October 31, 2016 | Graham

Pascal’s wager called into defence of climate change

Professor Martin Weissman Weitzman postulates “that if there is a finite possibility, however small, of an infinitely bad outcome (human extinction) then virtually any cost is worth incurring to prevent it,” according to Peter Lilley, writing in this review of the Stern Report.

But that is essentially the trick that Pascal used to justify religious observance, called “Pascal’s wager” and defined thus by Google “the argument that it is in one’s own best interest to behave as if God exists, since the possibility of eternal punishment in hell outweighs any advantage in believing otherwise.”

All of which confirms, as many have been suggesting, that global warming catastrophism is a species of religion. It can’t be confirmed by the facts, so it has to be confirmed by sophistic sleight of hand.

Except Pascal’s wager doesn’t really work. Certainly not in a world where there is a plethora of possible ways, from global warming, to nuclear war, to world-eating asteroids, to arrive at an infinitely bad outcome.

But in a world of finite resources, you can’t throw virtually everything at virtually anything that can be conjured up in someone’s fetid imagination or computer model.

There aren’t enough resources to go around.

So, you have to make intelligent guesses and discount the infinitely small probabilities of infinitely bad possible outcomes and concentrate on those things that are highly probable, and with a higher chance of being solved.

To do otherwise is to be dictated to by the neuroses of the various Chicken Lickens who populate the environmental NGOs, universities, and most western left of centre political parties, squandering resources that could be used to improve someone’s lot sacrificing to the idols of idle thought.

And in the process pathologising government and society.

The pyramids are an inspiring monument to civic mobilisation of national resources in the service of religion.

But while we may find them enriching, they must have impoverished the civilisations that were forced to build them. Diverting resources and imagination to sterile and futile monuments to protect against the gods.

These days we build windmills, but they have exactly the same propensity to impoverish at the same time they fail to ward off disaster.

In this world Bjorn Lomborg is the necessary heretic. Asking what can be tackled, at what price, and then providing a list in order of priority.

He’s not a climate change atheist, but he’s not taken in by Pascal’s wager either.

Neither should we.

Particularly as the resort to Pascal’s wager tends to the conclusion that there is absolutely nothing to worry about.

Posted by Graham at 9:00 pm | Comments (12) |

October 11, 2016 | Graham

Queensland’s over-promise on privatisation

Earlier this month the Queensland State Labor government broke an election promise not to privatise assets and announced that it was looking to sell or develop a number of assets including the Boggo Road jail, GoPrint site at Woolloongabba, the Albion Railway Yards, and property in Rockhampton and Townsville.

I’m not going to quibble about them breaking an election promise. Dishonesty should not be allowed to veto good governance.

But I am going to point out that the expectations of what can be funded from these privatisations is completely overblown. The proposals are all included in Advancing our Cities and Regions Strategy document, which appears to be not much more than a glossy media release.

The document is pretty vague about what is actually going to happen, apart from talking a lot about things like “Health and knowledge precincts” or the “Cross River Rail innovation and economic development corridor”.

These are names without much substance, and the last sounds like a way of ramping the Cross River Rail project up in importance so that it is harder for the federal government to say no to funding a large portion of it.

What is sure is that these projects are largely based on selling sites for residential dwellings and are unlikely to contribute significant monies towards any large infrastructure projects.

One could ask what the Cross River Rail innovation and economic development corridor would be worth without the Cross River Rail.

Fortunately for the government the answer is probably much the same as with it, because the Cross River Rail is unlikely to add significantly to the economic value of land in close proximity to it which is already well-serviced by transport infrastructure.

And the monies raised from developing the nominated sites are unlikely to meet the projected $5.4 billion cost of building the CRR.

To see how this would be the case let’s look at the Queensland unit market.

At the height of the boom highrise unit sites were selling for approximately $65,000 per site. I’m now told it is $30,000, if you can find anyone willing and able to purchase these large sites.

At the higher figure it would take the sale of land capable of supporting 83,077 units to fund the entire cost of the Cross River tunnel. At the lower figure that blows out to 180,000.

This graph shows the last 10 years of unit approvals for the whole of Queensland on an annual basis up until August this year.


Source ABS 8731.0 Building Approvals, Australia, August 2016

Even if the government supplied 100% of the market, it would take three years at the inflated level of approvals of this year, and the inflated prices of last, to pay for the project.

So how many real estate cycles would there be before enough land could be sold to fund the project? Hard to say, but on a more realistic basis of the government supplying say 10% of the market, we’re looking at 30 years at least.

Population growth isn’t likely to rush to the rescue either.

Source: ABS 3101.0 - Australian Demographic Statistics Mar 2016

Source: ABS 3101.0 – Australian Demographic Statistics Mar 2016

All this residential development is proposed at a time when in the last two years population growth in Queensland from all factors is the lowest it has been since 2002.

Time for the government to bite the bullet and look at recycling some assets with real value.


Posted by Graham at 12:17 pm | Comments (2) |

October 03, 2016 | Graham

Trump’s tax losses are not tax avoidance

If the Donald wants to come back from his tax debacle he will admit to having really screwed up in the ’90s. He will tell people he isn’t proud of his mistakes, but he has learned from them, and he will admit to them.

He will say how grateful he is that America is a country which allows you to start all over again, and that Americans are all the better for that, as is he.

His supporters (not him) will point out that Abraham Lincoln once went bankrupt.

Donald Trump really did screw-up. This not a secret and is well-documented. He lost a lot of money. According to his tax returns, in 1995 the amount was USD $916 million.

That means that until he earns another $916 million he will not have to pay tax.

This is not avoidance, it is how the tax system works – you are allowed to subtract your expenses from your income. If you couldn’t then no business would be able to make money. We would all have to be employees of the state.

Indeed, given the scale of these losses it is likely he paid more in taxes in the lead-up to its declaration than he should have.

If he had gone bankrupt, then those losses would not have been available to him. But his creditors were prepared to give him space in return for partial payments, or time payments, and they did not put him under.

So they were available to him.

There is no shame in that and nothing to hide.

If you are going to target this you might as well complain because donations made to the Clinton Foundation are tax deductible.

Do people make donations to the Clinton Foundation to get a tax deduction? Yes, they definitely do, depending on the what and how of your giving. So donors will give money to the foundation as part of their tax planning, and the foundation will get money that other non-deductible uses won’t. That makes sense.

Did Donald Trump lose money to get a tax deduction? No he most definitely didn’t. That makes no sense at all. He didn’t make the loss for tax planning reasons, he made it because he made a series of collosal mistakes.

Trump could win the election by pointing out that when he makes a mistake, he admits to it. And when he makes one, he learns from it. Unlike his opponent.

And he will do that, unless he is really just like his opponent, and the outsider schtick has been just that – schtick.



Posted by Graham at 8:29 pm | Comments (3) |