist, he rarely publishes his papers in journals peer reviewed by other economists and to get the difference between nominal and real quantities wrong is so fundamentally concerning, it is an indictment on the Australian university system that it awarded him with a PhD and then hired him and let him infect the minds of many economics students.
Crikey is just giving this man more attention than he really deserves. It is really disappointing.
Les Heimann writes: Actually the Australian Economic Report Card as read by Bernard Keane is wrong and the one read by Steve Keen is right! As usual we are obsessed by meaningless figures — because the “economy” rose by 0.4% we are not in a recession and, as Bernard Keane says — congrats to all for avoiding doom.
Steven Keen, on the other hand, is absolutely spot on (once again) when he points to the fact that if imports had not decreased by twice the amount of exports we would have figures that show us in economic decline. Which of course we are!
Importing less is good because we owe less; it is also bad because it shows we are not tooling up and we are disinvesting in growth. We are in fact — repeat “fact” — an economy in decline. We will see a substantial increase in unemployment which will in turn cause a reduction in demand which will in turn further weaken the economy with further disinvestment. etc.
I found it quite fascinating to read Keane vs. Keen seemingly at completely opposite ends of the spectrum.
Keen winner of Round One. I can’t wait for Round Two.
Guy Rundle writes: It took me a while to work out what Gideon Haigh’s point was (yesterday, comments) about my piece on GM, mainly because I keep forgetting what “belies” means. GM may have been failing for decades in terms of efficiency, innovation etc, but that isn’t a long cycle. The test of a system is how it deals with the tough times, not the fat years. In the latter everyone gets rich, and good or bad management doesn’t matter. Nor does corporate morality and bastardry, a factor important only to liberals, who believe in the possibility of a virtuous corporation.
My point was not that GM was inefficient or ruthless — it was that the working assumption of American capitalism since Reagan, that social and economic infrastructure can be increasingly off-loaded to the private sector, privatised and marketised — is the great and original failure. As George Soros noted, this shift from investment, infrastructure and social plant and capital in the west, to economies dependent on imports, consumption and financial instruments is a “super-bubble” of 30 years duration, of which the most recently burst bubble was mere subset.
The social democratic economies are less affected by this because the social and economic structure offers a firmer base by which people can live their lives — health care, home occupancy, urban functioning are less affected, so individual corporations can be allowed to fail (the Saab example) without that failure creating a domino effect. Saab’s management may be no better or worse than GM’s — but their failure is not going to tear a hole in Sweden the way GM’s failure will tear a hole in Michigan and surrounding states.
It’s obvious to any fair-minded person that the northern European societies offer a degree of social and economic stability, together with a sufficient degree of economic freedom, and unparalleled levels of political freedom, transparency, and the same liveliness, opportunity etc. The one failure has been Iceland — which was the only northern European society consistently run by right wing parties for the past 15 years, on a neo-liberal model.
So as I said, I reckon the debate is over. And that may prove to be the most important result of the current global economic crunch.
As to the “good for GM good for America” quote, I’ll take that on advisement.
Dave Long, in the once-ruined Seoul, writes: Allow me to assist Gideon Haigh in giving the never-knowingly-underwritten Guy Rundle some more of a kicking. Rundle’s screed on GM waffles on as if he feels some national duty to impart his deep knowledge of Swedish socialism as if we, Crikey‘s clearly (in Guy’s mind) dopey readers, have never grasped/read/understood that Scandinavia existed, let alone its economist-sociologists contributing to the vast ocean of global economic thinking. Odd, given Guy’s obsession with Sweden, that his opening stanza muses about visiting “Finland’s Ice Hotel.” Any Laplander worth his or her salted icefloe knows that the famous Ice Hotel is in, err, Sweden.
And as for Guy’s confident assertion that Detroit is the world’s “first modern urban ruin” there are a good few Pittsburghers, Glaswegians, Baltimoreans, not to mention the denizens of those myriad industrial centres of the former USSR and empire — many named after Guy’s lefty heroes like Togliatti — who’d beg to differ, and while doing describe how they were able to re-generate their abandoned “Brownfield” cities.
Dr Rosemary Stanton writes: Re. “Where is the evidence that junk food ads make kids fat?” (Yesterday, item 14). Chris Berg repeats the old line that there is no proof that advertising has any effect on childhood obesity. There is indeed proof that most of the foods (and drinks) advertised are what the public calls junk food. There is also proof that these ads increase during programs watched by children. There is also proof that as kids have grown fatter, their consumption of these same junk foods and drinks has increased. And I think we can assume that no rational food company would spend millions of dollars on advertising if it did not increase sales of their products.
We can’t produce absolute scientific proof that advertising causes obesity because that would involve comparing a group of children who are similar to another group of children in all ways except that one group is subjected to advertising and the other group is not. Such groups are not available anywhere on the globe.
Frankly, I need no more proof that advertising works than the continued outcry from those with vested interests at any suggestion it should be banned.
Michael James writes: Re. “Indian students on racism: a Crikey voxpop” (yesterday, item 14). One of the most amusing and revealing moments in the UK comedy show about Indian migrants, The Kumars at Number 42 was as follows (from memory):
The extended Kumar family are sitting around their living room in the evening drinking tea. The living room is at the very front of the house, with windows on the street. Suddenly a brick is hurled through the glass window landing in the middle of the living room.
It has a message tied to it. Someone reads it aloud: GO HOME PAKIS.
Deathly silent pause for several seconds, then … the Kumars unanimously acclaim agreement: “Oh yes, that seems only fair…”