Archive for December, 2003

A snippet on the generation game

December 14th, 2003 Comments off

This is one of a series of posts where I include bits cut from longer articles for space and other reasons.

Oddly enough, to the extent that there is anything remotely new in generational rhetoric, it was perfected by members of a generation that is never mentioned in these discussions, and even lacks a name. Those born in the low-birthrate years between 1930 and 1945 were too young to join the ‘Greatest Generation’ that fought World War II, and too few to share in the experiences of the Baby Boomers.

Nevertheless, they were the first cohort to be known as ‘teenagers’, the first to experience a ‘generation gap’ and both the first and last to have music that was specifically their own, creating both rock music and the now-cliched postures of rebellion that go along with it. The archetypal phrase ‘never trust anyone over 30’ was popularised by Abby Hoffman (born in 1936) and Jerry Rubin (born in 1938) – not one of the famous Chicago Seven was a Baby Boomer.

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Thanks and warning!

December 14th, 2003 2 comments

Robert Corr has kindly spent much of his weekend fixing up the database corruption problem that affected the whole mentalspace domain. This leads me to reissue a warning that I had hoped was no longer necessary. If you’re writing what you think may be deathless prose in a comments box, keep a backup copy!

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Grade deflation

December 13th, 2003 3 comments

Hi. Robert here. We’ve encountered a problem with John’s blog (and mine and a couple of others) involving database corruption.

My first priority has been to get John posting again, and it seems that is now possible.

Next on the list is to restore his archives. I’ve created 1426 empty placeholder posts, one for each of John’s real posts to date, which will protect his permalinks from being over-written by new posts. Over the next few days, I’ll go back and replace those placeholders with the real text.

When that’s finished, we’ll work on the comments. Hopefully everything will be back to normal by the end of the week — and this time, we’ll have a more rigorous backup regime to make life simpler when things like this happen!

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Worth watching

December 13th, 2003 Comments off

The elections in Northern Cyprus this weekend could turn out to be the most important held in 2003, even though there are only 140 000 voters and the result won’t be recognised anywhere outside the Northern Cyprus enclave and its increasingly reluctant sponsor, Turkey.

The elections raise the prospect that Turkish Cypriots will finally dump separatist leader Rauf Denktash and join the rest of Cyprus when it enters the EU next year. That in turn would remove the biggest single obstacle to the admission of Turkey to candidate status, a process that would probably lead to Turkish entry to the EU around 2010. The EU has rightly kept Turkey at arms length while demanding improvements in human rights and efforts to resolve the Cyprus question, but any further delay can only be seen as the product of a search for excuses.

As I’ve said before, the admission of Turkey to the EU (or its exclusion) is in many ways, the biggest single geopolitical question facing the world today. For a start, it would mean that Europe would have borders with Iran, Iraq and Syria. More generally, the success or failure of Europe in integrating Muslim countries, beginning with Turkey, will do more to determine future relations between Islam and the West than any military expedition.

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The case against speed limits

December 12th, 2003 Comments off

In a couple of recent posts, I mentioned estimates that higher speed limits adopted by a number of US states cost 1900 lives between 1996 and 1999, and, presumably, a similar number since then. One of those killed was motorcyclist Randy Scott, run down by Congressmen Bill Janklow, a chronic speeder and advocate of lax speed enforcement.

Today’s NYT runs an Op-Ed piece by Judy Blunt defending the repeal of speed limits. I couldn’t find anything here substantive enough to comment on, but I’m providing the link so readers can make up their own minds.

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Sauce for the goose

December 11th, 2003 Comments off

In a report in today’s AFR (subscription required), Law Council of Australia president Bob Gotterson attacks a proposal to have medical malpractice lawsuits assessed by a panel of doctors before proceeding to trial. As he says

professionals should not be able to veto a citizen obtaining compensation from one of their colleagues

In a spirit of compromise, I offer the following suggestion. Why not appoint a panel of doctors and let them arbitrate on complaints against lawyers

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The Flynn effect and the Bell Curve

December 11th, 2003 2 comments

In my last post on the American Enterprise Institute, I lumped Charles Murray in with James Glassman, Karl Zinsmeister and Lynne Cheney, as someone who had contributed to the loss of the AEI’s reputation for scholarship (John Lott, the main subject of the post is in a class of his own). Regular reader Jack Strocchi objected, and I thought that this would be a good time to set out my views on Murray, and more particularly on The Bell Curve with Richard Herrnstein, which is, I think, his most significant work.

The Bell Curve got a thorough hammering on statistical grounds when it came out (this Heckman review is one of the more favorable but is still pretty damning. But the thing that most annoyed me when I read it was their discussion of the Flynn effect, namely that average scores on IQ tests have risen steadily over time, by amounts sufficient to wipe out the differences between racial groups on which Murray and Herrnstein rely. As Thomas Sowell points out in this review (reproduced by Brad de Long), it’s hard to see how any claim that differences in IQ test scores observed in Western societies are mostly due to genetic factors can stand up in the face of this observation. But Murray and Herrnstein slide straight past it, saying that they are concerned with contemporary inequality not with time trends. This is about as reasonable as a “nurturist” deciding to ignore twin studies on the grounds that most people aren’t twins.

Update Marginal revolution and Aranda Blog have more on the Flynn effect. And Brad de Long says “pretty damning” is too kind a description of Heckman’s review. He prefers “the impeccably right-wing Jim Heckman flayed Murry and Herrnstein alive and hung their skins on his office door”.
Read more…

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Lott's more fun

December 10th, 2003 Comments off

The tireless Tim Lambert exposes yet more sociopathic behavior from pro-gun economist John Lott. This time it’s yet another sock puppet who, among other things gives Lott’s books glowing reviews on Amazon. (I won’t document Lott’s long rap sheet on this kind of thing, but Tim’s blog has all the details).

Various people have been asking how Lott manages to keep his job at the American Enterprise Institute. Given that this outfit now houses Karl Zinsmeister, James Glassman, Charles Murray, Lynne Cheney and others, I think the more relevant question is how the few remaining legitimate scholars left over from the days when AEI was a reputable, if conservative, institution can justify their continuing ties.

But it is interesting to ask why so few individual conservatives and libertarians have dumped Lott. Michelle Malkin did so at the time of the Mary Rosh expose (and copped a nasty review from one of Lott’s sock puppets as a result), and of course the expose itself was due to the work of Julian Sanchez.

But Glenn Reynolds at Instapundit, who led the charge against Lott’s liberal counterpart Bellisles, is still saying “all this is way too complex for me” (check the comments thread here at Calpundit, and his attitude appears to be far more representative.

Update The Glenn Reynolds comment was too good to be true, and was someone taking the mickey (see comment by Tim L). Still, it’s a pretty fair summary of Reynolds’ position.

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A good result?

December 10th, 2003 Comments off

Comment on the Russian election outcome has been almost universally negative. This is not surprising when you look at the winners – a government party whose only platform is to support Putin and an opposition party deliberately confected by Putin’s cronies to ensure a tame parliament.

You get a rather different perspective if you look at the main losers – the Communists, Zhirinovsky’s bizarrely misnamed Liberal Democrats and two parties owned by kleptocrats – Yabloko and the Union of Right Forces*. All of them are discredited, and there is no prospect of a serious opposition emerging until they are gone.

It’s certainly true that the next Parliament won’t represent any sort of check on Putin and that this isn’t good for democracy, but the situation is not obviously worse, in this respect, than say, Britain under Thatcher. Of course, Putin could use the situation to entrench a dictatorship. It seems more likely though, that he will rig the situation further to his advantage, but not so much so as to be able to resist a popular and coherent opposition when it finally emerges. Again, the parallel with Thatcher is apposite.

* The Union of Right Forces is openly pro-kleptocrat, and is run by the architect of kleptocracy Anatoly Chubais . Yabloko and its leader Gregory Yavlinsky are more appealing but the party is deeply in hock to leading kleptocrat Khodorkovsky, who recently ran afoul of Putin. (spelling/transliteration corrections welcome).

Categories: General Tags:

More on the retreat of privatisation

December 10th, 2003 Comments off

One of the reasons privatisation has pretty much halted in the English-speaking countries is that obvious failures have become more common as governments have moved on to the harder cases. In the UK, the last three big privatisations were the breakup and sale of British Rail under the Tories and the part privatisation of air traffic control and the London Underground by the Blair government (more particularly Chancellor Gordon Brown).

The rail breakup/privatisation is universally recognised as a disaster and is being gradually reversed. Now the House of Commons Public Accounts Committee has reported that the air traffic control privatisation should never have happened. Looking at the troubles of the Underground, it’s a safe bet that similar findings will be made when this deal is reviewed.

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December 9th, 2003 Comments off

One of the Grand Young Men of Australian blogging, Gareth Parker has announced that he is going over to other side with the offer of a cadetship from the West Australian. Well done!

Under the rules that seem to have evolved, it’s OK for columnists (like me) to have blogs, but not for real journalists, so it looks as if Gareth’s blog “My Two Cents” is no more. It was one I enjoyed a lot, and was an important part of my corner of the blogworld, particularly back in the early days (2002, that is).

Another loss is Stewart Kelly who has apparently succumbed to the ailment all bloggers fear most, getting a life.

Meanwhile there are more arrivals than I can keep up with, so I’ll defer introductions until I get time for an update of the blogroll – soon I hope.

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December 9th, 2003 Comments off

Regular reader James Farrell has asked me to launch a competition with an appealing prize. He says

John, can I have your permission to hold a competition?*

I was just recruited to give a ninety-minute talk in Krakow in January on the Australian Economy.

What the hell am I going to say?

The question: what are the five most important and/or interesting things about the Australian economy from a Polish point of view? Keep it very brief: I don’t need you to write the lecture for me.

I should stress that I’m not getting paid for the talk, apart from an airfare from Budapest.

The prize is a bottle of whatever fancy Polish grog someone recommends to me. I’ll send it to you when I get back.

Entries close Friday noon. So as not to disadvantage the earlier respondents, I place no limit on the number of entries per person. But a later entry would need to be sufficiently differentiated from an earlier one by another competitor to beat it.

A ninety-minute talk! Those Poles must really have some Sitzfleisch.

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Speeding research

December 9th, 2003 Comments off

Via NZPundit via Professor Bunyip via Technorati, I’ve tracked down the study by the New Zealand Land Transport Safety Authority (PDF file) which formed the basis of the estimate that higher speed limits in the US cost 1900 lives.

The study looks at states which had a highway limit of 65mph (about 110 km/h) in 1995, at which time this was the maximum allowed under the National Maximum Speed Limit. The NMSL was repealed in December 1995 and a lot of states increased the limit to 70 or 75. Over the next few years, fatality rates rose, on average, in the states that raised their limits and fell in the states that did not. The LTSA uses a statistical model to check that this wasn’t merely a random fluctuation and to correct for the most important possible source of spurious correlation, an increase in vehicle miles travelled. They find that the increase in fatalities was statistically significant – given that their estimates imply a loss of 1900 lives, it was obviously significant in the ordinary usage of the term.

NZPundit admits to a bit of confusion about the paper and in particular, the divergence between statistical estimates and predictions. To clarify this point, the estimates are those based on the actual outcomes observed in the states in question. The predictions are derived from previous studies that estimated the impact of a given increase in average speeds, and are higher than those obtained here. The suggested explanation is that, since lots of people were speeding anyway, an increase in speed limits does not translate to an equal increase in average speeds, though average speeds do increase.

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An Austin Powers moment

December 9th, 2003 Comments off

Supermodel Linda Evangelista is reported to have said that “she wouldn’t get out of bed for less than 10,000 pounds”. I have a similar view regarding possible budgetary savings – if it’s less than $10 million, I’ll leave it to the Department of Finance to chase (of course, I’d probably have a different attitude if economists were paid on a commission basis).

Given my attention threshold, I was pretty impressed to read in my morning AFR that “Travelling ex-pollies cost Australia half a billion”. That looked like some money worth grabbing in my next budget review. Sad to say, it was all a subeditor’s error – the actual cost is half a million. Not only that, but the Internet edition fixed it before I could post a link.

Categories: General Tags:

Privatisation passé

December 8th, 2003 Comments off

The conference on Public-Private Partnerships I attended today gave me lots of food for thought. Perhaps most interesting was the fact that nearly all the speakers noted that the era of privatisation has passed (at least in the English-speaking countries). I’ve been pointing this out for some years now, but I missed the point when it passed from iconoclastic provocation to conventional wisdom.

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Monday Message Board

December 8th, 2003 Comments off

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

My suggested discussion starter: which political party will be the next to change leaders? (I’m taking the Democrats to have changed already)

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Can we stop the generation game?

December 7th, 2003 Comments off

Like lots of other people, I’m sure, I’m getting more and more impatient with the stream of articles about the merits or otherwise of different generations. The main focus is on the Boomers born between 1945 and the early 1960s, and their successors, denoted X and Y, with an occasional nod to the generation who fought in WWII. Those born in the ‘Baby Bust’ between 1930 and 1945 are usually not mentioned, but are, in practice, treated as if they were Boomers (for example, it was the Busters who were the first teenagers and who pioneered rock-and-roll.

My impatience is heightened by the fact that I’ve already published what I immodestly regard as the definitive refutation of the ‘generation game’.

My general point is that, most of the time, claims about generations amount to no more than the repetition of unchanging formulas about different age groups ­ the moral degeneration of the young, the rigidity and hypocrisy of the old, and so on. This is true in spades at present.

I also point out that the use of generational arguments is particularly silly in relation to Baby Boomers because economic and social conditions changed radically over the period when the boomers entered adulthood (the only time at which membership of a given age cohort makes a significant difference). Those born before about 1955* had experiences very similar to those of the preceding Baby Bust generation, entering a booming labour market where not much education was needed to get a good job. Those born towards the end of the baby boom had experience much more like that of the succeeding generations X and Y – in some respects worse, since youth unemployment reached its peak in the late 1970s.

Most pundits who play the generation game simply ignore these inconsistencies. To have all the traits that are commonly attributed to Baby Boomers, for example, you would have to be simultaneously over 65 (to have been around at the beginning of teen rebellion) and under 35 (to have been among the last to get a free university education).

* It’s easy enough to check out my birthdate, but I’ll leave it to readers to do so.

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The end of the Democrats

December 6th, 2003 Comments off

If the Australian Democrats weren’t already doomed, the apparently alcohol-fuelled fracas involving Andrew Bartlett is surely the last straw. Rather than rake over the coals of the last few years, I thought it might be worth assessing their contribution.

The biggest single thing the Democrats have done is to give the Senate a constructive role when it seemed, after 1975, that this was impossible. After 1975 Senate without a government majority seemed like a guarantee of chaos with the axe poised to fall the moment the government’s popularity slipped. And a Senate with a government majority would be waste of space (not to mention money).

Although they didn’t always get it right, the Democrats used the balance of power well, both in their initial phase as a centrist party and subsequently when they became, on most issues, a left alternative to Labor. With luck, the Greens will succeed them in the balance of power and will follow this tradition, driving tougher bargains than the Democrats have done, but still being willing to make the system work.

The pity is that they didn’t merge with the Greens ten years ago. A merger would have been good for both sides. I believe it was considered but was derailed by personal rivalries and party bickering.

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Boeing woes

December 6th, 2003 Comments off

The rapid decline of Boeing, until recently the world’s dominant firm in both commercial and military aviation has attracted relatively little attention until it recently attracted the added element of scandal. Writing in Slate, Douglas Gantenbein gives an analysis focusing on top-level mismanagement.

This story fits into, all sorts of economic narratives, but not always neatly. For instance, the ease with which Airbus has captured most of the commercial aviation market from Boeing runs against standard claims about the resurgent US and sclerotic Europe. Airbus looks like a success for industry policy, but then it turns out that Boeing is just as deeply enmeshed in the government trough.

Anyway, what struck me was this observation from Gantenbein

the Boeing 747 stands with Coca-Cola and the Golden Arches as the best-known American products around the globe …. the sheer visibility of Boeing’s products has a kind of halo effect, enhancing America’s status in a way that hamburgers and soft drinks do not. The sight of a European or Asian airport packed with 747s and 777s says one thing about the United States. Those same airports crammed with Airbus A340s—and, before long, with mammoth A380 superjumbo jets—say another.

This meshes quite neatly with a point raised in my discussion of soft power, namely that the success of American cultural exports, like movies and McDonalds

partly comes at the expense of other exporters. In talking about American ‘soft power’, it’s not often noted that, with some important exceptions such as computers, it’s rare nowadays to encounter American manufactured products outside the US.

Gantenbein quotes some economists who assert that

“the single most important sector in the U.S. economy in terms of skilled production jobs, value-added [to products] and exports

. You don’t have to accept this in full to recognise the limitations of claims that the ubiquity of McDonalds and Hollywood movies are a guarantee of global hegemony.

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December 5th, 2003 Comments off

I’m attending a conference on outsourcing at the Centre for Applied Economic Research at the University of NSW*. It’s been very interesting so far and the program for today also looks good (at the Rupert Myers theatre if anyone wants to drop in).

In talking with organiser Kevin Fox, though, it turned out, to my surprise that he was unable to get a speaker, or even any delegates, from the Commonwealth government. The Productivity Commission, which pushed competitive tendering very hard in the early 1990s, is no longer working on the topic, and the Department of Finance showed no interest at all.

It can scarcely be supposed that the issues have all been resolved. On the face of things, efforts at competitive tendering have produced both some big successes (the Productivity Commission claims this for the Job Network) and some glaring failures (the program to outsource Commonwealth IT). It would surely be useful to consider what worked and what didn’t.

This is, I suppose, part of the general problem that a lot more time is spent on making the case for (and against) policy initiatives than on evaluating them after they are implemented.

*If academics had any market power, these would be the ideal occasions to organise a cartel!

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Relationships and cronyism

December 5th, 2003 Comments off

Virginia Postrel has an interesting piece on the work of Chicago economists Rajan and Zingales saving capitalism from the capitalists. Essentially, their claim is that where that where finance is allocated on the basis of personal relationships, it becomes a tool for creating and protecting monopoly. This is what they call “relationship capitalism”. Others have used the more pejorative phrase “crony capitalism”.

Postrel uses these ideas to attack the idealised, and largely mythical, small-town bankers of the past in favor of today’s more impersonal system. It’s certainly true for retail borrowers that relationships with bankers are no longer important. But she misses the irony that while distancing themselves from most of their customers, members of the financial sector have gathered together ever more closely in centres like New York and London.

As I observed a couple of weeks ago, quoting Adam Smith from memory

Men of the same trade seldom gather together, even for innocent merriment, but the meeting ends in some conspiracy against the public.

The work that financial institutions are supposed to perform, trading assets and allocating risk in transparent markets, can be done anywhere on the planet. It’s the stuff they want to do without any inconvenient records, and with the kind of trust that’s needed for conspiracy that requires clustering in a central location where social bonds can be cemented by eating, drinking and sleeping together.

Categories: General Tags:

Sistani rules*, ok

December 4th, 2003 Comments off

A few days ago, I argued that of the (generally unattractive) outcomes that could arise in Iraq, the one with the best chance was a two-state solution, in which a Shiite majority ruled Iraq as a whole, while the Kurds maintained the effective autonomy they have now.

Now that Ayatollah Sistani has spoken, I think the probability of this outcome is very high. The announcement that power will be handed to an Iraqi government on a set date (July next year) has created a dynamic over which they have no control, and which naturally leads in the direction of a majority vote rather than the convoluted system of caucuses proposed by the occupying authorities. The latter is typical of what an absolute ruler comes up with when seeking to provide a democratic facade while maintaining control over the outcome, and has rarely worked. Either the process is carried through, but has zero credibility, or it leads to genuine democratisation and the overthrow of the ruler (the French revolution provides the template).

In the case of Iraq, it’s clear that all Sistani has to do from now is hold his ground. The caucuses can’t go ahead with substantial Shiite opposition and the occupiers can’t sustain for long a position in which they are arguing for rigged elections and against democracy. Hence, I foresee an outcome in which Shiite parties win something close to an outright majority and in which Islam is enshrined as the official religion.

* As I understand things (I’m drawing on Juan Cole here), it won’t be an Iran-style theocracy, because Sistani doesn’t favor the idea of clerics exercising political power directly.

How will all this turn out? Obviously, there are a lot of problems. First, if the government overreaches itself in terms of monopolising power or avenging past injuries, things could really bad. Second, even assuming good sense on the part of the government, it’s difficult to run a country well when the capital and the administrative class are strongly hostile, which is bound to be the case. Third, the guerilla war will only intensify, and the counterinsurgency measures adopted by an Iraqi government are bound to be more brutal (but probably more effective) than those of the Americans. Fourth, there could be problems with the Kurds, though these are likely to be less with a government whose support base is among southern Shiites (who, I imagine, don’t care that much about the distribution of power in the north) than with a more broad-based coalition, Finally, there will be a lot of pressure on both sides for a quick US pullout. In particular, the neocons will, I imagine, lose interest in the whole project once it becomes clear that the nation they are building is, at best, a more moderate version of Iran.

Despite all these problems, this is the approach that has the best chance of producing a stable, and at least partially democratic, Iraq, and of permitting the withdrawal of most US troops without a descent into chaos. In response to the objection that the odds are not what we might want, I can only paraphrase the Irish farmer in the story “In that case, we shouldn’t be starting from here”.

Update 1/12 The dynamic is working even more rapidly than I expected. Judging by this report from the NYT, the caucus plan is already dead.

Further update 4/12The occupation authority isn’t doing itself or the cause of democracy any good with dishonest evasions about the impracticality of a proper democratic elections. These claims were false and both Iraqis and Americans have known it for some time. Any government “elected” under the caucus system will have the same credibility as the current Governing Council, less six months more erosion caused by the inevitable unpopularity of occupation. That comes to less than zero in my judgement.

If Bremer thinks Iraqis are not ready for democracy (and it’s obvious he does think that) he’d be better off imposing a constitution with undemocratic safeguards such as a nominated upper house or a requirement for predetermined ethnic power-sharing than going ahead with the charade he has proposed. And if Bush doesn’t agree with Bremer why is he still there? Jay Garner was sacked after one month, and that was about the best month the occupation forces have had.

Yet further update 5/12 After asking his readers Are you sitting down?, Thomas Friedman restates most of the argument of the original post above.

Categories: General Tags:

The end of PPP mania

December 4th, 2003 Comments off

The use of Public-Private Partnerships, modelled on the British Private Finance Initiative has been all the rage in Australia lately, with Victoria leading the way. As Ken Davidson reports, a review undertaken by the Victorian Government has issued a draft report which, if it is accepted, will confine PPPs to a very minor role. You can get the report (PDF file) from the Partnerships Victoria website.

The crucial point in the report is that it recommends using the governments actual cost of capital (the real bond rate) and explicitly adjusting it for project risks rather than a notional private discount rate derived from the Capital Asset Pricing Model. The result will be to recognise the cost advantage in financing infrastructure assets using public debt rather than private equity. As a result, PPP projects are likely to show up as beneficial only for innovative, high-risk projects and not for routine public procurement of things like schools and hospitals. This has been the big growth area in the UK despite a string of negative reports.

The Victorian draft report quotes a lot of UK evidence, raising the possibility that there will be some flow of ideas back to the UK leading, perhaps, to a scaling down of the PFI there. This would mark a big step for the Blair government away from “The Third Way” and towards a modernised social democracy.

Coincidentally, I’ll be speaking at a conference on PPPs in Sydney next week. I believe Peter Fitzgerald, the report’s author will also be attending. It should be interesting.

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Alternatives to Kyoto

December 3rd, 2003 Comments off

While Kremlinology remains a dark art, it now seems unlikely that Russia will ratify the Kyoto Protocol. This means that, barring a reversal by the United States, the Protocol will not come into force. Obviously, this isn’t going to happen before the 2004 election at the earliest.

This is pretty grim news, but I’ll do my best to extract a silver lining from the clouds. A lot of critics of Kyoto, including Bjorn Lomborg and Warwick McKibbin, along with the Australian and US governments have not denied the reality of global warming but have argued that alternative policies could yield better outcomes. Now they have their chance to show that their policies represent both politically realistic and economically and ecologically sustainable alternatives to Kyoto. If governments that have opposed Kyoto are serious about alternatives, this is their chance.

I am not too optimistic about the alternatives – my guess is that, whatever their merits, the governments that have rejected Kyoto will continue with business as usual. But I’d be happy to be surprised.

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Interest rates up!

December 3rd, 2003 Comments off

As expected, the Reserve Bank has increased official interest rates again by 0.25 per cent. It seems safe to predict that, unless the housing bubble turns rapidly to a bust, there will be two more instalments in the New Year, bringing interest rates back to a ‘neutral’ position with a real rate for borrowers of around 5 per cent.

These prospects and the collapse of leveraged-investment promoter Henry Kaye should be enough to end the boom in house and unit prices. The question is, can current prices be sustained in the absence of prospects for capital gains, or the fear of being left behind by a rising market, and in a situation where renting is so much cheaper than buying.

I’m a notorious Cassandra on such matters, so feel free to ignore my prediction that Sydney prices are set to fall by 30 or 40 per cent, with less dramatic, but still substantial, falls in other capital cities.

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The morning after

December 3rd, 2003 Comments off

Latham’s victory seems to have been reasonably well-received, and there are certainly a number of positives. First, while I’m not a fan of activism and innovation for its own sake, Australian politics is certainly in need of some new ideas.

The leaders on both sides of Australian politics have been people whose ideas were formed in the 1980s, and who haven’t seen much need for thinking since. Ross Gittins made this point about Howard a couple of days ago, but its true more generally. When they find that 1980s ideas won’t wash with the electorate, their instinct is to go back to the 1950s (this is particularly true of Howard and explains his long dalliance with Hansonism).

Although age obviously matters, it’s not the sole determinant here. Peter Costello is only a few years older than Latham, but his political views, formed in the unionbusting days of the Dollar Sweets dispute are even more anchored in the past than those of Crean and Beazley, who at least recognised the issues even if they did not come up with much in the way of new responses.

The big issue for the 21st century is that of balancing the needs of a knowledge-based economy, which naturally implies greater demand for publicly-funded services like health and education with the obvious problems of raising additional government revenue. In parallel with this is the conflict between the gift-exchange/common property model that has been the source of most of the productivity growth associated with the Internet and the demands of corporations for tighter control of ‘intellectual property’. In trying to respond to these issues, Latham has flailed about a bit, but at least he is trying.

A more tenuous ground for optimism is that Latham’s election might mark the last gasp of the faction system, at least at the level of the Federal Parliamentary Party. As Dave Ricardo pointed out in a comments thread, the factions in the ALP are now comparable to those that dominated the Japanese Liberal Democratic Party for decades. Any ideological element is long gone, replaced by personal power bases, typically cemented by family ties and inherited leadership positions.

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Whitlam a small target?

December 2nd, 2003 Comments off

Gerard Henderson usually puts forward historical arguments that are at least plausible. But his claim that Whitlam and Chifley were exponents of the small-target strategy is (literally) incredible.

Labor has had only four prime ministers since the end of World War II – Ben Chifley, Gough Whitlam, Bob Hawke and Paul Keating. Each won his inaugural election – in 1946, 1972, 1983 and 1993 respectively – on what today would be called a small target strategy.

Chifley, Whitlam and Keating subsequently threw the political switch to the big picture – and lost in 1949, 1975 and 1996 respectively. Hawke, ever the pragmatist, was not defeated in an election.

Whitlam’s It’s Time program was one of the most detailed and ambitious ever put forward by an Opposition and, contrary to Henderson’s claim, his government was in full retreat in 1975, following the Hayden Budget. Chifley was campaigning on the basis of, among other things, the White Paper on Full Employment which, for the first time, committed governments to maintaining full employment. More importantly, considering the whole period of the Curtin-Chifley government it was one which managed a radical transformation of the role of government. Hawke ran on the basis of the Accord which was a radical (though not radical left) approach to macroeconomic policy.

It’s only the 1993 and 1996 election that give real credence to small-target theory. Even here, it’s strange to focus on Keating who simply took the line that seemed most likely to deliver a win in the face of huge resentment arising from ‘the recession we had to have’. It was Hewson who failed with a big target (Fightback!) and Howard who succeeded with a small one.

In fairness, I suppose 1949 also counts as a defeat for big-picture politics, but there were quite a few factors working against Labor by then.

Update I’ve been wondering what on earth Henderson could have been thinking in imputing a ‘small target’ strategy to Whitlam and I think it must be the fact that Whitlam was a moderate on issues like Vietnam and state aid to private schools, compared to the dogmatic purism of, for example, the Victorian branch. But this reasoning excludes any possibility of serious political debate or of a substantial political program that takes political reality into account. Whitlam fought on the issues, but he focused on the issues that were winners for Labor. By contrast, Beazley ducked anything that would create any sort of trouble.

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Backing Latham

December 2nd, 2003 Comments off

The vote is under way, and the Caucus members have entered the Party room. I can think of at least half a dozen members of the Caucus I’d prefer to either of the candidates. Nevertheless, of the two I’d prefer to go with the erratic Latham in the hope that he’ll somehow turn up trumps as leader.

On the main issue of disagreement between the two, tax cuts vs public spending, I agree with Beazley not Latham. But I think Beazley had his chance to take a firm stand on this in 2001 and, as on every other issue, muffed it.

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An easy puzzle

December 1st, 2003 1 comment

For those who’d like a little mental exercise, and are interested in road safety, here’s an analysis of road safety that misses an obvious source of spurious correlation. I got it from the SMH, but to make life easy I’ve lifted the whole story. First to spot the obvious error gets a free mention in the update to this post (not much of a prize, but it’s an easy contest). My judgement is final, but, this being the blogosphere, lengthy flame wars will be entered into.

The popular stereotype of the dumb blonde could be shattered if accident statistics are any guide.

Insurance company Suncorp yesterday released a survey that shows blondes could be the nation’s best drivers.

The nationwide study of car accident trends found that people who described themselves as blonde had fewer crashes than others.

They were also less likely to be the victims of road rage and second least likely to feel rage against other drivers.

But the study found fiery redheads lived up to their reputation with red-haired women admitting they were the most likely of all respondents to feel fury on the road.

“As a group, blonde men and women came out on top in the driving stakes,” Suncorp personal insurance spokesman Warren Duke said.

“But the best drivers of all were black-haired women with only 47 per cent stating they had ever been involved in an accident.

“Red and black-haired men tied for the title of the most car accident prone.”

Mr Duke said Suncorp had decided to take a lighthearted look at a range of car crash data and found only 56 per cent of blonde respondents had ever been in a crash.

Update The winner is Kinich Gatsky, who observes that women are likely to be over-represented in the blonde group, and also to have lower accident rates. Runner-up is Derrida Derider.

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No brains

December 1st, 2003 Comments off

When Crean’s resignation was obviously imminent, I wrote

Leaving that aside, the choice is, I hope, a no-brainer. Beazley and Latham both had lots of strikes against them anyway, and they’ve spent the last six months bagging each other. Excluding a bunch of candidates who might be good but who don’t have the profile to score a win, we’re left with Rudd.

Rudd’s failure to gather enough support for a run has left me to conclude that the Caucus has no collective brains.

It appears that Caucus will go for Beazley and near-certain (but hopefully not disastrous) defeat, rather than take a risk with Latham. Rudd has supposedly made some sort of succession deal with Beazley, but this will count for nothing after Labor is defeated and Beazley resigns. So we’ll probably get Beazley, then Latham, a depressing prospect for those of us who’d like to see this government defeated.

Surprisingly, no one seems to have pointed out what a gift Beazley’s election will be to the Greens. For Caucus members in ‘safe’ (that is, safe from the Liberals) seats, this, and not the supposed fickleness of aspirational voters, is what they should be worried about.

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