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Fossil Fuel Subsidies and Free Market Hypocrisy

In an almost unbelievable report released on the 18th of May, the International Monetary Fund has shown that subsidies for fossil fuel companies have reached $10 million dollars a minute. The companies are benefitting from global subsidies of 5.3 trillion dollars a year, more than the total health spending of all the world’s governments. It seems that polluters have been failing to foot the costs imposed on governments by the burning of coal, oil and gas, which include the adverse environmental effects of climate change such as floods and droughts, and the harm caused to local settlements by air pollution.

Quoted in an article over at The Guardian, climate economist Nicholas Stern of the London School of Economics said that the figure was likely an understatement.

“A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.”

The IMF’s projections for outcomes should the subsidies be cut are astounding. It has claimed that ending the subsidies for fossil fuels companies would cut global carbon emissions by a fifth, and slash premature deaths from outdoor air pollution by 50%, equivalent to some 1.6 million lives annually. Resources freed by ending the subsidies could also drive economic growth and reduce poverty through a redirection of the wasted funds into infrastructure, health and education.

A report from February 2015 by the Nordic Council of Ministers and the Global Subsidies Initiative of IISD found that “the removal of fossil fuel subsidies to consumers and to society could reduce global greenhouse gas emissions by between 6-13% by 2050.”

So who’s doing all the subsidising? China comes in on top with around 2.3 trillion per year, with the United States trailing not far behind at around 700 billion annually. Other large contributors include India, at 277 billion, Russia at 335 billion, and Japan, with 157 billion spent every year on subsidies to fossil fuels. A quarter of the total costs result from climate change driven by emissions, amounting to 1.27 trillion per year.

The official response in the past to the skyrocketing figures has been typically blustery but without a great deal of effective action. World leaders called for an end to the subsidies at the 2009 G20 conference, but little progress has been made since. While there are economic factors at play, as well as the political influence of big business, governments committed to fulfilling their role as representatives for their citizenry should not balk at the prospect of taking a hard line with organisations harming those they have sworn to advocate for, in fact, it should ideally be their defining characteristic. Whatever short term losses Rio Tinto and Shell can threaten, they pale in comparison to the very real and likely irreversible costs of continuing to throw money at what ultimately amounts to a vehicle for our own extinction.

We are especially culpable, with Australia leading the world in per capita emissions at 28 billion tonnes of CO2 per annum and our political treatment of the issue ranging from toothless opposition to fervent bankrolled support. The president of the World Bank told the Guardian in April that it was ridiculous that governments were still driving the industry. He notes that fossil fuel subsidies effectively act as encouragement for unsustainable practices. “Fossil fuel subsidies send out a terrible signal: burn more carbon.”

With many detailed assessments showing that the world’s energy needs can be met adequately with existing renewable technologies, the cheap, paid-for-by-industry rhetoric of conservative governments is wearing paper thin. A study published by the University of Melbourne claims that Australia could be fully powered by wind and solar alone in around a decade by spending approximately 3% of GDP along the pathways outlined in the report, pathways which are predicted to create some 80,000 jobs. According to the study, the main obstacle to this is a lack of political will. To follow through with a project of this sort would be to join the ranks of Germany, the United Kingdom and Denmark among others in investing in a sustainable and healthy future for ourselves and generations to follow.

In addition to the progressive policymaking of the aforementioned nations, in 2014 almost 30 countries, including Indonesia, India and Egypt, had delivered some form of fossil fuel subsidy reform. Other countries that support the reform of inefficient fossil fuel subsidies are Costa Rica, New Zealand, Norway and Switzerland.

As a nation, Australia has denied that it subsidises fossil fuels, however there is strong and compelling data demonstrating that this is not the case.

The 2010 report by the Australian Conservation Foundation suggests that the annual value of fossil fuel subsidies in Australia is currently valued at 7.7 billion, the largest of those subsidies being the Fuel Tax Credits program, which rebates fuel excise tax on diesel fuel consumption for many business users. It is worth 65% of total fossil fuel subsidies, or around 5 billion per annum. Other subsidies include tax concessions for “private use of company cars” and “car parking”, meaning that the people of Australia are effectively paying the travel costs of the wealthy in addition to propping up their failing businesses.

Now, granted, all these figures do seem shocking, but you’ll recall that so far I’ve only given them to you without any direct context. Here’s where your knuckles are going to whiten. This is costing you around a hundred and eighty two dollars a year. That money you probably needed for rent, food or bills is literally lining the pockets of someone who by any honest standard doesn’t need it, so they can continue to grow their personal fortunes with money that you’ll never see a cent of. As stated above, this isn’t even beneficial to you in a roundabout way, as the funds used to subsidise these industries and the people who profit from them could be redirected into services that would confer a tangible benefit to your everyday lives, whether from improved healthcare or simply better infrastructure.

Typically, businesses have been outraged at the notion that they may have to take part in the free markets they so commonly evangelise. The Minerals Council of Australia claims that government funding and tax breaks for exploration are not “subsidies”, which has obviously become a dirty word for corporations, but “legitimate tax deductions for business”. Innes Wilcox of the Australian Industry Group, a blatantly neoconservative organisation that seems to exist almost solely to legitimise illegitimate business practices, has called for subsidies to natural gas export facilities, stating that “the Commonwealth and the states took the decision to allow the eastern gas market to be linked to the high priced Asian and east Asian gas market. Government should not escape responsibility for the unintended consequences of that decision.” Apparently businesses should, according to Mr. Wilcox.

The main argument from those who would see subsidies continued or even expanded is that the practice “supports jobs”. The subsidies are deemed necessary because because if it were not paid, and here comes the kicker, the industry would fail. Ironically these same supporters of what are, in effect, welfare payments to failing businesses from the population of the country they do business in, are also the biggest critics of government intervention. Gina Rinehart, owner of Hancock Prospecting, has argued for Australia to cut it’s “entitlement” mentality. Penning a piece of surrealist fiction Dali would have been proud of, Rinehart claims that “Australians have to… work harder and smarter to pay [the bill created by welfare payments].”

In a remarkable display of cognitive dissonance, Rinehart points out that “we are living beyond our means” and that “we all have a role to play in mitigating the thinking that’s not helping our country’s future, including the entitlement mentality of individuals, companies — and our leaders.” These statements came not six months after Rinehart suggested that parents buy their children books from the likes of Milton Friedman and Ayn Rand, two historical supporters of free market ideology that would have looked down their noses in disgust at the hypocrisy of a woman who preaches the ideals of free market capitalism yet owes her success and fortune to the parasitic relationship she has forged with the Australian government.

Technically speaking, a free market economy is free of subsidies by definition. A subsidy introduced to a previously free market transforms it into what is known as a mixed economy. The authors that Rinehart and her contemporaries cite as major influences would argue that subsidies unnecessarily distort markets and divert resources from more productive uses to less productive uses. Conveniently, the leaders of business in this country and abroad have managed to characterise these arguments as product of scheming leftoids and “greenies”, and it seems no-one in our media or government has the stones to point out how dishonest a statement that actually is.

So what could possibly motivate such staunch supporters of free market ideology to bat for the opposing team? I think this short statement says it all:

“To the extent subsidies raise the profits of those receiving beneficial treatment, a new political incentive is created to lobby for the subsidy even after its usefulness runs out. This potentially allows political interests and business interests to create a mutual benefit at the expense of other taxpayers or competitive firms.”

That mutual benefit seems to be the driving principle behind government relations with fossil fuel companies in Australia, and it stands out like a sore thumb despite bungling efforts to minimise its visibility to the public. In 2013, Barnaby Joyce claimed that Gina Rinehart fronted the cost of a flight to Hyderabad for the wedding of the granddaughter of Rinehart’s business partner. Another story from the Sydney Morning Herald shows Rinehart meeting a small group of Coalition members in her private hotel suite, including Speaker Bronwyn Bishop and Liberal Senator Cory Bernardi. I’m sure there is an infinite stream of spurious justification just waiting to dribble forth from the maws of their respective supporters, but I fail to see how secretive meetings between the captains of industry and the leaders of government can result in anything but a conflict of interest.

One of the world’s leading public intellectuals, MIT linguist Noam Chomsky, has spoken at some length about the relationship of the idealist notion of free markets and their real world counterparts. Chomsky states in his talk, Free Market Fantasies, that the overarching political rhetoric of our age is that the poor and needy must learn responsibility through exposure to the pressures and forces of the free market, while the rich demand a nanny state to protect them from market discipline, minimise competitive risk and maximise profits. What Chomsky notes is that when something goes wrong in the affairs of one of these large businesses, the state intervenes using tax dollars to “bail out” the corporation. According to Fortune magazine, not a single one of the top one hundred transnational corporations missed out on such beneficial state intervention. Here’s a short excerpt from his talk:

“Well “subsidy” is another interesting word, kind of like reform. It’s a subsidy if public funds are used for public purposes. That’s called a subsidy. It’s not called a subsidy when they go to private wealth. That’s reform. So they’re cutting down subsidies for public transportation. Well, that’s just a tax. If you pay 20 percent more for getting on the subway, that’s a tax. Same if you pay higher tuition at City College. And that’s a highly regressive tax. So, who rides the subways, and who goes to City College?

So what they’re doing is shifting- is cutting taxes for business — for the rich, and increasing taxes for the poor, which are going to compensate for that. And that’s called fiscal conservatism, and cutting government. Well, so it is across the board. Take a close look at the things that are called cutting government, and you notice that they quite characteristically have this property.”

So what are we going to do about this? There are numerous avenues for interested persons to organise and present a united front against these practices. 

On the side of politics, the Australian Greens count among their principles the notion that “subsidies to the fossil fuel sector, including funding for research and development, should be transferred to the renewable energy, energy efficiency and sustainable transport sectors.” There are other minor parties that support an end to fossil fuel subsidies and run on a platform including other targets for sustainable and renewable energy practices.

For a more direct approach, non-governmental organisations such as 350.org and Market Forces offer ways for the average citizen to get involved and take direct action to affect change in business and government.

Finally, simply talking about the issue with friends and family can be an invaluable way to spread awareness about the reality of our situation with regards to fossil fuels. Social media groups and online communities are a great way to network with likeminded people and organise activism in your local area.

Although the situation seems grim, and it is, all hope is not lost. We are at a point in the history of our species where our access to information is as free as it has ever been, where democratic structures exist and can be used for their intended purpose with enough popular support. We have thrown off the shackles of the church and hereditary leadership, and made enormous progress in securing the rights of marginalised sections of the human population. We have been to space.

I have no doubt that an informed and motivated citizenry can bring about radical change despite moneyed opposition from big business. We are an incredible phenomenon of life. Let’s not let the least of us snuff that out.

 


This article was originally published on the author’s blog, which you can find here.

23 comments

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  1. Denis Bright

    A lovely interpretation of fossil fuel subsidies as anomalies in prevailing market rhetoric.

    Future generations will shake their heads in disbelief at the extent of political gullibility in this still early phase of the New Globalization since 1990.

    Just reaching out for carbon trading alternatives to this mess, as favoured by even the more open-minded LNP leaders like Malcolm Turnbull, do not go far enough.

    As this article suggests, our policy responses must be multi-dimensional and extend far beyond the anomalies of public subsidies to energy producers and mining companies generally.

    These political responses can only come from an alternative government with a mandate to speak for the whole community and not from a minority government which has to scratch up support on every major issue.

    As Noam Chomsky explains, global capitalism has acquired a linguistic repertoire of conventional responses to justify its accumulated privileges.

    Many of these privileges are so commonplace that they are simply accepted as part of the hegemony common sense that was de-constructed by Antonio Gramsci.

    In my own suburb in Brisbane, the Indooroopilly Shopping Centre attracts so many cars that its parking spaces and exit points are overwhelmed.

    Special property rates should be imposed on such business ventures to cover some of this environmental impact.

    But privilege is well protected.

    I noticed that property rates charged by the LNP Brisbane City Council are actually higher per square metre in the small shopping precinct at Hawken Village near University of Queensland to cover the surcharge imposed on landlords and passed on to tenants in higher rents to pay for some routine landscaping installed under the Suburban Community Improvement Programme (SCIP) for a five year period.

    Thanks to Rod Marsh for moving from a populist green agenda to comprehensive political action. The article is really appreciated. It is thought provoking and this develops from a disciplined use of language. Definitely one of the best low-key interpretations.

  2. RosemaryJ36

    Much food for thought

  3. stephentardrew

    We really do live in a nation of nongs where the majority vote for the corrupt ideologues who contrive to subsidies the wealthy at the expense of the poor and middle class.

    And the pundits believe that conservatives are the better financial managers.

    I would tear my hair out if it were not so thin.

  4. Terry2

    “I have no doubt that an informed and motivated citizenry can bring about radical change despite moneyed opposition from big business. We are an incredible phenomenon of life. Let’s not let the least of us snuff that out.”

    Can’t disagree with that statement, Rob, but when an informed citizen has to rely on a fourth estate that is in the pocket of a deeply conservative government working hand-in-hand with big business it does present some formidable hurdles to bringing about radical change.

    As we have seen in recent weeks, an intelligent and probing interview involving an informed ABC journalist and an evasive politician brings about vilification of the journalist for being too tough.

  5. Möbius Ecko

    Yes Colin Gradolf, but worse is that if you look at just about every major policy Howard implemented they were costly failures. His was also the highest taxing, biggest and most wasteful government in our history, and he personally is the most expensive ex-PM at tax payers expense in our history, costing more per annum than all the other ex-PM’s combined, and that was when Gough was alive.

    I have no doubt Abbott will surpass Howard as the most expensive ex-PM. The signs were there when he was the most expensive opposition leader in our history, his office and himself costing more than the PM’s office. That’s without counting his considerable ledger or rorts when in opposition.

    Howard only got away with his billions in failures, apart from a compliant media, because he was raking in so much revenue his government couldn’t keep up with it month on month. Still, even with that Costello managed a deficit. But to give Costello his due he did one good thing on the back of the Hawke/Keating structural economic reforms, and that was the change to regulation of the financial sectors and banks, but that was the only thing. The rest of his time as Treasurer reads like a lazy man’s hammock guide to half baked economic management, or, “How to run an economy on autopilot”.

  6. John Armour

    “John Howard left a pretty fat bank book. He managed.”

    Actually, he stuffed up. Best not to get your economics from newspapers.

    Bill Mitchell:

    “The fact is that the current government has as much ‘money’ now as it had yesterday and the same amount it will have tomorrow. That is, it has whatever it wants to spend. It always has that. It has no more or less capacity to spend today because there were surpluses in the past than it would have if there had have been deficits in the past.”

  7. Möbius Ecko

    Fact on that John is Australia for most of its history has been in deficit, even Howard had one year of deficit despite bringing in a record run of high revenues, that is he ran a deliberate policy of record private debt, something Costello stated was unsustainable but Howard, Australia’s worst Treasurer, ignored.

    So for all those considerable majority of years in deficit Australia never went down the gurgler or became a third world bankrupt State. Indeed it did better in the deficit ridden years as major long term infrastructure and social programs were built. Howard’s infrastructure and social programs are a bleak desert with the occasional tumble weed rolling on by.

  8. John Armour

    “Private debt is irrelevant”.

    Government surplus = Private sector deficit.

    Econ 101.

  9. John Armour

    ME,

    That’s certainly our economic history: back-to-back deficits with unemployment averaging 1.9% from the end of WW2 until the first oil shock.

    Tell that the kiddies today and they won’t believe you.

    Anybody with half a brain understands you can’t run surpluses AND current account deficits without driving the private sector into unsustainable debt.

    That’s arithmetic, not opinion.

  10. John Armour

    “Private debt has got absolutely nothing to do with a govt’s economic position.”

    Along with Custer’s last words, that’s worth framing.

    Hockey’s biggest problem is private sector debt.

  11. Mercurial

    Well written Rob. One wonders how well the renewable energy sector would be doing if the billions in fossil fuel industry subsidies were transferred to it.

  12. Rob Marsh

    Thank you all for your input, your comments have been insightful as usual. I’m currently having a back and forth with a supporter of Rinehart and, ironically, free market capitalism over at the original article on my blog, if anyone would like to have a dialogue with a supporter of the opposite viewpoint you’re more than welcome to it.

  13. Harquebus

    It is not just the direct costs of fossil fuel subsidies, it is also the hidden costs such as pollution that the taxpayer also pays to clean up.
    Renewable energy generators can not replace fossil fuels. They will never lead us to a fossil fuel free and energy independence. Those that advocate them are only making the inevitable reduction of the human population a lot worse by offering false hope.
    I do not advocate fossil fuels. Population reduction and control is the only viable solution to just about every problem that we have.

  14. jimhaz

    Yes, well established miners should be disliked nearly as much as bankers. Unlike bankers though some are OK – whereas NO banker is.

    There are many many failed small mining companies, and unfortunately they become shell companies for opportunists (read as outright liars). Small private miners producing income are fine.

    Rinehart for instance really needs to be recognised as an innate bully, and treated the same way by the media. ie as a human being that needs to be taught that bullying is not acceptable.

  15. reality check

    re Jammies economics:

    The neo-classical economic models that are the basis for his understanding do not include the roll of money, banks or debt in describing the functioning of the economy, and are based on false and outdated assumptions

    In the 1930s the gold standard was abolished as a mechanism to address the great depression, what this did was uncouple the requirement that there be a deposit of gold to the value of the currency issued, which was previously the limit of the expansion of monetary supply.

    To replace this restraint, a Capital Liquidity Requirement was introduced, which is a percantage value of how much a bank can loan against cash deposits On the face of it, Capital Liquidity and Fractional reserve banking are pretty much the same beast.

    in the case of Fractional Reserves, roughly a $10 cash deposit results in $90 worth of lending.

    CASH is liquidity issued by the Government via the RBA and it is the money in your pocket and the money that banks pay each other.

    Currency is what the banks issue you in the form of housing loans, credit cards, purchases with EFTPOS etc. Both are guaranteed by the government at our cost but only money is a store of value, currency is an exchange of IOU’s between banks.

    Banks pay each other with money. When you add up all the amounts that a bank owes another bank and take away what other banks owe it, the remainder (usually dramatically lower than the total of all the transactions, i.e. 100-90=10) is paid from one bank to another, if a bank doesnt have enough it borrows the money from another bank. Banks being scared to lend to each other precipitated the GFC.

    So we have a situation where conservatively, we have 10% real money and 90% iou’s as our monetary supply, analogous to having $1000 in cash and a $9000.00 credit card or $1000 in money issued by government and $9000 in currency issued via debt by banks.

    the Monetary supply is comprised of a) government spending b)bank lending c)external trade balances

    Confidence = the rate at which the Monetary Supply circulates in time.

    GDP = (government spending + Lending + trade balance) x confidence.

    i.e 10 = (2+5+3)x1

    This understanding puts in perspective the role of banks, monetary supply, government surpluses/deficits, international trade and consumer confidence. Banks and private Debt are integral to the basic functioning of the monetary system, economy and the quality of life.

    It also suggests the real intentions of governments who are aligned with producing surpluses, regardless. They know that in order to produce a surplus, the private sector has to wrack up more debt, which you have to ask, benefits whom?

    Our government can create debt free money, as much as it needs without limit except for inflation (think monetary supply = bowl, prices = goldfish), it could stimulate economic activity by releasing debt free money into the economy through people who have to spend (pensioners, unemployed, health, education) rather than those who save (remember the importance of GDP and the turnover of supply) or speculate in asset bubbles (housing, share market). THEY JUST CHOOSE NOT TO.

  16. Jepat

    Our government can create debt free money, as much as it needs without limit except for inflation

    Reality check:

    The above statement is why most progressive economists scoff at MMT -and why it has no credibility among policy makers.

    A government that simply “creates as much debt free money as it needs” can will only induce rampant inflation (far greater than that of deficits financed by bond issue) but will also depreciate its currency against other currencies to the point where it becomes unacceptible as a means of international trade (and in some cases domestic trade as well).

    See, i.e., http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/?_r=0

  17. reality check

    jexpat,

    hence why I said that the only limitation is the impact on inflation. However, through debt fuelled currency issue through lending, that inflation is already built into the system. goldfish = bowl

    If you increased the liquidity ratios required of the banking sector, e.g. to 25%, there would be a shrinkage of the total proportion of GDP spending linked to that debt through paying that debt down, (which negates the original issuing of currency and reduces the proportion of MONEY that the public pays to the banks in the form of interest) and the REQUIRED (political, growth mantra) increases in GDP being required to be made up for either through public spending or trade improvements until their debt to asset ratios reach that level.

    That shrinkage in gdp would create space for government to increase its spending (debt free) on those that will directly spend into the economy, creating greater economic activity, leading to higher incomes and so the whole thing rises and falls.

    I remind you that most of these economists you refer to missed the GFC and have backed Quantative Easing, which the US directed at the banks (who then paid themselves bigger bonuses and speculated, created even more loans to multinationals and large organisations) and are unable to explain how things work in such a clear way that makes intuitive, empirical and observational sense and draws back the curtain of the “invisible hand” that is all about faith, not fact. Just trust us, they say.

    any model that doesn’t include the roll of banks and private debt in an economy, which is the model that has prevailed over the last 40 years is inherently flawed, and any decisions or assumptions made based on those models are also inherently flawed. by ignoring them, they escape examination of their role. this is important.

    i akin it to the concept that the “trickle down theory” distributes wealth to the poorest by enriching the richest, where the observable and empirical results are the exact opposite to the outcomes described by the theory. once again, you need only ask the question as to who benefits to, as they say, follow the money.

    And i also point out that the entire thing relies upon the ignorance of the population on how things really work. very much along the lines of how our democracy functions when you get down to it. And people sense it. they just lack the information to quantify it, intentionally.

    Sorry to bust your bubble, but it is important that people finally begin to get a grasp on where we ARE to enable a proper discussion about how to deal with the challenges it presents.

  18. Jexpat

    The inflation and curency depreciation limitation is such that the central premise “Our government can create debt free money, as much as it needs…” is effectively negated! That’s the trouble inherent in attempting to extract too much from seigniorage, as Krugman notes.

    Also, with respect to the GFC and quantitative easing, that would also have been inflationary if the US and other nations hadn’t been in a liquidity trap with interst rates already at the lower bound. Indeed, for a considerable amount of time, real interest rates on some US Bonds was negative- people actually paid the government to hold their money.

    Australia on the other hand, has not been mired in a liquidity trap- and so more “normal” and severe limitations set out in my post above would apply.

    The far more effective way to respond in the US and UK would have been through expansive fiscal policy- especially through capital investments and improvements which would easily yield, under those conditions, a positive rate of return AND improve employment -but that was curtailed (indeed, forbidden) by the right wing ideologues with their irrational and dysfunctional obsession with austerity for austerity’s sake.

    As to the dangers of “cheap money” (especially where, as in the US, major corporations were already sitting on many 100’s of billions in idle cash) – we’re seeing those results in asset inflation and rentier benefits that for the most part do not, and not in any way proprtionately “trickle down” and improve the lot of the vast majority of the population.

    ps: many of the economists I refer to did not miss the GFC (although some may have underestimated its severity). On the contrary, some very high profile progressives, such as Dean Baker at CEPR warned us repeatedly about the inevitability as early as 2003-4.

  19. stephentardrew

    Yes Jexpat and here we are back where we started again.

    Though I do think your offhanded rejection of MMT is completely unreasonable. More of the same twisted irrationality is not going to succeed. Economics is not a science it is a grab bag of postulates conditioned by certain measurable constructs driven primarily by opinion. The tendency to give economics some empirical leverage is exactly what leads us astray.

    We must decide what type society we need and then proceed to shape economics to fulfill those goals and obligations.

    Nothing has changed because of the false equivalence of economics with science.

    All of those Nobel Prizes in economics and we are still in deep crap.

    Critical thinking?

    Bah who needs it.

  20. Jexpat

    stephentardrew:

    Most progressive economists don’t reject all aspects of MMT -there is some considerable overlap in policy preferences, for example. But the central premise as stated above we recognise as folly. Closer to home, economist John Quiggin worries (justifiably) that the notion prpoagated by MMT’ers that increased government spending doesn’t imply increased taxation undermines progressive outcomes and is politically pernicious.

    [“this] leads people to dodge the issue that taxation is the price of civilisation. One way or another we have to pay for what we consume, and it’s silly to try and dodge this. It’s particularly damaging to the extent that MMT is associated with the left. The last thing the left needs is to be portrayed as offering a deceptive ‘free lunch’…”

    See Money for nothing?

    Also, as to whether economics is like the hard sciences -or social science, well, there’s a reason why the moniker “dismal science” stuck.

    Having said that, to the extent that a model (like IS-LM) is adequately descriptive, accurately predictive, and falsifiable, the disciplines have much in common.

  21. Reality check

    Lol, i am not advocating a free lunch and frankly, you are coming over a little hysterical. I dont understand why your preference is for banks to increase monetary supply rather than the sovereign currency issuer. I can only surmise that it is your preference that the currency is white anted through interest obligations on each dollar issued. Inevitably, that process will lead to the banks owning all. As is evidenced by record prrofits for the banks and falling wealth in the rest of the economy.

    The question is always a matter of scale and the voodoo economics of neo-classical theory js just more or the insanity that lead us here.

    If you pay for everything through debt (bank issued currency) ultimately and inevitably you WILL go bankrupt and the bank will take it all. You need only look to America to see what mainstream economic policy leads to.

    So, if the money supply remained static, with a 20% fall in debt based currency is matched by a 20% increase in sovereign, debt free money, where is the inflation? The main and crucial difference remains that the percentage of gdp that used to service debt through interest diminishes (rent) and the percentage of gdp that remains in circulation increases. Remember that the higher the level of currency taken out of the system in interest requires more currency to be put in circulation, which, if it bank issue currency is an ever increasing level of debt.

  22. jim

    https://www.laborherald.com.au/environment/government-must-do-more-than-mouth-the-right-words-on-climate/The worldwide move is away from coal
    “So either Greg Hunt and Malcolm Turnbull are going to join with the enormous opportunities in the future, which lie in renewable energy and clean energy or they are going to continue with Tony Abbott’s right wing reactionary policies to abolish the CEFC, to abolish the renewable energy agency ARENA and to withdraw support entirely from renewable energy beyond 2020,” Butler said.

    When asked about new coal mines, Butler said the rest of the world is moving to clean energy. Vote LNP with a BLANK space.

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