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Eco-philo-pol

Has Beazley lost his marbles along with Labor’s chance of winning the next federal election?

Mark Latham may have been potty mouthed, his policies may have been misguided and he may have ended up being universally despised. But one thing he had going for him was conviction. To me, he came across as knowing how he wanted Australia to be, and he believed in his policies. In other words, he had a vision, even if most Australians clearly disagreed with that vision. Kim Beazley, on the other hand, seems at a total loss when it comes to articulating a clear platform for Labor, beyond the expected vociferous opposition to the Coalition’s workplace reforms. Worse still, Beazley seems intent on hijacking his own tilt at the prime ministership by announcing policies that appear to be completely devoid of anything resembling logic.

His most recent idea, which can only be described as stunningly ill-conceived, is to have all those coming to our shores – even tourists – sign a pledge to respect Australian values. Not only is this idea unworkable, it’s just plain stupid, because it won’t have any effect whatsoever on improving migrant integration. This laughable policy follows hot on the heels of Beazley’s confused uranium policy, which I’ve commented on previously. I note with interest that Bill Shorten, the secretary for the Australian Workers’ Union and new Labor candidate for Maribyrnong, has also called for Labor’s “half pregnant” uranium policy to be scrapped.

Kim Beazley is trying to match John Howard’s political savvy by attempting to appear clever and wise. Unfortunately, all he’s managing to do, in my eyes, is prove that he is incapable of leading this country. John Howard’s call to the state Liberal and National parties in the wake of their humiliating defeat in the Queensland election was basically “get a plan, get a vision and spend time working on them”. Federal Labor would do well to take that advice on board, too. Beazley has been completely reactive, continually playing catch-up, and therefore relying on half-baked policies which he feels compelled to introduce to look as though he’s providing a sensible option to the Australian people. It won’t do. Labor needs to provide us with an alternative to the Coalition at the next election; but on current form, I can’t see that many people will trust the management of our country to the Labor party, workplace reforms or not.

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Eco-philo-pol

Beazley on Uranium

Kim Beazley, leader of the opposition, is asking his colleagues in the Labor Party to support an about-face with regards to their long-standing “no-new-mines” uranium mining policy. Essentially, Beazley is now arguing that new uranium mines should be opened so that Australia can benefit economically from responsible mining of the fissile material. Nevertheless, Beazley is at pains to differentiate his view on uranium mining from that of the Liberal Party. Like Kim Beazley, the Liberals are keen for Australia to become an “energy superpower” on the back of uranium mining, but they are also open to the idea of establishing nuclear power generators as a means to reduce carbon emissions and to diversify Australia’s energy sources. Furthermore, John Howard is now speaking of the possibility that Australia could enrich the uranium that it mines, rather than leaving the enrichment phase of the nuclear fuel cycle to the nations that already have well-established enrichment facilities such as the US, France and Japan. Mr Beazley, however, remains firmly against the development of nuclear power plants and enrichment facilities in Australia, saying that Australia’s energy future is with renewables. In effect, Kim Beazley is saying that it’s okay for Australia to dig up uranium and export it to other countries where it will be enriched and then used as fuel in nuclear power reactors, but it’s not okay for Australia to generate electricity from uranium.

This new policy stance smacks of hypocrisy, and is surely no less arbitrary than Labor’s existing “three mines” policy. I can see absolutely no sense in Kim Beazley’s position on the use of uranium within Australia. Either uranium should stay in the ground or Australia should be able to use it to generate electricity as other nations do. Furthermore, if Australia is to increase uranium mining, why ought we not add value to that uranium by enriching it ourselves, especially if we are to develop a nuclear power industry. As John Howard notes, it would be ludicrous to sell uranium to, say, the US, and then buy it back in its enriched form for use in a nuclear power generator. If Beazley’s reasons for not developing a nuclear power industry were grounded in economics – that it is probably not cost effective to build nuclear generators – or a genuine concern that leaving behind radioactive waste for future generations is morally reprehensible, then fair enough. But his objections to this point have been totally unqualified.

Obviously, it would be great if Australia could develop its renewable energy industry to the point where fossil fuels and nuclear power aren’t needed. But the reality is, at this point, and for several decades to come, coal, gas, hydro and nuclear power are and will be the only technologies capable of meeting Australia’s base load requirements. Most renewable energy sources have the severe limitation that they cannot produce electricity on demand: the sun doesn’t always shine, the wind doesn’t always blow, the waves aren’t always rolling in. For the same reasons, they cannot satisfy peak-load demand either. Things might change if some form of large-scale energy storage technology was devised, but this won’t happen soon. Even though the entire east coast of Australia (including Tasmania) is linked by an electricity grid, and it’s possible that the production peaks and troughs of renewable energy sources could be probabilistically compensated for (if the sun isn’t shining in Melbourne, the sun might be shining and the wind might be blowing along the coast of Queensland), demand would outstrip supply. This would be the case even if a huge increase in the efficiency of electronic equipment were factored into the equation.

I’m undecided on whether the nuclear power option should be pursued. But I do know that if we increase our mining of uranium, which both major parties seem to think is a good idea and which will therefore probably happen unless the Greens are miraculously handed government at the next election, then we should also consider developing our nuclear power industry if it is economically viable. Beazley’s position makes no sense at all. We ought to invest in research on renewable energy because Australia can eventually become an energy superpower by exporting renewable technologies too, but it’s fair to say renewables won’t be able to satisfy our power needs on their own for a long time to come.

Update (26/07/2006):

According to this report (pdf) from the CRC for Coal in Sustainable Development, Concentrating Solar Thermal (CST) power may, in fact, be able to satisfy a large portion (if not all) of Australia’s electricity needs. One thing in its favour is that it can store energy as heat, which is much simpler and more cost-effective than using batteries. Although the report cites some sources that claim CST will be cost-competitive with coal by 2013, the lowest prices achieved by CST technologies are around US$120/MWh, which are the lowest of any solar technology. By comparison, the average price of electricity in Queensland in the 2005-2006 financial year was A$28.12/MWh.

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Eco-philo-pol

Buffet Gives to Gates

Warren Buffet, one of the wealthiest people in the world, has given 85% of his fortune to charity. This works out at around US$37.4 billion. The lion’s share will go to the Bill and Melinda Gates Foundation, a worthy recipient if ever there was one. I’m a fan of such organisations, as I’ve previously commented.

As a sidenote, a recent article in The Economist speaks about the rise in philanthropy, and the pitfalls therein. Fewer scandals and better governance might encourage more of the world’s rich to donate a large slice of their fortunes to worthy causes.

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Eco-philo-pol

The Undercover Economist

I recently bought a book called The Undercover Economist by Tim Harford. After a rather too cutesy beginning, in which his explanations of how scarcity determines the price of everyday items are somewhat more longwinded and waffly than they ought to be (a bit like this sentence), Harford’s book warms to the task of convincing the lay reader (for that is the audience at which the book is aimed) that free markets are good for the most part. If you’ve ever wondered about the connection between used cars and private health insurance (I can’t say I have, but I found that chapter interesting), or why countries like Cameroon are poor, or why China’s economy is taking off, then this book is for you; but don’t expect too much depth.

The Undercover Economist starts out by giving a pub-counter lesson in David Ricardo’s theory of economic rent. It goes on to explain the strategies used by Supermarkets and other shops to get as much money out of you as possible, and why competition is important. The middle chapters outline why perfect markets convey ultimate truths, why and how externalities (positive ones and negative ones) ought to be accounted for and under what circumstances markets fail. It’s in the chapter about market failure that he discusses used cars and private health insurance – which are both examples of where the market can and often does fail (hint: think about the disparity between what a seller knows and what a buyer knows in the used car market or in the market for health insurance). There’s a chapter which explains why rational investment behaviour leads to erratic stock prices. One of my favourite chapters was about designing auctions to sell radio spectrum: Australia, New Zealand and the US got some of their auctions terribly wrong, leaving the public short-changed. Britain, on the other hand, designed a near perfect auction for 3G licences, leading to a big windfall for the public (Harford goes on to show why the common assumption that high costs for 3G licences imply high prices for consumers of mobile phone services is a fallacy). The last three chapters tackle "the big issues", which are often the subject of news stories: poverty, globalisation and the rising behemoth called China. Harford argues that sweatshop conditions are better than what came before them, and that sweatshop economies are a mere stepping stone to a much brighter future, which, given the evidence is an argument hard to refute. However, he doesn’t answer the question as to whether the sweatshop path is the only way to an improved quality of life.

Overall, an interesting book, though not groundbreaking. It provides a nice refresher in Economics 101, and clears up some misconceptions for the lay reader. For example, it’s easy to think about prices and rents the wrong way, and sometimes I catch myself making the mistake. Starbucks on the corner of Queen’s Plaza in the city will charge high prices for coffee because that’s what I’m willing to pay, and the owner of Queen’s Plaza charges high rent to Starbucks because the price of a cup of coffee is high. The price of a cup of coffee isn’t high because rent is high. Some people have claimed that Freakonomics is a better book, though Harford does a better job of showing how economic theories postulated in the nineteenth century explain a lot about the way the world works in the twenty-first century.

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Eco-philo-pol

Political Correctness

I abhor political correctness in all its forms. Some months ago, I watched a news or current affairs story on how some groups have urged the title and lyrics of Baa Baa Black Sheep to be changed because they could be viewed as racist. In addition, it seems there’s a problem with Humpty Dumpty being sexist. Finally, Fairy Penguins can’t be called that any more because these days the word fairy connotes homosexuality in addition to its regular usage as the name given to a class of tiny, imaginary humanlike creatures typified by Tinkerbell from Peter Pan. The other day I was also told how the title of a Nickelodeon cartoon had to be changed in the UK because the word bender is associated with homosexuality. In the USA, the word flamer is avoided by cartoons and computer games because it is also used to describe a homosexual. The question is, who exactly is suggesting bans on all these words, as in the case of flamer, bender and fairy, it’s surely not individual homosexuals who take offence at such terms. I’m left wondering whether one day there will be any words left in the English language which haven’t been blacklisted by some special interest group or another.

For the record, the suggested alternative to Baa Baa Black Sheep was Baa Baa Rainbow Sheep, but then that surely calls into question the sexual orientation of the sheep, and it probably won’t be long before the same people are calling for a ban on the word rainbow.

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Eco-philo-pol

RU486

With both houses of parliament voting to hand control of the drug RU486 to the Therapeutic Drugs Administration, women who choose to abort their pregnancy now have a choice as to how that abortion will be carried out. At least, they will soon be able to use RU486 to terminate their unborn child if they have made the choice to abort before the 6-8 weeks period during which the drug is effective. Given that the debate was not supposed to be about whether abortions should be allowed but whether women ought to have a choice about how abortions are carried out, sanity seems to have prevailed.

Some people of considerable influence, however, did their best to make the debate about abortion itself. Tony Abbott, the Health Minister, was one of these people. He made no bones about bringing his religious beliefs to the debate. This raises a whole heap of questions about separation/integration of religion into politics, but this post won’t be asking any of those questions. Rather, the object of this post is to highlight what I think is very valid point made by the Health Minister:

We have a bizarre double standard in this country where someone who kills a pregnant woman’s baby is guilty of murder, but a woman who aborts an unborn baby is simply exercising choice.

Although some have described Mr Abbott’s statement as "unfortunate" (notably Amanda Vanstone), to me, as somebody who is generally pro-choice, this poses a real moral dilemma, which cannot be dismissed and simply swept under the carpet. Unfortunately, I don’t see how this dilemma can be adequately resolved.

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Eco-philo-pol

Nguyen hanged

Today Singapore executed a man because the drugs he was smuggling to Australia may have resulted in the deaths of many people. Nguyen was caught. The drugs seized. The drugs never even reached the streets of Sydney. I will never understand how any country can justify putting someone to death because something they might have done had they not been caught might have resulted in people dying.

Number of people killed by Nguyen’s drugs: 0.
Number of people killed by the Singaporean government: Nguyen plus countless others.

Joseph Koh, the Singaporean High Commissioner in Australia was quoted as saying:

We respect Australia’s sovereign choice not to have capital punishment. We hope Australia will likewise respect Singapore’s sovereign choice to impose the death penalty for the most serious crimes, including drug trafficking.

The sovereign choice to impose the death penalty is one thing; having a mandatory death sentence for a crime which may have resulted in the deaths of some people were it not foiled, is quite another, especially when the means of execution is a barbaric relic of the dark ages.

In this instance, Singapore asks for respect where there is none to be found.

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Eco-philo-pol

Transferring money internationally

I had a sum of money held in an account at the Bank of America. My problem was how to get this money back to Australia quickly and cost-effectively. Due to the said bank instituting some very strict regulations (or maybe it just hasn’t moved into the 21st century) and a very modest weekly withdrawal limit, my options were limited. I thought simply closing the account might be the easiest way if they’d wire the balance of my account to my nominated bank. But alas, I cannot close the account remotely (via phone, letter or fax) unless the balance of the account is zero. I have a cheque book which is exempt from the withdrawal limit, but it takes nearly a month for an international cheque to clear these days and my local Australian bank suggested I find an alternative means of getting my money home. The Bank of America’s online banking system allows transfers only to accounts held with other US banks, and even then only to accounts that are held in your name. I could have used my cheque (or check, if you want to use the American spelling) card, but the withdrawal limit meant I’d have to transfer my cash in installments, with each transaction incurring foreign exchange charges as well as any other charges the banks wanted to tack on. So, I started investigating alternative methods.

One option was to use PayPal. This solution is quite attractive, because the fees are quite competitive, and I can hook up both my US and Australian bank accounts to a single PayPal account. By setting up my PayPal account to directly debit the funds from my US account, and then to credit my Australian account, I could get my cash home fairly cheaply. Direct debits, like cheques, seem to be exempt from the withdrawal limit. The costs in using PayPal are incurred in the conversion from US dollars to Australian dollars. There are no fees, per se, for withdrawing money from your PayPal account, as long as you withdraw above a certain threshold amount. Furthermore, there are no withdrawal limits once you’ve verified your identity.

I looked into using traditional telegraphic transfer companies such as Western Union, but that was a no go since there was no way to transfer my funds from the Bank of America to the wire service.

Moneybookers was another potential option, but again, I could not get my funds from the Bank of America to Moneybookers, because Moneybookers’ Bank Account is held in Frankfurt. Besides which, due to the restriction that I must own any account I’m transferring money to via SWIFT or whatever, Moneybookers turned out not to be a viable alternative.

I also came upon OzForex, who are an online foreign exchange service. You open an account with them, and you can buy and sell almost any currency through them. I needed to sell US dollars and buy Aussie. I told them I needed a US account into which I could deposit my money, and it turned out they had one (at this point I wasn’t aware of the Bank of America transfer restrictions; in fact, I’d called up Bank of America to confirm that I could transfer money to someone else’s account held at another US bank and they said it wouldn’t be a problem!). Of course, it turned out I couldn’t transfer money to their US account because I didn’t own that account. But, I thought, what if I could transfer money to their account via PayPal, thereby taking advantage of OzForex’s excellent rates and low fees, and avoiding any PayPal fees? Unfortunately, anti-money laundering regulations prevent OzForex from accepting deposits from a PayPal account, since PayPal is essentially acting as a third party. Nevertheless, I found OzForex’s customer support to be absolutely fantastic. They were on top of everything, and tried to ensure that everything was progressing smoothly. When you trade currency through OzForex, you’re more or less exposed to spot market rates, meaning OzForex’s rates are more volatile than the rates you get at banks, who generally leave their rates unchanged for hours at a time. This means it’s possible that at any given moment, you might be better off converting your money through a bank. But the thing is, with OzForex you can credit your account, and then have the conversion take place at a time of your choosing. You can even make a limit order, which means you instruct OzForex to buy or sell one currency for another at a target rate that is better than the current spot rate. This allows you to beat the banks on most occasions. Their testimonials page makes for interesting reading. If ever I have a need to transfer money internationally in the future, I’ll be sure to remember OzForex.

In the end, the pure PayPal solution won out. A bit more expensive than if I’d been able to use OzForex, but cheaper and much faster than transferring the money via cheque or ATM withdrawal.

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Eco-philo-pol

Struggling farmers should leave the land

A while ago I wrote that struggling farmers should be enticed off the land for environmental and economic reasons. Now a new CSIRO report suggests that drought aid simply prolongs farmers’ agony and delays the inevitable, and that the billions of dollars of aid given to farmers would be better used to help farmers leave the land. These aren’t new revelations, of course; it’s all been suggested before. But this time it’s in a formal report from the federal science organisation, and it comes at a time in this country’s history when water shortages are foremost in the minds of many people. Maybe somebody in a high place will listen this time.

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Eco-philo-pol

Biofuels becoming big business

Not last weekend but the weekend before, I caught up with Ben, Anna and Matthew over a cup of coffee. During the course of the conversation I happened to ask Ben, who’s my authority when it comes to cars, about Ethanol and why some people and lobby groups claim that too much ethanol in your fuel mix can damage your engine. His response was that he thought it can corrode some materials used in the engine. More interestingly, he introduced me to the concept of biodiesel: diesel produced from vegetable oils and animal fats. It can be used as a straight replacement for standard diesel which you buy from the bowser. Hobbyists have been making their own biodiesel for years from new or used vegetable oil. Our conversation piqued my interest, and I’ve since been doing some investigating and keeping a lookout for any news stories to do with biodiesel. Well, this morning there was a story in the finance section of news.com.au. It turns out that it’s not just hobbyists who are interested in biodiesel. It’s on its way to becoming big business, driven by high world oil prices and the push for more environmentally friendly fuels. The EU has passed legislation to ensure that biodiesel constitutes no less than 5.75% of all fuel consumption by 2010 in an effort to meet its Kyoto requirements. This has seen the European market for biodiesel grow to $A5 billion per year. There are some Australian companies already getting in on the act. See the news story for more information.

Karen’s 1985 Corolla, which runs on unleaded and an additive (because the engine was designed for Super), is performing admirably for the moment, but we’re resigned to the fact that we’ll need a replacement within the next few years. I’ve been considering the purchase of a diesel car for some time now. They are generally more efficient than petrol engines, which means you need to fill up less frequently. They’re popular in Europe and they seem set to make an impact in Australia beyond 4WDs and heavy vehicles. I’ve got my eye on the Peugeot 307 XSR HDi. :-)

Until you can buy biodiesel from the pump, you’ll have to make it yourself. I’m not sure that having a biodiesel lab in the backyard will go down too well. But making your own fuel certainly has cool factor.