Niall Clugston writes: Re. “Our commodities caught in China’s inflation cycle” (yesterday, item 21). I hope the Chinese government gets better advice than that offered by the Business Spectator‘s Karen Maley.

The fundamental flaw in her argument is treating China as if it is a standard advanced capitalist economy. While obviously inappropriate, this is the only type dealt with in economics textbooks. From this her argument builds with mechanical predictability: inflation is up; therefore the government must raise interest rates. She dismisses any other measures, even though the government retains the control structures of a command economy, because these aren’t in the textbooks.

As Maley notes, the Chinese government is worried that a rise in interest rates will trigger mass bankruptcies and, through appreciating the yuan, make Chinese exports less competitive. But she doesn’t seem much concerned about sending the world’s largest country hurtling into depression.

“The worry is that the longer the Chinese government delays raising interest rates, the more aggressive the tightening will eventually become, which could cause a huge slump in commodity prices.”

Apart from the slightly contradictory nature of this advice — raise rates or else you’ll have to raise rates — the thing to note is the conclusion: “And countries such as Australia, Brazil and Russia which have benefited from surging commodity prices would face a steep slump in their export earnings.”

That’s right:  it’s all about us.


Marcus L’Estrange writes: Re. “Measuring the ‘crises’ in health and education” (Wednesday, item 2). Bernard Keane quoted The Age‘s Kenneth Davidson who wrote: “There is a crisis in public education and the policies of Prime Minister Julia Gillard and Premier John Brumby are making it worse.”

However Kenneth Davidson has missed a key point why so many parents prefer non-government schools. They and a large number of my state school teaching colleagues do so because what they are buying are not better teachers or a different curriculum but a peer group that values education plus the absence of disaffected or disruptive students who are allowed by Minister Pike (e.g. ‘The Victorian Government’s Student Engagement Guidelines’) and the AEU policies to spoil the learning environment of good working class state school students who want to learn.

State Labor (Labor Unity faction) handed over control of state education to the Socialist Left and their fellow travellers in return for LU faction gaining control of the key portfolios of Treasury and Finance. The EL’s control of state education had lead to the current parlous situation. Additionally, the Coalition (and LU) knows that there is no better way of residualising state education than to let the EL run it.

If Kenneth Davidson wants to save state education it would be much better for him to help remove the Educational Left (the AEU, the ALP Socialist Left / Socialist Forum) control of state education and their reigning philosophy of Edubable (automatic or social promotion, no meaningful sanctions against bad behaviour and non-performance of set work, no intelligent streaming with each year being a ‘cage for an age’). Then and only then will good students and funds pour back into the once great State system.


Dave Horsfall writes: Alex Jurkiewicz (yesterday, comments) rants about Crikey folding “like a pack of cards when Boeing politely asked you to take down the A380 pics[…]”.  Perhaps I’ve missed something, but what exactly does Boeing have to do with the Airbus A380?  Perhaps he meant the 787 Dreamliner which caught fire?

Climate change:

Tamas Calderwood writes: Wil Blackburn (yesterday, comments)  assumes that because the world has been on a warming trajectory for the past 130 years, this warming must be man-made.  As evidence he points out that latter years are generally warmer and that the 00’s were warmer than the 90’s, which were warmer than the 80’s.

The UAH satellite temperature data show that the 00’s were 0.17C warmer than the 90’s, which in turn were 0.1C warmer than the 80’s.  They also show 1998 was the warmest year (again, ignoring the Medieval and Roman warm periods, and multiple other warm peaks during the past 8000 years).

This means we’ve had a single warming spurt, from 1975-1998, in the past 70 years (given that it cooled from 1940-1975).

How is that a crisis?  And why do we assume humanity’s 4% share of CO2 caused the one warming spurt that we’ve had since WWII?

Peter Fray

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