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Archive for October, 2003

Vote!

October 17th, 2003 16 comments

In the Monday Message Board before last, I asked for suggestions for a possible name for this blog. When I started blogging, I didn’t really think too much about this. I knew I didn’t want to run a pseudonymous blog (disclaimer: some of my best friends are pseudonymous bloggers, or might be) so I just used my own name for the blog as well as when I signed my posts. But now I think a name for the blog might be a good idea. In addition, I’m interested in testing out polling plugins.

When I thought about it, my own idea for a name was “Honest disagreement”. It lacks the irony that most blognames seem to display, but it does give an idea of the kind of forum I hope to provide. Of the many suggestions by commenters, the two I liked best were “QED” and “Quog”. And of course, there’s the option, favored by at least some, of sticking to the existing name.

So, here’s my poll. The usual caveats apply. The results do not represent a scientific sample of anything and I am not bound to pay any attention to them if I don’t feel like it.


You must turn on JavaScript to view the PulsePoll. For tech support: co-laboratory

Categories: Metablogging Tags:

A nice plug

October 17th, 2003 4 comments

British journal Economica is currently listing one of my papers (with Simon Grant) as its feature article on its website. I’m very happy about this, since the paper makes what I think is one of my most important policy arguments, that the discount rate for public investment should be less than the rate of return demanded by private equity investors in comparable projects.

I’d be interested to debate this point with readers, but please have a look at the article first – you don’t need to go through all the algebra to get the main point.

Categories: Economics - General Tags:

Trouble with pronouns

October 16th, 2003 7 comments

Stanley Gudgeon, aka Professor Bunyip, aka Imre writes

Being of the left, it goes without saying that John Quiggin is an enemy of pleasure — at least those that don’t involve curtailing the not-good-for-you joys of others.

(Link via Ken Parish who points out some inconsistencies in the Professor’s own position.)

On the contrary, what I want to curtail is the bad-for-me pleasures of people (speeding drivers, gun fans etc) who are happy to say I should take some risks to facilitate their fun.

As I mentioned quite a while ago, if we could find a suitable location for gun fans and speedsters to act out their Grand Theft Auto fantasies away from everyone else, I’d support it*. In fact, I’d sign up for pay-TV to watch.

*James Farrell made a similar suggestion in the comments thread

Categories: Life in General Tags:

A puzzle for the libertarians

October 16th, 2003 16 comments

One of the striking features of the debate over road safety is the extent to which the opinions of blogosphere residents can be predicted on the basis of political affiliation. Rightwingers, both libertarians and law-and-order types, are in favor both of soft laws (high speed limits etc) and weak law enforcement, and leftwingers the opposite. A number of commentators on both sides have made this point.

So I was interested to see this pro-speeding site [thanks to TJW for the link]. The main argument is fairly standard (everybody speeds, so travelling at the speed limit is dangerous so speed limits should not be enforced). But what’s interesting is this para

In the United States, just two speeding tickets can increase your insurance premiums by 50%! In BC, the penalty points from two speeding tickets will cost you $300.

The Insurance Institute for Highway Safety (IIHS), a powerful lobby group funded by the US insurance industry, has been the chief opponent of moves to raise speed limits.

Insurance companies in the US (and ICBC in BC) frequently purchase radar and laser guns for police forces to issue more speeding tickets.

which presents an obvious paradox for libertarian supporters of speeding. A fully privatised system would give more power to the insurance companies to impose their own conditions on insured drivers and, if this site is correct, the companies would be keen to tighten the rules.

In my experience, libertarians love the kind of intellectual gymnastics required to produce free-market solutions to puzzles of this kind, so I’m offering it for their enjoyment.

Categories: Life in General Tags:

Strike!

October 16th, 2003 8 comments

Like most academics, I’m somewhat ambivalent about strike action. On the one hand, given the nature of the work, a one-day or even a one-week strike would barely be noticed by the employers (and, as I’ll mention below, it’s not clear whether the employers are the universities or the government). On the other hand, the right to strike is an important one, that has been struggled for and defended for nearly 200 years, and we have plenty of reasons for wanting to exercise it.

In practice, there’s never been a national strike of more than one day, and my response has usually been to stay home and work there, occasionally turning out on a ‘picket’ (more accurately, ‘protest’) line. Even the loss of pay has been spotty. For the same reasons as strikes are somewhat ineffectual, it’s hard to verify who is on strike and who is simply out of the office for some other reason on a given day. So the university is generally reduced to asking people to dob themselves in and the old-style unionist in me objects to helping the boss in this way.

But on this occasion, I’ll be doing things properly. I’m going to spend the day catching up on non-uni jobs (including, I hope, polishing up the blog) and I’ve already advised the uni so they can dock my pay for the day. The issues are worth a strike

Read more…

Categories: Life in General Tags:

Challenging the virus monopoly

October 15th, 2003 Comments off

Microsoft’s core business is under attack

Categories: Mac & other computers Tags:

Tailgating

October 15th, 2003 16 comments

The comments thread for the previous post raises the issue of tailgating. I’ve seen surveys in which the two most common annoyances are (1) tailgating and (2) slow drivers. Given that, in my experience, at least 95 per cent of drivers drive within a few k of the speed limit whenever they can, I’d guess that a large proportion of those giving response (2) are the people who annoy those of us giving response (1). Road safety would be greatly enhanced if these people could either be deterred or delicensed.

But there’s no obvious way of enforcing laws against this species of dangerous driving. I can think of various possibilities, but I can also think of technical difficulties with all of them. About the most promising would be a fixed video camera that would record all passing traffic. It ought to be able to infer both speed and distance between cars, and then prosecute tailgaters, but the computational requirements of recording this digitally and processing it automatically would be immense. Still, Moore’s Law is on our side, here.

Categories: Life in General Tags:

Rolling the dice

October 14th, 2003 4 comments

An interesting Four Corners last night. Here’s the transcript. I worked on gambling issues back in the 90s, and put in a submission to the Productivity Commission inquiry in 1999. Having worked in the field, there are a number of things that everybody knows (including the casinos). Among them:
The bulk of the money comes from a small number of heavy gamblers
A problem gambler is a heavy gambler who’s run out of money
There’s nothing casinos will resist more vigorously than an interruption to play
All of this came out in the program.

On the analysis that I did and also that of the Productivity Commission, it’s pretty clear that some forms of gambling cause more social harm than good, if you apply standard consumer theory to moderate gamblers but assume that heavy/problem gamblers are not getting any benefits from gambling. Pokies and racetrack betting are the worst, lotteries are the best.

One last feature, showing that this blog is still in touch with the zeitgeist was the use of the MRD response “They would say that, wouldn’t they”, in an entirely appropriate context.

Categories: Economic policy Tags:

Littoral cringe

October 14th, 2003 5 comments

I stayed at the Gold Coast last weeked, at Tugun Beach near Coolangatta. A nice enough spot, with miles of uncrowded beaches and not overdeveloped by Gold Coast standards, though the towers of Surfers Paradise in the distance produced a rather surreal effect. We stayed at a pleasant place called the Golden Riviera, and the neighbouring places had the usual names – Costa del Sol, Malibu etc. I haven’t been to the Riviera or Costa del Sol, but Malibu is not a patch on Coolangatta, and the pictures of European beaches I’ve seen don’t impress.

So the thought struck me – do villas on the Riviera have names like Noosa and Bondi? I doubt it. Still, Australia has at least advanced since the days when beachside locations were named after Brighton and Margate.

Categories: Life in General Tags:

Do motives matter ?

October 13th, 2003 14 comments

There’s been a good deal of debate on this blog about whether it’s appropriate to look at the motives of people who are making particular arguments (for example Lomborg and the environment), or whether you should take them at face value and respond to the arguments directly. Much the same debate has been taking place among US econobloggers, including Brad de Long and Arnold Kling. You can get started with Brad here.

My view is that motives matter. It’s very difficult to conduct a reasoned discussion with someone if you know they will lie, or distort the truth, whenever they get away with it. Hence, it’s important to distinguish between honest disagreement and propaganda and necessary to respond differently to one than to the other.

Update This post from Tim Lambert illustrates the point perfectly. It concerns an article by well-known pro-gun academic John Lott purporting to prove the correctness of some claims made by rightwing windbag Rush Limbaugh about media coverage of black quarterbacks in the NFL. As Lambert says

Even if all the data is correct and his regressions have been correctly calculated his analysis is not in the slightest bit persuasive. The reason is that his behaviour in the coding errors case suggests that he just keeps trying different models and just cherry picks the one that gives the result he wants. Would Lott want to get a result that supports Limbaugh? Well, check out this Mary Rosh posting:
You have got to download this paper. Lott has done an amazing piece here. Fits in perfectly with Rush Limbaughâs program today.

Tim’s site has more on the Lott/Rosh saga and the bizarre parallels with the case of antigun researcher Michael Bellisles. Ted Barlow at Crooked Timber has more on this (warning: Turn irony detectors on full before reading this post). Finally, for more on the problem of cherry-picking, aka “data mining”, read here, here and here. To spell it out, statistical results from someone you can trust to play by the rules are worth discussing, those from someone known to engage in data-mining/cherry-picking are not.

Categories: Metablogging Tags:

The Fin leans left and gets it right

October 13th, 2003 19 comments

Although I’ve written for the Fin for nearly ten years, it’s always been in the role of a dissenting voice on the Op-Ed page. Even when, as at present, the regular opinion commentators are fairly evenly balanced between left and right, the editorial column has stuck closely to economic rationalist/neoliberal orthodoxy.

Today’s editorial on unemployment (subscription required) though is positively Quigginesque*, making the points that 6 per cent unemployment is too much and the Job Network is a mess (for my views on the same topic, go here. There’s even a warning against excessive reliance on market ideology, to balance the inevitable call for further liberalisation of labour markets.

Obviously it’s great to see the Fin taking a hard look at an issue like unemployment and coming up with an answer I can agree with in large measure. I also take a less worthy pleasure in thinking how much this will annoy my friends at the Institute of Public Affairs. They’ve always been bitter at the Fin for having me as a columnist, and they’ll be spitting chips if they think that my heresies could start to infect the editorial column.

While we’re on the opinion pages, check out this neat application of prospect theory by Ross Gittins.

*This delightful term was coined, I think, by Henry Ergas

Categories: Economic policy Tags:

Monday Message Board

October 13th, 2003 22 comments

It’s time, as usual, for your comments on any topic (civilised discussion and no coarse language, please).

Suggested discussion starter: Which football code, if any, is Australia’s national game?

Categories: Regular Features Tags:

Bali Anniversary

October 12th, 2003 5 comments

aus-halfmoon-wattle.jpg

Categories: Life in General Tags:

Another dubious quote

October 10th, 2003 5 comments

I’m always suspicious when I see a quote attributed to some historical figure that seems too neatly in tune with the preoccupations of today. Take this widely-cited quote, attributed to Marcus Tullius Cicero in 63 BC

The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt

What’s wrong with this? For a start, the concept of bankruptcy didn’t emerge until the Renaissance and neither did double-entry accounting, without which the concept of ‘balancing the budget’ makes no sense. The Roman Republic did not have anything that really corresponds to “officialdom” – there was no standing bureaucracy and most public offices were held for short terms by aristocratic figures like Cicero himself. And foreign aid was not something the Romans went in for. On the other hand, if you wanted a statement that perfectly encapsulated the views of a large group of Americans in the late 20th century, when this quote seems to have surfaced, you couldn’t do much better than this.

At a minimum, there’s some free translation being used here. But my guess is that the quote is entirely bogus. Does anyone have any info?

Instant update Yet again, Alan from Southerly Buster comes to my rescue. He writes: Everyone reliable seems to agree the Cicero quote is bogus. So is the Petronius quote.

Categories: Books and culture Tags:

MRD

October 10th, 2003 Comments off

Over at Troppo Armadillo, Wayne Wood, discussing Beazley’s contribution to a defence conference, says

Well he would say that wouldn’t he ? (wasn’t that first said by someone else that had something to do with Profumo ?)

This immortal line was indeed first uttered by Mandy Rice-Davies, who is now, I discover, a grandmother living in the United States.

I’ve often thought that a great deal of space could be saved if utterly predictable false statements by politicians and others were replaced by the simple notation MRD. For example, when a political leader is asked whether they are concerned about his or her followers plotting a spill, any response other than “Yes, and I plan to get them before they get me!” could just be reported as “MRD”.

Categories: Life in General Tags:

How much is water worth ?

October 10th, 2003 9 comments

In a comments thread, a few weeks ago, regular commentator Observa asked

read somewhere (maybe on the Sydney water supply price hikes for heavy users)that it takes about 7,400L of water to grow a dollars worth of rice compared to a tenth of that volume for fruit and veges and hence we should import our rice. Are those sorts of consumption figures true?

Here’s a a table from an article I published in the Australian Journal of Agricultural and Resource Economics a couple of years ago.

Table 1: Water required for $1 000 gross profit
Commodity Water use, in Ml
Fruit 2.0
Vegetables 4.6
Dairy products 5.0
Cotton 7.6
Rice 18.5
Pasture 27.8
Source: adapted from Hall, Poulter and Curtotti (1994)

Observa’s relativities are right and the number in the table implies 18000 litres for a dollar of profit in rice. Assuming gross profit is around half the value of total output, the number quoted also looks pretty accurate.

Before drawing policy implications, it’s worth noting that irrigating pasture is even more water-inefficient. The quoted number implies that an increase of $40/Ml in the price of water would wipe out all the gross profit from this activity.

So the first big agricultural adjustment is likely to be a shift away from the use of irrigation for pastures. One feature of the table that surprised me is that irrigation for dairy products (which presumably means pastures for dairy cows) is actually quite profitable.

Categories: Environment Tags:

Good news?

October 9th, 2003 7 comments

The NYT presents this story with an oddly positive spin. The guts of it is a World Bank study estimating that Iraq can only ‘absorb’ $6 billion in reconstruction spending in 2004. To put it another way, given a total cost estimate of $55 billion (which has not been challenged), only about one-tenth of the job will be done by the time the US and presumably (if things are going at all well) Iraqi elections are held next year.

This is ‘good news’, because it seems likely that the total amount available from non-US donors might be a couple of billion, which, as a proportion of $6 billion, can be spun as a successful outcome.

But the unnamed American officials quoted at the end of the story are right to be ‘ unhappy over any suggestion that Iraq cannot “absorb” more than $6 billion in the first year’. As one correctly observes, “You can’t get the country back on its feet until the power is back on.” So, if the World Bank is right, and all the evidence so far suggests that it is, Iraq is not going to be back on its feet for quite a few years to come.

There’s no easy resolution here. The correct policy would have to been to let the UN inspections proceed, relax economic sanctions when no weapons were found and try to deal with the problems of the Middle East as a whole before focusing on Iraq. As it is, the world, and particularly the Coalition of the Willing will have to make the best of a bad job. It’s still not clear exactly what this will mean, but the process of lowering expectations has already begun.

Update Even with lowered expectations, I find this story in The Economist hard to believe. Apparently, thousands of workers from Bangladesh and India have been imported for all the jobs on American bases in Iraq because “Iraqis are a security risk”. Can this be true?

Categories: World Events Tags:

Constitutional change vs convention

October 9th, 2003 3 comments

One point that hasn’t been noted in the current debate over reform* of the Senate is that there is no need at all for the major parties to secure a constitutional change. If they think that upper houses are too obstructive, they need only agree not to oppose each others’ legislation, whenever this has an appropriate mandate. The minority parties could do nothing to stop the operation of such a convention.

Howard could show his good faith by instructing the Liberals in the Western Australian Upper House to pass legislation for a one-vote, one-value electoral system, something for which the Gallop government has a clear mandate and which is, in any case, a basic requirement of democracy.

Then again, pigs could fly, given wings and an appropriate power-to-weight ratio.

*As always, I use this term to mean “change in form”, not “change for the better”.

Categories: Oz Politics Tags:

Thought for Thursday

October 9th, 2003 25 comments

My column in today’s Fin (subscription) is on Lomborg and foreign aid. Having tried out the full frontal assault in the blog and found my readers generally unconvinced, I decided to take Lomborg and his backers at face value, at least to begin with.

Lomborg argues that, rather than incur the costs of Kyoto, which he estimates at around $US 200 billion per year, the money should be spent on aid to poor countries such as improvements in health and drinking water. This is more than 1 per cent of the GDP of the developed countries as a group, compared to current aid levels ranging from 0.1 per cent of GDP for the United States to 1 per cent for Denmark, Lomborgâs home country.

If Australia adopted Lomborgâs proposal, foreign aid would need to be quadrupled at least. The cost to the budget would be somewhere between $5 billion and $10 billion per year.

Itâs not surprising that the conservative commentariat has endorsed Lomborgâs opposition to Kyoto – they were against long before anyone had ever heard of Lomborg. Whatâs striking is that, without exception, they have either explicitly endorsed or tacitly accepted the second part of Lomborgâs argument, calling for a massive increase in foreign aid.

The position of the Institute of Public Affairs is particularly interesting …

Regardless of whether Lomborgâs argument is put forward in good faith, or merely as a debating point, it is worth taking seriously. There is no investment the rich countries of the world could make that would yield higher returns, even in terms of our self-interest in a less chaotic world, than $100 billion per year allocated to improved health and sanitation in the worldâs poorest countries.
Fortunately, we do not need to choose between Kyoto and aid. As Lomborg and others, both critics and supporters of Kyoto, have pointed out, implementing Kyoto through global emissions trading would amount to a massive foreign aid program as well as being an important first step towards resolving the problem of climate change.

Categories: Environment Tags:

Intelligence test

October 8th, 2003 8 comments

For anyone who cared to look at the issue logically, it was obvious that the question of Saddam’s putative weapons of mass destruction would be decided on day one of the war. As I said, the day before the war started,

the “best” time for Saddam to use them is before the US attack commences, which means almost immediately … If, in the face of an invasion aimed at killing him or seizing him for a war crimes trial, Saddam still refrains from using WMDs, only two conclusions are possible:
(a) there were no weapons; or
(b) they were not, even in the most drastic circumstances, a threat to the US

This is clear enough, but still, some reasonable people might have taken a little longer to be convinced, and, as we’ve seen, there’s still the possibility of a leftover test-tube in a fridge somewhere. But after six months, anyone who continues to think that illegal weapons in working order are going to be discovered is revealing more about their own psychology than about the real world. What then, is to be said about the report that Polish troops had discovered four French Roland missiles, manufactured in 2003 and delivered to Iraq at a time when massive US forces were already surrounding the country, and when the capture of such missiles would have utterly discredited the French government?

This story was so unlikely that any rational person would have dismissed it out of hand, especially in the presence of a clear alternative explanation, that the missiles had been delivered before the imposition of sanctions in 1990* , and the Poles just got the dates wrong (as they subsequently admitted). In its combination of wish fulfilment and total implausibility, it was on a par with the various rumours that Jews/Muslims/highly placed Americans had been tipped off before September 11 and stayed away from the World Trade Center.

So, who fell for it? As far as I can tell, a large proportion of warbloggerdom bought the story and hardly any debunked it.

At the top of the list, there’s, Instapundit, LGF, samizdata and Kevin Donahue

Google reveals so many suckers for this story that it’s impossible to list them all, but I estimate the number must be into the hundreds, even excluding those who reproduced the story without comment. A few linked to the subsequent retraction, but mostly in a way that failed to admit that the original report had been completely falsified. For example, Instapundit is still suggesting that the Polish retraction is part of a coverup.

Hat-tip to Roger Ailes whose link to Instapundit I followed.

*That is, in the days when Saddam was “a mass murderer, but our mass murderer”.

Categories: World Events Tags:

Arnie !

October 8th, 2003 7 comments

There are all sorts of problems with the process that has made Arnold Schwarzenegger governor of California. The numbers needed for a recall seem too small, the mechanics of US elections are chaotic, and the first-past-the-post (plurality) system induces lots of strategic voting.

But the idea of recall is a good one, directly opposed to the notion that governments are entitled to a set term of office, the longer the better, that dominates Australian discussion of issues such as four-year terms. The more democratic checks on government, the better.

As regards the outcome, I can’t say I endorse it, but it’s easy to make the case that, considering the feasible outcomes from the viewpoint of the average Californian, Schwarzenegger looked like the best of a bad bunch. Whatever merits Davis might have had (and they were far from obvious) and whatever the role of adverse circumstances (clearly dominant) his administration had failed, and, in a democratic system, the usual response to failure is to let someone else have a go.

Categories: World Events Tags:

Blair and Brown

October 8th, 2003 5 comments

Following the recent British Labour Party conference, Chris Sheil suggests that Tony Blair will be gone by Christmas. In these narrow personal terms, I’mnot sure. Most commentary suggests that his position was somewhat strengthened. More importantly, Blairism is gone already. Back in 2001, I argued that, in substantive terms, the Third Way was already dead. After the recent conference this fact is right out in the open. Its most noteworthy feature was not the debate over Iraq, but the fact that Gordon Brown felt free to give a speech in which he mentioned Labour and its traditions 57 times and failed to use the phrase New Labour even once.

Read more…

Categories: World Events Tags:

Barbarism

October 7th, 2003 12 comments

I’m opposed to the death penalty, on the grounds that it does more harm than good in the circumstances of a modern society, but I don’t feel any particular repugnance at the execution of someone who has had a fair trial and is obviously guilty of murder. This, however, seems like something out of the Middle Ages.

Update Some more gruesome details have just emerged about the chemical execution process.

Categories: World Events Tags:

If not Crean, who?

October 6th, 2003 11 comments

Chris Sheil puts forward a somewhat tentative case for the return of Kim Beazley to the Labor leadership, prompting me to clarify my own views on the subject.

In my view, it’s a mistake to expect an Opposition leader to be a votewinner. There are exceptions, such as Hawke in 1983, but most of the time the best an Opposition can hope for is that the leader should not drag the party down. An illustration is the fact that the incumbent Prime Minister, no matter how unpopular, almost invariably beats the Opposition leader on the question “Who would make the better PM”.

In current circumstances, there’s also not much point in trying to distinguish between alternative leaders on the basis of their beliefs about policy. To the extent that apparent differences have emerged from time to time, they are more about political positioning than anything else. So, for example, Beazley is now attacking Crean and Latham from the left, arguing against tax cuts, but the positions could easily be reversed. Similarly factional allegiances, while they are important in lining up numbers, now have little or nothing to do with policy. The Socialist Left faction, for example, might as well be called the Impressionist Blue faction as far as the significance of the name is concerned.

My view therefore, is that Labor needs someone competent, without substantial negatives, rather than a savior.

Read more…

Categories: Oz Politics Tags:

Spies and scandals

October 6th, 2003 10 comments

I haven’t got around to blogging about the parallel Plame/Kelly/Wilkie scandals, but I didn’t have a well-thought out reason for not doing so either. Nathan Newman supplies the gap (see also here). To restate Nathan’s key points more generically

  • The main purpose of secrecy laws is to protect governments against their own citizens, so breaking these laws isn’t such a big deal
  • Scandals are a distraction from the real issues

I wrote an essay on the spy myth a couple of years ago, concluding as follows

The spy myth clearly served the interests of intelligence agencies, which prospered during the 20th century more than any set of spies before them. The real beneficiaries, however, were the counterintelligence agencies or, to dispense with euphemisms, the secret police, of both Western and Communist countries. The powers granted to them for their struggle against armies of spies were used primarily against domestic dissidents. Terms such as ‘agent of influence’ were used to stigmatise anyone whose activities, however open and above-board, could be represented as helpful to the other side.

The supposed role of the secret police, to keep secrets from opposing governments, was, as we have seen, futile. Secret police, and the associated panoply of security laws, Official Secrets Acts and so forth, were much more successful in protecting their governments’ secrets from potentially embarrassing public scrutiny in their own countries.

As spies and the associated fears have faded in their public mind, their place has been taken by terrorists. In many ways, this is a reversion to the 19th century, when the bomb-throwing anarchist was a focus of popular fears and the subject of novels by such writers as Chesterton and Conrad.

As the attacks of September 11 showed us, the threat posed by terrorists is real. Nevertheless, even if terrorists were to mount attacks ten times as deadly in the future, they would still present the citizens of the Western World with less danger than we accept from our fellow-citizens every time we step into our cars.

If the century of the spy has taught us anything, it is that we need to assess the dangers posed by terrorists coolly and calmly rather than giving way to panic.

Categories: World Events Tags:

Monday Message Board

October 6th, 2003 26 comments

I’m back in beautiful Brisbane and, I hope, back to normal blogging. It’s time for your comments on any topic (civilised discussion and no coarse language, please).

As a starter question, I’ll ask – should I join the general trend, and give this blog a name? If so, any suggestions? (I know I’m leaving myself wide open here, but that’s what blogging’s all about!)

Categories: Regular Features Tags:

What I'm reading, and more

October 5th, 2003 Comments off

Disgrace by JM Coetzee. It’s been sitting on my shelf for a year or so, and the Nobel Prize (along with the interesting, if not strictly relevant, fact that Coetzee is now living in Adelaide) finally prompted me to read it. It’s a bleak look at post-apartheid South Africa and at the human condition in general. The hero is a middle-aged academic, formerly a classicist and now reduced to teaching communications who leaves his job in disgrace after an affair with a student, and goes to live with his daughter on a remote farmlet. Coetzee got into a lot of trouble in South Africa over the central scene, in which the pair are attacked by a group of black marauders, and for the generally pessimistic outlook of the book as a whole. His latest book, Elizabeth Costello has an Australian writer as its main character, and covers some of the same themes as Disgrace, including animal rights and how to talk about evil. I was impressed by the excerpt I read in Prospect but haven’t yet seen the book.

Last night, I went to a concert by Margret RoadKnight, looking back on forty years on the folk scene. She showed off both her vast range of traditional and contemporary music and a voice that hasn’t lost any of its quality in the thirty years I’ve been listening to her. Accompaniment was provided by Bruce McNicol, late of the Captain Matchbox Whoopee Band. The concert was held at the very snazzy Judith Wright Cultural Centre and the audience was much more cultural centre than folk club. With the exception of the goateed youngsters taking the tickets mine was just about the only beard there.

Categories: Books and culture Tags:

Puzzles and solutions

October 3rd, 2003 5 comments

Brad de Long reports on a dinner discussion with Paul Krugman and Janet Yellen, hinking About Puzzling Anomalies in the Flow of Macroeconomic Data . He says

We currently have two large, puzzling anomalies in the macroeconomic dataflow. First, productivity growth is ludicrously, ridiculously, unbelievably rapid. Second, the high current level of the U.S. trade deficit fits very uneasily with the relatively high value of the dollar and the lack of large interest rate differentials in favor of the U.S. relative to other countries

and says

Things that readers think are smart should be attributed to Paul Krugman or to Janet Yellen. Things that people think are dumb should be attributed to me.

. At the risk of showing myself up as dumb (at least relative to these very smart guys), I don’t see a problem in either case.

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. I’ve done the numbers here (see also here and here), and they fit the data neatly.

On the absence of a large interest rate differential and the relatively high value of the dollar despite the large deficit, this is only a problem if you assume capital markets operate rationally. All the recent evidence is against this assumption, but in any case the markets aren’t as crazy as all that. Most non-US participants are now selling US-denominated assets ,which are only being kept afloat by the efforts of Asian central banks. Strong versions of the efficient markets hypothesis would suggest that such activities must be futile, and that speculators, anticipating the inevitable decline of the dollar would drive the central banks to the wall, but I don’t have any problem ignoring strong versions of the efficient markets hypothesis.

Categories: Economics - General Tags:

Telstra & Alston

October 3rd, 2003 3 comments

I’m just back from appearing before yet another Senate inquiry into the sale of Telstra. I’ve been doing this for so many years, I’ve outlasted all the original members of the Committee, and most of the government’s policy position (in 1996, for example, they were arguing strenuously that partial privatisation was a good idea). I’ll post my submission soon, but this Evatt piece gives you a summary of my position.

I’ve also outlasted Communications Minister Richard Alston, described in this political obituary by Tex as “One of the worst ministers of his generation”. What was even more striking than Alston’s incompetence was the arrogance that went with it. I think Alston would be aptly memorialised by a scale measuring the ratio of arrogance to the amount one has to be arrogant about. Richard himself would set the upper bound of 10.

Assuming a log scale, I’d give Costello a 6 on the Alston scale, Keating a 5 and Whitlam a 4. They’re about equally arrogant, but Keating has 10 times as much to be arrogant about than Costello, and similarly for Whitlam v Keating (common sense is another matter).

Categories: Economic policy Tags:

Conference news

October 3rd, 2003 3 comments

A quick report on the Economists’ conference.

The first plenary was by Paul Ormerod on “What can economic agents learn?”. The central idea is that we need more realistic models in which people’s capacity to learn and make inferences is bounded. I’m fully in agreement with this and am actively working on a way of modelling such ideas. Ormerod didn’t give much detail about his own approach to the problem.

Deirdre McCloskey presented her ideas on statistical significance, which have already been discussed on this blog. In question time, Adrian Pagan gave a characteristically vigorous defence of the standard approach, making some good points I thought (disclosure: McCloskey’s paper includes a ranking of all the papers published in the American Economic Review according to the adequacy of their treatment of significance in published regressions. My paper with Steve Dowrick ranks a bit below average on this scale. I don’t really think it should have been included, since the main focus of the paper is on nonparametric measures of relative international income. We only threw in a regression to show the difference between our measure and the standard PPP measure).

Richard Freeman gave a talk on “Not your Father’s Union”, talking up the prospect of a resurgence of unionism based on Internet organisation. Coincidentally or otherwise, the same day I got an email from the AFL-CIO (US equivalent of the ACTU), which I’ve appended as an instance of this phenomenon. It was part of a campaign to resist Administration attacks on overtime pay, which was successful in its immediate objective of getting a favorable vote in the House of Representatives.

The higher education session was, as Derrida Derider mentioned, disgustingly civilised, with no fisticuffs between me and fellow-blogger Andrew Norton. I plan to post a full paper before long. There was at least a good crowd, filling the small room. By contrast, my paper on water reform was presented to an audience of about twenty in a theatre with a capacity of 500. Again, I’ll try to post a paper. My idea is to spend money now buying irrigators’ rights to license renewal in ten years’ time.

(AFL-CIO email follows)

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Categories: Economics - General Tags: