Viagogo and related leeches

Ed Sheeran’s Australian tour was announced the other day, with tickets at two price points, neither excessive: $70 or $165. Of course, no good deed goes unpunished: Scalpers thwart Ed Sheeran’s noble gesture for Australian fans with tickets offered on ticket flipping sites like Viagogo for $1500.

It would be nice if sites like Viagogo were outlawed. Easier said than done though, when they aren’t physically located in Australia. And for all the promoters’ tut-tutting about scalping, they’re making their money, and there’s little downside for them when people flip tickets like this.

But resale sites need a critical mass of buyers and sellers to be successful. I think the only way they could be starved out is if Visa, MasterCard, Amex and PayPal refused to offer them payment gateway facilities. If they were forced to handle payments using bitcoin, Western Union or some other niche method, their business model collapses. Unfortunately there’s no great incentive for the card companies to do this either, of course. But the cost to those companies is inconsequential, and the goodwill possibly quite significant.

That’s the only solution I see.

Surreal Disarray

Politico has a brilliant piece rounding up the interviews Trump gave to mark his first 100 days in office. Chin up! Only 1,361 days to go.

Entitled “Trump’s dizzying day of interviews“, I was particularly taken by this paragraph:

White House officials said privately there was no broader strategy behind the interviews. GOP strategists and Capitol Hill aides were puzzled by it all. “I have no idea what they view as a successful media hit,” said one senior GOP consultant with close ties to the administration. “He just seemed to go crazy today,” a senior GOP aide said.

He. Just. Seemed. To. Go. Crazy. Today.

That’s comforting.

More Goodies and Baddies

So on Thursday morning we were greeted by the thoroughly unedifying spectacle of Federal Treasurer and Irredeemable Incompetent Scott Morrison pitching up the idea that there is now “Good Debt” and “Bad Debt”. You have got to be kidding me. After years of relentless talk of “Debt and Deficit Disaster”, people are starting to notice that under this government, the debt and deficits continue to climb, yet unemployment remains stubbornly high, inflation has been well below target, and consumer confidence is shot. Which begs the question: what the hell are they spending this money on? It clearly isn’t going anywhere useful.

So now ScoMo is going to rewrite the rules, and retrospectively declare some debt good, and some bad. Furthermore, entire functions of government will be rated on their net debt, as if the whole thing were some corporation implementing an internal charge-back model, rather than, well, government programmes: doing the unprofitable things of positive social worth. It’s just idiocy. You don’t have to be Einstein to figure out that this is going to lead to an apples and oranges comparison of all debt under Labor, versus (what they hope will be) a downward trajectory of “bad debt” under their so-called superior economic management. Ignore the “good debt”, nothing to see there, folks! That’s investment! Jobs and Growth. Just ignore that man behind the curtain.

So how will debt be classified?

This unmitigated disaster of an NBN, that will be worth a fraction of what’s been spent on it when completed, that’s a “good debt”, presumably? Obviously welfare will be “bad debt”, that goes without saying. Where does the Health Insurance Rebate fit? How about the Chaplaincy programme? Wars on Terror etc?

This mob truly are irredeemably incompetent. They’re obsessed with what the ratings agencies think of them despite it being of zero consequence to anyone, and fixated on how many dollars they can claw back out of the economy, as if they’re some scarce resource we might run out of, rather than the renewable fuel necessary to makes the economy work.

And whilst they bloviate, millions of hours of productive human potential are wasted every day, lost forever.

The Earth Is Doomed

In an unusual development, The Associated Press have published a verbatim transcript of an interview with The Donald. It’s pretty heavy going. I pointed it out to a friend in the US, and he said he would read it before going to bed (since he was working at the time I messaged him). I strongly advised against that. It’s not something I would recommend attempting to read unless you’re in an upright position, and preferably with a strong beverage handy.
Lindy West has written a pretty good piece about it in the Guardian, entitled “100 days of gibberish – Trump has weaponised nonsense”, which I’d also highly recommend. But you really do have to force yourself to read the original. It’s long in words yet bafflingly short on meaning, full of rambling paragraphs that surprise the reader here and there with glimpses of something approaching reality. Not actual reality, of course, but something that might be vaguely related to it.

But most of the time it’s simply extraordinarily unhinged. Not so much an interview as a stream of consciousness, into which a reporter occasionally interjects.

Often times bloggers write pieces that say something along the lines of “I’ve read this so you don’t have to, and here’s a summary”. But you really do need to have a go at taking in the stupefying madness of it yourself. That said, don’t feel bad if you can’t get through it all. There’s not even a prize if you do.

The man is crazy. Deeply, thoroughly, batshit crazy.

Sukkar – New face, same old rubbish argument

The ALP recently announced further proposals for reining in the escalating price of real estate in Australia, and the eastern seaboard capital cities in particular. These proposals add to the changes to negative gearing and capital gains tax announced prior to the 2016 election, and introduce much higher fees for foreign property investors, and outright banning of borrowing for investment in real estate by self-managed super funds (SMSFs). There was also talk of “bond aggregators” for housing construction (meh), and the opening of a discussion with state governments about vacancy taxes on properties.

I’m not sold on the bond aggregator idea, but the rest of the proposal seems meritorious, and good on the Labor Party for getting ahead of the May budget with some concrete policy.

All that said, it’s no surprise whatsoever that the government have come out hard against these ideas. The Assistant Treasurer Michael Sukkar was quoted in The New Daily:

But Assistant Treasurer Michael Sukkar said Labor’s housing plan, including its policies around negative gearing, would actually make it harder for first home buyers to enter the market.

“We also know Labor’s tax will make it more difficult for renters,” he said.

“If you increase taxes on investment into the residential housing market, you ultimately push up rents.”

In a media release, Mr Sukkar said: “Labor’s attack on Self-Managed Super Funds shows they are once again reaching for the chainsaw.”

“Labor just don’t understand the need for finely tuned measures on housing,” he said.

He also accused the opposition of “plagiarising” the Turnbull government’s policy work on a social housing bond aggregator.

The outright case of the sooks about plagiarism can be safely ignored. The man is just being childish. But the rest of his argument about pushing up rents is simply rubbish, for one very simple reason. The renters and the prospective first home buyers are the same people. Virtually everyone trying to become a new owner occupier is currently renting a house or unit. Every property sold to a new owner-occupier reduces demand for rental property, so they largely even each other out. To put that another way, supply of rental properties may fall, but so will demand at roughly the  same rate. The proposition that these changes, (and the negative gearing and capital gains tax changes announced previously), will push rent through the roof must be challenged. It’s a failure to appreciate the macro aspects of renting versus home owner-occupancy.

Superannuation swindle. Yeah, but not for the reasons you say.

Rob Burgess seems a decent sort of bloke. Affable enough in those videos he did tooling around Melbourne in his old Ford*, pontificating on economics and whatnot.

But once again we’ve got the same old tripe being trotted out in The Great Superannuation Swindle Must Be Stopped.

Yes, allowing people to access their super to invest in housing is only going to drive real estate prices up further, you’ll get no argument from  me on that score. That’s a colossally stupid idea if your aim is to help first home buyers.

But the rest of the article is just Neoliberal Groupthink 101. For example:

State and federal governments raise taxes to fund infrastructure, education, health, administration and so on – goods and services which on balance make the economy work more efficiently and increase the ‘common wealth’.

State governments do, but the federal government does not. This is a lie, and Burgess knows it to be a lie. Yet it blithely gets repeated here.

If Australia had not amassed a pool of $2 trillion in superannuation assets so far, with more to come, we’d have had no hope of providing for the ageing population in retirement. So no, it’s not true that money in your super account is your and yours alone.

It has not only been topped up by your fellow taxpayers, but it is a comprehensive plan to prevent older Australians living in cars and dining on tinned dog food.

This is where I start to shout at the screen as I read the article. The ageing retired population cannot eat their superannuation, no matter how large it is.

The New Daily is supported by Industry Super, so these comments would be deeply unpopular on their site, but the simple fact is that superannuation is a complete con. It just does not do what its proponents (such as Mr Burgess above) claim. In fact, as Dr Steven Hail wrote recently, you can argue that it could actually have the opposite effect of what it was intended for, and is in fact – to use the terminology in Warren Mosler’s work – an “innocent fraud”.**

Superannuation is a forced savings plan. Legislated garnisheeing of your wages into a savings account, deferring your spending until you turn 60/65/whatever. It cuts your spending capacity today with the promise of increased spending capacity in the future. As Dr Hail says, releasing that spending capacity later on could conceivably trigger inflationary effects, driving up the cost of the goods and services that pensioners require at the very time they require them, what with the ageing population crisis we keep hearing about.

Superannuation is bullshit. There’s nothing wrong with saving for your retirement, but it’s simply false to assert super is the only way the nation can afford to keep our senior citizens. The federal government can afford to pay pensions and public service retirement scheme costs every fortnight forever. They issue the currency and can never run out. What’s important is that there are the real goods and services available in the economy to be purchased with those dollars. It’s the lack of things to buy with your money that causes inflation, not money itself.

Look, I’m a fan of Keating, but he sold us a pup with superannuation. The moment we floated the dollar, the rationale for superannuation disappeared. Perhaps he didn’t realise that at the time, but it should have become obvious since.

 

* Call that thing old? Pfft. Perhaps I should do some videos on macroeconomics whilst driving around in my 1956 Holden?

** I cannot recommend Dr Hail’s article highly enough. If you didn’t click the link before, do it now. Here it is again.

Monbiot on Neoliberalism

We* try to post original content on this blog, but occasionally something turns up and that just needs to be shared. This interview with George Monbiot is well worth 16 minutes of your time. He explains succinctly what neoliberalism is, what its impact on society has been, and ultimately the thread that has brought us from Hayek to Trump.

I’m looking forward to reading this new book, although I suspect it will profoundly depress me.

* That seems to be a royal “we”, since none of the other rogues have quite brought themselves to start blogging…

Define Employment, if you would

Before the Garage Death Match that was the contretemps between SA Premier Jay Weatherill and Federal Energy Minister Josh Frydenberg (as it might have well have been given the way it consumed all available journalists  for days), something else noteworthy happened in Adelaide.

Former Treasurer Wayne Swan gave a very thought-provoking speech at Flinders University where he argued that full employment needs to be an active strategy for governments, not a passive one.

As usual, this was met with howls of “government interference in the markets”, make-work schemes, communism, end-of-the-world-as-we-know-it and so on. This particular example is fairly typical:

What a ridiculous idea, you may as well employ people to dig up holes and then fill them in again, employment for the sake of employment, similar to countries like the USSR and other command economies. The problem is that this involves siphoning money away from the private sector which could be used to create new products and services that improve living standards.

I never cease to be amazed by the lack of imagination on display in comments like this. Why must government provided employment be make-work?

Just take a walk around your community, and ask yourself what could be done to improve the place if there was a standing army of people willing and able to do them? If your local council had the human resources (paid for by the federal government) to call on to provide services to the community, what would they be able to achieve?

Virtually anything that the private sector wouldn’t touch because there’s not a quid in it is a candidate for a Job Guarantee Programme. Think big.

Because the fact is every single unemployed person is already on the government’s payroll. It would make so much more sense to pay them a living wage to do something useful than pay them a miserable pittance to do nothing.

On Penalty Rates

The economy runs on sales. That may sound trite, but it is a fundamental truth. When you cut wages, you cut aggregate spending power. At the macro level, the outcome will be reduced sales, which leads to reduced production, which leads to greater unemployment, which cuts aggregate spending power, and so the vicious cycle continues.

What the businesses championing this reduction in wages fail to appreciate is that their wage costs are also the source of their profits. Clearly they expect to cut their own wage costs and rely on every other business not doing the same so that spending power remains constant or growing and profits continue. That’s some pretty magical thinking.

Koukoulas’ latest is just more of the same garbage

Stephen Koukoulas’ latest missive in The Guardian entitled “Balanced budget needs higher tax take, but which taxes should be hiked?” inconveniences an unknown number of electrons pulling together 700 words of very little worth whatsoever.

Morrison is talking about the need to raise taxes to ensure these government services are provided while simultaneously moving the budget towards surplus, which is an essential element to avoiding the credit rating downgrade that appears to be just around the corner.

The prognostications of the credit rating agencies for a sovereign currency issuing government have about as much impact on that government’s ability to manage the economy as your footy tips do on the weekend’s results. They’re completely irrelevant, and should be paid no notice whatsoever. Morrison would, of course, because he’s an economic illiterate. The Kouk and his readers don’t need to buy into this neoliberal nonsense.

If the federal government is in surplus, then everyone else (i.e. us, the private sector, in aggregate) must be in deficit. Over whatever period of time we’re discussing, the net flow of money can only be into, or out of, the economy. There’s no other option. And money that isn’t in the economy no longer exists. There’s no warehouse of dollars the government must keep stocked for next week’s spending.

So the question is why the draining of money from the economy is treated as some unalloyed “good thing”. The whole notion of “budget repair” is wrong-headed. The government is not a household, but the currency issuer. It’s not the budget that needs to be repaired, it’s the economy. The ratio between government spending and GDP is of no great significance. The focus should be on attaining full employment with price stability. In other words, getting both unemployment and inflation into that goldilocks zone of between 1 and 2%. Achieve that and most other problems solve themselves.

As usual, his article triggers a thousand comments, arguing over what should be taxed, what programmes axed, the usual crap. Tax the rich! Cayman Islands! Apple, Google! The NDIS is unaffordable! You get the picture.

All the comments recommending who or what should be taxed are well meaning but misguided. The federal government does not need tax money in order to invest in public services, social security and infrastructure.

As I said earlier, the federal government is the issuer of the currency, and they literally have a bottomless pit of dollars they can issue. Dollars are the one thing the government has an endless supply of. What constrains them are real, physical things: the amount of labour and resources available in the economy. When dollars are issued past the point of what the economy can absorb in increased production, then you get inflation.

So taxation is the inflation control mechanism – draining money out of the economy to make room for additional spending. Hypothecating new spending against taxation such as Morrison’s suggestion about the NDIS is a furphy and economically illiterate.

The government can always afford to do whatever it wants. It can buy anything offered for sale in $A. Asking where the money comes from is the wrong question. The only right question is whether the real resources being consumed are being put to their best use for our common wealth.