Richard Farmer’s chunky bits

The marvels of forecasts. They are wonderful things, those economists’ models. Tweak a figure here and a figure there and billions of dollars just jump in. We saw that yesterday when Treasurer Wayne Swan gave us his update on economic conditions. Take a cheerful view of future iron ore and coal prices and suddenly things look much better. Thank you China.

But what goes up can also go down so I wish that Swan would stop talking as if a projection about what things will be like in two or three years time was some kind of fact. It isn’t. It is just today’s best guess. And I wonder how much weight was given to this factor, as reported in the International Herald Tribune, in the latest optimistic modelling?

Non-working old people next? Compulsory euthanasia for retired people must surely be the next proposal from environmental groups to save the planet from greenhouse gas emissions. Culling the aged would follow on nicely from the suggestion by the Nature Conservancy and the Pew Environment Group that feral animals be destroyed. Yesterday Pew spokesman Barry Traill revealed that “when feral animals belch they release methane, a particularly noxious greenhouse gas, and every single camel or water buffalo releases the equivalent of around one tonne of carbon dioxide each year”. He made no mention of the contribution humans make when breaking wind but decreasing the number of unproductive burpers would seem to fit in with his call that “practical and inexpensive measures should be part of all political parties’ climate change policies”.

Those slack Tasmanians. They are a bludging lot those Tasmanians. They have significantly fewer people in the workforce as a proportion than any other state — only 58.1% of them in June according to the Australian Bureau of Statistics.The national average is 62% and where the federal government rules — the Northern Territory and the Australian Capital Territory — the figures are 71.2% and 70.5% respectively. Those New South Welshmen and South Australians are a pretty slack lot too, both well below the national average. Victoria about holds its own but Queensland and Western Australia clearly are the working states.

I don’t care about Fiji at all really. We all just love being a big bully, don’t we. Telling those Fijians how they should behave. Respect democracy. Adhere to one man one vote. We’ll punish you when you don’t.

It’s just so good being the big boy in the school yard throwing your weight around on those little fellows. It makes up for having to be the supine coward when we deal with those bigger than us. So while we preach our great principles to the South Pacific we kowtow to the totalitarian Chinese.

Such is diplomatic life.

Fearing state capitalism. The Trotskyists will be happy. Concern about state capitalism is making a comeback.

This time it is an avowed free market man at the forefront of the new concern — Ian Bremmer, the author of The West should fear the growth of state capitalism, is president of Eurasia Group, an independent political science research and analysis body with more than 300 clients ranging from multi-nationals to hedge funds. He is not advocating a move towards worker-led industry but fearful of “a set of governing principles” used by governments around the world to manage the performance of markets and companies for long-term political survival.

A little sample from an interview published in London’s Sunday Telegraph that is of special relevance to Australia now that China has become our major trading partner:

Those who fear that China is going to be the global economic super-power bar none can also find solace in his prediction that China is “the biggest bubble we’ve ever seen”. “The fact that I am very bullish on China for the next three to five years does not mean it’s not a bubble,” he adds.

The bubble, he argues, is in part caused by the unsustainability of China’s productivity and worker model — and there has been much reporting recently on worker unrest in China’s massive factories — by its growing environmental problems, and the fact that companies — such as Google and General Electric — are becoming increasingly aggravated at the way China does business.

“You add all of that stuff up and you project 30 years from now, and you say this system will explode,” Bremmer said.

Once that happens — and Bremmer argues this is the same for all state capitalist countries — there is a choice to be made: a country either looks inwardly and opts for a “virulently nationalist” route, or it chooses to embrace the free market, and integrate with the rest of the world.