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Archive for May, 2003

The Memory Hole

May 15th, 2003 7 comments

Stephen Moore at National Review Online seems not to understand the way the Web works. When he’s caught in an absurd error or nailed on a misleading statement, he just alters his web columns without acknowledgement. A month ago, he was promoting “brilliant supply-side academics” like “Brian Wesbury of Chicago” as alternatives to Greg Mankiw on the Council of Economic Advisors. When I pointed out that Wesbury was not, as Moore implied, an economist at the University of Chicago, but a spokesman for a bank there, Moore edited the post to delete the word “academic”.

Now, Kevin Drum at Calpundit has caught Moore out making the basic error of adding percentages instead of multiplying them. And what do you know. Kevin reports that NRO has stealthily fixed Stephen Moore’s column. Unfortunately the fix makes nonsense of his article, which promises to show a tax rate of 70 or 80 per cent, when the corrected calculation only makes 60.

If he’s quick enough, Moore can get away with this kind of thing before the Wayback Machine or Google archives catch him. But the blogs recording his trickery won’t disappear. And next time I cite him, I’ll be sure to take a copy of the page before he changes it.

Update Brad de Long joins in the fun, pointing out yet more examples of flagrant dishonesty from Moore and the National Review team.

Categories: Metablogging Tags:

The highest taxing government?

May 15th, 2003 20 comments

Is this, as Simon Crean has repeatedly told us, the highest taxing government in Australian history? Before answering this question, I’ll make a more important point. If this isn’t the highest taxing government in Australian history, it ought to be. The demand for the kind of services provided by government (health, education, protection against income risk) rises more than proportionally with income. So the share of income allocated to publicly-provided services, as opposed to private consumption, should increase as income grows.

Update I’ve fixed a broken link to OECD data
Read more…

Categories: Economic policy Tags:

1000 posts, 10000 comments

May 15th, 2003 6 comments

According to MT, this will make 1000 posts on my weblog (for reasons i can’t figure out, it’s post #1005, but no matter). I did a word count on the file I exported from blogger and I’ve typed 250 000 words in a bit less than a year.

A much more conjectural question is the number of comments from readers. An average comment thread gets about 10, with a fair number of zeros offset by the occasional 30+ comments. So I’m going to claim 10 000 comments. Unfortunately, most of them are, if not lost, inaccessible. There are about 3000 in Haloscan’s database, if they haven’t been purged, and a lot more in the one c8to set up for me after I dumped Haloscan. While these are accessible in principle, there’s no easy way of reattaching them to the posts they belong to – a project for some later date perhaps. Older comments are gone for good with the site that hosted them.

Anyway, this is a good opportunity to thank all my readers, especially those who’ve bookmarked or linked to the new site, and invite anyone who hasn’t yet posted a comment to start doing so.

Categories: Metablogging Tags:

Quadratic taxes

May 14th, 2003 11 comments

My post on bracket creep brought up some discussion of the idea of a smooth tax curve in place of the piecewise linear one we have now.

I’ve long thought this was a good idea and I have what I think is a neat way to implement it. Instead of providing a table that lets taxpayers calculate their tax payment in one step at present (take the tax payable at the threshold below actual income and apply the marginal rate to income above the threshold), I’d provide a similar mechanism to enable calculation of the average tax rate which would increase linearly between threshold points, just like total tax in the current system. Calculating the tax payable takes one more step – multiplying income by the average tax rate.

The big merit of this it that it focuses attention on the variable relevant to social choices about tax – the average tax rate, rather than on the marginal tax rate, although you can still calculate the latter if you’re so inclined.

Categories: Economic policy Tags:

Word for Wednesday: Utilitarianism (definition)

May 14th, 2003 5 comments

Utilitarianism is important because it is the dominant philosophical viewpoint of modern times, although this is obscured by the way it is discussed.

Utilitarianism is usually presented as an ethical postulate, that good actions are those which promote ‘the greatest happiness of the greatest number’ or some such.

Considered as a guide to individual conduct, utilitarianism is impossibly demanding, since it requires complete selflessness (anybody else’s happiness is just as important as yours) without even the reward of a blessed afterlife.

In fact, utilitarianism only makes sense as a public philosophy, that is as a way of assessing public policy, and it’s pretty clear that this is how Bentham intended it. The only philosopher I know who’s made this point is Bob Goodin of ANU. Going further, utilitarianism only makes sense for a basically democratic society, in which everyone is equal in some formal sense. Obviously in an absolute monarchy, public philosophy is just individual ethics for the monarch, and something analogous is true for aristocracies, theocracies and so on.

In its role as a democratic public philosophy, utilitarianism lacks serious competitors. Ideas proposed as alternatives are usually jerry-built modifications of ideas about individual ethics that don’t scale up to the public sphere

With this background, utilitarianism can be seen as the combination of three principles

  • Consequentialism – actions should be judged according to their (likely) consequences
  • Equality – each individual counts equally
  • Happiness as preference-satisfaction – what matters is each individual’s happiness as they choose to pursue it

Within consequentialism, there’s an important dispute over whether it is best to seek, in every decision, the specific action that would (be likely to) produce the best outcome (act-consequentialism) or whether it’s best to find rules of action that produce the best outcomes on average and adhere to those rules on all occasions (rule-consequentialism). This distinction is critical when we come to consider issues of government policy. I plan to elaborate on it in a later post, and also continue previous discussions on equality and happiness.

Update My claim that utilitarianism lacks serious competitors leaves Lawrence Solum “gasping for breath”. He asks “what about Nozick and Rawls?”. My answer
(i) I don’t think Nozick provides a serious alternative to anything
(ii) Rawls attempts to provide an alternative to utilitarianism, but in the end only produces a variant that is more egalitarian than usual because the underlying preferences are more risk averse than most utilitarians assume [Harsanyi derives standard utilitarianism from an almost identical setup].

Categories: Dictionary Tags:

Bracket creep

May 14th, 2003 10 comments

The tax cuts announced in yesterday’s Budget essentially involve handing back bracket creep. But how much bracket creep? The threshold for the main (30 cent) tax bracket has been raised by 8 per cent from $20000 to $21600. If you take the common definition of bracket creep ‘inflation pushing people into higher tax brackets’ and assume inflation is running at about 2 per cent per year, that would mean the cuts gave back four years worth of bracket creep.

But, as the Treasurer is happy to point out, real incomes are rising. If the ratio of income tax to national income is to be held constant, tax brackets must be adjusted in line with increases in nominal income per person. At the income levels we’re looking at here, this basically means movements in average weekly earnings, which have been growing at 4 or 5 per cent per year lately, depending on the measure you use. So on this definition the tax cuts offset between eighteen months and two years worth of bracket creep.

The top bracket wasn’t adjusted at all, so those on incomes above $50 000 didn’t get much relief from bracket creep this time, however, you mention it. But they (or rather we) have done pretty well under this government, with big cuts when the GST came in and the halving of capital gains tax, as well as the absence of any serious attack on tax avoidance through trusts and companies.

Update 15/5 The last para of this post was completely wrong. All the thresholds were adjusted. The 42 per cent threshold was increased from $50,000 to $52,000 and the 47 per cent threshold from $60,000 to $62,500. Both are about 4 per cent, equal to two years inflation or one years wage growth.

Categories: Economic policy Tags:

Request for suggestions

May 14th, 2003 11 comments

I’m doing a book chapter on The Politics of Australian Economic Policy which needs “suggestions for further reading”, and one thing I need to suggest is a couple of good sources (preferably books, but reports or survey articles would do) giving a summary of the general case in favour of microeconomic reform in Australia and a positive evaluation of the reform experience.

I’d normally cite Productivity Commission reports, but I’d like something a bit less technical [the main audience is undergraduate political science students]. On the critical/sceptical side, I plan to suggest my own book Great Expectations and books by Michael Pusey and Fred Argy. Any other suggestions would be gratefully received.

Another question Thanks for comments and suggestions so far, which basically confirm my view that there isn’t a book of the kind I am looking for. I would also be interested in a book covering the period 1945-75 in Australia with a focus on economic policy from a political viewpoint. Perhaps I should follow the suggestion of one of my commentators and write it myself

Categories: Books and culture Tags:

Meet the New Europe …

May 13th, 2003 5 comments

Running about a month behind the Zeitgeist, PP McGuinness picks up the Old Europe/New Europe meme (the new European states will be pro-market, more friendly to the US etc). Oddly enough he picks on Vaclav Klaus, who recently became President of the Czech Republic, succeeding his former ally and more recent opponent Vaclav Havel.

In fact, Klaus’ career is an illustration of why the Old Europe/New Europe thesis is wrong on nearly every point, and McGuinness tacitly concedes as much.
Read more…

Categories: World Events Tags:

Shortchanging Iraq

May 12th, 2003 1 comment

Kevin Drum at Calpundit posts on the disarray in the reconstruction plan in Iraq. He focuses on the fact that postwar Iraq has been very different from what was expected by the Administration – many fewer refugees but much more civil disorder and much less enthusiastic cooperation with the occupying powers.

The big problem, though, is lack of commitment.
Read more…

Categories: World Events Tags:

Monday Message Board

May 12th, 2003 24 comments

For the first (at least the first functioning) time on the new MT weblog, it’s time for Monday’s Message Board. Post comments on any topic (no coarse language and civilised discussion only please). I’m still interested in feedback on the new site, suggestions for additional features and so on.

Update Be sure to read Observa’s account of his family’s brush with paedophilia. It will help to inform discussion of this difficult problem.

Categories: Regular Features Tags:

Excuses, excuses

May 11th, 2003 14 comments

Kevin Drum at Calpundit says:

But why do I get the feeling that most people who complain about traffic cameras are actually just people who routinely push their luck at intersections and are afraid of getting caught? Is it because their principled arguments always strike me as completely lame?

Yeah, that’s it.

I’d note that, in my experience, complaints about enforcement of road safety laws of all kinds come mainly from the political right, and, as Kevin notes, mostly from people who routinely break the law themselves.

By contrast, suggestions for more lenient treatment of burglars, drug users etc come mostly from liberals, most of whom are not prone to burglary or even (relative to the general population) illegal drug use. This, along with the Bill Bennett affair, leads me to the following gigantic overgeneralisation. Conservatives make excuses for their own wrongdoing, liberals for the wrongdoing of others.

Categories: Politics (general) Tags:

Prestige in economics

May 11th, 2003 4 comments

Kieran Healy fresh from defending sociology against attacks from ignorant economists, returns fire with this sly dig in a post about the underrepresentation of women

Even the lower-status fields in Economics (e.g., those that involve looking at data of any sort, hem hem) require a very high degree of competence in formal methods.

Actually, Kieran is out of date here. The availability of large cross-section data sets and the development of new techniques for analysing them has led to a resurgence in the prestige of empirical methods accompanied by a decline in the status of abstract theory. Steve Levitt’s Clark Prize is the most recent example (of winners in the last decade, I’d say only Matt Rabin is primarily a theorist).

What remains striking is the ambiguous status of policy. Although quite a lot of high-profile economists are engaged in the policy debate, there’s still quite a strong undercurrent of academic disdain for such a grubby activity, especially when it involves being embroiled in controversy (Stiglitz, Krugman etc). The situation in Australia was quite different in the generation preceding mine, when the top economists were almost automatically those actively involved in making or criticising public policy (Gruen, Gregory and Pitchford, just to name a few of the ANU contingent), but we now conform to the global norm. For the general public, an economist is someone who shills for a bank, and within the academic profession, involvement in policy is at best an optional extra . As in many things, I prefer the attitudes and institutions of the past, to those of the present in this matter.

Categories: Economics - General Tags:

What I'm reading

May 11th, 2003 Comments off

I’ve been reading lots of different things, but a couple of books illustrate the opposite ends of the spectrum of thought about the Internet and its possibilities.
Clifford Stoll’s 1995 Silicon Snake Oil was one of the first manifestations of neo-Luddism. An interesting example of a failed reductio ad absurdam is a critique of estimates of the growth rate of the Internet, where Stoll says

Just by counting network nodes, the Internet is now doubling in size every year. This growth rate can’t continue for long – at this rate, everyone on Earth will be connected by 2003. Impossible

Here we are in 2003, and while it’s not literally true that everyone on Earth is connected, it is true that almost everyone in the developed world has access to the Internet.
Stoll is similarly dismissive of prospects for a revival of public debate on the Internet, taking as his model the dying days of UseNet. He misses almost completely the impact of the Web. Of course, he does not anticipate blogging which, I think, has gone a long way towards fulfilling the early promise of the Internet. Imperfect as blogs are, they contain a lot of well-written and well-argued discussion of a wide range of issues that would have had very little chance of publication in the days before the Internet.

If Stoll was too pessimistic, this was nothing compared to the ludicrous overoptimism of the dotcom boom, chronicled in James Ledbetter’s Starving to Death on $200 Million a Year: The Short Absurd Life of the Industry Standard We have yet to see a really good book on this topic. (Thomas Frank’s One Market Under God, which I reviewed here is easily the best book on the 1990s boom as a whole, but is only peripherally concerned with the dotcoms.

Categories: Books and culture Tags:

Read Soon soon

May 11th, 2003 Comments off

After a long period of relative quiescence, Jason Soon is back with a string of interesting and lengthy posts (made lengthier by the narrowness of his blogger template!). As he implies in one of them, his long-delayed adoption of a comments facility has been a major stimulus and has implied something of a change in blogstyle.

Categories: Metablogging Tags:

Blogging Lott

May 10th, 2003 2 comments

Julian Sanchez has a nice piece in Reason on the John Lott affair as an illustration of the strengths of bloggers compared to traditional media. You can read my thoughts on the same issue here.

BTW, I’ve finally got around to adding Julian’s blog to my blogroll.

Categories: Metablogging Tags:

Worth reading

May 10th, 2003 Comments off

Keneth Miles has returned from hiatus with a string of interesting posts. He’s particularly good on the science of global warming (I think I’ll just point to him from now on rather than chasing down the data myself).

I’ve added Keneth to the blogroll as an Ozplogger even though his title “The UnAustralian” indicates he clearly isn’t (he’s from those other nearby islands).

This is consistent with standard Australian practice of claiming for ourselves anything creditable done by a Kiwi who has even the most tenuous link to this country (see Jane Campion, Russell Crowe, Phar Lap etc etc).

Categories: Metablogging Tags:

Where are the women?

May 10th, 2003 2 comments

Kieran Healy and Brian Weatherson, among others, have been discussing the absence of women at the top levels of economics and analytic philosophy. For example, all the winners of the JB Clark Medal and the Nobel Prize in Economic Sciences have been men.

Kieran is mainly concerned to dismiss the idea that this reflects some fundamental difference between men and women. He takes the hypothesis of discrimination within the occupational groups as the alternative, more or less by default.

I’d argue that the bulk of the explanation can be found in high school or earlier.
Read more…

Categories: Economics - General Tags:

Who will pay for rebuilding Iraq

May 10th, 2003 1 comment

One of the curious developments in the aftermath of the Iraq war has been the fight over who will get contracts for the reconstruction of Iraq. It?s curious because, so far at least, the only money that has been put up to fund this reconstruction is $US2.3 billion included in the Bush?s $US73 billion war appropriation. This is a fair sum of money, but scarcely the stuff of an international incident. It?s important, then, to consider how much Iraqi reconstruction is likely to cost and where the money is going to come from.
Read more…

Categories: World Events Tags:

Set a thief …

May 9th, 2003 9 comments

Tim Blair (permalinks bloggered) points to an attack by Keith Windschuttle on Noam Chomsky, as does Andrew Norton at Catallaxy.

Apparently, Chomsky

  • plays down evidence of mass killings
  • applies moral standards inconsistently
  • cites evidence selectively to support his own ideological agenda; and
  • claims that social scientists who don’t share his views are engaged in a conspiracy to distort the truth

I’m shocked!

Categories: Oz Politics, World Events Tags:

Not a good start

May 9th, 2003 7 comments

No sooner had I made the move to my new home than the server for mentalspace and drivelwarehouse domains crashed, taking out a fair part of Ozplogistan. You can read the gory details here.

However, everything seems to be fixed now, and I plan to start working on improvements to this site. Suggestions gratefully accepted.

Update I’ve implemented a number of suggestions, including some changes in colour scheme and the addition of a photo. It’s newer (that is, older) than the one on the website, which I’ll update soon. More suggestions and criticism still very much welcome.

Categories: Metablogging Tags:

Salam Pax back on air

May 9th, 2003 Comments off

Salam Pax has posted a diary of the war in Baghdad, sent as a Word file to a friend. Obviously, rumors reported here that he was injured and in hospital were, like most rumors, false.

Categories: Metablogging Tags:

Old Mortality

May 9th, 2003 Comments off

This NYT report gives ground for a pessimistic view about SARS, but has some credibility problems. It begins:

The death rate from SARS may be significantly higher than health officials had thought, up to 55 percent in people 60 and older, and up to 13.2 percent in younger people, the first major epidemiological study of the disease suggests.

Mortality rates are bound to change somewhat as an epidemic continues. But unless the numbers fall drastically, SARS would be among infectious diseases with the highest death rates. Until now, fatality rates reported by the World Health Organization had ranged from 2 percent, when the epidemic was first detected in March, to 7.2 percent.

The new findings come from a statistical analysis of 1,425 patients suspected of having SARS who were admitted to Hong Kong hospitals from Feb. 20 to April 15. Over all, their mortality rate was estimated to be as high as 19.9 percent. By contrast, the influenza pandemic of 1918, which killed tens of millions of people worldwide, had an estimated mortality rate, over all, of 1 percent or less.

Let’s look at the last number. If a disease that kills ten million people has a mortality rate of 1 per cent, the number infected is 1 billion. The report is inexact, but clearly implies that several times that many people were killed and that the mortality rate was below 1 per cent. The world population in 1920 was less than 2 billion.

Obviously something is wrong here. This doesn’t mean that the estimates quoted about SARS are wrong, but it would be useful to have a better baseline for comparison.

Categories: World Events Tags:

The opportunity cost of war

May 9th, 2003 2 comments

My piece in todays Fin (subscription required) is about the opportunity cost of the war on Iraq. An excerpt

In the absence of large-scale discoveries of weapons, attention has focused on the undoubted benefits of overthrowing an evil and oppressive dictator. This is a form of foreign aid and can usefully be compared to other aid programs. The total budget of USAID, the main US agency for development and humanitarian assistance is $8.7 billion for the coming year. That is, the money already spent on the Iraq war could have doubled USAID’s budget for the next five years.

It seems certain, however, that the war will herald a sustained increase in military expenditure of at least $US100 billion per year. A more reasonable comparison, therefore, is the ambitious proposal of the Commission on Macroeconomics and Health, led by Harvard Economist Jeffrey Sachs. The Commission aimed to achieve, for all a poor countries, a two-thirds reduction of 1990 child mortality levels, a three-fourths reduction of 1990 maternal mortality ratios and an end to the rising prevalence of major diseases, especially HIV/AIDS.

As the Commission pointed out, in addition to the humanitarian benefits of saving as many as 8 million lives per year, reductions in mortality are directly correlated with a reduced frequency of military coups and state collapse. These provide the breeding ground for terrorism and dictatorship and ultimately lead, in many cases, lead to US military intervention. The estimated cost for the Commission’s seemingly-utopian program over the next decade is estimated at between $US 50 billion and $US 100 billion per year.

War is sometimes necessary in self-defence. But when war is adopted as an instrument of policy, it is often counterproductive and almost never cost-effective.

Categories: World Events Tags:

A self-denying argument

May 9th, 2003 3 comments

In today’s [Thursday} Fin (subscription required) Gary Johns continues the Institute of Public Affairs campaign against the idea of corporate social responsibility. The piece spends 750 words complaining about a Greenpeace exercise solely on the grounds that non-responses to a question were coded as zero.

The more substantive claim is that corporations should focus on making profits for their shareholders, and leave the shareholders to decide whether to keep the money themselves or to allocate it to worthy causes. One obvious implication of this argument is that corporations should stop funding organisations like the IPA. However much or little good the IPA does for Australian capitalism in general, its impact on the profitability of any individual corporation is clearly trivial. Hence, giving shareholders’ money to such organisations is a breach of the directors’ fiduciary responsibilities.

Update As Scott Wickstein points out in the comments, if shareholders want to support the IPA, they should do so as individuals.

Categories: Economics - General Tags:

Word for Wednesday: Intellectual (definition)

May 7th, 2003 4 comments

Intellectual is a particularly tricky word. Partly this is because it has no generally accepted definition. To make things even more difficult, almost no-one will admit to being one or even knowing one without some sort of qualifying adjective or caveat. I’m happy to call myself a public intellectual for example, and I know a few people who would admit to being ?literary intellectuals?, but I don’t think I’ve ever met a self-confessed intellectual.

Although there are occasional positive uses like this, the term is far more often used negatively, but again, never in a straightforward way. Negative uses are almost always surrounded by scare quotes, as in ‘intellectuals’, or with some similar qualifier as in so-called intellectual or my personal favorite ?pseudo-intellectual.
Read more…

Categories: Dictionary Tags:

Labour Day

May 5th, 2003 5 comments

Today is Labour Day in Queensland, held to mark May Day. In most other Australian states, though, Labour Day commemorates the passage of legislation in the mid-19th century limiting the working day to eight hours. This was the first step in a series of legislative measures and agreements negotiated by unions that steadily reduced the number of hours standardly worked per year from about 2400 in 1950 to around 1750 in the mid-1980s.

As we all know, that trend came to an abrupt halt and went into reverse through the 1990s. Strictly speaking, standard hours have not changed, but the majority of full-time workers now work longer-than-standard hours, typically without paid overtime. Similar trends have been evident in other English-speaking countries, most notably the US.

Meanwhile working hours have continued to decline in Europe. The imposition of a maximum 35 hour week in France has attracted most attention, but few Europeans work more than 1600 hours a year.

Is the return of longer hours a desirable market outcome or an aberration. In my view, it’s the latter. the intensification of work in the 1990s seems to be the product of a period of economic expansion combined with employer dominance. Working hours have already begun to decline in the United States.
The experience of Japan, famous for long working hours in the 1980s is instructive. The low growth of the last decade has not been accompanied, as one might expect, by strong growth in unemployment, even though productivity has continued to improve. This is because working hours have declined. As this ILO data shows, average working hours in Japan are now slightly below those in Australia and well below those of the US.

Intuition suggests that leisure is a normal good. Economic progress should entail shorter hours and less stress. Instead, for the last decade or so, we have had the opposite. Productivity gains derived from such sources are built on sand (in fact, correctly measured, they are nonexistent).

Categories: Economics - General Tags:

Welcome !

May 5th, 2003 11 comments

Welcome, everyone to my new site! I’d appreciate a comment just to let me know that people are finding their way here.

Categories: Metablogging Tags:

Monday Message Board

May 5th, 2003 1 comment

It’s a public holiday here in Queensand (Labour Day, on which I hope to post more soon). But it’s a normal workday in most of Australia which means you have no excuse for not devoting your time and your employer’s Internet connection to posting incisive comments on today’s Monday Message Board. As always, civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

What I'm reading, and more

May 4th, 2003 Comments off

I’ve finished the Inferno and am now beginning Dante’s ascent of Purgatory. I also made my first visit to Brisbane Forest Park, a very pleasant expanse of mixed eucalypt and subtropical rainforest, just west of my new home.

Partly because I was thinking about Dante, it struck me that Queensland seems to have more optimistic/picturesque placenames than the areas I’m used to. On today’s journey, for example, I passed Mt Glorious. By contrast, a typical bushwalk in the Snowy Mountains might begin at Dead Horse Gap, and bypass Mt Purgatory on the way to Mt Terrible. Or there’s Scabby Range, Dry Plain and Doubtful Creek, to name just a few of the spots I’ve visited.

Categories: Books and culture Tags:

It's gone pear-shaped, guv

May 3rd, 2003 Comments off

Despite occasional temptations, I’ve stuck to my resolution to abandon The Bill, which, as Rob Corr pointed out, jumped the shark some time ago (I nominate the station firebombing, which wrote out six characters in one episode, but the warning signs were evident well before that). I have, however, received reports of the ultimate shark-jump, a dramatic wedding episode. I didn’t get any good recommendations for alternative TV addictions, so I’ll be curled up in front of a video, instead of watching while Debbie, covered in blood, escapes from Tom’s office, as promised in the TV guide.

Update Demonstrating yet again this blog’s intimate link with the Zeitgeist, The Age runs a story on the soaping up of The Bill. It confirms that the firebombing was the first initiative of the shark-jumping new executive producer, but then descends into the realm of the bizarre, claiming that all of this reflects viewer demands for more “realism”. This confirms the inversion of the term that first arose with the use of the term “reality TV” to describe live-in game shows.

Categories: Books and culture Tags: