Saturday, September 28, 2002

Misleading Headline Alert, Part III
AAP has this story with the headline "Govt Considers Iraq War Tax".

So who exactly in the government is "considering" this? John Howard? Peter Costello? Robert Hill?

No, no and no, according to the story. In fact, it is not being considered at all, since we are not, in fact, at war with Iraq.

Al "I Want to Put the War on Terrorism in a Lockbox" Gore

Ann Coulter gives Al Bore a good Fisking.

Misleading Headline Alert, Part II

Marian Wilkinson's piece in today's Sydney Morning Herald has the headline "Doubts Over al-Qaeda Ties to Baghdad".

The article starts out:

Claims by the Bush Administration of intelligence detailing links between Saddam Hussein and the al-Qaeda terrorist network have been met with scepticism in Washington.

So you might expect the rest of the story to detail who exactly is sceptical of these claims, and why. Who is Wilkinson's primary sceptic? Tom Daschle? Ted Kennedy? Do they have some contradictory evidence?

No, no and no, according to Wilkinson. Instead, Wilkinson tries to make us believe that it is that old doubter, that famous pacifist who is so dove-ish on Iraq, Secretary of Defense Donald Rumsfeld, who on Friday backed up Wilkinson's headline by strongly reaffirming his sceptism:

"We do have solid evidence of the presence in Iraq of al Qaeda members, including some that have been in Baghdad. We have what we consider to be credible contacts in Iraq who could help them acquire weapons of mass destruction capabilities."

My guess is that you won't hear about this from Media Watch.

Friday, September 27, 2002

Democrat Watch, Part I
Our ABC radio and television can't seem to get enough of Senator Tom Daschle going off the deep end on Iraq (in response to a comment by George Bush on a completely different issue).

What these stories fail to mention is that Daschle was one of 47 Senate Democrats who voted against the 1991 Gulf War resolution. So did 2000 Democrat Presidential candidate Bill Bradley, as well as current senators Patrick Leahy, Robert Byrd , Edward Kennedy , Joseph Biden and Senate Armed Services Committee Chairman Carl Levin.

In the House, the vast majority of Democrats (179 out of 265) voted against the very same resolution, including current House Minority Leader Dick Gephardt and Minority Whip Nancy Pelosi (the ranking Democrat on the House intelligence committee).

Presumably, if Daschle and these other Democrats had gotten their way back in 1991, Saddam would still be in Kuwait. By now, he would probably also have seized Saudi Arabia and acquired nuclear weapons. So we would be faced with a nuclear armed homicidal maniac in control of most of the world's oil reserves. Why doesn't the ABC report that?

Only 10 Democrats voted in favour of the resolution in the Senate, including both members of the Sore-Loserman team.

In fact, Gore has been consistently hawkish on Iraq, until his most recent outburst. For example, consider the following exchange during the Presidential Debate at Wake Forest University on Oct 11, 2000:

GORE: We have to keep a weather eye toward Saddam Hussein because he’s taking advantage of this situation [in Israel] to once again make threats and he needs to understand that he’s not only dealing with Israel, he is dealing with us.

BUSH: The coalition against Saddam has fallen apart or it’s unraveling, let’s put it that way. The sanctions are being violated. We don’t know whether he’s developing weapons of mass destruction. He better not be or there’s going to be a consequence, should I be the president.

Q: You could get him out of there?

BUSH: I’d like to, of course. But it’s going to be important to rebuild that coalition to keep the pressure on him.

Q: You feel that as a failure of the Clinton administration?

BUSH: I do.

GORE: We have maintained the sanctions. I want to go further. I want to give robust support to the groups that are trying to overthrow Saddam Hussein. Some say they’re too weak to do it. But that’s what they said about those opposing Milosevic in Serbia.

And on May 23, 2000, deep into the US presidential election campaign, Vice President Gore addressed the American Israel Political Action Committee, and stated:

The classic challenges of war and peace extend beyond Israel's immediate neighborhood, to Iraq and Iran. In 1991, I broke with many in my own party, and voted to use force to stop Saddam Hussein's aggression in the Middle East. Despite our swift victory and all our efforts since, there is no doubt in my mind that Saddam Hussein still seeks to amass weapons of mass destruction.

You know as well as I do: as long as Saddam Hussein stays in power, there can be no comprehensive peace for the people of Israel, or the people of the Middle East. We have made it clear that it is our policy to see Saddam Hussein gone. We have sought coalitions of opponents to challenge his power from within or without. I have met with the Iraqi resistance, and I have invited them to meet with me again next month – when I will encourage them to further unite in their efforts against Saddam.

We have maintained sanctions in the face of rising criticism, while improving the oil-to-food program to help the Iraqi people directly. We have used force when necessary. And we will not let up in our efforts to free Iraq from Saddam’s rule. Should he think of challenging us, I would strongly advise against it. As a Senator, I voted for the use of force. As Vice President, I supported the use of force. And if entrusted with the Presidency, my resolve will never waver.

The Melbourne Age redeems itself by publishing this piece, "Why America Doesn't Need UN Approval" by one Avigdor Haselkorn. Thanks to Professor Bunyip for this link.

Thursday, September 26, 2002

The Balance of Payments Balances Everywhere, Except in Fairfaxville
Davidson Watch, Part I

In an earlier post I noted the Sydney Morning Herald's economic illiteracy regarding the balance of payments.

It seems like this affliction is doing the rounds of the Fairfax press. This piece by Ken Davidson in the Melbourne Age on the IMF's latest report on Australia repeats the error:

The report has nothing to say about Australia's long-term structural problems associated with its chronic balance of payments deficit as a result of reliance on commodity exports, and the associated problem that Australia is now the largest per capita producer of greenhouse gas emissions, by far.

First, as I've already noted on these pages, Australia has a current account deficit, not a balance of payments deficit. The balance of payments always balances. Life's funny like that.

Update: Don't just take my word for it - you can check the ABS site on the balance of payments here. The phrase "balance of payments deficit" is not mentioned a single time, but the phrases "current account deficit" and "capital account surplus" are, of course, mentioned several times. Presumably the ABS does not use the phrase "balance of payments deficit" because it is meaningless and stupid.

Second, I'm not sure which economic theory Davidson is drawing on when he tries to link the balance of payments with greenhouse gas emissions. It would be just as sensible to try to make a link between greenhouse gas emissions and the capital and financial account surplus.

In any case, the data show that empirically, the link is a silly one to make. According to recent IMF data, Australia's current account deficit in 2001 was 2.6 per cent of GDP. But Spain, Greece, Portugal, Iceland, Cyprus, and New Zealand all had bigger current account deficits, and yet, according to Davidson, their per capita greenhouse emissions are smaller than Australia's. So what does one have to do with the other?

Davidson is an editor of Dissent magazine, whose mission statement claims that:

The state has a duty to ensure that its citizens have equality of access to education and health services, and a level of income adequate to the basic needs of civilised life. Markets cannot ensure these outcomes even in the richest economies. No society can be truly economically efficient, unless all its citizens are able to express their fullest creative potential in a secure, healthy environment.

Well, Ken, I don't know much about your access to health services or your level of income, but with elementary errors like this it's obvious that you haven't had much education on economic issues. I guess we should get the state to intervene and send you back to economics school, courtesy of the taxpayer. And I'll even give you a tip before you get there: economic efficiency has nothing to do with "expressing your full creative potential".

Davidson also writes on the IMF's recommendation that the top marginal income tax rate needed to be brought down in line with the corporate tax rate (30 per cent):

There is no attempt by the IMF to cost this ambit claim on behalf of the rich.

Perhaps Davidson hasn't heard, but Australia's top marginal rate cuts in at AUD$60,000. And someone earning this amount of money is not rich.

He then goes on to discuss why we're all paying too little in tax:

It is not true that Australians pay too much income tax.

The case is based on excluding employee social security contributions which, in most other countries, is a hypothecated income tax, similar to the Medicare levy in Australia.

Thus, while Australian employees pay no SSC, the SSCs range from 7.7 per cent of the average full-time production worker's wage in the US, up to 26 per cent in the Netherlands, according to the OECD.

When SSCs are added back as part of the tax burden, for a single earner on 167 per cent of an average income ($72,000) the average tax rate is 30.3 per cent. Only 10 out of the 30 OECD countries measured have a lower rate of tax than Australia, and most with lower income-tax burdens are the less developed OECD members, such as Mexico, Portugal, Spain and Turkey.

This completely misses the IMF's point, which is about marginal rates. Any high school economics student knows that it is marginal tax rates that affect economic incentives not average rates, which is why the IMF recommended that marginal rates be cut, in order to "boost work incentives and foster the development of a higher skilled workforce by increasing returns to human capital."

And the top marginal rates in Australia are far higher than in, say, the US (39.6 per cent as opposed to 48.5 here), and they cut in at a much higher level of income (US$288,350 in 2000, according to this history, as opposed to a paltry AUD$60,000 here).

And, to top it all off, Davidson also neglects to mention that Australians are forced to pay into a superannuation fund, and that at a certain wage level, contributions are taxed at 15% (this occurs at around $80,000 - which, again, does not classify one as "rich", by any stretch of the imagination).

Great Moments in Interventionist Idiocy, Part I

The Australia Institute's most recent stupid idea (they have so many) is to start a HECS-style loan scheme to fund paid maternity leave. The scheme was put forward by Dr Bruce Chapman of the ANU:

A family would apply for a loan paying, say, $1000 per month for nine months of leave and would not have to begin repaying until either the mother or her partner’s income reached, say, $38,000.

Without government intervention parents wishing to take leave for childrearing purposes face unpalatable alternatives – a period of reduced incomes, running down savings or extended borrowing from a bank.

Perhaps Dr Chapman could tell us exactly what is so "unpalatable" about parents saving for their own child's expenditures, as opposed to forcing others to pay for them.

And perhaps he could tell us why it is "unpalatable" for people to voluntarily borrow from a bank and then pay the loan back at market-determined interest rates, but on the other hand it is "palatable" to force taxpayers to lend at subsidised, non-market interest rates.

And finally, perhaps he could tell us the reason why it is so "unpalatable" to have a period of reduced income while taking leave for childrearing purposes, whereas having a period of reduced income when the loan has to be paid back is, in contrast, "palatable".

Wednesday, September 25, 2002

Great Moments in Socialized Health Care, Part II
The Sydney Morning Herald reports that a pregnant woman caught fire while she was in labor in a New Zealand operating theatre. Apparently, according to the story, “staff were not immediately aware the woman was on fire.”

Baby-Milk Factory Watch, Part II
Today the Sydney Morning Herald published this letter by one Paul Kunino Lynch of Leura:

Many will recall the US insistence 11 years ago that an Iraqi chemical plant it bombed to destruction with the loss of civilian lives, was making weapons of mass destruction.

As Western reporters established after hostilities ended, it was in fact making powdered milk.

Well no Paul, actually they didn't establish any such thing. The site was a secret location for nuclear weapons research and development. In an earlier post I noted (courtesy of the Wall Street Journal) how CNN's Peter Arnett fell for the baby-milk factory hoax by the Iraqis. Mr Lynch and the SMH's letters editor obviously still remain blissfully ignorant of this hoax.

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