Archive for October, 2003

The CIS on speeding

October 31st, 2003 Comments off

The Centre for Independent Studies has published a number of pieces by pro-speeding British sociologist, Alan Buckingham. The site structure doesn’t facilitate linking so you’ll have to look for them individually. Suffice it to say that the standard of argument is well below that usually associated with the CIS. This passage for example, is fairly typical of the general level

If speed did kill then the safest roads would be urban roads where speeds are lowest. In fact, the reverse is true. It is freeways, where speeds are much higher, which are the safest roads.

I hope it’s not necessary to point out that speeding means going faster than is safe on a given road, and that the safe speed is higher on a freeway than on a suburban street, but just in case it is necessary to point it out, I’ve done so.

Similarly, Buckingham praises increases in the speed limit in Italy and the US, not bothering to observe that both countries have worse road death rates than Australia (the US rate has actually been rising over the past decade).

Then there’s the claim that because road deaths in Britain declined more slowly after the introduction of speed cameras than before, speed cameras are ineffectual. Again Buckingham fails to mention the fact that the policies he’s attacking have produced one of the safest road systems in the world. If his arguments prove anything (this kind of casual empiricism is highly unreliable) is that the safety benefit from speed cameras is less than that from previous interventions such as seat belt laws and random breath tests, all of which were vigorously opposed by the Buckinghams of this world.

Buckingham’s work is riddled with sloppy time-series arguments, invalid cross country comparisons and plain non sequiturs.

There are serious issues to be debated regarding speed and law enforcement, and a fair bit of debate has taken place on this blog. Buckingham has done nothing to advance the debate.

Categories: General Tags:

Hughes goes American

October 31st, 2003 Comments off

I made a negative reference to Robert Hughes’ The Shock of the New a couple of days ago. Now this fawning piece by Paul Sheehan (link via Tim Dunlop) reports that Robert Hughes has

relinquished his Australian passport, become an American citizen, and made his self-imposed exile permanent …Exactly three years ago, in the aftermath of the squalls that smashed and permanently damaged him (a near fatal car crash, a hostile reaction to his florid criticisms of the investigation, and a critical pummelling of his TV series about Australia) Hughes told me he was giving up on Australia and applying for American citizenship. When it came through he would quietly hand back both his Australian passport and his AO, and not return.

I can’t say I’m filled with deep regret at this news. Hughes has made some worthwhile contributions in the past, most notably The Fatal Shore, but his behavior over the car crash was very poor (admittedly, not an event to bring out the best in anyone), and his TV series combined an incredibly patronising attitude with an almost total lack of knowledge of, or insight into, Australia.

Categories: General Tags:

Tory trouble, part 2

October 31st, 2003 Comments off

Max Hastings, former editor of the Daily Telegraph and the London Evening Standard, but now writing in the Guardian, says

The Tories will never be electable until they can find a leader who
can offer the British people a vision of the future, not of the past. Britain is now a social democratic country. Barring a national cataclysm, a visibly rightwing party will not again achieve power here.

I think the same is true of NZ and Canada.

In Australia, underlying attitudes are much the same, but it is still more likely than not that Howard will be re-elected in 2004. However, a political party usually pays a price for a long run in office driven by fluke victories and the failings of the opposition, rather than by solid support. Labor paid several times over for “the sweetest victory of all” in 1993, and the Liberals may do the same for Howard’s run.

Categories: General Tags:

Tory troubles

October 30th, 2003 Comments off

Almost unnoticed by the Australian media, the British Conservative Party and the NZ National Party both dumped their leaders in the last couple of days. in one sense, the moves are in opposite directions. Iain Duncan Smith, the British Tory leader was the favourite of the Thatcherite branch membership who have, for the moment at least, a substantial say in choosing the party leader, similar to the Greens and Democrats in Australia. By contrast, the NZ Nationals dumped a moderate, Bill English, in favour of someone identified very closely with the radical free-market reforms of the 1990s, former NZRB governor Don Brash.

I’ve met Brash a couple of times and he strikes me as a decent and honest person. But he was a failure as a central banker, both because of the inflation-only policy target adopted under the National government and because of technical failures like the disastrous flirtation with a Monetary Conditions Index. Finally, although I can’t instantly produce a convincing supporting analysis, I am uneasy at the prospect of senior public servants resigning and going into politics.

What the Tories and NZ Nationals do have in common is that they are in deep electoral trouble. With two election losses behind them, neither party has managed to dissipate the popular hostility generated by periods in office that combined radical free-market policies with an authoritarian style (the Tories are still trying, without much success, to shake the tag of “the nasty party”.)

This is part of a more widespread problem for the conservative parties of the English-speaking world. The most common electoral situation is that in both Britain and NZ with a dominant Labour government, a discredited official opposition and the anti-government vote divided among several mutually hostile parties.

Read more…

Categories: General Tags:

More on 20th century art

October 30th, 2003 2 comments

The modern art debate has divided this section of Ozplogistan and not on the usual lines. I’ve now uploaded my 1999 ReView article, which you can read here . I argue that the decline of painting and art music in the 20th century can be traced to emphasis on formal innovation and the Romantic idea, going back to Beethoven, that the artist creates not for the ignorant audiences of today, but for the the future. It is only a short step from this to the vulgarised idea that, the more shocking you are today, the more highly regarded you will be by posterity.

By contrast, with painting and art music, novels and popular music have flourished in the 20th century, precisely because they remain dependent on an audience, rather than on a closed circle of artists and critics. My conclusion:

The other striking characteristic of the novel is the relative insignificance of formal innovation, as opposed to changes in theme or content. A symphony in the style of Beethoven would be a conscious anachronism if composed today, even if it was inspired, like Beethoven’s own works, by contemporary events. By contrast, although there is a wide range of variation, the formal structure of the 19th-century novel remains the starting point for most modern novelists. This is not to say that writers have been constrained to follow this structure – one need only think of Joyce – or to confine themselves to the concerns and conventions of the 19th century novel. Rather, the point is that programmatic formal innovation, such as that of the nouveau roman school of the 1960s, never acquired the kind of institutional dominance it attained in other arts. In the absence of an audience, the nouveau roman withered and disappeared, but the novel flourished.

The experience of the 20th century shows that it is possible for the activity of art to continue, and even to prosper in an economic sense, without an audience. There are also examples like Picasso to show that, in the hands of sufficiently gifted artists, great art will emerge regardless of the underlying theory. In aggregate, however, the 21st century will surely see the art of the 20th as mannered and trivial. If there is to be a revival of art in the new millennium, it must begin with the revival of the mass audience.

Categories: General Tags:

Epater le bourgeois

October 28th, 2003 Comments off

Rob Schaap gives a well-justified bagging to the dominant trend in modern art, shock value for its own sake (exemplified by Robert Hughes The Shock of the New. I had a go at the same topic here. (Sorry for linkrot in external links).

Categories: General Tags:

Work and babies

October 28th, 2003 2 comments

This long piece in the New York Times Magazine has lots of stuff about highly qualified women dropping out of the full-time labor force to raise their kids. The money quote doesn’t come until near the end.

the exodus of professional women from the workplace isn’t really about motherhood at all. It is really about work. … quitting is driven as much from the job-dissatisfaction side as from the pull-to-motherhood side….Timing one’s quitting to coincide with a baby is like timing a breakup to coincide with graduation

The changes in work that have driven a good deal of productivity growth here and in the US have required steadily increased work intensity. Particularly in jobs with little in the way of intrinsic reward (most of the women interviewed were MBAs or corporate lawyers) this inevitably generates burnout. Men don’t have the socially acceptable exit of child-rearing, but their participation in the full-time labor force is still declining.

Categories: General Tags:

The Next Big Thing

October 27th, 2003 Comments off

A little while ago, I asked readers to identify the Next Big Thing in blogging. Although not immediately blog-related, it looks like this Amazon initiative may be it. Amazon has digitized about 100 000 books, and offers you the capacity to search within them.

In blog terms, the most notable implication is that it provides bloggers with a vast source of linkable raw material on which to comment. (I assume linking requires you to download the book segment provided by Amazon, then upload it, which is a bit more trouble than linking to a Web page, but no doubt this process will be simplified over time).

Maybe less dramatic, but possibly equally important is the MIT Open Courseware initiative. MIT has made the course materials for over 500 courses, included lecture notes, slides and exams, available to anyone who wants to use them. Here for example is an introductory course on game theory.

One immediate impact is to kill off, once and for all, the most popular version of the commercial online university. During the dotcom bubble, a number of leading universities tried to establish online commercial ventures and many others tried to assert ownership of course materials produced by their staff, with a view to selling it online. Clearly that isn’t going to happen now that MIT is giving its materials away.

A second impact is to make it much easier for a competent lecturer to set up a new course from scratch, even in a relatively poor (but Internet-connected) university in a less-developed or middle-income country. Using course materials developed by someone else at MIT is not a substitute for a well-prepared course in a field where you are already at or near the frontier, but it’s a very good starting point for anyone who is not at that position. And once MIT has done the hard work of setting up a coherent delivery system, there’s every reason to hope that other institutions will join in.

Even for universities that are already in the top 25 (all 50 of them!) there would be big benefits if publication of course materials became as routine as publication of journal articles is today.

Categories: General Tags:

Monday Message Board

October 27th, 2003 1 comment

It’s time, once again, for your thoughts on any topic that takes your fancy (civilised discussion and no coarse language, please).

My suggested discussion starter – can Labor win in 2004?

Categories: General Tags:

They knew it was a lie

October 26th, 2003 Comments off

This story in the Washington Post makes it clear that US forces didn’t even bother looking for Saddam’s alleged nuclear weapons program. The implication, made more or less explicit at various points, is that everyone who mattered in Washington knew that the claims made by Powell a month or two before the war, and restated in various forms by Bush, Blair, Cheney et al. were untrue. The fact that Saddam couldn’t have a nuclear program was obvious back in January even without the info that has subsequently come out about bogus intelligence and so on.

My guess is that the Administration was confident of finding at least some chemical weapons (Saddam had produced lots of them, had used them in the past, and hadn’t accounted for them adequately), and perhaps some sort of incriminating evidence on germs. No doubt they thought that, given such discoveries, they wouldn’t pay a serious political price for bolstering their case with lies about the really scary stuff like nukes.

Categories: General Tags:


October 26th, 2003 1 comment

Having watched a bit of the Rugby World Cup, and read a little bit about it, I’ve reached the conclusion (not an original one) that the structure is radically defective. Most of the games I’ve seen so far have had all the tension of the annual grudge match between the Brisbane Lions and the Toowong Under 12s (Reserves). There are only half a dozen teams that are serious contenders,and, as I understand it, the pool + elimination final setup means most of them will never play each other. Meanwhile, we get to watch game after game with scorelines like 300 to minus 10.

What’s needed here is two top pools of four (the finalists from the previous cup) with the bottom team in each pool eliminated after the pool matches, and two second division pools with the top qualifiers making it through to the finals. This would mean that most of the interesting matches would actually be played.

Then there’s the estimate that 4 billion people will watch the Cup. Those who’ve seen such statistics in the past know that this is calculated by counting the same people over and over again as they watch different matches. Even so, there are no more than 40 games scheduled, implying an average audience of 100 million. The only hard number I’ve seen is the Australian audience for Australia’s first game, against Argentina, which was about 2 million. Let’s be very generous and suppose that the same number of people watched in Argentina (a soccer-mad country where rubgy is the pastime of a tiny minority). That still leaves us short 96 million – presumably these are people who are passionate enough about rugby to watch a game in which they have no direct interest. Where in the world are that many rugby fans going to be found? The New Zealanders, Pacific Islanders and the Welsh are pretty keen, as are white South Africans, but that’s only about ten million people altogether. Rugby is a significant minority sport in the rest of the British Isles and in France and you might get another ten million potential viewers there. The US and Japan may have teams here, but I doubt that the average American or Japanese is even aware that the Cup is being played.

To sum up, if you supposed that the entire rugby-following population of the world, men, women and children, all watched every match, you might get something approaching a billion viewers in total. I’d guess, though, that a realistic estimate is closer to 100 million.

Categories: General Tags:

Bullets win!

October 25th, 2003 Comments off

I went to the basketball last night, passing up the alternative of the Rugby World Cup (on which more soon). I had some mixed feelings. Having made the move to Brisbane, I’ve committed to supporting the local teams at least in the sports I follow to any extent (AFL, basketball and cricket) but the Bullets’ opponents tonight were the Townsville Crocodiles, the first basketball team I followed, during my stint in the tropics in the mid-90s. Unlike the relatively tepid supporters of the Bullets, Townsville had and has a large and fanatical fan base, to the extent that they outnumbered (or at least outshouted) the Brisbane supporters in their (our) own stadium. At least part of me wanted to be with them.

On the other hand, Australian basketball, more than any other sport, is lacking in any notion of club loyalty. As a result, there are three or four players on the Brisbane team whom I’ve previously cheered as players for my local (Tville or Canberra) team. They include Derek Rucker who is, I think, the most skilled point guard the NBL has seen, though his career has never been crowned with the big prizes such as championships or Olympic selection (he was MVP back in 1990).

Despite any mixed feelings, it was a great night, with a convincing win by the Bullets, and was made better by the fact that you can go to and from the games by ferry, avoiding the traffic jams that usually accompany any sporting event.

Categories: General Tags:

The long road back

October 25th, 2003 Comments off

Britain has taken another small step back from privatisation, with the news that the renationalised owner of the rail network will cancel contracts with private firms for maintenance. (The best coverage I’ve found, oddly enough, is in the New York Times. This has been on the cards for some time. For the background to all this, you can’t do much better than watch Ken Loach’s film The Navigators, which I reviewed for the Canberra Times (my hope that this would lead to a new career as a film critic proved baseless). You can read the review at Australian Policy Online. The NYT article notes that the private contractors whose work proved unsatisfactory on the rail network are the same ones who got jobs under the biggest privatisation initiative of the Blair government, that of the London Underground, and that a partial reversal of this initiative is also on the cards.

In my assessment, the evidence shows that privatisation of “natural monopoly” infrastructure has been a failure. The only cases where the public has got a reasonable price for the sale of their assets have been those where the private buyers have paid too much in the expectation of getting high rates of return. In some cases (for example, Australian airports), the response has been to change the rules to give the buyers what they want at the expense of consumers. In other cases,the buyers have taken their lumps and resold at huge losses. In still other cases, they are still trying to extract higher payments with the threat of withholding capital investment.

The best long-run solution to this is a return to full public ownership. The likely alternative is the kind of quasi-private solution favoured by the Americans when they need a public enterprise but aren’t willing to admit it (Amtrak, Fannie Mae etc).

Categories: General Tags:

A modest proposal on WMDs

October 24th, 2003 Comments off

Things are not going very well as far as the proliferation of nuclear weapons (the only real weapons of mass destruction) are concerned. They are also not going brilliantly for Tony Blair, whose professed concern on this subject with respect to Iraq now looks pretty bogus.

I offer a proposal that might make a contribution in both directions. The United Kingdom should unilaterally abandon nuclear weapons. This would make little practical difference since Britain’s weapons are effectively under American control. But symbolic actions are important.

During the Cold War, the symbolism of unilateral disarmament was problematic, to say the least, since Britain had a major potential adversary that was bristling with nuclear weapons and had plenty of them targeted at British cities. Disarmament was seen as a sign of weakness in the face of this threat.

In the current situation, however, Britain has no nuclear-armed enemies and no reason for keeping them, except national pride and a feeling that they might come in handy some day. Since these are precisely the motives that are driving India, Pakistan, Iran etc, a British decision to disarm could have a big psychological impact in discouraging proliferation.

Of course, as the title of this post indicates, I’m dreaming. But perhaps someone could explain why this proposal doesn’t make sense.

Categories: General Tags:

1,500,000 swimming pools later

October 23rd, 2003 1 comment

The idea that a megalitre of water is the amount in an Olympic swimming pool has been repeated endlessly. Here’s what happened when someone actually checked.

Leaving aside the fact that Olympic swimming pools vary in depth and width, I find the metaphor almost useless. The old acre-foot (about 1.1 ML) at least gave an idea of how a given volume of water might be used in practice. You can do the same the fact that 1ML will supply 10cm of irrigation water to 1 hectare of land.

While I’m on this topic, my piece in today’s Fin (subscription required) is about the Murray, but regular readers will have already seen most of it in bits and pieces on the blog. Thanks to all who helped me sort out my thoughts on this

Categories: General Tags:

Coffee update

October 22nd, 2003 Comments off

A rather silly article in the Fin (Gloria Jean’s, purveyor of crap coffee in paper cups is described as ‘the leader in the specialty coffee market’, on the strength of its 140 food-court outlets), contains the gratifying news that Starbucks’ assault on the Australian market has been a failure so far. After opening 37 stores out of a promised 50 the purchaser of the franchise has given up and handed it back to Starbucks Central.

A couple of indicators of the problems ahead of Starbucks here.

First, the Qantas in-flight magazine I read on a recent trip had lots of restaurant reviews for visitors to Australian cities. Most included advice on both the brand of coffee served and the quality of preparation and service – the wine list was mentioned only occasionally.

Second, there’s the ubiquity of high-quality espresso. The Fin article I mentioned claimed that the number of cafes had declined marginally in the last couple of years, but if that’s true it’s only because espresso machines have become a universal feature the landscape. In my little corner of Brisbane I have a choice of buying my coffee at the Faculty rooftop cafe, the fish-and-chip shop, the bakery, the deli, the bookshop and the garden centre, not to mention a couple of dozen cafes and restaurants. Meanwhile, judging by the average news story on the subject, Starbucks thinks it’s competing with Gloria Jeans and McCafe.

Categories: General Tags:

Fridges with webcams!

October 22nd, 2003 Comments off

I’ve just had my first experience of public WiFi (I’ve had a little home Airport network for some time) and I think this may be, as others have suggested, the Next Big Thing. (First poster to say “Huh! I was doing this five years ago!” does not get a prize!)

It’s still expensive (though I understand there are ways of getting access for free if you know what to do) and coverage is still very limited. The other problem in getting properly untethered is the limited battery life of full-scale laptops – alternatives with miniature screens and keyboards/keypads are not for me.

Having got enthusiastic over one technology, I have to maintain my generally technosceptic stance by debunking another, and what better than yet another Internet-enabled fridge story. This is one about a proposed fridge with a webcam inside it. I’ve got used to the idea of bedroom and bathroom webcams by now, but a fridge webcam sounds as if it could be truly gross!

In any case, this got me thinking: What is it with gee-whiz technology journalists and fridges ? I suppose the answer is that it’s marginally less implausible than an Internet-ready microwave oven. But as a public service, I’m going to attempt a once-for-all debunking of the idea of Internet-enabled white goods and similar appliances.

There are two potential applications worth considering. The first is the idea of a fridge that will check its contents, note shortfalls and time-expired items and order replacements from the supermarket. This is silly for two reasons. First, the fridge can’t tell whether the milk is all gone or whether the kids forgot to put it back after making their breakfast cereal. Second, a superior technology is available now if anyone wants it. All you need is a barcode scanner and off-the-shelf inventory software. You swipe items as they enter the inventory and again when they are used. Assuming the existence of stores set up for automated phone orders, the last bit would be easy.

This approach covers all grocery items not just refrigerated goods, and is cheap and relatively easy. If you’re prepared to work a bit harder you can home-brew the software, do the data entry manually and you get the whole thing for free. My Dad actually implemented such a system a decade or so ago and ran it for several years, but got tired of it in the end. For most people, even cheap and off the shelf, this would not be worth the effort.

The other possibility is remote control – telling the oven to turn on an hour before you get home for dinner and so on. Again this is pretty much feasible already, using home automation systems such as X-10 and again very few people bother. The problem is that a disciplined person can achieve most of the required functionality with simple timers and a disorganised person will generally find it easier to wait until they get home.

The big exception to all of this is communications and entertainment. I’m not talking here about the silly idea of convergence in which the TV set, computer and phone would merge (if you think about, the potential benefit of this is the saving of one screen). Rather its the idea that instead of having to negotiate a badly-designed interface, different for each system, whenever you want to control, say, a video, you should be able to manage all your digital media from a system designed for flexible control, that is, a computer.

Categories: General Tags:


October 22nd, 2003 Comments off

Thanks to the magic of Trackback, I’ve been prematurely alerted to a new blog setup by Chris Sheil, late of Troppo Armadillo. The name Back Pages, and the fact that at least some of the posts are recycled suggests that this is still in the testing phase and may be some sort of “Best Of” site, but hopefully the fact that it’s on air means that Chris will be back in full voice shortly.

Update It was, as I speculated, a test site, and I’ve removed the link at Chris’ request. The Real Thing, he promises will be coming Real Soon Now.

Categories: General Tags:

Iraq importing immigrants?

October 21st, 2003 Comments off

I was stunned by this piece from The Economist when it came out, and expected a furore. But, with the inevitable exception of Tim Dunlop and the unsurprising exception of Nathan Newman, no-one else seems to have noticed (Nathan’s post did get one link, from

I find this startling. Far more than debates about imminence or WMDs, and even more than the daily drip of guerilla attack and counterattack, the success or failure of the US policy in Iraq depends on getting the economy moving. Any attempts in this direction are doomed to failure, if, as The Economist asserts, the occupying forces have a policy of not employing Iraqis

If this story is correct, and representative of the policies of the occupation forces in general, it’s time to abandon the “you broke it, you own it” stance I’ve advocated previously. Rather than pursue a strategy that is doomed to be an expensive failure, it would be better to pull out immediately, and let the chips fall where they may.

UpdateSteve Edwards also has a good comment on this, and on the US Democrats proposal to turn half the aid to Iraq into loans (I anticipated this some time ago, but not that it would come from the Dems).

Categories: General Tags:

More cost-benefit on road safety

October 21st, 2003 Comments off

The debate on road safety has been lively, and has certainly helped me to sharpen my ideas on the subject. In particular, I’ve gone back to the most recent source of controversy, the proposal for banks of speed cameras on the Victorian section of the Hume Highway which would be able to check a driver’s average speed over sections of the Highway. The main effect would be to make it impossible to speed consistently (given fixed locations, the cameras don’t have much affect on such things as speeding up to overtake and so on).

This is a relatively straightforward case for cost-benefit analysis. People who formerly travelled at above the speed limit will go slower and take more time. On the other hand, since this will reduce both average speed and speed variance, there will be less accidents.

For the costs, I’ve assumed 15 000 cars per year, 20 per cent of whom speed consistently, maintaining an average of 130km/h (vs a limit of 110). I’ve given them a value of time saved of $20/hour (higher than is standard), and I estimate an annual cost of $10 million per year from enforcing the limit.

As already noted, the cost per life lost is above $20 million, between $5 million and $10 million so we only need to prevent one or two fatalities per year to get benefits>costs (there have been about 8 deaths per year in the last five years).

A slightly more involved calculation shows that the net externality generated by speeders and other dangerous drivers on the Hume is around half the total damage incurred from accidents (the actual cost incurred by safe drivers + the extra costs of defensive driving). On standard “pollution tax” arguments, the fine revenue that ought to be collected from the Hume, net of enforcement costs is therefore around $50 million per year.

This post has been updated to correct for an erroneous value-of-life calculation in the original version

Categories: General Tags:

NILF bludgers?

October 20th, 2003 20 comments

A reader asks a question to which I don’t have an immediate answer

I’ve noticed that in general people are always concerned with the unemployed and how/why they don’t work etc. Often this attitude is negative, and this is certainly capilized by the goverment.

So what I wondered is why doesn’t this attitude doesn’t seem to also apply to people who don’t work but don’t collect benefits ? What I mean by this is that it seems clear there are lots of indirect benefits that people still receive/received even if they don’t work (roads, schooling etc.) and direct benefits too (health-care) that must cost the community. However, this group seems exempt from the negative criticism of those that collect unemployment benefits in particular, and sometime it is also positive (if you make enough money to retire at thirty, thats great!). Why ?

Any thoughts on this?

Categories: Economics - General Tags:

Explaining (away) the productivity miracle

October 20th, 2003 7 comments

There’s been a lengthy debate, in the blogworld and elsewhere about the causes of recent growth in US labor productivity, and the associated fact that reasonably good output growth has produced little or no employment growth. Brad de Long, in particular has discussed this at length. My preferred explanation, which I put forward here is that

Beginning with productivity, it’s only labour productivity that’s grown rapidly and seemingly anomalously. Capital productivity has declined markedly, as has multifactor productivity (a weighted average of capital and labour productivity) In part this reflects the economics of embodied technical change – as computing power has become cheaper it has been applied more intensively. But there’s also a big hangover effect from the bubble and bust, when crazy signals from capital markets led lots of firms to undertake unprofitable investments. Once some semblance of reality returns, the natural response is to cut back and it’s much easier to sack the least productive workers than to reduce capital stock. So labour productivity rises fast, but output growth is weak.

This NYT piece gives lots evidence, admittedly msotly anecdotal, to back up my analysis. The key statement is the

the slow process of working through a glut of boom-era investment that continues to litter the economy with underused factories [ is weighing on job creation]

Along with lots of case studies of soap factories is the point that

Not since the severe recession of the early 1980’s has capacity use in manufacturing stayed so low for so long, government data show. Production as a percentage of total capacity fell precipitously in the aftermath of the last recession, which ended in 2001, and 23 months into the recovery, the upturn has still not come. On average, manufacturers are using less than 73 percent of their capacity.

If multifactor productivity were really rising we’d expect to see new investment and hiring as US producers displaced competing imports, especially with the dollar depreciating. But there’s no sign of this so far.

Updated Brad de Long has responded to the same article with a restatement of his main argument

Louis Uchitelle frames the issue the wrong way around: there is no such thing as “overinvestment,” there is only too little aggregate demand. If you think that there is “overinvestment,” dropping the interest rate will cure you of that belief. At least, it will until you hit a liquidity trap… But it looks like that is no longer a dangerous possibility.

There’s a disconnect here between the macro arguments Brad is making and the micro arguments I’m making. My intuition is that the size of the US CAD indicates that deficient aggregate demand is not the problem. But I need to think more about this.

Categories: Economics - General Tags:

Meme watch

October 20th, 2003 9 comments

While I’m dubious about the validity of the Dawkins analogy between memes and genes, there’s no doubt that we need some sort of word for a minimal unit of argument that is subject to reproduction and selection, and meme seems to have become that word.

One I’ve noticed in particular among supporters of the Howard government is exemplified by Michael Baume in today’s Fin (subscription required). He writes that the Howard government has halved youth unemployment, then immediately follows up with the small print “since the Keating era peak in 1992”. If seen similar comparisons regarding interest rates and, I think even occasionally on inflation. In all these cases, the majority of the improvements occurred before Labor lost office.

In political terms, this is a straightforward case of claiming your opponents’ accomplishments as your own. Underlying this is the fact, which I’ve pointed out that, in economic terms, the Howard government is essentially a continuation of those of Hawke and Keating, with a gradual (and not continuous) slowdown in the pace of microeconomic reform.

As it’s normally used, this argument is clearly dishonest. There might be circumstances in which it could be used honestly, particularly in relation to policy instruments under direct government control. For example, if the government controlled interest rates, it might say that “we have kept interest rates low, and will always do so. By contrast, Labor allowed them to rise to 17 per cent”. But in terms of targets like unemployment, the natural base point for comparisons is 1996, not 1992, and the government’s performance looks most unimpressive.

Categories: Oz Politics Tags:

Monday Message Board

October 20th, 2003 9 comments

Time as usual for the Monday Message Board. As the discussion on speeding has attracted a couple of abusive comments with foul language, I’ll stress the usual reminder that this is a PG-rated blog. No coarse language, and civilised discussion, please.

As always, comment on any topic that takes your fancy, but in the light of my recent exercise in bloggerative democracy, I’m interested in your thoughts on the question “What is the Next Big Thing in blogging/the Internet in general?”

Categories: Regular Features Tags:

The GG as a politician

October 19th, 2003 7 comments

As is often the case, I’m coming late to a story that more alert ploggers have covered at length, that of Governor-General Michael Jeffery’s remarks supporting pre-emptive military action. Roughly speaking, it seems that opinion is divided along left-right lines as might be expected. The left line, represented by my blogtwin, Tim Dunlop focuses on the Howard government’s hypocrisy in view of its criticism of less overtly political statements by William Deane. The right line, which I’ve seen but can’t now locate a good instance of, is that the hypocrisy is on the side of the left, who cheered Deane on, but are now deploring Jeffery. I have a couple of observations.

First, this is a typical instance of the policy dynamic under the current government. When faced with some aspect of Labor’s behavior in office (weak code of ministerial conduct, publicly funded political advertising and so on) the Howard government has initially deplored it and promised to do better. But when this inevitably proves inconvenient, the response is to take actions which are claimed to be in line with precedents from the Labor government but which in fact are “pushing the envelope”. Ministerial conflicts of interest and use of public money to fund political ad campaigns allow for much more impropriety (relative to the views of propriety that prevailed until the 1980s) than under the last Labor government (though who knows what the next one will be like).

In the present case, the government disliked Deane’s attempts to act as a social conscience, so it decided to appoint Hollingworth who seemed to have a track record that would protect him from adverse comparisons with Deane combined with a willingness to look dignified and stick to his script. When it turned out that the latter qualities, in operation as Archbishop of Brisbane, had produced some disastrous outcomes, the government decided to give up on neutrality and appoint someone who would speak out on their side of the debate.

The second point is that, as a result of this, it’s now clear that the post of Governor-General is a political one and that anyone who holds it is a politician. The natural conclusion is that a politician holding such an important office should have the legitimacy that can only be derived from popular election.

This is logically independent of the Republic issue. We can have an elected governor-general (David Solomon pushed this idea after 1975, and Ken Parish revived it recently) or an appointed president. Realistically speaking though, a move to directly electing the GG would lead straight to a republic with a directly elected president. By giving up on the idea of the GG as a neutral figurehead, the government has effectively conceded defeat on the main arguments against both a republic and direct election.

Categories: Oz Politics Tags:

"John Quiggin" wins

October 18th, 2003 10 comments

The votes are in (53 of them, anyway) and the result is a resounding endorsement of the status quo. From the Australian daytime voting, it looked as if we might have to go to preferences, but a late surge from Western hemisphere voters produced an outright majority in favour of keeping “John Quiggin” as the name for this blog. The runner-up was “Quog” which was my least-favoured choice and attracted some negative comments from others.

This was interesting and I might try it again some time, just for fun.

Categories: Metablogging Tags:

Slowing down

October 18th, 2003 18 comments

We’ve been discussing speed quite a bit lately, and this story about the end of Concorde illustrates a point I’ve been making for some time. On most of the obvious measures, technological progress in transport stopped sometime in the late 1960s and, at the frontiers, we are now seeing retrogression.

In 1970, we had regular visits to the moon, and supersonic passenger flight via Concorde was on the way. Now we have neither. Even the space shuttle, designed as a low-cost “space truck” to replace the expensive moon program, is now headed for oblivion, with no obvious replacement.

At a more prosaic level, the 747 jumbo jet, introduced in the late 1960s, is still the workhorse of passenger air transport. Boeing’s attempts at producing a new generation of passenger planes have failed, and the likely replacement for the jumbo jet is the Airbus A380 – essentially just a double-decker jumbo. In all probability, this will be the standard for the next thirty or even fifty years. Of course we don’t have flying cars, or even personal helicopters, as most projections from 50 years ago supposed.

On the ground, cars are safer and more comfortable than they used to be, but the rate of innovation has slowed substantially, and as we’ve discussed, there’s been no increase in the average speed at which we travel – if anything the opposite. Here, for illustration are specs for the 1962 Holden EJ released just over 40 years ago. There are some obvious differences from the cars of today, but they are pretty minor. Go back another 40 years and you’re looking at this. Forty years more and even the bicycle is still is in embryo (the first modern one was made in 1885, predating the first Daimler and Benz cars by four years)

There are a couple of points to make here. The first is that, outside the areas of information and communications, technological progress has generally slowed. All the easy stuff (penicillin, jet aircraft, skyscrapers) had been done by the late 1960s. Only in IT and telecom does anything like Moore’s Law work in our favour.

The second is that while the relationship between transport and communications is complex, in the long run they are substitutes. We don’t need to send humans into outer space to tell us what’s there, because we can send cameras and telescopes and download the results. We don’t need to fly from London to New York in five hours when we can make a phone call for a few cents a minute.

Interestingly, this logic hasn’t prevented some industries, notably financial services, from clustering ever more closely in a handful of ‘global cities”. As I’ll argue in a later post, this says more about the dominance of crony capitalism in the financial sector than about the technological requirements of doing business.

Categories: Life in General Tags:

Remembering Jim Cairns

October 17th, 2003 4 comments

Everybody else has had their say about Jim Cairns, and I suppose I should put my own thoughts on record, too, even if they are not particularly original. In my view, Cairns played a significant and essentially positive role in the Vietnam moratorium movement, and everything after that was largely irrelevant.

In talking about Vietnam, it’s important to remember not only that the war was wrong in itself, but that the government was conscripting young men (too young to vote against it*) to fight, rather than making a moral case strong enough to attract volunteers or paying wages high enough to make the army an attractive choice. Whereas it’s possible to make a case for the war itself (not, in my view, a convincing one) this was unequivocally wrong.

As regards the anti-Vietnam campaign, Cairns must get a fair bit of the credit for the fact that, despite some fringe violence, the movement never produced the kind of terrorist offshoots that emerged in the US and Europe.

Once the war was over, so was the role of someone like Cairns. He wasn’t a great minister, but that’s not surprising – the politics of the street don’t translate well into the requirements of public office. The kind of moral certainty that was needed for the Vietnam campaign was of little use in the period of chaos and compromise that emerged after 1974.

His infatuation with Junie Morosi led him to dishonest and arguably corrupt actions and contributed to the dismissal of the Whitlam government, but any social democratic government elected in 1972 was doomed in the face of the global economic crisis of the early 1970s.

I’m not a Melbournian so I only know of his later life, selling his books at the market and so on from occasional reports. It sounded rather sad, but substantially more honorable to the post-Parliamentary careers of a lot of other Labor MPs.

* As I recall, the govt acknowledged the untenability of its position by letting conscripts vote after they had been called up.

Categories: Oz Politics Tags:

The costs and benefits of speeding

October 17th, 2003 26 comments

Various commentators (notably including Tom Nankivell) have raised the issue of the costs and benefits of current speed limits and of more or less rigorous enforcement of those limits, and have asked that I consider costs as well as benefits of enforcing speed limits. I’m going to give some back-of-the-envelope numbers in an effort to inform the debate. The total economic cost of road crashes in Australia is at least $20 billion per year (This BTRE study gives direct costs of $15 billion for 1996, but an analysis based on economic welfare theory would include substantial costs (for example, in the BTRE analysis, there is zero cost in the case when a retired person is killed instantly in a crash).

The main cost of speeding restrictions is that of additional travel time. Assuming that complete abolition of speed limits would reduce average travel time by 20 per cent (very generous, since a lot of travel is on congested roads where the speed limit isn’t a constraint), and taking the BTRE estimate that value of reduced travel time is $10/hour, the total travel time cost of speed limits is around $5 billion per year.

It’s pretty obvious that abolishing speed limits altogether would raise road death rates by more than 25 per cent (the NT is the only jurisdiction in Australia without speed limits and its death rates are several times higher than in the rest of the country, though there are other factors as well as speed in play). The same argument applies, essentially pro-rata to more limited relaxation of limits. It gets harder to justify further reductions as the limit gets lower, but I’d say there’s a pretty good case for more general application of 50k limits in suburban areas to cover everything except main roads.

Turning to other costs and benefits, the survey evidence I’ve seen suggests that the disutility imposed by speeders on other drivers (particularly through tailgating, forcing their way back into traffic etc) is at least as large as any psychic benefits gained by the speeders.

Finally, on the enforcement issue, one point that has secured a lot of agreement is that variance in speed is as much of a problem as speed itself. On the assumption that there are a large number of law-abiding drivers travelling at or near the legal limit, and vehicles such as trucks that cannot safely exceed the limit, this provides a strong argument for both rigorous enforcement and tight tolerances. It also implies that excessively slow driving should be penalised.

Categories: Economics - General Tags:

How much is water worth in the US ?

October 17th, 2003 1 comment

This NYT story shows the similarity between Australia’s water problems and those of the Western US. There as here, rights originally allocated to irrigators for little or nothing are being bought back at substantially higher values.

The San Diego district will pay market prices for the water, or about $258 per acre-foot at the outset. The farmers typically pay only delivery fees for their water, which amount to $15 or $20 per acre-foot.

If my arithmetic is correct, the market price quoted here is about $A300/ML while the farm delivery price is around $A20/ML. An acre-foot (enough to put a foot of water on an acre of land) is about 1.2 ML (a megalitre enough to put 10cm of water on a hectare of land) and in purchasing-power-parity terms, an Australian dollar is worth about $US0.70 which, coincidentally, is close to the current market exchange rate.

Categories: Environment Tags: