Archive for September, 2005

Books and bombs

September 9th, 2005 3 comments

Tom Stafford points to academic publisher Elsevier’s involvement in the international arms trade. Even the legal aspects of this trade are deplorable, given the excessive readiness of governments and would-be governments to resort to armed force, but the boundary between legal and illegal arms trade is pretty porous. For example, there’s evidence that the arms fairs organised by Elsevier subsidiary Spearhead are venues for the illegal trade in landmines. Tom has a number of suggestions for possible responses.

Categories: World Events Tags:

Section 328 in Japan

September 9th, 2005 3 comments

I’ve been arguing against attempts to apply Australian electoral laws, requiring that “electoral material” include the name and address of an authorising person to blog posts and comments. But, judging by a report in the Age, the situation is far worse in Japan

Categories: Metablogging Tags:

By Quigger’s beard

September 7th, 2005 85 comments

Professor Bunyip coins a bon mot at my expense, saying in relation to a dispute between Sharon Beder and Leigh Cartwright over the effects of the Reagan tax cuts on revenue that

some of the itchier creatures in John Quiggin’s beard are the intellectual betters by an order of magnitude.

of one participant. Unfortunately, Prof B is not a professor of economics, and he applies the epithet to the wrong party in the dispute[1].
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Categories: Economics - General Tags:

Neither fish nor fowl

September 7th, 2005 43 comments

John Howard’s blistering attack on Telstra management is an example of why I’ve always regarded partial privatisation as the worst of both worlds. Although I’m unimpressed by Trujillo’s performance so far, I have some sympathy with his position as CEO of a company 51 per cent owned by the Australian government. To whom is he supposed to be responsible? The private minority shareholders? The Australian public as majority shareholders? The government? The shareholding ministers? The Liberal Party?
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Categories: Economic policy Tags:

Back in Brisbane

September 7th, 2005 9 comments

The trip back home was long and tiring, but I’m glad to be home again, and Brisbane is beautiful as always. There’s a lot to catch up on – Internet news only takes you so far – and I have quite a few posts planned, but jet lag and backlogs will probably slow me down for a while.

Categories: Life in General Tags:

Monday message board

September 5th, 2005 93 comments

I hope to be properly back on air soon, but in the meantime here’s the Monday Message Board. Civilised discussion and no coarse language.

Categories: Regular Features Tags:

An anti-market argument from authority

September 4th, 2005 41 comments

Miranda Devine’s latest piece on Kyoto (sent to me by Jack Strocchi) adds a couple of new (or newish) talking points to the debate. The first is the claim that New Zealand faces a “cost blowout” of $1 billion as a result of the treaty. As far as I can tell, this is a beat-up. The government had calculated that under existing policies, New Zealand would meet its Kyoto commitments with a bit left over that could be traded on international carbon emission credits markets. Now it looks as if they won’t, which means either changing the policies, buying credits or repudiating the commitments. Its hard to see how the availability of the second option makes NZ any worse off.

What’s more interesting is that Devine attacks not merely the carbon emissions market established under Kyoto, but the whole idea of emissions trading. This is fairly surprising since the whole thrust of environmental policy under the Howard and Keating governments, including the current government’s negotiating position on Kyoto, has been to encourage the used of market-based instruments, of which emissions trading systems are an archetypal example. Although problems can emerge with naive application of this kind of policy, it’s generally the right direction in which to go. The development of tradeable water rights in the Murray-Darling system and elsewhere is a prominent example of both the benefits and some potential pitfalls.
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Categories: Environment Tags:

Crooked Timber lunch

September 4th, 2005 Comments off

Today is my last day in DC and I had a very enjoyable lunch with several members of my group blog, Crooked Timber. The group was me, Henry Farrell, Maria Farrell, John Holbo and Micah Schwartzman, making one of the largest collections of Timberites in one place ever to take place. I also met bloggers Russell Arben Fox and Daniel Drezner, both in town for the American Political Science Association. I’ve had an enjoyable and productive time here, but I’ll be very glad to be back in Oz, and home in Brisbane.

Categories: Life in General, Metablogging Tags:

Katrina, Kobe and Kyoto

September 3rd, 2005 52 comments

The still-developing disaster of Hurricane Katrina has some obvious parallels with the Kobe earthquake ten years ago. Both were predictable (and widely predicted) events. The damage from Kobe took years to fix, and it’s already obvious that the same will be true of Katrina.

Equally significantly, weaknesses in the state response to Kobe had big psychological impacts in Japan. The earthquake came at a time when the Japanese economy was recovering from the bursting of a huge property bubble, but when triumphalist rhetoric about the strengths of the Japanese state, and the inevitable dominance of Japanese ways of doing business, was stronger even than during the 1980s. The failure of the initial government response to the disaster and the mismanagement and pork-barrelling that characterised the reconstruction effort went a long way towards reducing confidence.
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Categories: Environment Tags:

Simplifying taxes

September 2nd, 2005 46 comments

In addition to spurious claims about the burden of the top marginal tax rate, one of the standard complaints about taxation in Australia concerns the excessive length of the tax code. There’s a fairly typical example in this SMH piece (sent to me by Jack Strocchi). Let’s start with Phil Ruthven, who says that all federal taxes could be replaced with a simple 10 per cent tax on all revenues (I assume this refers to gross turnover of businesses). He might be right, but such a tax would be economically disastrous. It’s sometimes referred to as a cascade tax, since it applies to the same item each time it moves down the processing chain, creating massive distortions. It is in fact, the same as the Easytax, proposed by Pauline Hanson a few years back, though she proposed only a 2 per cent rate. I analysed it in this post a while back.

A more defensible, but still incorrect claim is that the complexity of the tax code is generated primarily by concessions. I’ll respond to this in a later post.

Categories: Economic policy Tags:

Katrina and the economy

September 1st, 2005 33 comments

People are already wondering what effect Hurricane Katrina will have on the US economy. So far, most of the discussion I’ve seen has focused on very simplified Keynesian or GDP-based views of the economy, in which the resources that go into rebuilding New Orleans and the surrounding regions count as a net addition to economic activity.

As far as the national accounts go, this may be right. As the name says, GDP is a gross measure, which means it takes no account of depreciation, including the massive destruction caused by events like hurricanes. Depending on how things like insurance payouts are counted, there could easily be an increase in measured GDP. The main lesson from this is that, if you’re interested in economic welfare, don’t look at GDP.

But I don’t think the old-style Keynesian story, in which a reconstruction effort brings unused resources into use and thereby stimulates more economic activity, is likely to be applicable. I assume any injection of funds will come primarily from the national government, which is already running massive deficits, to the point where its capacity for fiscal stimulus is pretty much exhausted. The impact of any further expenditure will almost certainly offset, in part by cuts to other areas, but even more by tighter monetary policy and upward market pressure on interest rates.

The immediate reaction of oil prices shows how tightly stretched the entire market has become, but I don’t think the effect on supplies will be great enough to have much effect in the medium term (say in six months time). However, that’s just a guess.

The real problem I haven’t seen discussed much so far is what will happen if, as is now predicted, it takes three to six months to pump all the water out of the city of New Orleans. In the absence of well-designed and large-scale intervention, that would imply bankruptcy for the vast majority of private businesses based in the city. This in turn would imply unemployment for many people who might otherwise return, and a whole lot of second-round effects working through supply chains. It’s unclear what kind of economic activity will survive, beyond a tourist market centred on the French Quarter (apparently relatively undamaged).

Even in the best of all possible worlds it would be hard to design a policy response to a disaster of this magnitude and duration. In practice, based on recent past experience, I think we’re likely to see some impressive rhetoric, a lot of gigantic boondoggles as favoured interests cash in on the reconstruction program, but not much effective alleviation of hardship or coherent thinking about sustainable economic recovery.

Categories: Economics - General Tags: