Carbon pricing:

Gavin R. Putland writes: Re. “Essential: Labor cops a hammering over “broken promise” on carbon pricing” (yesterday, item 2). Labor is getting a “hammering” on the carbon tax because of two elementary political blunders.

The first blunder was to announce a great big new tax without abolishing at least two great big old ones. Among existing federal taxes, the two most obvious candidates for replacement by a carbon tax are fuel excise, which has the most similar base, and GST, which has a similar tendency to feed into prices. A carbon tax at a sufficient rate to replace both would not cause any overall rise in prices and would massively reduce compliance costs. That’s a sure political winner.

The second blunder was to grant a free kick to climate-change deniers by justifying the new tax solely in terms of climate change. When I was an undergraduate, we worried about burning fossil fuels because they were a finite and irreplaceable resource.

When I was younger still, we worried about the combustion products, not because they warmed the planet but because they threatened human health. But lower-carbon fuels are less dangerous to health because they burn more completely, with less carbon monoxide and particulates. Put those pieces together and you get an argument for taxing fossil fuels in proportion to their carbon content regardless of climate change or lack thereof. That’s as sensible an argument as could be made for almost any other tax.

Oh, yes, the GST is theoretically more competitive than a carbon tax because the GST has a destination base, not an origin base. I’ve acknowledged that problem elsewhere and even offered a solution. Politically, however, the whole destination-vs-origin argument is a yawn — as is shown by the survival of the biggest tax of all: the origin-based income tax.

And yes, my list of blunders deliberately omits the broken election promise, which would have been instantly forgiven if Gillard had announced the demise of the GST.

Niall Clugston writes: Bernard Keane continues his political climate denialism despite the evidence he is reporting.

Take the statement:

“Voters have long indicated they want to see action on climate change — one of the reasons why Kevin Rudd’s support vanished so quickly when he walked away from his CPRS.”

Really? Keane needs to take off his emerald-tinted glasses and realise that only 11% voted Green in the last federal election. Oh, I can already hear the chorus telling me that the environmentally conscious don’t all vote Green. But if they abandoned Labor and didn’t vote Green, who did they vote for? The “Climate Change is Crap” Coalition?

The general public wanted action on climate change when they saw it as hugging polar bears. Since controversy has ignited, this mass support has melted faster than the glaciers.  Australians don’t all live in the Emerald City, or even Melbourne Ports.

And Rudd didn’t walk away from “his CPRS” anyway:  the saintly Greens voted it down!

Nigel Brunel writes: CO2 may be invisible to the naked eye but you would have to be seriously blind (deluded) if you think a price for carbon into the economy can be injected into the economy and it won’t raise prices. That’s what it’s designed to do. Now — can every one move on and bring it in so we can adjust to the impost and make the necessary changes that it is designed to make. Good grief!

Downloading:

Paul Hampton-Smith writes: Re. “Data download: lies, damned lies and piracy reports” (yesterday, item 4). The recording industry only really started to hit its straps when vinyl records were introduced in the 1940’s, giving it a lifespan of less than 70 years. Before then, if you desired to have an “orchestra playing in the lounge room” (as per advertising hype for hi fi systems), you hired an orchestra!

Likewise, movies have not been around for long in the scheme of things, although they have had a longer gestation. Silent movies came into vogue in the 1900’s (interestingly, often accompanied by live musicians).

So the ability to make squillions of dollars with a single copyrighted audio or visual recording occupies a tiny blip in the history of music performance and theatre.

What we are seeing is an overdue adjustment back to selling the occasion of watching and listening to something live. In Adelaide right now, the combination of Festival, Fringe and Womadelaide is pulling in direct revenue to performers in the tens of millions over a period of three weeks.

Many attendees will have in their pocket an iPod storing hundreds of pirated songs, but they are clearly willing to part with money for music and theatre when it delivers a live experience of that calibre.

UN’s Human Development Report :

Robert Johnson writes: Re. “It’s official: Australia is the No.1 place to be” (Friday, item 16). Damian Kingsbury’s article concerning the UN’s Human Development Report (which, if my memory is correct, Richard Farmer reported well on at the time of its release four months ago).

Kingsbury perhaps reasonably equates standard of living with that report’s Human Development Index (HDI), in that it has — since the first publication of that annual report in 1990 — moved beyond simply measuring progress in terms of income per capita as per the World Bank’s longer-running annual World Development Report. But the perennial concern with the HDI (perhaps confusing to the reader of Friday’s article in moving between the “index” and broader “human development indicators”) is that of how it is used.

Which of the most affluent countries is top of the pile in a publication aimed to assist development planning seems to me to be a moot point. Nevertheless, Norway — not Australia — remains in that position; by 1995 Australia was ahead of Norway and not “approaching” it (from the UN table that Kingsbury refers to, it would seem that Australia lost its edge over Norway during the period starting with Howard’s Prime Ministership and may now be improving its comparative position); Ireland is ranked 5th (not 4th); and progress in UN statistical systems means that the 2010 indicators are 2010 estimates, and not the two to three year lag time of earlier years’ HDI tables.

This latter point still means, as Kingsbury says, that the effect of recent disasters in Australia is not factored in, but I’m not sure whether this will raise or lower such measures, given likely boosts to public expenditure and associated employment and consumption by recovery efforts  and the limitations or quirks of GNI/GDP measures.

Also, it is important to clarify that one value of the HDI has been that it has remained a composite of a small number of the core and more ‘causal’ development indicators: life expectancy, education and income per capita, so that it is only “longevity” and education that are factored into the HDI from amongst Kingsbury’s “complex range of factors, including income distribution, longevity, infant and maternal mortality rates, education, crime rates, natural disasters and so on”.

The situation in sub-Saharan African countries is — as Kingsbury points out — “all but unbelievably bad”, although the primary factor in that region’s infant mortality and life expectancy data has been AIDS rather than wars, and such data are showing promising signs of improvement, mainly due to improved access to drugs, improved rates of HIV testing, and improved awareness by younger people of safe sexual practices.  This includes Zimbabwe, which, as Kingsbury notes, has the lowest HDI in the world.  This is overwhelmingly due to its economic situation, as its other HDI components (AIDS-related life expectancy and education rates) are not significantly worse and in some cases better than many of its neighbours.  There is even a chance that Zimbabwe’s HDI is on the rise: improving in 2010 more than any of the other 168 countries, albeit from an alarmingly low point in 2009.

However, the importance of the latest (2010) HDI data is not whether Australia or Norway is the “best” country to live in (and, to be fair, this may not have been Kingsbury’s main concern), but the progress in statistical measures of inequality that have, since the early 1990s, been mainly confined to gender inequality.

Measuring inequality certainly drives a wedge between Australia and Norway, and Australia does not fare so well. The political and policy failure of governments, UN agencies, and international donors alike to grapple with increasing income inequality is likely the greatest development failure, mainly thanks to the combination of the continuing effects of World Bank/IMF ideology of the 80s and 90s, the character of quasi-democratic regimes in newly independent countries, and the crony capitalism of private foreign corporations entering vulnerable and/or opportunistic resource-rich states.

The stronger focus in the 2010 HDI report  on measures of inequality is therefore an important development, and better places inequality at the core of analysis and policy responses to poverty and under-development.  Countries with high rates of inequality – including Australia, notably on income-based inequality == do not fare so well on such an analysis (Norway and Australia diverge on inequality data).

I’ve just read this in a leading international development journal (abstract available here):

“The first thing people do when they get hold of the Human Development Report … is not to read the executive summary on the particular topic of the year.  Most look first at the HDI league table and compare the position of their country to previous years and other countries.”

Hopefully, the stronger inequality data for countries will be of more policy utility than looking at where a country sits on a global list.  Although, I’m also interested in such things, as I presently live in Namibia which has an income inequality rate much higher than any other country in the world (well entrenched at the top of the global list of national measures of the Gini coefficient), in a country deemed stable and democratic and with a wealth of natural resources such as diamonds, copper and uranium.

The capital, Windhoek, has a standard of living up there with many western cities, and the chronic poverty of the more remote populations is well concealed by national measures of human development like the HDI. But the same is true of Australia and a number of other countries at the top of lists of “standards of living”.

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