Monday, September 28, 2009

Kevin Rudd is "pretty smart"

Here is some good advice for all history students, memorise your American history and in particular, George Washington's strategy to defend New York from the British in the American War for Independence. The easier alternative is to simply visit wikipedia before having breakfast with Bill Clinton. These skills will hold you in good stead in the off-chance that you meet Mr Clinton. Kevin Rudd's ability to describe the American War for Independence in "excruciating detail" has led Mr Clinton to describe the Australian Prime Minister as being "pretty smart" and "one of the most well-informed, well-read, intelligent leaders in the world today." 

We in Australia have no such history, no wars fought for independence,  no tea parties where we proclaim, "no taxation without representation!" Australian's enjoy their tea too much to throw it into the sea, we do however, have a well publicised apology  made to the indigenous people of Australia (made by KRudd). But Mr Rudd is the Australian Prime Minister, not the US President, yet he was described by Mr Clinton as an Australian who "knows more about America than they know about Australia". 

Perhaps a contextual interpretation should be afforded for Mr Clinton's statements; that is, Mr Rudd is well-informed and well-read on American history. The critical question, however, is how will Mr Rudd's knowledge of American history benefit Australia? It won't, but it will promote Mr Rudd's image in the US after relations were strained when a sensitive phone call between Mr Rudd and the then US President George W Bush was leaked to the media where Mr Bush purportedly said, "whats the G20?".

Tony Abbott (a Rhodes Scholar and arguably more intelligent than Mr Rudd) cannot claim to have received the Clinton stamp of approval as one of the world's most intelligent and well-read politicians. Mr Abbott gave credit where credit was due yesterday and agreed that Rudd was indeed a smart person. He said,
"No one's ever criticised Kevin Rudd for being unintelligent. Dull? Yes. At times incapable of expressing himself clearly? Yes. But no one's ever said that he's not smart."

This is unlike the current Labor federal government, who only recognises and promotes their achievements, but does not give credit to achievements by other political parties. Kevin Rudd and Julia Gillard's recent statements suggesting that the Howard-Costello governments played no part in the development of Australian economic policy of the last decade are the best examples of our government's lack of humility.

Friday, September 25, 2009

Public servants going above and beyond their duties

Adair Turner, Baron of Ecchinswell, an academic and chair of the United Kingdom's Financial Services Authority (regulator) has made the headlines again, this time propounding that banks should use their profits to strengthen their finances as opposed to paying out lavish bonuses or stock dividends. These comments are very noble coming from someone who was once part of the banking profession himself. Amongst other thing, he has proposed that taxes be increased on financial transactions and increase that the capital requirements of banks, thus shrinking the financial industry in the UK. He said:
"[Banks] need to be willing, like the regulator, to recognize that there are some profitable activities so unlikely to have a social benefit, direct or indirect, that they should voluntarily walk away from them.”
Mr Turner has also proposed a Tobin tax; a tax intended to put a penalty on short-term speculation in currencies. It is difficult to understand why Mr Turner has suggested that banks should not profit from activities that have no social benefit. A fellow student suggested to me that this meant that pharmaceutical companies should not make abortion pills and should voluntarily walk away from these activities. Mr Turner's suggestions go against the most fundamental reasons of incorporation; limited liability and the enterprise and risk taking it encourages. 

Of course there is little chance that tax or proposals will receive any international support.  The power of banks was well demonstrated by the limited restrictions placed on recent bailout funds as the banks regarded themselves as being "too big to fail". So this begs the question as to why Mr Turner made these comments; the NY Times reported that Mr Turner was probably more interested in the reaction and "outroar" that these comments may incite. Mr Turner's comments make little sense and have even been described as "stupid", but this is precisely what Mr Turner anticipated when he made these comments. He is trying to venture into the area of politics.

This was also seen by Ken Henry, Australia's Treasury Secretary, who has been described as an "ambassador" for the Rudd government following comments defending the government's decision to impose economic stimulus. More recently, he has reject calls from the Opposition for these stimulus measures to be withdrawn, notwithstanding that these stimulus measures would impose dangerous debt burdens on future generations and deficits for at least six years. However, is it really a public servant's best interest to make these sorts of comments in public?

Public servants like Ken Henry or Adair Turner venture into dangerous territory when they assume the roles of politicians and espouse ideas or opinions such as describing recent stimulus packages as "the most effective use of fiscal policy we've seen in our lifetimes". Former Treasurer Peter Costello lay the blame back on the Rudd government for bringing Ken Henry into the political arena. He wrote that the government had attempted to "capture some economic shine from Henry" and therefore was inevitable that they would face political questioning. Very aptly, he stated that
 "Public servants are there to advise; politicians are there to make decisions."
Perhaps both Ken Henry and Adair Turner could learn from Mr Costello's wise advice. Stick to your own jobs of providing advice to politicians, and refrain from taking their ideas or recommendations to the public arena. Leave the difficult decisions to the politicians. 

Wednesday, September 23, 2009

The noble art of the physician: Hippocratic or hypocritical oath?

The legal and medical professions often do not see eye to eye. In university, they argue over who has to work harder. When they graduate, the argument pertains to who earns more money, or who has the higher societal standing. Given my background in law, it would be prudent for me to refrain from expressing my opinion on the matter. So one can imagine the doctors' disgust at frivolous lawsuits brought about by lawyers seeking an outcome for their clients. "These lawsuits are unethical!" the doctors cry. We all know that doctors take what is called a hippocratic oath to always practice medicine ethically. Many people don't know that lawyers are bound by strict rules of professionalism and actually face disbarment should they contravene these sets of ethical rules.

It came as a surprise to me when I was referred to a New York Times article suggesting an overhaul of the malpractice system in the US. President Obama famously appeared five times on different broadcasting stations on a Sunday to further his push for Health Care reforms in the US. Studies have shown that the malpractice system had imposed additional costs on medical treatment because of doctors' fears of being held accountable in malpractice suits. The result is additional and unnecessary tests being ordered to cover their bases, and thus higher health costs for the American people. This is more commonly known as 'defensive medicine' and is estimated to cost the American people in the region of US$60 billion a year.

But would an overhaul of the medical malpractice system reduce these costs? Doctors are paid more when they do more. Of course the extra tests and procedures are good for their patients but it is also good for the doctors. Furthermore, it will help protect doctors from lawsuits. If doctors are negligent then they should be held accountable for their actions. In any case, it is their insurance companies which bear the costs of any settlements or damages imposed by courts. Who says these extra tests and procedures are unethical? It is in the patient's well being and it helps protects doctors from lawsuits, never mind that it also earns the doctors significant amounts of money. Doctors took an oath to act ethically at all times, a tradition that goes back to the 400BC, they would never act unethically.

So what is there to complain about malpractice suits? When a doctor is negligent and causes injury to a patient, lawyers are brought in to obtain reasonable outcomes for their client. If a doctor is not negligent, then there are no suits. It isn't the lawyers and medical malpractice lawsuits that impose the costs on the health care system, it is the incompetence of doctors who are unable to uphold their duty of care to their patients. The predicament was well summed up by the NY Times which wrote, "The goal, remember, isn’t just to reduce malpractice lawsuits. It’s also to reduce malpractice."

The situation is no different in Western Australia. Last month it was revealed that many doctors and nurses had exploited a salary packaging system aimed directly at benefiting health care providers. It was reported that several workers had claimed up to $100,000 from birthday parties, weddings and barbecues as entertainment expenses. Of course the hippocratic oath only applies exclusively to medical practice. Nevertheless, the Australian Medical Association (AMA) had the nerve to ask for an 'amnesty' to avoid harm to the Western Australian health system in general. That is, these health care workers should not be held accountable for their deliberate tax fraud (which in certain cases may be criminal) because it is in the general good for Western Australia.

The Australian Nursing Federation (ANF) was "appalled" by subsequent sackings that came as a result of these tax frauds. ANF State secretary Mark Olson said, "I know that in many cases with these nurses we're only talking a couple of thousand dollars." Only a few thousand? No apologies have been proffered by either the AMA or the ANF, in fact, it wasn't the doctors or nurses fault at all. AMA State president Gary Geelhoed said that people were not clear about what the rules were, and thus did not knowingly breach those rules. I beg your pardon? What about the person who claimed his/her entire income as a meal allowance? Ignorance of the law is no excuse.

What we have are health care workers intentionally exploiting systems created for the benefit (in the case of salary sacrifice tax systems) and accountability (medical negligence laws) of health care workers. Who bears the cost of their exploits? The tax-payers, higher medical costs, higher medical insurance fees and ultimately, less resources available for the development of infrastructure for the greater economy (which I might add, is facing the worst economic downturn since the Great Depression).

Climate change ultimatum

Kevin Rudd and Penny Wong have issued an October 20 ultimatum to the Opposition, requiring that the Opposition finalise its proposed amendments to the governments legislation by that date. Mr Rudd remarked that "[t]his is not just a piece of political slap and tickle you know, this is a serious piece of legislation." Of course it is serious, it is a serious dud. It will lead to higher costs of energy and consumption for the Australian people without delivering much (if any) effect on net carbon dioxide emissions. Furthermore, if the legislation does not go through, Rudd has stated that it would be in the national interests to hold a double dissolution election.

What? Since when did it become the in the "national interest" of Australia to impose greater taxes on its people and increase the cost of living for the sake of passing legislation that will have little, if any, effect on reducing greenhouse gas emissions? China, the largest greenhouse gas emitter, has stated that "we will endeavour to cut carbon dioxide emissions per unit of GDP by a notable margin by 2020 from the 2005 level". Notice that China will "endeavour" as opposed to "commit". Kevin Rudd wants to be seen as a global leader of climate change at the expense of Australians and our well-being. This may also explain why Penny Wong's "ETS letter" was somehow leaked to the media before it reached Mr Turnbull and the Opposition. Very bona fide indeed.

Pardon the sarcasm, what I meant to say was that Senator Wong actually wrote to Mr Turnbull to state that the Government would negotiate in 'good faith' on the ETS legislation, if and only if, the Coalition had finalised their position by October 20. But the Opposition already had a plan in place (prior to this letter) to get amendments before the partyroom on October 19 and Mr Turnbull also gave an undertaking to Penny Wong to negotiate amendments in good faith. Of course this isn't "political slap and tickle", it is a political stunt to make the Labor party seem active in pursuit of a climate change policy.

Why should the people of Australia tolerate this insincerity conducted by our Government? Mr Turnbull in response stated:
"Her letter is really just a bit of bluster because she seems to be proposing that we adopt the process that we have already said publicly we are going to adopt ... this is a rapidly moving situation with new developments every day about what is likely to happen at Copenhagen, it makes absolutely no sense at all to be forcing a vote on this in November when you could do it in February when you are fully informed ... if they insist on proceeding with a vote in November then we will engage with them."
The Opposition has stated that it would not rush to meet the "threats and ultimatum" set by Penny Wong, and rightly so. The Government wants to rush through legislation to the detriment of the Australian people for the purpose of furthering our Prime Minister's international standing as a climate change leader. Mr Rudd wishes to enter Copenhagen negotiations with the ability to state that Australia has implemented an ETS. This is not about you Mr Rudd, this should be about the Australian people and our well-being.

Tuesday, September 22, 2009

Australians are a supplier of salient ideas

So what exactly does Australia contribute to the world? Why should other countries listen to what our politicians have to say? Kevin Rudd is by no means an investment banker, but Mr Rudd was in the United States pitching Australia as an investment safe haven because of Australia's perceived resilience in a time of great economic uncertainty. The pitch was made in the offices of Private Equity (PE) partners Kohlberg Kravis Roberts (KKR) and there were representatives from Moody's, JP Morgan Chase, Goldman Sachs and various other PE firms. 

Strangely, according to Kim Beazley, Ambassador designate to the United States, Australia is a "supplier of salient ideas" and that this could be seen through "the responses of President Obama to [ ] in the last couple of days on the G20 issues and the global warming issues". Mr Beazley was probably referring to Australia's proposed compromise deal under which developing countries would set their own binding schedules to cut carbon pollution. However, the United States has merely described this idea as a "constructive proposal".

What exactly was Kim Beazley implying when he said that Australia was a "supplier of salient ideas"? The natural interpretation would be that Australia simply provides good ideas, the other interpretation is that Mr Rudd is a "legal internationalist". That is, someone who is preoccupied with processes, forms and structures and spends little (if any) time thinking about the outcomes. Alternatively, to be blunt, Mr Rudd merely talks the talk, but does not walk the walk.

Evidence to back up this point can be seen from Mr Rudd's ambitious reform agenda aimed at lifting Australia's influence in international affairs, including the creation of an Asia-Pacific community (similar to that of the EU) or the establishment of a nuclear non-proliferation commission. His diplomatic background was supposed to improve foreign relations with Japan, China and India. Two years later, none of above have eventuated. In fact, Australia's relations with Japan, China and India have arguably deteriorated as Liberal Senator Russell Trood stated in an interview with The Weekend Australian.

With regards to Rudd's climate change policy, he is happy to force the Australian people and corporations into higher costs of energy and ultimately higher costs of living despite the wrath of the global financial crisis. Furthermore, he was happy to force Australians to accept this predicament despite having little international support to reduce greenhouse gas emissions. The emissions trading scheme (ETS) was tested in the European Union and failed, so why would it succeed in Australia? The ETS is really a scheme that proliferates the free market into environmental policy making. Ultimately, corporations or groups which do not pollute will sell their carbon credits to the highest bidders (usually the highest polluters). The net carbon reduction is negligible, but the costs are borne by consumers and corporations to the benefit of the government.

Hopefully, kRudd's ETS is just another of his "salient ideas" and that a climate change policy based on legislation and regulation forcing the reduction in fossil fuel extraction and pollution and the shifting resources towards research and development of renewable energy sources.

Friday, September 18, 2009


This is the Journal of Farcical Exuberance. This blog was previously located here but has now moved to this site which is relatively more readily accessible to the general web-browsing population. As you may or may not know, the name of this site is a play on the Journal of Financial Economics, regarded as a top tier international finance journal. The purpose and motivation of this blog is simple; to speak out against the incongruities occurring in the world of politics and financial economics.

It is inconceivable that in this day and age, the youth of today (leaders of tomorrow) have little say in issues that will affect them, and their children, in the future. There are few forums for their opinions to be heard, and if they are heard, little importance is attached to it. This generation, Generation Y or the Millennial Generation, will be the generation that bears the failures of governments today to address pressing issues such as climate change, renewable energy sources or financial regulatory framework. 

We are fortunate to live in a country with universal suffrage, yet the politicians who we elect are either incompetent or are more interested in pursuing their own self interests. Kevin Rudd is an example of both. The Australian reported:
"One of the biggest challenges Rudd faces is controlling his own ego. But if you believe you are always right maybe it doesn't present itself as a task that needs addressing. Rudd's treatment of the public service as shirkers because they are not as work-obsessed as he is and his gratuitous advice to our influential neighbouring countries on how to better run their regional affairs gives substance to this conclusion."
This sort of behaviour is typical of the ALP. Mr Rudd and his party have been abusing the systems of Parliamentary question time, by treating questions with arrogant disdain. Julia Gillard is a prime example, instead of answering legitimate concerns about the "Julia Gillard School Building Program", she has chosen to torture the Coalition about their decision to vote against the $14 billion school upgrades bill. The Government must be held accountable for its use of tax-payer funds. Questions pertaining to spending of tax-payer money to fund the demolishing of four classrooms, to build four more classrooms are legitimate and should be answered. 

More astonishing is the ALP's audacity to appoint Kim Beazley and Brendan Nelson for diplomatic ambassadors. Both men are former political foes of Mr Rudd, Mr Beazley a former leader of the ALP and Brendan Nelson a former Liberals leader. The appointment of Brendan Nelson appears to be a rare act of bipartisanship, but is also a sign of kRudd's absolute political supremacy. Only a Prime Minister who is confident of his own standing with the voting public could make such appointments. 

Let us not forget that the ALP hold government by only eight seats. Mr Rudd's famous Kevin07 slogans may have dazzled and won over the hearts of many young Australians. However, the author is most dazzled by the number of promises made by Mr Rudd and the failure to live up to these promises. Lower fuel prices was one such promise, and we all know how well Mr Rudd's proposed 'fuelwatch' scheme went. Broken promises, incompetence and arrogance do not go well together. 

Malcolm Turnbull summed it perfectly when he said, "Our vision of government is to enable and to empower, Labor's is to direct and command". Mr Rudd's 'Presidential' style of leadership and preoccupation with the micromanagement of government has left many voters wondering if they made the right decision in the previous elections. This blog, amongst other things, will be seeking to remind its readers of the short-comings of our Prime Minister and highlighting evidence pertaining to his arrogance, incompetence and his lack of vision for our nation.