Now I admit there are a few technical issues to overcome. We have to invent mass volume teleporters (we can move a few atoms at the moment though), we have to mass produce anti-matter (just a scaling up issue from a few atoms to kilotons of the stuff), we have to build a million ton Starship in Earth Orbit.

Now these are real problems, but trust me, they are insignificant to the issue of carbon sequestration, in both cost and technical difficulty. And this solution does have the advantage that, albeit difficult, it actually has a higher probability of succeeding.

(1) Mouthpieces for corporations and ‘think tanks’ (e.g. paid lobby groups (actually I typed that ‘tjink tanks’ the first time, looking at it it seems more appropriate).

Their message can be easily summarised: Less tax for the rich and corporations, lower wages (and benefits) for everyone else. Monopolies are good, despite the rabbiting on about ‘competition’, I’ve never heard one say anything about yet another takeover/merger/etc, that it ‘wasn’t good for productivity and investment’. They are paid to make those statements. If they don’t they will be fired and someone else will say them.

(2) Academics, who with a very few honourable exceptions live in a fantasy land of arcane, irrelevant theory.

(3) Realists, including some excellent amateurs, ‘eco-physicists’, cognitive psychologists and mavericks from the economic mainstream.

Don’t knock the amateurs, an example is the ‘peak oil’ crowd, largely non-mainstream, who have been more right than anyone else. Or the famous ‘War Nerd’, who has also been right every time about the outcomes of all those little military adventures that Western countries are so enamoured with nowadays. Or, our own Poll Bludger, who was bang on and more accurate than every ‘professional’ in the last election.

Anglo-Saxon Govts, whatever the party, all subscribe to post 1980 neo-liberal economics. The Rudd (did I say Dudd?) one is no different.

The US, UK and Australian Govt’s policies over that time have been designed to:
• Maintain US financial system leadership (with a nod to the UK). Allowing them to extract a ‘rent’ from the rest of the world for basically nothing.
• Reduce wages by legislation, smashing unions, more immigration, etc, plus ‘free trade’ and ‘globalisation’ (which weren’t).
• Aid and maintain monopolies and oligopolies
• Reduce the tax ‘burden’ on rich people and companies, lower rates, more loopholes, etc.
• Reduce research and development and science (subtle sociology here which I’ll go into another time).

In simple terms, try to return to a supposed ‘golden age’ for the elites, the 1920’s in the US, which was in reality quite a different time.

The Rudd Govt record tells you exactly where they want to go:

• Cut withholding taxes on overseas corporations.
• Cut solar incentive (ok it was not that great but it was something, I don’t see any alternatives being offered).
• Spend money on carbon sequestration*.
• Cut innovation grants to small and medium companies. Note: did NOT return the R&D tax allowance to previous levels.
• Cut $36M from the CSIRO.
• Increase immigration, already at a historic 300,000 per year to 330,000, adding that they would also be increasing low skilled migrants. Despite their own Budget forecasting increased unemployment.
• Spend .. HOW MUCH .. on a futile bid at getting the World soccer tournament here .. cynical populism .. nah.

OK, so you tell me where they are going?

Standard neo-liberal stuff. Bit of bone here and their to keep the proles in line, a bit of rhetoric and populism to keep everyone distracted while they get on with their real job economically.

Unfortunately for them, like the US and the UK the economy here is about to fall off a cliff.

Overburdened by debt, with a huge current account deficit ($70B+ a year now and growing), running out of oil (only 60% self sufficient), running out of food (at this rate we will lose food self sufficiency in 6-8 years).

In 3 years:
• Average property values will have dropped by 30%, some areas will be a lot more.
• Unemployment will be 8-10% (officially that is, the real numbers are double that).
• The Ozzie dollar will be a peso (you can’t have debt and deficit numbers like that and maintain a strong currency).
• Inflation will be in the 6-10% region (all imported and there is nothing we can do about it).
• Wages, for the majority of people will be down in real, inflation adjusted, terms. For the lowest end of society they will go down in actual dollar terms. For the unemployed they will be very down.

But don’t worry, we will still build new roads, desalination plants, cut the CSIRO budget (again), give even more tax breaks to the elite, bring in even more migrants and use our tax money (the elite don’t pay tax) to bail out the banks, etc, that start to go under. And the gap from the bottom to the top in wages and wealth will grow more and more.

Protests? Well we have all that lovely ‘national security’ legislation to use.

Now ignore this and go back to rabbiting on about Hansen or whatever.

You wrote:”And I agree, yes, variation matters. Yes, someone who has to drive a lot is hurting at the moment relative to someone who bikes to work. But macro policy or even pensions just can’t be based on each individual’s personal inflation rate.”

Well, my feeling is that some folk are saying, “The official inflation rates [CPI] sdon’t seem to tally with what I notice from week to week!”. It’s a story of “feel my pain!” or “Treasury boffins don’t understand how tough it is for me”. I agree, macro policy has mostly to be based on national or regional totals, means [averages], long-term trends, projections of totals and means, etc. For that reason alone, the macro policies are unlikely to meet ALL of the expectations of an individual or household.

That’s where welfare, charities, social workers, counsellors et al can try to fill in the gaps and help the worst-affected. Understood.

cheerio

If you Google “household expenditure survey, detailed”, you’ll get to an ABS page from which you can download a spreadsheet on the detailed spending of all households on each of the 400 items. Using sg’s example, spending on TVs per week ranges from $2.35 to $5 per week, or 0.6% to 0.3% of total household spending, depending on income quintile. Probably enough to buy a cheap TV every 2 years, or a good TV every 10 years? Food and oil are often excluded from ‘core’ calculations (used for monetary policy targeting purposes only) because their prices go up and down a lot so basing longer-run policy on those measures can be a bit difficult. But policy analysts look at both core and headline rates. If you still think the ABS is making horrible mistakes, all the info you need to prove it is publicly available, and you’ll be doing a public service if you expose them. But my bets are on the ABS. (Issues of international comparisons are much harder, coz what’s the appropriate basket? But there are hundreds of papers/books dealing with this.)

Re Ambigulous/variation: Figure 2 in this publication (
http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/6D5F1DDFF4729C60CA25705900755727/$File/65300_2003-04.pdf) shows the highest vs lowest income quintile spending shares, and there are important differences, in exactly the way you would expect. Relative standard errors on estimates are given in Tables A1 and A2. And I agree, yes, variation matters. Yes, someone who has to drive a lot is hurting at the moment relative to someone who bikes to work. But macro policy or even pensions just can’t be based on each individual’s personal inflation rate. (Also thanks for kind words on knowing my stuff, but macro’s not really my area these days – google is my friend, though.)

you clearly know your stuff. You wrote: “the ‘average’ government transfer recipient household don’t appear to be very different from that for the average of all households.”

Fine. Now I have one supplementary question, if I may. When the surveys of household expenditure are published, do they publish the sample standard deviations for each category of spending in the basket? e.g. if the average household spends (say) $136 per week on food…, do they cite
$136 +/- $22
so we can see the SPREAD in that figure over the sample;
and for fuel it could be $63 +/- $19,
and for rent it might be $196 +/- $68, etc.
Are you able to advise?

In an earlier post I suggested that MEAN [average] values of expenditure might not be telling us the whole story, even though the means are calculated in a fair and reasonable and technically correct way.

Simple example: Fiona uses public transport (electric trains) + bike; Jimmy is a tradesman in a rural town and does 77,000 km in his car every year: they may be affected quite differently by a 36% increase in fuel costs (though I am aware they’ll both pay more for any food & other goods transported by trucks).

cheers

An alternative explanation is that the CPI (similarly to an odds ratio) is a number which people just can’t relate to reality. So that when one hears “3.7%” it sounds like it has to be low, but the actual real effect of a 3.7% inflation rate for a normal person is actually really noticeable.

As for international comparisons, any survey which turns up Tokyo as more expensive than Sydney is just wrong. The methodology of these things seems okay, but there just has to be something wrong about them. People go to Tokyo with Nova, for example, they travel to Asia regularly and drink out regularly, and come home with savings, all on a $35000 a year job – but according to these surveys the city they lived in is the most expensive city in the world. There’s something wrong with these “representative baskets” and price comparisons more generally. I don’t have to know what that something is to think something’s up.

But this started with the question of why policy makers/economists are not particularly worried about general price inflation at the moment, not why some random high income person doesn’t notice it. This was suggested to be because economists are male and high income, so they don’t actually see any prices themselves, AND because the statistics that they look at in their daily jobs are not telling the true story. If the statistics are not wrong and the economists are looking at the statistics (I can assure you they are), then how does it matter for policy whether they notice prices themselves when they are shopping?

And again, the calculations of price inflation for the basket of goods purchased by the ‘average’ old age pensioner household and the ‘average’ government transfer recipient household don’t appear to be very different from that for the average of all households. So there’s not much evidence that signals on inflation coming from the average CPI are wrong for even very low income households. This doesn’t mean that it’s not affecting some households, or that there aren’t any households going through rough times for whom any price increases are a big problem (sorry, Maggie, sounds very nasty; I hope your partner gets better soon). This is why, eg, pension payments are indexed to the CPI. But there isn’t much evidence this indexing is wrong (due to wrong basket issues), or that macro policies are wrong because they’re not based on correct estimates of average price inflation rates, much less that policy is wrong because the economists involved don’t know what’s really happening to prices.

yes they’re averages over households, and yes they must be, and yes they are calculated correctly; and yes the best way is to hold the “basket of goods” steady over a period, otherwise comparisons are impossible; and yes the basket must change (slowly) to reflect changes in consumption [e.g. no longer includes typewriter ribbon or oil lamps or other superseded products]. Yes, consumers substitute: sometimes from week to week. Some consumers are more picky about price than others.

I’ve heard of the different ways the CPI can be calculated (Laspeyres? etc.] But that wasn’t my main point. My point was that someone for whom food and petrol (just examples here) cost a RELATIVELY LOW fraction of their weekly expenditure, is LESS LIKELY to notice a sudden (or indeed a slow, long-term) increase in that sub-basket of the CPI basket. I think that’s likely to be the case, because if the weekly supermarket visit costs an extra $40, that might be around the size of a “discretionary” purchase of 2 bottles of wine,

OR it might be such a low fraction of the person’s total “discretionary” spending [non-essentials like restaurant bills, holidays, random recreation, dabbling in shares, etc] that it simply WON’T be noticed. That may be because the discretionary spending is “lumpy” – it bounces around to a large degree, from week to week. Not just because boys are careless with money and girls are careful (though that may be true – on average – also).

IMIO the “noticing price rises” is about two things:
i) how different from a mean value, many persons’ spending is,
and
ii) what fraction of one’s income is taken up by the ‘goods du jour’ being discussed in the press [other recent examples include "soaring rents" for renters, "soaring interest rates" for mortgagees, "rising child care costs" for those using child care, etc etc]

I don’t believe economists have been negligent or ignorant. I do believe there’s a good deal of interesting texture in the particularities of household and individual spending that simple averages can only hint at. Those who wish to ameliorate poverty, may be interested. I dunno. Some journalists cover these topics, others seem oblivious or uninterested.

To any passing economist: please make allowances if I’ve used terminology incorrectly above. Corrections welcome.

BTW (but for another thread) almost the same problem = “mean versus individual variations” bedevils some sciences, such as ecology, hydrology, etc I think. Statisticians can deal with “extreme events”; mean [average] values can be very misleading; temporal and spatial VARIABILITY is sometimes the main effect!!, rather than a little quibble to tack onto a story where the mean is the leading indicator.

In a separate context of theorising, what did Karl Marx call it? “uneven development”? My guess is that development is always uneven: get bloody used to it.

IMIO = In My Ignorant Opinion

Living in a resource town, I am surrounded by relatively high income earners and not one of them has grizzled to me about the price of groceries. The biggest whinge has been how much more a six pack of black rats costs now. Big deal. If you earn the big coin, rising food costs will scarely register as significant with you.

So yes they are aware of the spiralling price of groceries but they don’t give a rat’s (much) because it doesn’t affect them personally.

DD’s question remains: precisely how are these calculations wrong? The issue of regularity of purchases, which sparked this post, is one possibility, but even that suggests a gap between perception (with consumption bundle adjusted for regularity of purchase) and what’s actually happening (based on average consumption bundles over a longer period of time).

The banana example adds another layer of complexity – the CPI gives you cost of living changes with no substitution away from more expensive goods (it can’t, or it can’t do its job properly). But that means that if there’s a lot of substitution, actual costs don’t increase as much as it appears from the CPI. (Naturally, this is easier in the case where banana prices increase but other fruit prices don’t than in the case where all food prices are increasing rapidly.)

But economists have actually thought about that, you know. A lot. Even male ones.

More broadly on the female economists question, a few points. One: no woman has ever got the ‘Nobel’ in econ. Two: for the first time last year, a woman (Susan Athey) won the John Bates Clark Medal for best young economist. Three: for Mark, lots of info on and analysis of women in economics in the US at http://www.cswep.org/annual_reports.htm, which discusses leaky pipeline issues.

Maybe we need to follow Malaysia’s example:

“…the two most important regulators in financial services in Malaysia are also women — Tan Sri Dr Zeti Akhtar Aziz is the globally respected Governor of Bank Negara Malaysia and Dato Zarinah Anwar is the chairperson of the Securities Commission of Malaysia, the securities regulator. Dr Zeti is
often regarded as the most powerful woman in international finance, widely respected and who won the FT’s ‘Central Banker of the Year’ Award a few
years ago.” (Arab News)

So if in my household FOOD or PETROL makes up a much higher, or indeed much lower, proportion of weekly expenses, then isn’t it possible I won’t really notice the price rises that the media are talking about?

Or as someone as already said, if one is very highly paid, the food AND petrol are likely to make up only a low % of one’s weekly expenses (because one is rolling in ‘discretionary income’ after routine weekly chores like eating and driving have been paid for). What’s $50 here or there?

Some folk stopped buying bananas for months after that cyclone hit the Quinceland Bananas. Others didn’t notice. It’s an income thing. It really is.

I’m not an economist (obviously). In our setup the working husband and the working wife hop for groceries about equally. The husband has learnt where all the necessaries are shelved in the supermarket. He quite enjoys the visit. Still doesn’t remember to take a heap of ‘green bags’ in, but.

Its no good arguing “well they must be wrong” without specifying just why they’re wrong. That the results of the survey don’t accord with your political preferences is not enough to discredit the ABS professionals, who have spent many years thinking hard about these questions.

It may just be me, but whilst I do see plenty of blokes at my local ALDI (most with their wives, some not) very few of them look like they are economists doing their weekly shopping, I have to say.

Well, economists are a scruffy lot but you shouldn’t draw conclusions from appearances.

Exactly. But the question is, how can anyone ‘cut through’ the hyper unreality of what passes for economic debate? It is a rhetorical question of course. The result is policies that continue to tilt the economic field away from people whose sole source of disposable income is what they earn from wages and salaries.

Calculations I am doing at the moment for work activity have just reinforced the unbelievable gap between what people actually earn (even in industries not reliant on the Award safety net), and what the people who make and influence policy, earn. It is not just the base numbers. It is the intensity of work effort (measured in additional hours worked) that is required just to keep in the same relative place. I just wish the moonbats who blather about ‘prosperity’ were required to work the 12 hours a day (including shift penalties of course, we wouldn’t take that away from them!), rent/pay mortgage on a house, drive the average 15ks per day to and from work, and maintain a couple of kids to make a living which is AWE.

Perhaps we might hear a little less BS about how ‘well off’ everybody is, and a bit more attention might be paid to the unbeleivably long hours that have to be spent away from home, earning a living, just to maintain the ‘glow’ that comes from being ‘the best off you have ever been’. Bah humbug.

It may just be me, but whilst I do see plenty of blokes at my local ALDI (most with their wives, some not) very few of them look like they are economists doing their weekly shopping, I have to say.

Just what does an economist look like?

Besides maybe they do their grocery shopping online!