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Sunday, 19 November

20:08

Maybe we no longer want long lives Peter Martin

So you'd like to live forever.

I'm going to deliver some bad news, straight from this week's conference on the future of Australian lifespans: you probably won't even make 100.

Worse still, your children probably won't make 100, and maybe not even their children.

The massive and unprecedented progress we've made since our first estimates were published in 1867 has blinded us to the fact that  just like regularly squeezing more speed out of computer chips is becoming harder it's becoming harder to squeeze more years out of life.

No one is yet signing off on an upper limit. Some people are talking about 125 years; others 600 years, which is the age by which, even if we could medically live forever, we would be as good as certain to have a life-ending accident.

Getting even a handful of those extra years would require herculean efforts of the kinds at which we once excelled but now find daunting.

Australia's first life table, published in The Sydney Morning Herald a century and a half ago, gave a newborn colonist just 45.6 years. One published today would give that newborn boy 80.4 years and a newborn girl 84.6.

The figures are midpoints, derived from adding up the death rates at each year of life. Some newborns will live longer. In Melbourne's inner east and Sydney's north shore the typical newborn girl can expect 87 years. Indigenous Australians can expect much less, about 70 for a boy and 75 for a girl.

Higher education is associated with an extra four years, according to Melbourne University's Philip Clarke, although it may not be education itself that buys the years, but something that goes with it. Higher income buys an extra five to six years. Perhaps because of that it matters which electorate you are in. People in Labor and National Party electorates get fewer years than those in Liberal electorates.

The early gains were relatively easy. In the 1860s an ex...

16:00

Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.0001 BTC
0.0001 BTC = 1.05 AUD
Converter

12:01

Gross State Product. Victoria top, but NSW the real winner Peter Martin

Victoria has Australia's top-performing state economy, but the real prizes have gone to NSW and South Australia.

The annual Bureau of Statistics measure of state domestic product puts Victoria's economic growth at 3.3 per cent throughout 2016-17. NSW recorded weaker growth of 2.9 per cent, South Australia 2.2 per cent, Queensland 1.8 per cent and Tasmania 1.1 per cent. Western Australia's economy shrank 2.7 per cent.

But the league table takes no account of population growth.

Victoria had by far the strongest population growth during 2016-17. NSW and Queensland were well behind, and the other states even further behind. When adjusted for population, gross state product per resident grew fastest in South Australia (1.6 per cent) and NSW (1.3 per cent). Victoria's gross state product per resident grew just 0.9 per cent.

 

The Australian Capital Territory and the Northern Territory did better than the states on all measures. The ACT recorded economic growth of 4.6 per cent and growth per resident of 2.9 per cent and the Northern Territory recording growth of 4 per cent and 3.7 per cent.

Victorian Treasurer Tim Pallas brushed aside the per capita measure to declare that the overall 3.3 per cent result was higher than at any point during the previous term of the Liberal National Party government.

"This data once again shows the strength of Victoria's economy, and reinforces the direction we've steered our economy across three successive budgets with a focus on the infrastructure and services Victorians need," he said.

In both big states the growth was broadly based with the production of "professional, scientific and technical services" the biggest contributor.

"For the past five years professional, sc...

07:30

Swiss cheesed Pete Wargent Daily Blog

200,000 more Oz millionaires

2017 saw another large increase in global wealth, increasing by 6.4 per cent or (USD) $16.7 trillion to $280 trillion, driven by equity prices and non-financial assets, including housing.  

Global wealth is projected by Credit Suisse to hit $341 trillion by 2022, driven largely by rapid growth in countries such as China and India. 

The US continued an unbroken run of gains since the financial crisis in 2017. 

The Eurozone saw the creation of 620,000 new US dollar millionaires as the currency picked up, and Australia once again punched above its weight in adding a further 202,000 millionaires, taking the total up from 958,000 to 1.16 million. 

Switzerland's wealth per adult has increased by by a thunderous 130 per cent since the turn of the century in US dollar terms to $537,600, albeit largely due to shifts in the exchange rate, according to the Credit Suisse 2017 Global Wealth Report. 

Among the countries in the world with available figures over the long term, Switzerland stands alone in seeing no decline in wealth inequality over the past century. 

Home to just 0.01 per cent of the global population, Switzerland alone accounts for some 1.7 per cent of the top 1 per cent of global wealth holders, with several thousand ultra-high net worth individuals with personal wealth in excess of $50 million. 

Lucky country

Switzerland is something of an exceptional case as a tax haven, but next in line comes Australia with a mean wealth per adult of $402,600, partly driven by "high property prices in the capital cities", somewhat perversely.

Australian household wealth gains have averaged 12 per cent per annum since the turn of the century, and the average debt to assets ratio is surprisingly low at only 20 per cent. 

68 per cent of Australian adults have a net worth of above $100,000, which is some eight times the world average. 

...

Saturday, 18 November

22:09

Drain the swamp Pete Wargent Daily Blog

Swamp thing

Since the hiring freeze was lifted, Canberra has seen by far and way the strongest household income growth, with gross income per capita in the ACT up from $101,600 to above $110,000 over the past two financial years.

Nice work if you can get it!

At the other end of the scale household income per capita declined in Western Australia in FY2017, back to below the level seen in the 2014 financial year in nominal terms. 


Disposable incomes followed a very similar pattern, with Canberra absolutely miles ahead of the rest, by a magnitude of almost 50 per cent. 

Surprisingly the Northern Territory has been the strongest performer over the past five years in per capita terms, with disposable incomes rising by +24 per cent. 


Queensland incomes have really struggled since the peak of the resources construction boom in 2012, and income growth has been relatively modest elsewhere.

These numbers are derived from the state accounts, and as ever some household are faring better than others. 

18:08

An opportunity for a Bill of Rights John Quiggin

One of the striking outcomes of the equal marriage survey is that a lot of people who had always assumed themselves to be part of (in Spiro Agnews phrase) the silent majority have been presented with undeniable evidence that they are actually in the minority. Not only that, but the minority to which they belong on equal marriage would be even smaller if it werent boosted by lots of people theyve always thought of as undesirable minorities. Most notably, the note vote was swelled by Muslims and recent migrants from more traditional cultures.

Against that background, its not surprising to see people who have never had a good word to say about the United Nations, or about a Bill of Rights, embracing the idea of incorporating the International Covenant on Civil and Political Rights into Australian law (were already a signatory, but that has no legal effect).

It would be absurd to incorporate a document dealing with topics as diverse as the death penalty and war propaganda (both prohibited) into the Marriage Act. Nevertheless, now that the issue has been raised, its a great opportunity for Australia to get something like a Bill of Rights enshrined into law (though of course it wouldnt change the Constitution).

Its tempting to use the thumping majority recorded in the survey as a stick with which to beat those (variously described as dinosaurs or reactionaries) who campaigned against equal rights on this occasion. But all majorities are temporary. It would be far better to use this moment to make common cause in support of protections for minorities of all kinds.

A couple more points

As occasional commenter Fran B points out on Twitter, theres no risk of the ICCPR becoming a backdoor way of implementing Brandis right to be a bigot. Section 18(3) reads

Freedom to manifest ones religion or beliefs may be subject only to such limitations as are prescribed by law and are necessary to protect public safety, order, health, or morals or the fundamental rights and freedoms of others.

and this clearly includes the protections of our current anti-discrimination law, not to mention Article 26 of the ICCPR which prohibits all kinds of discrimination.

Another appealing feature of this approach is that it doesnt leave room for lots of quibbling about what rights to protect: we cant amend the ICCPR, so the appropriate approach is to legislate it as a binding set of principles, then use subsequent legislation to interpret.

So, lets get equal marriage done straight away, then turn to the broader question of protecting civil and political rights for everyone.

17:00

The Weekend Quiz November 18-19, 2017 answers and discussion Bill Mitchell billy blog

Here are the answers with discussion for this Weekends Quiz. The information provided should help you work out why you missed a question or three! If you havent already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

Larger fiscal deficits as a percentage of GDP typically mean that there are less real resources available for other productive uses.

The answer is True.

It is clear that at any point in time, there are finite real resources available for production. New resources can be discovered, produced and the old stock spread better via education and productivity growth. The aim of production is to use these real resources to produce goods and services that people want either via private or public provision.

So by definition any sectoral claim (via spending) on the real resources reduces the availability for other users. There is always an opportunity cost involved in real terms when one component of spending increases relative to another.

Unless you subscribe to the extreme end of mainstream economics which espouses concepts such as 100 per cent crowding out via financial markets and/or Ricardian equivalence consumption effects, you will conclude that rising net public spending as percentage of GDP will add to aggregate demand and as long as the economy can produce more real goods and services in response, this increase in public demand will be met with increased public access to real goods and services.

You might also wonder whether it matters if the economy is already at full capacity. Under these conditions a rising public share of GDP must squeeze real usage by the non-government sector which might also drive inflation as the economy tries to siphon of the incompatible nominal demands on final real output.

You might say that the deficits might rise as a percentage of GDP as a result of a decline in private spending triggering the automatic stabilisers which would suggest many idle resources. That is clearly possible but doesnt alter the fact that the public claims on the total resources available have risen.

Under these circumstances the opportunity costs involved are very low because of the excess capacity.
The question really seeks to detect whether you have been able to distinguish between the financial crowding out myth that is found in all the mainstream macroeconomics textbooks and concepts of real crowding out.

The normal presentation of the crowding out hypothesis which is a central plank in the mainstream economics attack on government fiscal intervention is more accurately called financial crowding out.

...

16:18

The gains from cutting corporate tax rates "IndyWatch Feed Economics"

Here is a recent paper by Stephen Bond and Jing Xing:

We present new empirical evidence that sector-level capitaloutput ratios are strongly influenced by corporate tax incentives, as summarised by the tax component of a standard user cost of capital measure. We use sectoral panel data for the USA, Japan, Australia and eleven EU countries over the period 19822007. Our panel combines internationally consistent data on capital stocks, value-added and relative prices from the EU KLEMS database with corporate tax measures from the Oxford University Centre for Business Taxation. Our results for equipment investment are particularly robust, and strikingly consistent with the basic economic theory of corporate investment.

Via Henry Curr.  Here is a piece by Fuest, Piechl, and Siegloch, forthcoming in the American Economic Review:

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firrm effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using an event study design, we test the predictions of the theory. Our results indicate that workers bear about 40% of the total tax burden. Empirically, we confirm the importance of both labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.

Via Dina D. Pomeranz.  Ive been reading in this area on and off since the 1980s, and I really dont think these are phony results.

The post The gains from cutting corporate tax rates appeared first on Marginal REVOLUTION.

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