Archive for March, 2005


March 13th, 2005 4 comments

Last week there was a lot of triumphalism from parts of the blogosphere regarding anti-Syrian protests in Lebanon, which was cut rather embarrassingly short when the pro-Syrian PM was re-installed following a huge pro-Syrian demonstration. I thought that the likely cause of these developments was internal to Lebanon rather than the inspirational example of GW Bush, though I was too ignorant of recent Lebanese politics too say much more. As usual, many others did not feel constrained by ignorance from drawing firm conclusions.

For those who’d like to inform themselves, The Head Heeb has a lengthy series giving some of the background. One important point is that the withdrawal of Israeli occupation forces from South Lebanon back in 2000 set in motion many of the forces that are operating today and, in particular, undermined the legitimacy of the Syrian occupation and the maintenance of a militia by Hezbollah.

Categories: World Events Tags:

What I’m reading

March 13th, 2005 3 comments

“The Coming Generational Storm : What You Need to Know about America’s Economic Future” (Laurence J. Kotlikoff, Scott Burns). As I was reading this book, laden with predictions of doom, I was thinking, “if people call Krugman shrill, they should read these guys”. By coincidence, Jack Strocchi sent me this review of Kotlikoff and Burns, by Krugman. I broadly agree with Krugman’s assessment, so I’ll just lift out a quote that appealed to me:

In March 199, Time included Laffer in its cover story on ‘The Century’s Greates Minds’ and called the Laffer curve one of ‘a few of the advances that powered this extraordinary century’. Just think about it. When it comes to physics, you need to be Albert Einstein to be classified as one of the century’s greatest minds. But when it comes to economics, all you have to do is draw a completely obvious picture on a napkin

I was also struck by this smackdown of a study predicting a huge wealth transfer to baby boomers from their parents

A close look at the Avery-Rendall study shows it to be a hoax. The only question is whether the authors were fooling themselves as well as their readers.


The non-global public intellectual

March 13th, 2005 7 comments

The SMH has come with a list of Australia’s top 100 public intellectuals, of whom the top 10 are (with votes from a panel of 100[1])

Robert Manne – political scientist 39
Peter Singer – philosopher 33
Germaine – Greer feminist 29
Tim Flannery – scientist 25
Noel Pearson – Aboriginal advocate 24
Inga Clendinnen – historian 23
Geoffrey Blainey – historian 22
Helen Garner – writer 21
Donald Horne civil – society 19
Michael Kirby – judge 19

Andrew Norton has some discussion of the list, and the comments are also interesting. I just thought I’d repeat an observation I made in relation to Posner’s book on the subject. Of the top 10, only Singer and Greer (both expats) would have any significant recognition outside Australia.

This isn’t because our intellectuals can’t cut it on the world stage but because, in this respect, there is no world stage. As I observed at the time, Posner’s top 10 US public intellectuals are marginal figures as far as most Australians are concerned (unless they are famous for other reasons). The Prospect list for the UK (not easily available as far as I can tell, and I’ve misplaced my password) had more recognisable names (including our Germs at #2), but few who would fit naturally into a ‘public intellectual’ category. Each country, it seems wants to hear its own policy problems discussed in its own accent.

fn1. I was included in the panel, and also among the also-rans in the list of 100. I voted for three people who made it into the top 10 (Manne, Kirby and Garner) and Raymond Gaita who was ranked #11, as well as a couple of fellow-economists.

Categories: Economics - General Tags:

Request for help

March 12th, 2005 16 comments

Although I read quite a bit, one thing I always have difficulty with is suggesting good readings on topics, or knowing who originally proposed some idea. I think this has something to do with the fact that I tend to flit from one topic to another, picking up ideas but rarely doing a proper review of the literature. In any case, I’ve been asked to suggest some readings and so I thought I’d pass this request on to any readers who can help me[1]. What I’d like is either an original/early source for various concepts or a more recent summary discussion, ideally one accessible to an intelligent general reader. Anyone with useful suggestions gets an acknowledgement in my forthcoming Oxford Handbook chapter which is, literally, priceless.

Here’s my list of terms

* Crowding out
* Twin deficits hypothesis
* Shadow price
* Golden rule (for budgeting in UK and elsewhere)
* Globalisation
* Crony capitalism

Thanks in advance for any help

fn1. There is a piece of blog jargon for what I’m doing here, but I refuse to even mention it. It’s bad enough that we’re lumbered with “blog”.

Categories: Economics - General Tags:

The US trade deficit makes the front page

March 12th, 2005 13 comments

In my first-ever blog post (apart from a Hello World! announcement), I commented on the fact that, whereas trade and current account deficits were big news in Australia, US papers buried them in the back pages. At least in the online edition of the New York Times, this is no longer the case. The latest US Trade deficit ($58.3 billion in January) is front-page news.

Despite this catch-up, it’s still true that anyone wanting coverage of economic issues in the US would do far better to read blogs than to follow either the NY Times or the WSJ, and no other mainstream media even come close. It isn’t even true, as it is in other cases, that bloggers need the established media to get the facts on which they can then comment. The NY Times story linked above is basically a rewrite of the Bureau of Economic Analysis press release which you can get by automatic email if you want.

The competition is much tougher in Australia. Media coverage of economic issues is better, the number of economist-bloggers is smaller and quite a few of us play both sides of the street anyway.

Categories: Economics - General, Metablogging Tags:

Weekend reflections

March 11th, 2005 55 comments

This (somewhat irregular)) regular feature is back. The idea is that, over the weekend, you should post your thoughts in a more leisurely fashion than in ordinary comments or the Monday Message Board.

Please post your thoughts on any topic, at whatever length seems appropriate to you. Civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

All bloggers are liars?

March 11th, 2005 9 comments

Slate runs a good debunking of romantic popular misinterpetations of Godel’s theorem. Key quote

The precise mathematical formulation that is Gödel’s theorem doesn’t really say “there are true things which cannot be proved” any more than Einstein’s theory means “everything is relative, dude, it just depends on your point of view.”

I’ve lost count of the number of times I’ve seen dubious appeals to intuition or claims about chaos theory and the like supported with reference to Godel’s theorem, but I have derived the following proposition:

Quiggin’s metatheorem: Any interesting conclusion derived with reference to Godel’s theorem is unfounded.

Feel free to evaluate with reference to the post title.

Categories: Philosophy Tags:


March 10th, 2005 13 comments

Tenix always seems to be in the news for the wrong reasons, so I wasn’t too surprised to get this message from Eric Lee at Labourstart, with the title above. Eric writes

That’s the question posed by a strike which recently broke out at a Melbourne, Australia-based company called Tenix. After six years of individual contracts and no union, six years which delivered only tiny wage increases, a court-ordered ballot showed that 83% of Tenix workers had decided they wanted union representation. The employer’s reaction was to try to force workers to sign individual contracts — and to refuse to recognize the union. The workers reacted by going out on strike.

We’ve been asked by the Australian Services Union to send a strong message to the management of Tenix, saying that when 83% of your workers tell you they want a union, you really should respect that choice. Please support the campaign by clicking on this link

And spread the word!

Categories: Oz Politics Tags:

Worth watching

March 10th, 2005 3 comments

It’s too early to call an end to the great low-interest bond bubble. But interest rates on US 10-year Treasury notes have risen sharply in the leadup to a forthcoming Treasury auction. It’s hard to see how the US can restore balance on the trade account (as it must) without a significant increase in interest rates as well as a depreciation. And if US rates rise, there’s likely to be a flow on from Australia.

However, the Asian central banks that have been keeping both us and the Americans afloat still have plenty of buying power, and this could easily turn out to be another false alarm.

Categories: Economics - General Tags:

My five minutes of fame

March 10th, 2005 5 comments

I just got off the phone from an interview with the Wall Street Journal. Of course, you’ll all be agog to read my views on bankruptcy reform, social security, the trade deficit, the impending crisis of capitalism, and so on. You’ll have to wait a little while, however. The topic of the interview was bunnies vs bilbies.

Categories: Oz Politics Tags:

Time dilation

March 9th, 2005 18 comments

I was fascinated by reports on a government study of Australian women (the phrasing I mention appears to come from the study, as I saw much the same elsewhere)

The Federal Minister assisting the Prime Minister on Women’s Issues, Kay Patterson, will release the research on 19,000 Australian men and women, which compares women’s lives to 10 years ago.

And as Tanya Nolan reports, it paints a picture of women as being increasingly lonely and unhealthy.

TANYA NOLAN: She used to be in her early thirties and married with children. Now she’s pushing 37, is likely to be single, with one or two offspring.

I am most miffed about this. The average woman, it appears, has aged about four years in the last decade[1]. I, on the other hand, have aged exactly 10 years. Whatever she is taking to achieve this time dilation, I want some of it.

fn1. I won’t even ask what has happened to her spouse and some of her children.

Categories: Life in General Tags:

The chains of debt

March 8th, 2005 7 comments

I’ve been sitting on this great post about reforms to US bankruptcy laws and how they fit into the general pattern of risk being shifted from business to workers and to ordinary people in general. But I waited too long and Paul Krugman’s already written it. So go and read his piece, and then, if you want, you can look at the things I was going to write that Krugman hasn’t said already.
Read more…

Categories: Oz Politics Tags:

Back to the 1950s, part 2

March 8th, 2005 18 comments

There’s another way in which Howard’s comments suggesting kids should drop out at Year 10 are out of touch with reality. The implied background is one in which parents (and social pressure in general) are increasingly pushing kids to finish year 12 and go on to University. In reality, Australia’s school completion rate[1] peaked in 1992 and the number of new Australian undergraduate enrolments in universities has barely changed since the Howard government was elected. The suggestion that we need even more dropouts is simply bizarre.

In most developed countries, including European countries that do a much better job on technical education than we do, universal high-school completion is either a central policy goal or an established reality. It’s true, as many have pointed out that this implies a need for schools to adopt a broader approach to what is offered in Years 11 and 12, with more technically-oriented courses, and less exclusive focus on traditional preparation for university. Oddly enough, however, most recent criticism of the school curriculum has focused on the fact that they aren’t teaching enough Shakespeare.

fn1. This measure isn’t perfect and the 1992 peak is probably overstated. But the general pattern is clear enough.

Categories: Economic policy Tags:

Back to the 1950s

March 7th, 2005 51 comments

John Howard’s suggestion that young people should drop out of school in Year 10 and get a trade is both bad advice and an indication that, on this as on many other issues, Howard hasn’t updated his world view since the 1950s[1]. As Tim Dunlop says, it’s unlikely anyone in the government is giving this advice to their own kids.

Howard’s advice is exactly that given by many working class parents to their sons in the 1950s and, at the time it worked pretty well. It is only since the 1980s that the problems have emerged for older workers with limited education and obsolete skills. Parents in the 1950s can scarcely be blamed for failing to foresee this, but Howard has no such excuse.

In today’s world, car mechanics are increasingly required to debug computer programs[2], and virtually everyone with a job[3] has to deal with substantial volumes of (literal or digital) paperwork. This is one reason why the “sitting next to Sally” apprenticeships Howard is so fond of have increasingly been replaced by TAFE courses. For practical purposes, the skills of a Year 10 dropout are not adequate for these courses.

Even if, in the current labour market, it would be possible to get a trade with a Year 10 education, it would still be a bad idea in the long run. Skills become obsolete and replacing them requires the kind of flexibility acquired from education.

These 1950s attitudes have translated into disastrous policies regarding post-secondary education. The number of Australian students starting undergraduate degrees has barely changed since 1996 (I think it may actually have declined in the last few years). And despite a lot of rhetoric, the TAFE system is in a dreadful mess, which can be traced back, in the end, to inadequate funding.

There’s a lot of justified concern about inadequate investment in infrastructure. But an even bigger problem under this government has been declining investment in human capital.

fn1. In saying this, I don’t mean to adopt the Keating sneer about the 1950s. There were a lot of positive features of the 1950s, in particular full employment, and the associated fact that someone with a Year 10 education could leave school and walk into a reasonably well-paid job. But wishing won’t bring these things back.

fn2. Although I was aware of this in theory, I still got a mild surprise when I was talking to a guy at the service desk and he mentioned that some problem with my engine would probably go away by itself when they ran the software upgrade that went with my routine service.

fn3. Admittedly, there are plenty of casual jobs (for example, in the fast-food industries) that are designed not to require this kind of thing. But, with rare exceptions they don’t provide any real route to permanent jobs on decent pay.

Categories: Oz Politics Tags:

Monday Message Board

March 7th, 2005 56 comments

It’s time for the regular Monday message board, where you are invited to post your thoughts on any topic. I haven’t had time to post on the competing royal tours, but I’d be interested in readers’ thoughts. Civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

Long march to freedom

March 6th, 2005 7 comments

As mentioned previously, there has been a general increase in repression in Iran in recent years, and several bloggers have been arrested and imprisoned Similar repression is taking place in Bahrain. You can keep up with developments and suggested actions with The Committee to Protect Bloggers.

This is worth thinking about in relation to the current euphoria about positive developments in Lebanon and Israel/Palestine (and some positive gestures in Egypt and Saudi Arabia), and attempts to tie all this to the elections in Iraq.

Read more…

Categories: World Events Tags:

A snippet on budget policy

March 5th, 2005 18 comments

Over the fold, some notes I prepared in relation to issues raised by this case regarding the ‘use it or lose it’ approach to annual budget appropriations. Maybe of interest to hardcore budget policy wonks. Comments and corrections appreciated.
Read more…

Categories: Economics - General Tags:

Global fund appeal update

March 5th, 2005 1 comment

I’ve been a bit rushed and I haven’t had time for a thorough check of all the donations to the Global Fund Appeal However, I’m very happy to report that thanks to the generosity of contributors who gave more than they had promised, the total amount donated to Medecins Sans Frontiers exceeds $A1000. Thanks again to everyone who took part.

Categories: Life in General Tags:

Etiquette tips, please

March 4th, 2005 37 comments

The Fin reprints this piece from the New Statesman by Nick Cohen

I think you can smoke in the Groucho[1], but you can’t in Waitrose or at any Islington dinner party I’ve been to in the past decade. The social taboo against smoking is becoming absolute, in the middle classes at any rate … it is social death to put a cigarette in your mouth, not to stuff cocaine up your nose.

I’m obviously out of touch here. I thought it was de rigeur to go to the bathroom to snort cocaine, and to go out to the porch to smoke. But now I fear total embarrassment at my next middle-class dinner party: obviously I should have the cocaine served at the table. Can anyone give me more details here – are individual salvers the way to go, for example, and is it OK to ask guests to bring some of their own?

Read more…

Categories: Life in General Tags:

The 7 per cent solution

March 2nd, 2005 34 comments

If you’re trying to reconcile unlimited wants with limited resources, and someone is willing to lend you the money, borrowing looks like a neat solution. For nations, collective borrowing is measured by the current account deficit[1]. Until quite recently, however, it seemed to be generally accepted that there was a limit beyond which such borrowing was imprudent and that the limit was around 5 per cent of GDP.

There are some good arguments against the traditional view, and we’d better all hope they are valid, though I fear they are not. I’m working on a big piece on this. More soon I hope.

fn1. More precisely, by the capital account surplus which is equal and opposite to the CAD.

Categories: General Tags:

Creeping capitalism

March 1st, 2005 40 comments

In today’s Fin (subscription required), Sinclair Davidson tries to resuscitate the claim that Australian taxpayers are suffering from severe bracket creep, a claim I refuted in my piece last week (over the fold). The case is so thin that he spends half of his article restating a version of the claim I’d already refuted, before admitting that it is spurious (this is the claim that the abolition of the old 66 per cent rate, by making 47 per cent the new top rate, put more people into the top tax bracket. While this is trivially true, it’s also clear that this change was the opposite of bracket creep).

Davidson’s second argument, involves an interesting redefinition of the terms of debate. The standard approach has been to look at either the real income level or the proportion of average weekly earnings at which the top rate is payable. The real income level has risen over time and the proportion of average weekly earnings has been roughly stable. Davidson instead looks at the proportion of taxpayers paying the top rate. Obviously, if pretax incomes become more unequal, as they did over the 1990s, this proportion will rise, and this is what he finds.
Read more…

Categories: Economic policy Tags:

Not an appealing judgement

March 1st, 2005 25 comments

This kind of thing makes me think that the NSW Court of Criminal Appeal has some sort of death-wish. It has overturned a conviction in a lengthy drug trial, on the grounds that the wrong person signed the indictment, although it was common ground that this had no effect on the fairness of the trial. Following a series of disastrous decisions to hold retrials in gang rape cases, which have already led to amendments to the law designed to repudiate the Court’s judgements[1], I’d have thought the judges would be cautious about playing this kind of game with technicalities.

A decision like this is bound to produce a further reaction, and probably an over-reaction, from the legislature. We could easily see changes to procedures, designed to preclude further appeals of this kind, that eliminate important safeguards against unfair trials. In their quest to protect the niceties of some imagined ideal system of law, appropriate to a world of unlimited resources and costless trials, the Court of Appeal is gravely damaging the system we actually have to live with.

fn1. For example, the Tayyab Sheikh case elicited an amendment to rules about publicity, and the recent successful appeals by the Skaf brothers have produced rules allowing retrials to be conducted on the basis of transcripts.

Categories: General Tags: