Thursday, July 14, 2011

Clouding weather - carbon prices, poker machines & booms

Here in Australia the political warfare over the carbon price continues. While it's quite interesting for political junkies, I have nothing to add to my earlier comments beyond noting a story by Amos Aikman in the Australian, Scientists query ground storage.

I mention this one only because in my earlier writing on carbon capture in soil I noted the problems involved in measurement and accounting. One problem at the time lay in the identified difficulty in measuring carbon capture. I saw this as a distorting factor in what might otherwise be a very sensible approach.

Having said I had nothing more to add, I should mention for interest that my previous post due a comment linking to this post: Prime Minister – Please answer a simple question. The question was:

By how many degrees, (or parts thereof)
will your Carbon Pollution Reduction Scheme - 
your Carbon Tax – your Emissions  Trading Scheme,
reduce the warming of our planet?

No doubt the PM could provide an answer based on the modelling, but it's actually not a very sensible question because of the number of variables involved. Certainly the number would be very small because Australia is, in global terms, a small proportion of a much larger number.

Since Mr Abbott is also committed to a similar carbon reduction target, I would have thought the same question would apply to him. It just comes back to relative costs and gains.

It seems that visiting New England is a bit of a political health hazard. It used to be the case that remarks uttered in the quiet New England countryside passed without notice. Not any more, as Mr Turnbull has found:  Turnbull takes swipe at Abbott just about summarises it all.

Meantime, the anti-poker machine tax agitation rolls-on, this time at Braidwood on the Monaro in NSW. It's a while since I've written on this one, but it's another of those issues where the Government can't actually win. Again, it's a distributional issue in that you have a large number of people who are generally supportive of the Wilkie plan, but a smaller number who feel quite strongly against and who are also concentrated in particular areas.

Outside Australia, debt clouds continue to gather in Europe. While I have been following this one, I haven't written about it because I haven't had a lot to say. Every so often I dust off my economist hat and comment, but you really need to be a lot closer to the numbers and structure than I am.

I think that the real problem, and it's one that I don't properly understand, lies in the nature of structural imbalances across the global economy at a time of fundamental economic change. I have long argued from a purely Australian perspective that some of the hype around the Australian mining boom was just that, hype. It's all to close to 1979, 1980, 1981 for my comfort.

Then we had an oil shock that increased energy prices leading to an apparent Australian investment boom. By the time this started to feed though in real terms, it was effectively swept away by the global economic downturn triggered by the second oil shock.

I am not saying anything profound. It's just that I would feel a lot more comfortable with more discussion about how Australia might actually survive the end of the mining boom, less about ways of spending the expected largesse from the boom. But perhaps I'm just too pessimistic!

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