Archive for April, 2005

MayDay again

April 30th, 2005 15 comments

Another year, another May Day, reminding me that I still haven’t got round to my long-planned posts on the erosion of workers’ rights under the present (and for that matter the preceding) government.

In the short term, though, the most important historical fact about May 1 is that it’s the anniversary of Bush’s “Mission Accomplished” speech on Iraq in 2003. When I wrote about this anniversary last year, I observed

the anniversary of Bush declaration of victory looks as good a time as any to date what seems increasingly certain to be a defeat [at least for the policies that have been pursued for the last year] … The Administration seems to be inching towards the position I’ve been advocating for some time – dumping the policies of Bremer and Chalabi (though not, unfortunately Bremer and Chalabi themselves), and handing over real military power to Iraqis. If the interim (still inchoate) government has substantial real power, manages to hold early elections and can get enough support to permit a rapid US withdrawal, the outcome might not be too bad. But there’s very little time left, and this scenario assumes exceptionally skilful management of the situation from now on.

How do things look a year later? Bremer is gone, thankfully, and I doubt that there’s anyone left who would suggest that the Coalition Provisional Administration he ran was anything better than a set of incompetent bunglers who achieved less than nothing[1]. Chalabi, by contrast, seems to be the eternal survivor, . The Americans dumped him after all, but he promptly switched sides and has popped up as some sort of Deputy Prime Minister in the new Iraqi government and looks set to get the lucrative oil ministry he’s been after for so long..
Read more…

Categories: World Events Tags:

Back to DTP

April 30th, 2005 10 comments

When I first started using Macs, back in 1984, one of the big selling points was desktop publishing. The resulting explosion in amateur publishing produced some pretty awful results, but the net impact was a huge increase in the quality of computer-generated output, which went from being almost unreadably awful to quite pleasant to read. I produced a bunch of things in the 80s, including various newsletters and even a book of satirical songs, using long-dead packages like ReadySetGo and Deluxe Music Construction Set[1].

But once the real professionals started using packages like Quark and Pagemaker, the competition got a bit too hard, and I stopped worrying about page layout. Now however, I’ve started having some real fun with Apple’s iWork package, consisting of Keynote, a presentation package, and Pages, a page layout program. They produce really nice output, but are still easy and fun to use.

I’ve been working on the annual report for the Risk and Sustainable Management Group which is the little team I’ve set up to run my ARC Federation Fellowship and Discovery projects. If I can get the PDF file down to a manageable size, I’ll post the report here when it’s done. In the meantime, feel free to check out what we’ve been up to here and here.

fn1. Having picked the minority platform, I showed a fairly unerring instinct for minority software packages. I still use NisusWriter rather than the ubiquitous and awful MS Word for most of my word processing, and Bookends rather than Endnote for bibliographic stuff. Both well worth a look if you’re a Mac user unhappy with the usual offerings.

Categories: Mac & other computers Tags:

Weekend reflections

April 29th, 2005 22 comments

This regular feature is back again. 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:

Time to go nuclear ?

April 29th, 2005 38 comments

My column in yesterday’s Fin was about the option of nuclear energy as a solution to the problem of climate change, an issue that’s been discussed a few times here already. One point I didn’t make is that the availability of nuclear-generated electricity as a ‘backstop’ technology puts an upper bound on the costs of a strategy that would reduce CO2 emissions enough to stabilise atmospheric concentrations (this is much more than Kyoto which aims only to stabilise emissions from developed countries, as a first step to a solution).

There’s lots more on global warming over at Troppo Armadillo, with a lengthy comments thread raising some interesting points.
Read more…

Categories: Environment Tags:


April 28th, 2005 11 comments

While bloggers tend to burble on about replacing the mainstream media, there’s nothing like getting an on-air mention from the very same MSM. This Media Report on blogging mentions most of the leading sites in Ozplogistan, including this one. If you’re quick, you can catch the repeat at 8:00 pm.

Categories: Metablogging Tags:

Academics and athletics

April 27th, 2005 12 comments

Via Rafe Champion at Catallaxy, I found this NYRoB review of a book Reclaiming the Game: College Sports and Educational Values on the vexed topic of sport in US colleges. Bowen and Levin view the US system, where colleges use all sorts of inducements to recruit students who will play in their sporting teams, as entirely deplorable, and spend a fair bit of time on its various pernicious effects, but don’t really seem to have much of a solution. The reviewer, Benjamin DeMott has a more favorable view, pointing among other things to the fact that sports provide a route to college for working-class kids who wouldn’t otherwise get in, but doesn’t have a very effective response to the central point made by Bowen and Levin about the negative effects of a group of students who are mostly well below the average in ability, not academically motivated and are effectively employed full-time in their sporting careers in any case. Proposals to restore the ideal of the amateur student athlete have gone nowhere, and it seems unlikely that the radical approach of getting large numbers of colleges to pull out of the game altogether will do any better.

I’d like to suggest an alternative that is probably still too radical, but would not challenge the existence of college sports, and would overcome at least some of the problems aired by Bowen and Levin along with many others. College should recruit athletes as they do now, but let them defer all their classes for the four(?) years they play for the college team (unless they get cut earlier on). At the end of that time, a minority will make it into the professional leagues and big money, and won’t need a college degree. The rest will no longer have sporting commitments or the illusory hope of sporting riches. At this point, the college should give them their deferred education, with an explicit recognition that they are likely to need more help than the average student.

This seems like an improvement all round to me, but no doubt there’s lots of things I haven’t thought of, so I’ll let better-informed readers set me straight.

Categories: Books and culture Tags:

Global glut

April 27th, 2005 18 comments

The big question in global macro policy today is : Why are long-term interest rates so low. I had a go at this topic over at Institutional Economics and i thought I’d reprint it here. Very preliminary, needless to say.

A general comment on why so few economists trust the market on bubbles. It’s obvious that low interest rates are crucial, and that current asset prices make sense if and only if sustained low interest rates are a market-driven response to changes in the real economy.

But in an environment with near-zero savings in the English-speaking countries, and large unfunded state obligations in the rest of the developed world, interest rates should be high, not low.

The proximate cause of low interest rates is the willingness of Asian countries to run large current account surpluses (that is, capital account deficits), but there is no convincing micro story as to why people in poor countries should want to save massive amounts to lend to fund consumption in rich countries.

The leading optimist on all this is Bernanke, but he sees the surpluses as the product of macro policy, governments building up reserves in reaction to the crises of the 1990s. This source of surpluses presumably won’t be sustained, since the countries concerned are incurring huge unrealised losses on their US dollar holdings. So the ‘global savings glut’ is a temporary one, and is being squandered by borrower nations in high levels of consumption.

Categories: Economics - General Tags:

I was saying “Boo-urns”

April 27th, 2005 11 comments

Life imitates Art, or at least The Simpsons, in this Guardian report, headlines Blair gets ‘boomed’ by pupils

Categories: World Events Tags:

Beazley on Gallipoli

April 26th, 2005 46 comments

I was just getting vaguely reconciled to the idea of Beazley as Labor leader when he came out with the following claim in a speech at the Lowy Institute (PDF):

We cannot understand the decisions of 1914, and we cannot understand Gallipoli, if we do not understand that Australia had compelling direct and distinctly Australian reasons for being there, he argued. Australia recognised that Britain would become increasingly less able and willing to guarantee Australia’s future security. So it was in Australian interests to become an active participant in imperial security, to ensure British power was not eclipsed.

This is wrong in just about every way a historical claim can be wrong
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Categories: Oz Politics, World Events Tags:

Back on air

April 25th, 2005 15 comments

I foolishly decided that I would do the upgrade of WordPress to v1.5 myself, rather than getting it done for me by someone who knew what they were doing. Four or five hours of frustration later, the upgrade is done, though I still have to reconfigure the template. Enjoy the default layout for the moment.

Update Well, I can get the main page working fine with the old layout, but the comments are a mess. The header is displayed in a botched form, when it shouldn’t be there at all. If anyone can give me advice on what to do, that would be great. Otherwise it’s the default layout for the moment.

Categories: Metablogging Tags:

We shall remember them

April 25th, 2005 27 comments

On Anzac Day, there are two important things to remember

* Thousands of brave men died at Gallipoli and in the Great War and we should always honour their memory

* The Gallipoli campaign was a bloody and pointless diversionary attack in a bloody and pointless war. Millions were killed over trivial causes that were utterly irrelevant by the time the war ended. The 1914-8 War only paved the way for the even greater horrors of Nazism and Stalinism. Nothing good came of it.

From what I’ve seen of the last surviving Diggers they were fully aware of both of these things. At one time, it seemed possible that, as the generation who fought in the war passed on, we would forget the first of them. Now the danger is that we will forget the second. We should judge as harshly as possible the political and religious leaders who drove millions, mostly young men, to their deaths, and honour the handful who stood out against the War, including Bertrand Russell and Pope Benedict XV.

Categories: Regular Features Tags:

What I’ve been reading

April 24th, 2005 7 comments

“Singularity Sky” (Charles Stross) and The Algebraist (Iain M. Banks)

I enjoyed Singularity Sky very much and am looking forward to getting hold of Iron Sunrise, which has been nominated for this year’s Hugo awards, along with The Algebraist and two books I’ve reviewed earlier Jonathan Strange and Mr Norrell and Iron Council, plus River of Gods, which I haven’t seen yet.

I had planned to spend the afternoon in front of the TV, but it was so depressing (50 points down at haftime) that I went back to work on my review of Freakonomics An incomplete draft is over the fold: comments appreciated as always.
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Categories: Books and culture Tags:


April 23rd, 2005 8 comments

The latest London Review of Books has a great review article by David Runciman (subscription only, unfortunately). The books covered are Restoring Responsibility: Ethics in Government, Business and Healthcare by Dennis Thompson , NHS plc: The Privatisation of Our Healthcare by Allyson Pollock and Brown’s Britain by Robert Peston.

Of these, I’m most interested in the book by Pollock, who’s been a prominent critic of the Private Finance Initiative, particularly in relation to health care. I think the biggest problems with the PFI are going to emerge ten or twenty years into the contracts, when any safeguards written into the original contracts will be obsolete, and the private party will have an incentive to extract as much rent as possible from the remaining life of the deal.

The whole idea of governments signing these long-term contracts is dubious in many respects. It’s bad public policy for a government to bind its successors in this way. And it’s bad commercial policy to sign 30-year contracts for services where ordinary principles of risk allocation would suggest a term more like five years. The PFI and similar initiatives have already run into plenty of problems, but I think the worst is yet to come.

A particularly egregious example came to light in Australia recently. The late, and not much lamented Kennett government signed contracts giving monopoly rights monopoly rights to operate gambling enterprises to two firms, Tabcorp and Tattersalls.

It now emerges that, if these contracts are not renewed, obscure clauses entitle the monopolists to compensation of up to $1 billion.

Categories: Economics - General Tags:

Darfur again

April 23rd, 2005 5 comments

Via Jeff Weintraub, I got this link from Harry’s Place on possible actions that can be taken to pressure the Sudanese government into calling off the continuing campaign of terror in Darfur. Things have improved somewhat under international pressure, but a lot more needs to be done. A good source of up-to-date information is Passion of the Present

Having opposed the war in Iraq, I should perhaps explain why I support intervention in Sudan. There are two aspects to the issue. The first is simple costs and benefits. A few tens of millions of dollars and some modest military force could save thousands of lives in Darfur. By contrast, the war in Iraq has cost tens of thousands of lives (quite possible more than 100 000) and hundreds of billions of dollars, for prospective benefits that have not yet been delivered.

Second, I think it’s necessary to strike a balance between the extreme claims for national sovereignty, defended, for obvious reasons by the Chinese Communists, and the US doctrine, backed by Howard and endorsed in blood by Putin, that any sufficiently powerful government should be able to do what it likes in response to perceived threats. Where a government engages in war against its own citizens, the international community should be willing to step in, starting with sanctions and going on to safe areas protected by no-fly signs and peacekeepers with rules of engagement that allow them to defend themselves and refugees against any attack. If this leads to the downfall of the government, as it did with Milosevic in Serbia, so much the better. The step of overthrowing a government, even a brutal and dictatorial one, and imposing rule by an occupying army is one fraught with danger, which should be an absolute last resort.

Categories: World Events Tags:

Surfdom is back: but where has it been?

April 22nd, 2005 1 comment

Despite my expectations of a bit more free time, I’ve been scrambling all week, and much of my blogging time has been spent dealing with comment spam and similar nuisances. So, although I noticed Tim Dunlop hadn’t posted for a while, I didn’t get around to emailing him, and I also didn’t tour Ozplogistan as I do when I have free time. Imagine my surprise when I found out he’s spent the week at Tim Blair’s. I’ll be interested to read the comments threads, again when I get time. Meanwhile, Tim D is back on air and blogging up a storm.

Categories: Metablogging Tags:

Two in one

April 22nd, 2005 23 comments

Today is a bit of a red letter day for me as the late email brought in my second journal article acceptance for the day: the first time I’ve managed this, I think, though I’ve had three rejections in the same day before now. So no more work for me; it’s time to uncork the Hentschke’s Hensckes!Henschke’s

Categories: Life in General Tags:

Weekend reflections

April 22nd, 2005 26 comments

This regular feature is back again. 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:

Amity and co-operation

April 22nd, 2005 5 comments

Like others, I suspect, I’ve been puzzled by the Howard government’s unwillingness to sign the apparently obligation-free treaty of amity and co-operation with our Asian neighbours. Rex Ringschott points to a possible explanation.

Categories: World Events Tags:


April 21st, 2005 6 comments

Assuming there are no car crashes or political scandals in the next couple of hours, Brisbane-based readers might catch a glimpse of me on the Channel Ten news at 5:00pm, talking about oil prices. Nothing you haven’t already read here on the blog, of course.

Categories: Economic policy Tags:

A request for help

April 21st, 2005 54 comments

In the discussion over Michael Duffy’s SMH article, we had a lot of trouble with a survey supposedly showing that 25 per cent of climate scientists doubted the reality of anthropogenic (human-caused) climate change. We’ve tracked the survey downhere and it appears that the relevant question is number 40

Climate change is mostly the result of anthropogenic causes.
Respondents have to answer on a 7 point Likert scale from Strongly agree to Stongly disagree

Tim Lambert observes that this was an online survey, which may raise doubts about the sample frame, though it appears that Dennis Bray, who ran the survey, tried to keep participation limited to those in the study population.

Brian Bahnisch comments

To me the question is too open-ended. Surely any rational, logical scientist would see that “climate change� has been going on a lot longer than we have been walking upright.
It is also possible to think that anthropogenic causes are less than natural ones, but still a significant, indeed critical, influence.
How does he count the fence-sitters who marked “4�?

and I share these concerns.

Anyway, the immediate problem is that Bray has set up some fancy code to display the survey results and neither Brian or I can make it work. It appears to be set for either Mozilla or Windows IE. Can anyone find the results and advise me.

Update Thanks to TIm Lambert, who has located what appear to be the results to Question 40 here The number giving “Disagree” responses (29 per cent) roughly matches the 25 per cent cited by Duffy, who was apparently relying on a second-hand and not very reliable source. But, as we’ve seen the description of the question given by Duffy was incorrect, as was the date of the survey and the description of the sample population, not to mention the characterisation of the thinktank where the results were presented.

There’s obviously a big difference between “the modest warming of the past 150 years is due to human activity” (Duffy’s description) and “Climate change is mostly the result of anthropogenic causes” (Bray’s actual question) and neither represents the IPCC position, which is that at least some of the warming observed over the last 50 years is anthropogenic and that, under current policies, this warming will continue. For appropriate time scales (say, as short as an El Nino cycle or longer than 1000 years) it seems pretty clear that natural causes are dominant, so it’s perfectly reasonable to disagree with, or give a “Can’t answer” response to Bray’s question, while agreeing with the IPCC view.

Categories: Environment Tags:

A couple of thoughts on oil

April 21st, 2005 23 comments

he price of oil is stlll around $50, and there’s no reason to expect it to fall in a hurry. In particular, if China revalues the renminbi yuan, as is commonly expected, there will be a corresponding fall in the effective price of oil, both for suppliers and for consumers in China and other countries that revalue, for any given $US price. This probably doesn’t matter much on the supply side – everyone is pumping as hard as they can and will probably keep doing so. But China’s demand is probably quite price sensitive, and a reduction in the price could keep demand higher, even in the face of a slowdown in exports to the US.

The other thought that occurred to me relates to climate change. Although there are a variety of ways in which we could mitigate climate change, the simplest would be to double the price of carbon-based fuels. This would certainly reduce demand significantly in the long run (I’ll try and update this with some estimates soon). On the other hand, there’s a lot of concern about the short-run macroeconomic impacts of such an increase.

Well we’ve seen a doubling of oil prices, and substantial increases in coal and gas prices over the past few years, and any macroeconomic impact is undetectable amid the general noise. The cases aren’t perfectly comparable of course, notably

* the rising price has been driven by increased demand, not imposed exogenously

* the effect of rising market prices is to redistribute income to oil-producing countries, and increase trade deficits. This effect wouldn’t arise with carbon taxes and would be much smaller with tradeable permits

Still, the evidence is against the idea that higher energy prices would bring the economy to a grinding halt. Rather, the response so far seems to be a textbook case of orderly adjustment, as people gradually shift away from gas-guzzling vehicles, look again at energy saving options and so on. So far the response has been small, but over time (if supply declines and prices stay high) more substantial responses can be expected.

Categories: Economic policy Tags:

GW Bingo

April 19th, 2005 1 comment

Tim Lambert introduces Global Warming Sceptic Bingo. List the discredited arguments put forward by any given sceptic/contrarian/denialist. When you get four in a row, you win. Allow me to suggest another column for Tim’s card with the following entries (refutations of claims are indicated by #)

Uses bogus Schneider quote #
Claims IPCC projections are way off because of incorrect exchange rate conversions #
Claims Kyoto will be economically ruinous #
Relies on Copenhagen Consensus #

Categories: Environment Tags:

15 years of TidBITS

April 19th, 2005 6 comments

Macintosh fans will want to read this 15-year retrospective from Adam Engst who’s the leading figure behind on of the longest-running online publications in existence, Mac newsletter TidBITS

I bought one of the first 128K Macs in 1984, and like Adam, I’ve bought 20 or so of them in the intervening period, seven or eight of which are alive and in use among my extended family (the oldest, a PowerMac 8500 from 1995 is in use solely as a floppy disk reader, but most of the others are used on a daily basis). I can endorse Adam’s observation that the working life of a Mac, at around seven years, is quite a bit longer than that of the average Windows machine.

The last fifteen years have seen highs and lows for the Mac, but with the massive cash flow from the iPod and the apparent crossover effect on Mac sales, the future looks pretty bright.

Categories: Mac & other computers Tags:

Duffy and Carter on Counterpoint (updated)

April 18th, 2005 110 comments

Michael Duffy has run a second climate change show on Counterpoint, responding to critics of his SMH column and earlier show. His guest was Bob Carter, whom he described in his SMH column as an “environmental scientist”. The ABC site description is “Research Professor of Geology … geologist and environmental scientist, an adjunct research professor at James Cook University, and he specialises in climate change.” which is still an inaccurate description, as you can see here[1]. It would be more accurate to describe Carter as a prominent research geologist with a personal interest in the issue of climate change, and a strongly-held view that Kyoto is a bad idea.

As regards the major issues, I see little evidence to suggest that Carter is any better informed than I am. He claims, presumably relying on the increasingly absurd McKitrick and McIntyre, that “the hockey stick [showing rapidly rising temperatures over the last 100 years] is broken”, and then goes on to recycle long-exploded claims about urban heat islands and satellite data, all of which have been addressed in detail on this blog .

Duffy’s performance on this issue has been disgraceful. If he did the same thing pushing creationism[2] he would surely have been sacked, or at least pressured to put on some real experts.

Tim Lambert has more

fn1. A few of the papers listed for Carter are relevant to paleo-climate issues, and he’s well qualified to make the point, as he does in the show, that climate has varied over time. But since that’s not in dispute, it can only be used (as it is by Duffy) as a straw man to attack unnamed critics of his previous shows.

fn2. Fun Factoid: As I’ll argue in a bit more detail later on, the great majority of climate change sceptics, globally speaking, are also creationists – why doesn’t Duffy give them a go on his program?. Feel free to supply your own examples, counterexamples and statistical arguments in the meantime.

Categories: Environment Tags:

The opportunity cost of war

April 18th, 2005 46 comments

Among the responses to this post on the costs and benefits of the Iraq war, quite a few commenters doubted that it was reasonable to express the opportunity cost of war in terms of the alternative of an allocation to foreign aid.

This NY Times editorial refers to the fact that the main EU nations have finally made a serious commitment to increase overseas development aid to 0.7 per cent of GDP, a target that’s been around for a long time, but never reached. The US currently gives about 0.2 per cent, and an increase to 0.7 per cent would cost around $50 billion per year, which is pretty close to the annual cost of the Iraq war effort. It’s the one major country that’s holding out against making any sort of commitment.

Of course, it might be said that Americans, unlike the citizens of other developed countries, are prepared to pay to kill people, but not to help them, so the opportunity cost calculation is still irrelevant. Apart from being closely akin to the slur that Arabs are incapable of handling democracy, this runs up against the problem that many Americans support the view that the US government should give large amounts of foreign aid, well in excess of 0.7 per cent of GDP. The problem is that they imagine that the government is actually doing this on a still more lavish scale. On average, Americans think that 24 per cent of US government expenditure is allocated to foreign aid – the true figure is 1 per cent.

A more plausible objection is that it’s possible to do both. The UK was part of the Iraq war (though its contribution, in relative terms was much smaller than that of the US) and it has committed itself to meet the 0.7 per cent goal. To this my response is, let the US make a substantial commitment on aid first, and then it will be time to recalculate the opportunity costs of war.

UpdateHere’s a US criticism of aid in general

Categories: Economics - General, World Events Tags:

The PC on the failure of infrastructure reform

April 18th, 2005 36 comments

My Fin article last week (over the fold) was about telecommunications, and included the statement

It is true that prices have fallen, but … the rate of decline is no more than would have been expected from technological change…. [the outcome is] common to infrastructure reform in general. Although employment in the infrastructure services sector was slashed during the reforms of the 1980s and 1990s, and labour productivity rose impressively, household consumers saw little if any benefit. The gains were swallowed up by an explosion in the numbers and pay of senior managers, by increased rates of return demanded by investors in the new and riskier and environment and by various forms of ‘rebalancing’, which typically benefitted business at the expense of households.

This point is neatly confirmed by the PC report on National Competition Policy, which shows that households are paying higher prices for nearly all infrastructure prices as a result of reform, mainly because of shifts in costs from households to business.

The PC report notes declining average prices for most infrastructure services. However, as with telecommunications, there was, in most of these cases, a long-standing trend of declining prices before reform began. There’s no evidence to suggest that average prices have fallen faster (or in cases like urban transport, risen less) than would have been the case without reform.

The absence of any net change in average prices, relative to trend means that the effects of infrastructure reform have been almost entirely distributional. The losers have been household consumers of infrastructure services and workers in infrastructure industries. The winners have been senior managers and capital owners in the infrastructure sector and business consumers of infrastructure services. Presumably, businesses have passed on some of the savings to their consumers. And, in the case of publicly owned infrastructure services, households benefit in their capacity as members of the public.

Overall, though, it’s not surprising that there has been little enthusiasm from Australian households for another round of reform. The last round produced plenty of pain, and not much in the way of gain.
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Categories: Economic policy Tags:

The Productivity Commission and National Competition Policy

April 18th, 2005 10 comments

I spent a good deal of my academic time in the 1990s arguing with the Industry Commission (now the Productivity Commission) about their estimates of the benefits of microeconomic reform and, in particular the ‘Hilmer reforms’, enshrined in National Competition Policy. My main target was their estimate that NCP would raise Australia’s national income by 5.5 per cent relative to the level that would be obtained without reforms. I suggested that the likely benefits were less than 1 per cent.

In their latest report, available as a PDF download, the PC splits the difference, claiming a net benefit of 2.5 per cent. Reading a bit more closely, the ground they’ve conceded is even greater. The PC estimates cover not only NCP but the entire program of microeconomic reform including tariff reform, financial deregulation, labour market reform and so on. And, whereas the earlier estimates were for a five-year time frame, with more to come in future, the PC implicitly concedes that Australia’s productivity growth, after rising substantially between 1993-4 and 1998-9 fell back to the historical average rate, or below, from 2000 on.

One point on which the PC is holding its ground is that of work intensity. I’ve argued consistently that the upsurge in measured productivity in the middle and late 1990s was due, at least in part, to increases in the pace and intensity of work. They say

Further, contrary to the contention of some commentators (see, for example, Quiggin 2001), greater work intensity — manifest in longer working hours and an increased pace of work — does not provide a credible explanation for the sustained improvement in Australia’s productivity performance. The impacts of changes in hours worked are explicitly accounted for in measures of productivity growth. And claims that the productivity improvement would be temporary because of an unsustainable pace of work are inconsistent with the extended period of strong productivity growth that has been observed in Australia.

This argument fails because the supporting premise “an extended period of strong productivity growth” is false. As I’ve already observed, above-average productivity growth ceased after 1998-99. This is exactly consistent with a once-off increase in work intensity.

There’s some fancy footwork going on with levels and rates of change here. I’ve asserted that productivity growth based on increased work intensity is unsustainable in the sense that while you can increase work intensity for a few years, the process has to come to a halt. If the higher levels of intensity are maintained, productivity growth will return to its previous rate, but the increase in productivity level will be maintained. A stronger notion of ‘unsustainable’ is that the increase in effort will be reversed, and productivity growth will be below-average until the temporary increase in levels is lost. There is some evidence of a reduction in work intensity over the past few years, but it’s clear that much of the increase in the 1990s has been sustained.

What’s left in the case for microeconomic reform is not the productivity gains that were originally[1] promoted but the proposition that microeconomic reform has contributed to our good macroeconomic performance over the past fifteen years. There are a lot of problems with this claim. Most obviously, we were well into the micro reform push when the 1989-90 recession began. More importantly, our current strong performance seems heavily dependent on low interest rates, and it’s hard to see how these can be sustained with a large trade deficit and an expanding current account deficit. Still, this is one area where I’ve been overly pessimistic in the past, and we’ll just have to wait and see whether we can get back on to a sustainable trade path without a recession or serious slowdown.

fn1. Actually, this isn’t quite right. In the early 1980s, microeconomic reform was promoted on macroeconomic grounds, as providing the increased flexibility that would permit a sustained macro expansion without running into export bottlenecks and current account deficits (at that time, assumed to be unsustainable). These claims were abandoned after the 1989-90 recession and attention focused on productivity growth.

Categories: Economic policy Tags:

Monday Message Board

April 18th, 2005 26 comments

It’s time for the regular Monday message board, where you are invited to post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Regular Features Tags:

What I’ve been reading

April 17th, 2005 4 comments

As mentioned last week, <a href=" “In Defense of Globalization” (Jagdish Bhagwati) , along with Diversity in Development: Reconsidering the Washington Consensus There’s a draft of a review article over the fold. Comments much appreciated.

Moving on, I’ve read an advance copy o“Freakonomics : A Rogue Economist Explores the Hidden Side of Everything” (Steven D. Levitt, Stephen J. Dubner) The book contains a chapter defending the (mildly surprising) conclusion that having a black-sounding name like DeShawn is not a disadvantage in the US, once you take account of the class, education and family backgrounds variables typically associated with such a name. My first thought is that, in view the name Levitt and Dubner have given their baby, they must be pretty confident on this point. My second is that, if you haven’t already, you should read Baby’s Named a Bad, Bad Thing
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Categories: Books and culture Tags:

The expected utility of voting

April 17th, 2005 3 comments

In the comments thread to Chris’ post on tactical voting at Crooked Timber, Michael Otsuka very sensibly suggests

I believe there’s an extensive, sophisticated social science literature on the expected utility of voting in elections which has made some progress beyond the speculations posted above. Could anyone who’s up-to-speed post a reference to an accessible summary to save us the trouble of trying to reinvent the wheel?

This brings me to one of those papers I’ve been meaning to write for years (I wrote a several drafts of a joint paper with Geoff Brennan, but we never quite converged), and which has finally (2005!) been written by someone else. The idea was to prove an assertion I’ve made quite a few times in academic papers, and here at CT, that, as long as voters have ‘social’ rather than ‘egoistic’ preferences, the expected utility of voting is independent of the size of the electorate, and potentially large enough to justify high levels of participation. You can read this paper by Edlin, Gelman and Kaplan (PDF file). There’s an excellent appendix on why the probability of a decisive vote is of order 1/n.

There’s still the question of why people vote when one side or the other is bound to win. EGK have a go at this, and in my paper[1] on the subject, I say

This approach, in which b [the social benefit of the preferred party winning] is a simple step- function, may be replaced by a more sophisticated one in which b depends not only on the party elected, but on the size of its majority. This would be consistent with the fact that there is a substantial, though normally reduced, turnouts in elections which are perceived as foregone conclusions.)

That’s not a complete solution, and I think it’s also important to consider that voting per se is considered as a social duty or as yielding social benefits, but I think it’s at least as important as expressive motives.

fn1. Quiggin, J. (1987), Egoistic rationality and public choice: a critical review of theory and evidence’, Economic Record 63(180), 10–21.

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