(Click chart to see a larger version)

Key Points:

• Drilling meters are at the highest rates in 13 years.
• Expenditure per meter drilled (inflation adjusted) is current running at approximately $300 per meter. This is due to (in my personal view dealing with drilling contractors) a) high demand and lack of quality labour; b) exploratory holes are getting deeper and thus more expensive.

Whereas it took 25 years to reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six years between then and now. Poverty reduction of this magnitude is unparalleled in history; never before have so many people been lifted out of poverty over such a brief period of time.

The greatest reduction happened in Asia “home to some of the largest and most dynamic emerging economies” and surprisingly, Africa. I attribute this to the embrace of free(er) markets and increased global trade among nations. Let’s hope this trend continues.

The Mises Seminar will bring together Australians interested in libertarianism and the Austrian school of economics. The event comprises a dinner on Friday, November 25, and an all day seminar on Saturday, November 26. The events can be purchased separately, or together as a package deal at a discount.

The seminar will field a line-up of prominent anti-state, anti-war and pro-market thinkers from around Australia, with special guest Professor Hans-Hermann Hoppe. Our speakers understand that free-markets generate prosperity, and that government intervention is both economically and socially destructive.

The Mises Seminar venue is the Union, Universities and Schools Club (UUSC), located at 25 Bent Street Sydney. This is Sydney’s most prestigious and exclusive venue, and the compulsory dress code reflects that. Ties and blazers for men, and the equivalent for women.

The organising committee for the seminar consists of Samuel Marks (Macquarie University Libertarian League), Sukrit Sabhlok (Liberty Australia), Michael Conaghan (Liberty Australia), Dr Bulukani Mlalazi, Dr Washington Sanchez (Aussienomics), and Benjamin Marks (Economics.org.au).

A lot has been said to defend this tax, one of the reasons I’ve heard is because the youth of Australia want this tax. The people against this tax have been portrayed as a bunch of old people who are only worried about their power bills and don’t care about the future of the planet. We have been told that we should support this tax because it will leave the earth in a better place for future generations. Well I am here today to say I am a young person I am against this tax. This tax will not save the planet and it will hurt the youth of this country the most. Already young people face an uphill battle to make a living for themselves, home ownership is slowly becoming a distant dream, food, fuel, electricity and water are constantly rising and this is all before the carbon tax. This is tax will result in cost of living becoming even more expensive, pushing many Australians to the poverty line and threatens our economic prosperity and therefore our standard of living that we have worked so hard for.

One thing that needs to be said is that the taxes must stop. This government’s taxing is out of control, it’s time we stood up and said we are not going to bear the burden of all this taxing. So far we have seen the government introduce the flood tax, the mining tax, the luxury car tax, and the increases in tobacco and alcohol tax. Worst of all the Australian people have not benefited from any of these taxes, all we have seen is the government spend our taxes on wasteful projects like the school halls, the pink bats and the ever growing list of failed green schemes. So far all these taxes have done is increased the cost of various goods and services without achieving any of the supposed changes in behaviour that these taxes are designed for.

This brings me on to my next point; his tax is also being sold as the almighty solution to global warming, that if we don’t have this tax the planet will be doomed. This mindset ignores the very nature of how this tax will operate, it will not change people’s energy’s uses and will hurt those who least can afford it. The end result of this tax will the carbon tax will be passed on by electricity companies and business to consumers who will pay the tax through already expensive electricity and everyday goods and services. The alleged clean energy alternatives that people are meant to switch to when electricity gets too expensive are in no way ready to be rolled out in mass supply to consumers, wind and solar have not yet proven themselves as affordable alternatives. So what choices are households left with? If we do need to switch our energy sources then it should be left to private industry to make it affordable to the market place, if climate change is such a grave threat to us then we should wait for the free market forces to provide a solution. We should not proceed with an ill-though out destructive tax which will only hurt society.

It is important for us to keep up the fight against this tax and stay united as a movement. Whether you are against this tax because it won’t work, because you don’t believe in climate change, or because of the deceptive way it’s being introduced our strength is our unity. No matter who you are or where you come from we need to keep on fighting this tax until we defeat it. It will be hard to defeat this tax but we can, so far we have been smeared by the mainstream media as a bunch of right wing nutters who want to bring about a dramatic overthrow of the government. But what is so nutty about exercising our democratic right to protest our disagreement against an action a government has taken. The anti war protesters were allowed to express this right, so were the anti work choices protesters, and so are we. We were not given a right to vote on this tax, and we will continue our opposition until a chance to vote on this tax is given and we will defeat it. This only the beginning and with the strength of democracy behind us we can win this fight.

When I see such a mismatch, I begin to wonder why this is so. Donating your organs is such an altruistic commitment that gives life to another.  Obviously, there is a gap between what people need (ie. live saving organs) vs what people are willing to give. There are a number of ways to reduce this gap:

1. More education: this entails public service announcements pleading with us to donate our kidneys, hearts, lungs and other organs. The onus is still on the individual to voluntarily “opt-in” to the donation system.
2. Opt-out: Make everyone donate by default unless you specifically “opt-out”. This has a default position of “somebody else has a right to your organs after you die”. We, as a default, should have a natural right over our bodies after death just like we have rights of our property after death.
3. Allow Organ Trading: For those that can afford it, people should be able to buy organs in an open, but regulated, market. For those that cannot afford it can access the current donation system, get subsidized by the government or receive charity from non-profit organisations. More on this below.

Organ Trading as Public Policy

My Liberal Democrat colleague, Phillip Lillingston, and myself (I must say that Phillip is the real champion and original author) are constructing an organ trading public policy for the Liberal Democrats. Below is a discussion piece on the subject.

Introduction

The Victorian Health Minister is currently arranging a parliamentary committee to examine the possibility of making post mortem organ donations default positive instead of default negative. This is due to the fact that terminally ill people suffering organ failure die due to the lack of available organs.

Currently if an Australian is terminally ill and needing an organ transplant all he can do is go on a list unfortunately longer than that of available organs. That is unless someone close to him may like him enough that they would be prepared to voluntarily donate an organ even though it will have a small effect on the donor’s long term health.

If an otherwise dying person is lucky enough to find such a friend willing to donate she or he still has a 30% chance of disappointment due to the fact that all potential donors and their recipients are not tissue or blood group compatible.

Only 309 Australians donated organs in 2010 while there were 1700 people on the official waiting lists at any one time. A post mortem donation of organs from a single body often goes to as many as four people, so even though people die every year due to inability to receive donated organs the figure is not as high as the above statistic. initially implies.

No hard statistics are readily available but Victorian Health Minister David Davis has been quoted in the Herald Sun ‘Auto Organ Donors’ 14^th Feb 2011 as saying that changing Victoria’s consent laws on organ donation will save hundreds of lives. . This extrapolates into nearly one thousand lives across Australia. This does not mean that the honourable minister is necessarily correct with regards to the results of legislative change but only that there are many Australians dying from organ failure.

Having a universal default position of organ donation as a remedy still entails many problems.

The donation has to be confirmed by relatives of the deceased, and apart from religious considerations, many people in a state of trauma on the death of a loved one find it very difficult to agree to have that loved one immediately cut up into pieces.

As a solution to this problem why not simply introduce a law declaring the absolute proprietary right of a person to his or her own body? People would have the right to voluntarily donate or sell their organs, blood and other body tissues, to be delivered pre or post mortem in a regulated but open market.

What are the advantages of an organ market?

• There would be a greater incentive for people of all ages to agree to donate upon death if they knew the post mortem payment would go to their estate and thus to the loved ones to whom they had willed their assets. A death of a loved one, primarily the families bread winner, is particularly devastating. The option for the surviving family to receive some level of financial support from the deceased organs will provide some financial assistance in their time of need.
• Live donations (such as for kidneys) would increase and thus reduce fatalities of those suffering organ failure.
• One can’t predict what the eventual market price for a  an organ but would be but it is reasonable to believe that  if it is going to save a life of a person of a first world country it may be up to $100,000. If even half of that, it is still a substantial amount of money for an impecunious person who may well find the possible loss of five years of life expectancy a fair exchange.
• A voluntary donor who previously was thwarted due to blood or tissue incompatibility could now simply sell his organ to the highest compatible bidder and then with the proceeds purchase a compatible organ for his friend.
• Reduces the unsavoury aspects of the human organ black market.

Responses to commonly asked questions about an organ market

It’s exploiting poor people.

• It’s OK for poor people to voluntarily donate an organ now. Why should it suddenly become a crime if the poor now actually get paid for their services?
• Isn’t it for poor people themselves to decide whether or not they wish to be “exploited”? Are you saying that people in the lower socio economic ranks are not only poor but also uninformed and thus need politicians to say what contractual arrangements they may or may not enter into? Who are politicians to decide that people poorer than themselves can’t find their own ways to make some substantial income?
• If a building tradesman should decide to head up to Queensland to make some money by cashing in on the high prices now paid to carpenters to rebuild following the cyclone damage, is his “exploitation” of Queenslanders’ current problems a crime?
• If in a hypothetical situation a wealthy person with a rare blood group was needing an urgent organ transplant and the number of potential and immediately available donors had decreased to just one, and the price offered was $1,000,000, who then would actually be exploiting whom? If then it was the potential recipient, do we still make the trade illegal so as to prevent the wealthy person from being exploited?

It decreases the number of voluntary donations.

• Statistics in Iran, where it is legal, don’t reveal that.[Reason Magazine, ‘Kidneys for Sale, June 2008]
• Those who only look at organ donation as a voluntary action might still be tempted to donate if they decided to donate to only those who could not otherwise afford to buy one.
• Alternatively those who might feel repulsed by accepting money for such an action could donate their payment to their favourite charity.

Donors will very often suffer health problems later in life due to the organs they have given away.

• The only difference between the current legislation and the proposed is that money is involved. It is hard to imagine how the addition of money can make things worse for the health of the donor.
• Many jobs have ‘danger money’ allowances attached to the employee’s remuneration, either implied or overt. The worker gets paid extra to compensate for the fact that his/her life is at a greater risk.

Gullible people will rush in to donate from the lure of a large amount of money only to discover in later years that their health may be affected a lot more than they realised.

• As with the current system, no one can walk into a hospital off the street, sign a form and then lay down on the operating table. People wanting to give organs must take legal counsel before signing so as to aid them in understanding the full ramifications of what their decision will be. Apart from exceptional life and death situations, there probably would be a mandatory cooling off period of two weeks between agreeing and operation.
• However one must also remember there are always two parties involved. Is it still better for a totally innocent potential recipient to definitely die than for the possibility that an irresponsible person makes a negligent decision with regards to his health?

This will be a law that can only benefit rich people. How can a poor person suffering organ failure be able to get his hands of $50,000 to $100,000 for a transplant?

• People can still donate their organs or sell at below market rates, if they wish to assist low income people.
• If the ailing person is well known in his or her community it is also possible that charitable organisations may come to the rescue. However even when that is not the case, are we to embrace the less that noble principle that if the ailing poor cannot be saved then we must ensure, for the sake of equity, that the ailing rich must also die.

Do we need the reserve bank? No.

However, we cannot just abolish the banking system, as we know it; society needs reliable and easy way transfer money. The reserve banking system provides a somewhat reliable, and somewhat easy system, there is much utility within the banking system that must be systematically dismantled and replaced.

The best way to dismantle the reserve bank is to compete with it, provide a service (the free trade of money) that is far better than the service that the reserve bank provides. For a long time the system that had competed with the banking system, (and would still be out main money, if not for bad laws), is Gold standard, where any ‘bank’ could issue a said amount of Gold to their own notes.

However, this system has been replaced with our current debt based fiat (government declared) currency. The only reason people would accept such a poor form of money that is the principle to loans, is that the government has declared it as the ‘legal tender.’ It is ironic that the only (except for gold bullion) way to pay back debt within Australia happens to pay it with the principle of someone else’s debt.

The deeply saddening problem with the current fiat currency that we are forced to use is that it (in multiple ways), gives an unfair disadvantage to the poor.

• The poor are discouraged to save cash, as the buying power of cash diminishes over time through the dilution of the currency.
• The poor keep a larger proportion of their total assets in liquid holdings; again, through inflation they are effectively taxed.
• In economic downturns, when the poor find it harder to find jobs, deflation makes it also harder for the poor to pay back loans.

In theory, the current reserve banking system is geared towards making the most vulnerable in society default on their loans.

However, it is not without hope! Gold is hard to manage as money, it is heavy, needs to be guarded, carefully weighed etc. Thus, some have turned to a free-money that has more utility, in fact more utility than any bank, or government could provide.

Developed in 2008, Bitcoin, (bitcoin.org), is an open source software project, designed in creating new and secure money. This money is not ‘issued’ by any bank or government, or even organisation. It issued by consensus, like trading chips, any ‘bitcoin’ is not worth anything unless the community trading them deems the ‘bitcoins’ to have value.

The main features of bitcoin are that they are:

• Non-theftable (uses strong cryptology to validate the coins).
• Non-double spendable, it is prohibitively difficult to change the ‘agreed’ chain of events
• Fungible, bitcoins can be divided into very small amounts, such as 10millionth of a bitcoin.
• Well-defined monetary-inflation: there will never be more than 21million bitcoins.
• Easy to trade

The bitcoin economy is still very small, it each Bitcoin is only worth around 1 dollar. However, over time bitcoins as bitcoin becomes more widely adopted, the each bitcoin will gain value. (Providing the adoption rate is higher than the rate of production).

Bitcoin happens to be the best tool that we have to compete with the banking system; it frankly makes the banks irrelevant. If we put our resources into promoting and developing bitcoin, and other free currencies we will be showing how the world can get along just fine (and better) without the reserve banking system that is causing so-much harm!

(Disclaimer: The author, Cameron Garnham, is a BitCoin investor)

RA:

Thank you very much. Before we sign off, could I just take the opportunity to ask you what you think the prospects are for the attempts in Europe to create a common currency area? Are you optimistic about their success?

Professor Friedman:

I think it’s a big gamble and I’m not optimistic. Unfortunately, the Common Market does not have the features that are required for a common currency area. A common currency area is a very good thing under some circumstances, but not necessarily under others. The United States is a common currency area. Australia is also a common currency area. The characteristics that make Australia and the United States favourable for a common currency are that the populations all speak the same language or some approximation to it; there’s free movement of people from one part of the country to the other part, so there’s considerable mobility; and there’s a good deal of flexibility in prices and to some extent in wages. Finally, there’s a central government which is large relative to the local state governments so that if some special circumstances affect one part of the country adversely, there will be flows of funds from the centre which will tend to offset that.

If you look at the situation in the Common Market, it has none of those features. You have countries with people all of whom speak different languages. There’s very little mobility of people from one part of the Common Market to another. The local governments are very large compared to the central government in Brussels. Prices and wages are subject to all sorts of restrictions and control.

The exchange rates between different currencies provided a mechanism for adjusting to shocks and economic events which affected different countries differently. In establishing the common currency area, the Euro, the separate countries are essentially throwing away this adjustment mechanism. What will substitute for it?

Perhaps they will be lucky. It may be that events, as they turn out in the next 10 or 20 years, will be common to all the countries; there will be no shocks, no economic developments that affect the different parts of the Euro area asymmetrically. In that case, they’ll get along fine and perhaps the separate countries will gradually loosen up their arrangements, get rid of some of their restrictions and open up so that they’re more adaptable, more flexible.

On the other hand, the more likely possibility is that there will be asymmetric shocks hitting the different countries. That will mean that the only adjustment mechanism they have to meet that with is fiscal and unemployment: pressure on wages, pressure on prices. They have no way out. With a currency board, there is always the ultimate alternative that you can break the currency board. Hong Kong can dismantle its currency board tomorrow if it wants to. It doesn’t want to and I don’t think it will. But it could. But with the Euro, there is no escape mechanism.

Suppose things go badly and Italy is in trouble, how does Italy get out of the Euro system? It no longer has a lira after whatever it is – 2000 or 2001 – so it’s a very big gamble. I wish the Euro area well; it will be in the self-interest of Australia and the United States that the Euro area be successful. But I’m very much concerned that there’s a lot of uncertainty in prospect.

In line with the new vogue of behavioural economics, this would correct people’s failure to understand that they would save money by investing in household energy or water-saving devices. The government would correct this irrational quirk of human nature by designing and financing a better market.

Yet the five-year scheme collapsed barely a year after its mid-2009 launch, along with the overlapping $2.45 billion home insulation stimulus run by the same branch in Peter Garrett’s old Department of the Environment, Water, Heritage and the Arts.

…

While no one died doing green house assessments, the perverse incentives and lack of supervision ensured substandard work. Nearly half of households surveyed by the ANAO reported that their green assessors took less than 60 minutes rather than the supposed 90-minute standard. And, in evidence of widespread fraud, 10 per cent of supposedly assessed households reported they had not been assessed at all.

And this is before broader issues. Investing in household energy savings may provide community-wide benefits of reducing carbon emissions. But subsidising hundreds of thousands of household rainwater tanks is an inefficient way to increase water supply. While it may provide private benefits of reducing water bills, it is more cost-effective to build new dams. Instead, Rudd Labor poured close to $3bn down the drain on these two failed schemes.

Behavioural economics tells us that people are not always as coolly rational, internally consistent and clearly far-sighted as textbook theory suggests.

But the green loans program also confirms some basics of human nature. People won’t consider the costs of getting something for nothing. And they’ll pursue their own self-interest.

So putting a price on something encourages people to consider the costs. Governments need to keep close tabs on those it pays to deliver services. And, while markets don’t always behave perfectly, grandstanding politicians and hapless bureaucrats can easily make things worse.

A summary:

The Department of Finance’s Red Book notes that both schemes were plagued by “significant breaches of financial regulations, poor contract management, weak budgetary controls, conscious decisions to avoid purchasing policy requirements and poor lines of responsibility and accountability”.

Each Green Assessor were investing up to $3,000 on training, registration and insurance

Assessors would get $200 from Canberra for each household, which would be charged nothing for the assessments, get $50 of “green rewards” (such as free light bulbs) and the prospect of a subsidised $10,000 loan.

In March last year, the government-approved budget projected 72,000 assessments for all of 2009-10. By February this year, assessment bookings soared to 30,000 a week, even without any mass marketing.

In the four weeks to mid-February, only one-quarter of the 290,000 calls to the government’s call centre made the queue. Up to one-third of callers who got through hung up after holding for up to 2 1/2 hours.

The department eventually tried to cap runaway demand by limiting assessors to 5000. By then, however, the uncontrolled pipeline of those already trained and awaiting registration ensured they blew out to more than 9000.

Nearly half of households surveyed by the ANAO reported that their green assessors took less than 60 minutes rather than the supposed 90-minute standard. And, in evidence of widespread fraud, 10 per cent of supposedly assessed households reported they had not been assessed at all.

Insulation installers were offered a generous $1600 payment per job. Householders didn’t even have to make a reimbursable up-front payment . Demand erupted from the usual 6000 insulation retrofits a month to 180,000 a month.

Rudd Labor poured close to $3bn down the drain on these two failed schemes.

The bottom line is that governments, at their peril, artificially try shape our behaviour through subsidy, selective taxation and redistribution to a favoured group – in this case, green environmentalists.

SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and (since lighting consumes 6.5% of the world’s energy supply) less climate-changing carbon dioxide belching from power stations.

Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption, rather than the decrease hoped for by those promoting new forms of lighting.

The light perceived by the human eye is measured in units called lumen-hours. This is about the amount produced by burning a candle for an hour. In 1700 a typical Briton consumed 580 lumen-hours in the course of a year, from candles, wood and oil. Today, burning electric lights, he uses about 46 megalumen-hours—almost 100,000 times as much. Better technology has stimulated demand, resulting in more energy being purchased for conversion into light.

That, at least, is the conclusion of a study published in the Journal of Physics D: Applied Physics by Jeff Tsao of Sandia National Laboratories in New Mexico and his colleagues. They predict that the introduction of solid-state lighting could increase the consumption of light by a factor of ten within two decades.

To work out what solid-state lighting would do to the use of light by 2030, Dr Tsao and his colleagues made some assumptions about global economic output, the price of energy, the efficiency of the new technology and its cost. Assuming that, by 2030, solid-state lights will be about three times more efficient than fluorescent ones and that the price of electricity stays the same in real terms, the number of megalumen-hours consumed by the average person will, according to their model, rise tenfold, from 20 to 202. The amount of electricity needed to generate that light would more than double. Only if the price of electricity were to triple would the amount of electricity used to generate light start to fall by 2030.

I especially like this at the end:

So, for those who truly wish to reduce the amount of energy expended on lighting the answer may not be to ban old-fashioned incandescent bulbs, as is the current trend, but to make them compulsory.