And the Chicken Came Back

I've been worried about the chicken this weekend. Ever since the King's chicken died I've been much more aware our chicken's mortality. One day I just she'll die too. It makes me very sad. She's 10 years old we think. And such a trooper. She reminds me a bit of Bec.

But she came back this afternoon and I was very happy. Good old chicken.

I’ll show you my capital returns curve if you show me yours

One of the reasons people think that lending money to poor countries is such is a tremendous idea is because of this diminishing marginal returns thing. When we draw our returns to capital investment curves we always bend them over at the top to show that there's only so much machinery that's actually useful. After a while you can't fit any more machines in your factory, and even if you could you couldn't find any workers to drive them, because they're all at the beach or something spending their fabulous wealth. People look at the bend at the top and say that since it's bendy like that it's better for us to stop trying to stuff more machines into our factory, and instead buy some machines for countries with empty factories - like Bangladesh and Bolivia. These folk reckon that if we give them machines to put in their factory and make them promise to give us some of the t-shirts they make when they make them, then it works out good for everyone. They get more machines, and we get more t-shirts. And who can complain about that?

It all seems rather wonderful, except that as it turns out even though the bend says that our factories should be stuffed full of machines, they actually aren't. There's still plenty of space for more machines, and plenty of hardworking young wage slaves to drive them. And to confuse things even more, we've found out that Bangladesh and Bolivia, who we thought had all these empty factories, actually don't have any factories at all. So even if we gave them machines, they'd get wet when it rained. And it rains a lot in Bangladesh and Bolivia. In fact they sometimes get quite bad floods.

So we go back and look at our curves and try to work out where the bend should really be. It turns out we'd put the bend in too low. It should be much higher. We don't even know how high actually. What's more confusing, is that Bangladesh and Bolivia don't have the same curve as us. It's possible they have different curves from each other. We don't know where their bend starts either, or even which direction it goes. So we whilst we're not going to start drawing straight lines, or anything as radical as that, we're probably going to stop sending our machines all that way. Especially since they never sent us those t-shirts they promised us last time.

Although it may not seem like it, this sort of explains why I think foreign aid might sometimes be better than foreign investment. i.e., let's just give them some of our t-shirts to keep until they can build some factories to keep the rain off their machines

The Problem with Trade and Debt

One of the key problems of sovereign debt is the problem of trade barriers. Countries borrowed money on the understanding that they'd be able to pay it back by exporting stuff to the countries they borrowed it from. In fact that is the whole point of international lending. The countries themselves are meant to benefit, and some of those benefits they give back in the form of exports (or money from exports). They didn't count on all the crazy trade barriers than the US and Europe have put up. So the poor countries can't export. And the rich countries are not being paid back and the debt is getting bigger and bigger.

The problem with international lending is that the lending is done by the rich, but the costs are paid by the poor. After lending happens, exports in poor countries grow, industries in rich countries go bankrupt, wages in the rich countries fall and the poor in rich countries suffer. The rich in rich countries are happy because they can buy the stuff they love cheaper, and they're getting money coming in from interest repayments. International lending creates a structural flow of wealth that can only be balanced out by making the rich more rich and the poor even less rich. So the poor resist. The rich governments put up trade barriers. The poor in poor countries suffer. The poor countries borrow more. The rich bankers get more interest. The poor in poor countries suffer. And it goes around and around.

The whole fantastic mess is why we need massive compulsory superannuation. Align the interests of the rich and poor in the rich countries, and the poor in the poor countries will stop getting sandwiched in the middle.

Seditious Jon

As the Australian Constitution does not give the Commonwealth Parliament explicit power to make laws with respect to terrorism, the states have referred their legislative powers to the Commonwealth to support comprehensive terrorism offences at a national level. As part of the reference of power agreement, the Australian Government is required to consult with the states and territories on amendments to the terrorism offences. It has also undertaken to consult states and territories on listing terrorist organisations, including the provision of information on the activities of those organisations. Australia's preparedness and prevention capability - Counter-terrorism legislation

What travesty! Jon Stanton actually using his constitutional power to foster public debate. Publishing Federal drafts he was asked not to is surely "contempt for the Government of the Commonwealth". If he isn't guilty of sedition then who is?

I found this little snippet also. The (a) part is related to violence against people or property, but the Liberal Party's behaviour towards the States certainly seems to fulfill (b) and (c). All they have to do now is starting making threats against Jon Stanton's personal safety and the Federal Government will be guilty of a fair dinkum "terrorist act" pursuant to subsection 100.1(1) of the Criminal Code Amendment Act 2004.

(a) .... [refer to subsection (2) and (3)] (b) the action is done or the threat is made with the intention of advancing a political, religious or ideological cause; and (c) the action is done or the threat is made with the intention of:

(i) coercing, or influencing by intimidation, the government of the Commonwealth or a State, Territory or foreign country, or of part of a State, Territory or foreign country; or (ii) intimidating the public or a section of the public.
Criminal Code Amendment (Terrorist Organisations) Act 2004: subsection 100.1(1)

In theory talking positively about "terrorist acts" makes me guilty of a "terrorist act". Which means my organisation is a "terrorist organisation". Which presumably makes me a "terrorist". And if I'm a terrorist, then actions I take must be "terrorist acts", which is what I said in the first place. That's reassuring, because it's important to have more than one source of evidence when you're accusing people of something serious like terrorism.

I believe quite firmly that the role of official definitions (and any sort) is to narrow the meaning of words and phrases, not broaden them to incorporate virtually anything you can imagine. The usefulness of a definition is almost entirely in what it excludes. For example I think it would be good to have different phrases for planning and carrying out politically-motivated massacres of civilians, than we do for talking positively about politically-motivated damaging of private property that will never happen. Maybe the line gets blurry at some point, but it definitely exists. It would make me very sad indeed if no one was able to tell the difference.

Once all this is over, it will be "sedition" to go to a public demonstration that isn't legal. To be sure, I'll be attending every unauthorised demonstration I hear about. I want to get me some of the seditious intent. It will be something to tell the grandkids. Or at least I sincerely hope it will be.

So Much Bread

Mum and I have so much bread at the moment. It's brilliant. We had a bagel and croissant for breakfast this morning, and there are still three sour dough loaves left and other bread left too. I'm finding that deciding which to eat for lunch is a little overwhelming. It's already 3:48 and I haven't starting making it. But gee will it be grand when I do.

And also, I won two of my three chess games at Rough Edges last night. I sured showed those old, homeless guys who was boss. Rough Edges is so much fun. I chatted to a guy last night for ages about how Australia is being invaded by black muslims. I invited him to start going to mosques with me to attempt to inform ourselves and talk with some muslim folk to see if they really do hate everyone as much as the government says and if they do hate everyone to find out why they do so that everyone can stop doing whatever it is that is so annoying. He wasn't that keen on the idea.

Paying Tax is Great

It troubles me that the discussion of the appropriate income tax rate for Australia has become so dominated by what is internationally competitive. Apparently we no longer decide how much tax we'll pay by working out the sort of society we want to live in. In the past some have decided to have friendlier governments at the expense of higher taxes, and others have chosen less friendly governments. I've always been quite sure I wanted to live in a country with a friendly government that didn't let people die of cold and starvation. It's never seemed like the sort of thing anyone would want, even if letting those people die did reduce the tax bill. Particularly since I don't even think there's much evidence to suggest that high income taxes reduce growth. The very mildly higher growth of the United States, hasn't benefited many of its citizens and has arguably mostly come from American military intervention in virtually every poor country on the planet. I don't think the United States is compelling evidence for lower taxes.

How is it that the Scandinavian countries have had very similar growth rates and unemployment rates for decades and yet they have tax rates often double those of Britain, Australia and the United States. Tax levels don't influence how much stuff society has nearly as much as what sort of stuff society has. Plasma screens or schools.

I don't care if Australia is "internationally competitive" in taxation. But maybe I'm just confused. After all, we are no longer a society, merely an economy. The annoying thing is, I must have been concentrating on something else when we our society turned into an economy, because I really have no idea when it actually happened. Otherwise I certainly would have done something to stop it.

I Have Money Problems

I've been thinking a lot about debt lately. It's such an ugly thing when it goes wrong. And I think that debt repayments are one of the most tragic things happening in poor countries and the moment. I have to write an essay about why Latin American countries didn't join together and collectively default on their debt. It would be so marvellous if they were able to. They are all in far better shape than they have been for a long time, bar the odd socialist revolution which was typically a vast but short-lived improvement. I was wondering how they could do the default so that they didn't get cut of from foreign lending. A major part of the problem appears to be the bankers cartel, who apparently have all agreed to refuse loans to any country that defaults on its current debt. But I reckon that if the five of the largest Latin American countries banded together and agreed to guarantee each other's debt, then they could approach bankers one at a time and offer to collectively default in return for a large loan program.

A collective default would be a huge impact on the international financial system regardless of the response of the bankers. I seriously doubt that bankers could afford to stay out of Latin America, if the five or so countries were able to make a convincing case for their future. And even better, instead of IMF economic adjustments, you would have mutual accountability. Any of the five (or so) countries that shifted towards authoritarianism would be pressured by the other five countries to shift back. It would eliminate the conflict of interest that the IMF has. It is has to foster international financial stability, but also to "help" countries in need. Normal self-interested national policy will not always foster international stability, as the US has proved, so the IMF has an impossible conflict there and shouldn't manage both tasks. The IMF should definitely not be advising both the international bankers and the debtor countries.

Bankers are not stupid. They must understand that loans made during the last 50 years have not contributed to growth. When the loan money was stolen, the banks were ripped off as well as the countries from whom the money was taken. Except the poor countries have had to cover the losses of everyone. For that and other reasons, I'm not particularly upset that the banks have lost out, but surely they must see that their loans were foolish. I would think they thank god daily that they haven't yet been forced to pay for their stupidity. I think even the most mentally impoverished banks will understand that they have a much better chance of being repaid loans that generate economic activity than they do loans used to buy fancy foreign cars and expensive wine and cheese. I'm assuming that's what most corrupt politicians did with the money, because that's what I'd do. So there's no reason the countries should even be denied future investment. I'd invest in a healthy Latin American democracy, and I reckon that even after the impending default most of these banks will have more money to invest than I do.

I think that this post will become the gist of my essay. I hope I don't upset my tutor too much. I suspect he'd rather we wrote about the inevitable socialist revolution instead.

Coriander Pesto

Oh my goodness. Coriander Pesto is fully tasty. I cooked it last night and put bocconcini cheese on it, and it was the best. And when I took it to uni for lunch today everyone at the food coop was super jealous. I'll post the recipe I reckon.

Leadership and Democracy

I clever person once said "Don't vote for anyone who wants to be your leader." I'm inclined to agree. Why do we need an individual running the country? What's wrong with a whole lot of elected delegates and a facilitator to stop things from getting crazy? I wonder if the reason people are so keen to have someone "in charge" is because it means we don't have to be. Democracy is a scary thing. In one sense it's comforting to feel like there is some superman running things and making sure the rest of us don't stuff things up. But the whole point of democracy is that the people are in charge. I think that having single leaders blurs the line a little between democracy and authoritarianism. Not much, but enough. If you think about when a single leader is useful, it's in cases like war and internal conflict. Someone who can make decisions quickly without having to debate with and persuade those around them. Surely there is a role for that. Possibly there is, but if so we should aknowledge that there isn't as much difference between ourselves and the Chinas and Cubas as we pretend.

Uni Goodness

I'm actually enjoying university quite a lot for the first time this semester. Which is very unusual for this late in. I'm looking forward to next year, and normally I swear I'll never go again at the end of each semester.

Productivity Myth

Neo-liberals will tell you that what's wrong with poor countries is that they aren't productive enough. The reason they are so poor is because they aren't good enough at growing things quickly and cheaply. And because they are so unproductive and western workers are so incredibly productive, it looks like there is this unfair income imbalance when really it makes complete sense.

That's what they'll tell you. But I'll tell you that it's all bollocks. They'll give you some nonsense about terms of trade and productivity growth curves. But it really comes down to the number of people making and growing stuff. Incomes aren't low because workers aren't productive enough. Incomes have nothing to do with productivity if you're in a competitive market, which poor world agricultural producers certainly are. Actually too competitive, by about $300 billion of European agricultural subsidies each year and a similar amount in the US. Here are our "unproductive and hence poor" poor world farmers, driving the whole rich world out of business because they are too productive. So the problem here is certainly not productivity.

I'd suggest that the reason poor countries can't make any money is because food is far too cheap. Or food is cheap because the poor world is poor. There are too many poor world farmers trying to feed the rich world, so the price you can sell something for goes down faster than the cost of growing it goes down. The main reason there are so many growers is because that's what rich world economists have been telling poor countries to do for several centuries.

There is no such thing as a correct price for something. Neo-liberals will say that the market price is the correct price, and that earning an income means being able to make something at that price or cheaper. But there is absolutely no reason why someone working a farm should earn less than a person in an office. One thing isn't any easier or harder than the other. I doubt the stress levels are that different. It's purely a matter of education. And if you're talking about what stuff we're going to value when the shit hits the fan, then it's going to be rice and beans, not financial services or marketing companies. I think that the reason education should be available to everyone is that a privileged education systems allows the privileged to forget that our incomes are mere flukes of history. The reason John Howard doesn't want to fund higher education is that it's supposedly a waste of money educating people who are just going to be cleaners or farmers. But the other unfortunate side effect is that many of the people who would have been cleaners are financial advisors, and many of the people who would have been financial advisors are cleaners. John Howard would say that we need cleaners. Someone has to do it. And what's the use of a cleaner with a degree? The big difference between a cleaner with a degree and a cleaner without a degree is the pay. A cleaner with a degree will get paid a shitload more than a cleaner without one because the educated cleaner is cleaning for the money, and not because cleaning is all they are able to do.

So if you educate everyone, the rich pay more for their cleaning to be done. And the poor pay far less for their tax returns to be done. And the lovely outcome of that is that after not very long it's hard to tell the well-paid poor apart from the low-paid rich. This needs to happen here in Australia, and in the rest of the world too. The other nifty thing is that if you did achieve equal incomes and broke down some of the cultural barriers to education, then you could have a private education system which only educated people as much as they wanted to be. John Howard might be up for something like that. The only real difference being that you wouldn't really have high- and low-income people the way you do now. So perhaps he wouldn't be that keen after all.

Passionate about Plants

I completed a Permaculture course at the end of 2000, gaining skills I have used in the design of my home garden. I spent time in Peru and Costa Rica in 2002, working on organic farms and meeting local farmers. I am passionate about developing strategies to provide farmers with efficient and realistic alternatives to both industrial and chemical agriculture. I hope to study community development and agriculture at university as part of an economics degree. My resume from two years ago

I hardly ever talk about agriculture anymore. I still think about it quite a bit. I guess when it's not in your face every day it's easy to forget about it though. It makes me sad.

Dreamy

It's odd how those who dismiss the peace movement as utopian don't hesitate to proffer the most absurdly dreamy reasons for going to war: To stamp out terrorism, install democracy, eliminate fascism, and, most entertainingly, to "rid the world of evil-doers.") Arudhati Roy

Latin Violence

It seems to come up reasonably frequently the topic of violence in Latin America. Sometimes people aren't quite sure why Latin America has had so much violence when other countries managed to develop peacefully. Often people blame the character of the people in the continent, suggesting they're just naturally violent. However it seems like a fairly large coincedence that whenever there's violence in Latin America, the CIA seems to be on the poking around making a real nuisance of themselves. I think history suggests that it isn't Latin America with the predisposition to violence.

Post-Castro Cuba

The opposition can present itself as the party of inclusiveness and national reconciliation and as the party of individual liberty and freedom for all in contrast with its communist opponents. It can further present itself as the one party capable of effectively pursuing a new “national project� for the reconstruction and prosperity of the island, because only the democrats - not the communists -can count on broad U.S.and international support. AFTER CASTRO: ALTERNATIVE REGIMES AND U.S. POLICY

This paper is talking about a democratic election after Castro dies or leaves the government. It's suggesting that if even if communists democratically won an election they would not receive the US support that the "democrats" would. I strongly suspect that when they say "democrat" they're just confused and actually mean "capitalist".

This organisation, The Cuba Transition Project, is funded by USAID. This is all very interesting when you look at statements by US State Department officials, who are immensely happy about the progress Central America and the Caribbean are making on human rights, which the exception of Cuba. However, if Amnesty's list of human rights violations is anything to go by then Cuba is one of the most humanitarian nations in the region. It has 23 recent Urgent Action statements , compared to Guatemala's 151, Mexico's 156 and the US's 613.

Radical Reagan

In 1978, the US ended military assistance to the Somoza dictatorship.

In 1979, when Somoza was overthrown, two-thirds of the citizens earned less than US$300 a year; his personal wealth was estimated at $900 million.

In 1982, the House unanimously passed the Boland Amendment, "stating that none of the appropriated defense funds could be used to 'train, arm, or support persons not members of the regular army for the purpose of overthrowing the government of Nicaragua.'"

In 1986 The World Court ruled that: ... the United States of America, by training, arming, equipping, financing and supplying the Contra forces or otherwise encouraging, supporting and aiding military and paramilitary activities in and against Nicaragua, has acted... in breach of its obligation under customary international law not to intervene in the affairs of another state.

In 1987, the Iran-Contra affair made public a US scheme to secretly supply arms to Iran in exchange for money to be channelled to the contras.

US Politics

The world is a messed up place. Sometimes I can't believe how easily we pretend that everything is normal. The House of Representatives ruled unanimously, and yet Reagan and the CIA ignored them. After this was made public Reagan's approval ratings increased. I love democracy.

It's also interesting because, in this case, immediately after America stops using government money and military power to protect their foreign interests and keep Somoza in power, he is overthrown by an immensely popular revolution. I guess the US isn't likely to make the same mistake, of withdrawing support from a dictator just because he murders a whole bunch of people. Look at all the trouble they had to go to overthrow the Sandinistas. Supporting dictators might cost you a bit in terms of PR, but it sure saves a lot of money and inconvenience in the long run.

Writing

I don't know why it is so hard to write this essay. It's six weeks late and I don't feel any closer to writing it than I did six weeks ago. But it's an interesting topic and only a short essay. In the last two hours I've written two sentences. Which doesn't seem that great, but my productivity in the last two hours, is infinitely higher than it was during the weeks preceding it. So I'm happy about that.

Maybe I should see if Libby wants to go to the beach.

Who’s a good little banana picker

One of the things that pisses me off about the whole "comparative advantage" twaddle, is the earnestness with which people insist that banana picking, for example, really is what a country has comparative advantage in. Look at the statistics, they'll say, it is the best thing for them to do. Invariably the industry they are talking about is the absolute simplest thing one could imagine. Once they've established what a country has comparative advantage in it's like the dicussion is over.

What never seems to come through though, is that for a country with no capitalist tradition that has never tried to participate in industry, then their comparative advantage will always be in the simplest thing you can find. Comparative advantage is determined by the looking at the relative efficiencies of different possible industries, and sitting those numbers next to similar statistics for the rest of the world. So of course a poor country's comparative advantage will be in bananas or rice or coffee. But people often act like it's some revelation.

As I think I have said several times before, just because the logic of comparative advantage tells you to do something, doesn't mean you should.