Comments on the recent LDP posts here have descended into pitched battles on the pros and cons of legalising drugs. This is not a core issue for the party. Unlike the ideological purity of blogging, politics is about compromise. The more votes you target the more conventional your views must be. No-one will like all of the LDP's policies (i certainly don't). However, does anyone here like everything Howard or Rudd or The Greens have to say?
I joined the LDP earlier this year because i was attracted to its two principle messages. If you agree with these two points, then go out and vote for the LDP next month.
1. You are better able to decide how to run your life than the government.
There has been a concerning shift in the attitude of both the major parties in recent times from advising its citizens to ordering them around. Yesterday John Howard referred to the 1 in 4 Australians who enjoy a smoke as 'pariahs'. My local council in Manly wants to ban smokers from lighting up outdoors.
The role of government is to advise its people of the potential harm of certain activities when the science is proven. For instance smoking, skiing, super-sizing your diet, scuba diving and drinking alcohol are all potential killers. They are all also legal activities. Labeling cereals as high in sugar or sticking warning messages on a pack of ciggies is fine. Ordering people not to smoke or to eat junk food is not. The LDP believes that people make better decisions about how to live their lives than the government. It also believes that once you start treating adults like children, they will start behaving like children.
The flipside of greater choice is more responsibility. If you go skiing, or take part in the Sydney-Hobarth yacht race, you are advised to take out insurance. If you, like me, are rather partial to a flame-grilled Whopper, then skip desert. Or exercise. If you want to mix beer and ecstasy, don't go surfing at Bondi or swim with crocodiles after 'half a slab'.
Contrary to a report yesterday that 'individuals can no longer be held responsible for obesity', the LDP believes that individuals must be held accountable for the consequences of their actions.
As left-wing UK blogger Chris Dillow writes yesterday,
'It's obvious that the collectivization of responsibility leads to statism, to the view that we should all be treated as children. But the really nasty thing here - which should worry the left as much as right libertarians - is that it disempowers individuals. It's a cliche that, if something is owned by everyone it is in effect owned by none. And this is true of actions as much as anything else. In denying a role for individual responsibility, the statists deny the possibility that "ordinary" people are capable of improving their own lives, and instead invite them to look to their rulers for leadership.'
2. You pay too much tax
The State is a poor planner and manager. Nationalised businesses consistently underperform those in the private sector; micro-managed economies consistently underperform those allowed to develop ad hoc; countries with more economic freedom consistently outperform those with less. The principal roles of government are to enforce our property rights and to protect us from violence. It is not to plan or to manage. We all know what happens to 'Five Year Plans' and 'Great Leaps Forward' .
The LDP believes that the state is too big and that we pay too much tax. Each Australian is on average paying 34% more tax since John Howard came to power - despite an eleven year economic boom! This is a disgraceful and truly unbelievable state of affairs. The recent announcement to hand back $34bn of our money is a step in the right direction and is to be welcomed.
The LDP also believes that the current tax and welfare system does not encourage people to find work, discriminates against the poor and encourages our brightest graduates to seek their fortunes in low tax countries such as Hong Kong (top rate 15%) and Singapore (20%). Our solution is the neat '30/30' policy. You get to keep the first $30,000 of earnings tax-free and pay a flat rate of tax at 30% thereafter. Additionally, welfare is largely replaced by a negative income tax (similar to a Citizen's Basic Income).
Friday, October 19, 2007
Why You Should Support The LDP
Thursday, August 30, 2007
I May Be Some Time
For the usual reasons (life intruding on blogging) i am going to have to take a short break from blogging.
Will still be visiting other blogs and commenting and such like, writing for the Australian Libertarian Society and helping the LDP make some progress in the forthcoming Federal Elections.
Hopefully i won't be too long.
Tuesday, August 28, 2007
APEC Rally For Free Trade
In September, Sydney will host the Asia Pacific Economic Cooperation (APEC) forum. APEC is an inter-government forum which aims to facilitate economic growth and prosperity, cooperation, trade and investment within the Asia-Pacific region.
A bunch of anti-globalisation and Stop Bush demonstrators plan to march through the city to 'protest against the wars on Iraq and Afghanistan. The protest will also call for urgent action to stop environmental destruction and for the defence of workers’ rights.'
The LDP will be holding our own demonstration in Martin's Place on Saturday morning in support of free trade. Free trade (not foreign aid) is the only effective means of dragging the world's poor our of poverty. That is why it is vital. The best defence of worker' rights are free trade and a deregulated labour market. Countries with these two policies in place have the lowest unemployment rates and the highest standard of living.
We are no fans of Bush's disastrous policies in Iraq (though Afghanistan is more complex and certainly a more morally valid conflict), but do not share GreenLeft's view that he is 'the world’s leading mass murderer and climate vandal' nor do we 'reject the idea that non-violence is the only tactic that can be used in the battle against oppression.'
A peaceful demonstration is our aim. We are not violent thugs.
The itinery for the day is as follows:-
Please come along and join us if you share these aims.Saturday 8th September 2007
9:00am - Meet at the corner of York and Market Street on street level above the post office. This is across the intersection from the North-West corner of the Queen Victoria Building (QVB). There will be a short briefing with any last minute updates.
9:20am - Make our way as a group toward Hyde Park.
10:00am - 11:30am - Take our message of freedom to the people.
Update; these are the type of uneducated children who will be chanting school-yard slogans,
'The Liberty and Democracy Party are a bunch of Australian igno-douches halfway between 1st year economics and their first graduate jobs in the p.r./marketing/banking sector. But they’re not all poorly educated assholes.
Some of them are just assholes.
Anyway, the whole globalisation, workplace slavery, environmental degradation, planetary pollution, exponentiation of inequality, stealing land, killing villages, two-party police state bound by economic monotheism thing is going so badly (obviously) that these fans of John Laws think their mighty voices, tiny minds and hunger for media ops are needed at APEC.
So get along and check them out. Take urine.'
Charming.Time To Shut Down SBS
Paul Sheehan, writing in the SMH, argues that
'The real question facing the Federal Government, and the overwhelming majority of taxpayers who pay for SBS but rarely watch it, is whether SBS should continue to exist at all.'
(For those outside Australia, the SBS is a state-owned and run free-to-air TV channel roughly equivalent to BBC2). Sheehan continues,
'The Special Broadcasting Service Act should be repealed, the corporation dismantled and sold and its valuable broadcasting spectrum auctioned off. SBS has outlived its charter, and the charter has always been of dubious social utility. (I quote, in part: "As far as practicable, inform, educate and entertain Australians in their preferred languages.")'
'According to SBS projections, during the next five years, the Federal Government will spend almost $1 billion to keep the corporation afloat. And then there's the opportunity costs of the digital spectrum given to SBS by the Howard Government.'SBS was set up to provide Australians with a multicultural array of TV programs in an era of just two or three stations. Today, by subscribing to Foxtel, one can receive hundreds of such multicultural stations and foreign news 24/7. SBS averages a market share of just 5.4% of network TV viewers. It no longer serves any useful purpose.
The LDP believes that SBS, along with the ABC should be fully privatised.
Governments simply should not be in the business of owning and running TV stations. Their role is to regulate content to ensure standards are met and advertisers' claims are valid. The market is amply served and competition is rife, ensuring a large and diverse selection of TV channels to consumers at a good price.
The money can be better utilised building a Australia's much-needed broadband network or simply handed back to taxpayers to spend on a Foxtel subscription if that is what they want.
Monday, August 27, 2007
Time To Devalue Faith
Comedian Pat Condell on the growing menace of religious, especially Islamic, intolerance.
'Cultural sensitivity be damned. Some things are more important. Peaceful protest and free speech are not negotiable. Anyone who's offended by that, should damn well stay offended. Personal faith should stay personal.'
via Pub Philosopher
Friday, August 24, 2007
Thursday, August 23, 2007
Where Does Your University Rank?
The new 2007 Shanghai Jiao Tong University rankings are out.
- Harvard tops again (miles ahead of its nearest competitor)
- 17 of the Top 20 are American, 2 are English (Cambridge and Oxford) and 1 is Japanese
- 39 of the Top 50 are American
- The highest placed Aussie Unis are the Australian National University (57) and the Univ of Melbourne (79)
- Alumni of an institution winning Nobel Prizes and Fields Medals
- Staff of an institution winning Nobel Prizes and Fields Medals
- Highly cited researchers in 21 broad subject categories
- Articles published in Nature and Science
- Articles in Science Citation Index-expanded, Social Science Citation Index
- Academic performance with respect to the size of an institution
Socialism Guarantees Income Inequality
Isn't income equality the primary goal of socialists?
Well, in that case, why does Freedom (free trade, capitalism, deregulated markets)....
...correlate so perfectly with Social and Income Equality?
Dark green - most equal societies
Light green
Olive
Orange
Pink
Red
Dark red - most unequal societies
So, if socialism guarantees income inequality, then, err, what's its point?
Is Free Trade Working?
Some food for thought for us supporters of free trade.
Today's protectionist drift is similar to the challenges faced by the architect of the original New Deal. In August 1934, President Franklin Roosevelt declared;
'This Government intends no injury to honest business. The processes we follow in seeking social justice do not, in adding to general prosperity, take from one and give to another. In this modern world, the spreading out of opportunity ought not to consist of robbing Peter to pay Paul. In other words, we are concerned with more than mere subtraction and addition. We are concerned with multiplication also -- multiplication of wealth through cooperative action, wealth in which all can share.'
An interesting article in Foreign Affairs magazine by Kenneth F. Scheve, Professor of Political Science at Yale University and Matthew J. Slaughter, Professor of Economics at the Tuck School of Business at Dartmouth, accuses globalisation of failing to spread the wealth and recommends higher taxes for the rich to avert a protectionist backlash.
Summary
'Globalization has brought huge overall benefits, but earnings for most U.S. workers -- even those with college degrees -- have been falling recently; inequality is greater now than at any other time in the last 70 years. Whatever the cause, the result has been a surge in protectionism. To save globalization, policymakers must spread its gains more widely. The best way to do that is by redistributing income.'
The authors argue that US policy is turning more protectionist because the US public is turning more protectionist, and the reason is stagnant incomes for all groups except the very richest. The 109th Congress introduced 27 pieces of anti-China legislation, the Doha Trade round is in tatters and other developed nations, particularly France, are upping the anti-foreigner rhetoric.
They then argue that this is a deeply worrying trend as globalisation has been so economically beneficial for both the US (adding $1 trillion to its economy and doubling its worker productivity) and for the developing world, creating an entire new middle class in less than a generation in places such as India and China.
They cite the three commonly expressed opinions as to why globalisation is faltering;
i) the successful lobbying efforts of a few industries that have been hit the hardest (e.g. farmers and manufacturers)
ii) policy makers and the business community have failed to make the case for free trade effectively.
iii) the need to balance economic interests with national security concerns has resulted in a more protectionist stance.
But they go on to dismiss all three arguments and lay the blame squarely at stagnating incomes and the uneven distribution of incomes. They point to data showing an 11% rise in real median wages versus a 58% rise for those in the 90th percentile of income and 121% for those in the 99th percentile. Another way of looking at this data is the CEO/worker ratio which has jumped from 80x in the 1980s to 425x in 2005 (see graph above). the last time data such as this appeared was in 1928 - just before the Great Depression (caused ironically by a rise in protectionism).
A combination of globalised free trade and high immigration is exerting immense pressure on wages of the low-skilled and they know it. Hence politicians (all the Democrat nominees for the Presidency are espousing some protectionist policies) are merely responding to growing resentment amongst the population.
The authors argue that supporters of free trade now face a stark choice; ensure workers share more of the spoils or accept that liberalisation is no longer sustainable. Given how important free trade is for the US economy, they argue that tax breaks must be distributed to the poorest workers to be paid for by the richest. Their solution is to eliminate payroll tax (15%) for those workers earning below the median wage and to increase them for the richest.
Update; Jason Soon points me to this very interesting paper. The authors point out that whilst income inequality is indeed rising, inequality by race and sex are rapidly diminishing, especially for American black and Latino women.
Wednesday, August 22, 2007
Ten Things You Should Know About Hedge Funds
Chris Dillow asks why 'market neutral' hedge funds have performed so badly of late. (Market neutral means they are supposed to be indifferent to the ups and downs of the stock market because the are 'neutral' the market by being both long and short stocks.)
Having worked in the industry for many years, perhaps i can enlighten,
i) Hedge Funds are never 'market neutral'. They are generally long stocks with upwards momentum (e.g. commodity stocks, banks) and short those out of favour (conglomerates, healthcare).
ii) They invariably all have the same trades on. When the market turns, they all try and get out at the same time. Officially this is known as 'illiquid markets' or 'dislocation'. Unofficially this is called 'panic'.
iii) In a rising market, they tend to be an awful lot 'longer' than they are 'shorter' (i.e. they own far more stocks than they are 'short'). They should probably be called 'market neutral-ish'.
iv) In the golden days (pre-2003), HFs used to be able to genuinely 'arbitrage' the markets (put on riskless trades) because there were so few hedge funds. Now that every dog and his wife is a HF manager, these arbitrage opportunities are long gone. Now they are just stock pickers with a track record no better than a monkey throwing darts at the WSJ.
v) HFs are not asset managers. They are fee-generating machines with an attached asset management business.
vi) There are Two Golden Rules.
a) Golden Rule No.1 is "Never accept money paying less than '2 and 20'". i.e. never accept fees that don't pay 2% annually plus 20% of all performance. Some good HFs only take 20% excess performance (the return over the risk free rate). But this hard to do so they tend not to.
b) Golden Rule No. 2 is 'Always play with OPM' (other people's money). OPM is much easier to lose and much less painful than your own.
vii) The ultimate fee-machines are 'Fund of Funds'. These really are modern alchemy - they turn client assets into fees. Brilliant and simple. Their after-fee returns are similar to a Treasury bond (5%) but not quite so good.
viii) HF managers all work in three streets in London - Berkely Square, Curzon St and St. James'. They all drink at the same bars, attend the same parties, and are paying alimony to the same divorced wives.
ix) HF managers are all 'long a call option'. This means that they incentivised by their firms to bet the house. If they are right, they are paid on average 10% of whatever they make. This can and often does amount to millions of dollars. If they are wrong, they are fired and re-appear fully refreshed after a month's vacation at another HF.
x) In order to keep the client money rolling in, HFs have to show to the world that they really do make outsized returns. Hence these ever ingenious folk have come up with a unique concept - 'survivor bias'. This means that the HF Indices showing overall returns exclude those HFs that have gone bust (about 1 in 5 each year) so blostering the average returns. Neat, huh?
All HF managers are aware of these ten points and all know the game will soon be up. Hence all are gambling furiously with your money right now before the ref blows the whistle for full-time.
