Archive for March, 2008

Peace offers are for losers

March 31st, 2008 32 comments

The pro-war blogosphere is full of the news of Sadr’s defeat in the battle for Basra, manifested in his call for a truce, an end to government raids and the release of all prisoners. Here’s a roundup of the links from Glenn Reynolds. Reynolds, who has chronicled Sadr’s decline into irrelevance from 2004 to the present, is a bit more circumspect than he has been in the past, saying “it’s likely a blink, not a major defeat.”, but most of the bloggers he links to are unrestrained in their triumph.

Among the points I’ve picked up, illustrating the magnitude of the victory

* The number of Iraqi police and military who have defected to Sadr has been much exaggerated, and most of them were bad lots anyway

* The body count ratio looks really good

* Attacks on the Green Zone are a desperate fling, easily countered by staying indoors and wearing full body armor at all times

* The proportion of Basra controlled by the Mehdi Army has not increased much since the conflict began

* The proportion of Basra controlled by militias and criminal gangs (approximately 100 per cent) has not increased at all since the conflict began

* Much of the ground lost by the government elsewhere in Iraq has been recaptured

* The fact that the purported basis of the government’s action (an attack on criminal elements peripherally associated with various militias), endorsed by the US, is a transparent fiction, covering an attempt by one set of militias to weaken another, hasn’t worried anyone too much

* Allowing for the necessity of air attacks on densely populated areas, civilian casualties have been modest, ensuring the the popularity of the US and British forces will increase still further

* Maliki is still in Basra, proving the failure of Sadr’s attempts to oust him

But the crucial point underlying all of the argument is, that, simply by offering a truce, Sadr has proved he isn’t winning. After all, peace offers are for losers.

Categories: World Events Tags:

Monday Message Board

March 31st, 2008 44 comments

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Metablogging Tags:

Verbing the adjectivised abstraction

March 29th, 2008 7 comments

I’ve been reading William Dalrymple’s The Last Mughal: Fall of a Dynasty about the Indian Rebellion of 1857 with great interest. The complacent reports of the British commanders as they went about destroying the last remnants of independent Indian power are startlingly reminiscent of the “Good News from Iraq” we got so much of in 2003, and which was briefly revived during the now collapsing surge/awakening/truce. More generally, Dalrymple gives an evocative account of the Mughal court on the eve of destruction.

But I was, perhaps unfairly, amused by Dalrymple’s introduction where he extols the merits of archival research, as against the kind of “subaltern history” that pads out existing secondary sources with large dollops of theory to produce more or less interchangeable articles with titles of the general form “Othering the Imagined Construct” (feel free to permute the parts of speech to derive your own). I’ll leave it to others to decide whether this is better or worse than the old standby “Nonsensical Phrase Drawn From Primary Source: Random Word, Random Word, and the Actual Topic of this Book, or the generic economic article of the form “Hot Current Idea, Established Field and Putative Application”.

Categories: Books and culture Tags:

Schroedinger’s machines

March 27th, 2008 14 comments

The next in the popular series of BrisScience lectures will be on Monday 31 March. As the title, Schroedinger’s machines indicates, it’s on the fascinating topic of quantum computing. More over page.
Read more…

Categories: Science Tags:

Forced to fight renegades

March 27th, 2008 29 comments

The Maliki government’s offensive in Basra, directed against (some) Shiite militias seems to have taken most observers by surprise. Possibly as a result, reporting of the event has been unusually revealing about the implicit presumptions that guide the news we get to read. The New York Times, for example, leads with a photo of “Fighters loyal to renegade Shiite cleric Moktada al-Sadr”, taking up positions in Basra. Later on, the article notes

If the cease-fire were to unravel, there is little doubt about the mayhem that could be stirred up by Mr. Sadr, who forced the United States military to mount two bloody offensives against his fighters in 2004

Like most of the other militia leaders in Iraq (including the leaders of mercenary militias like Blackwater), Sadr is not a particularly attractive character. But in what possible sense can he be described as a “renegade”? He was a consistent opponent of Saddam and became a consistent opponent of the US occupation. This might justify descriptions like “rebel” or “recalcitrant”, but Sadr is one of the few Iraqi figures who hasn’t switched sides, in many cases more than once.

More important though, is the second paragraph. The US was not, in any sense, forced to launch the 2004 offensives. These were miniature wars of choice within the broader war of choice in Iraq. The assumption was that Sadr’s supporters could be crushed by military force, leaving the way open for the US occupation government to reshape Iraq along the lines it wanted. In the end, after much bloodshed, nothing was achieved. Arrest warrants for Sadr, the pretext for the first offensive, quietly disappeared when they became inconvenient, and much the same happened the second time around.

We are now seeing a repeat of the same strategy, adopted by the Maliki government. On past performance, the likely pattern will be one of initial success, followed by a lot of tough talk, and then a bloody stalemate, ending in a patched-up compromise.

Categories: Media, World Events Tags:

Monday Message Board (Tuesday edition)

March 25th, 2008 29 comments

I took the Easter weekend off, so here’s the Tuesday edition of the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Metablogging Tags:

Easter reflections

March 20th, 2008 53 comments

An early edition of reflections for the Easter long weekend. Write on any topic, or just “what I did for Easter”. Feel free to write at greater length than for a standard comment thread. As always, civilised discussion and no coarse language.

Categories: Regular Features Tags:

Only Clairol Knows For Sure

March 19th, 2008 16 comments

As I mentioned, I coloured my hair to raise funds for the Leukemia Foundation, as did some others in the Risk and Sustainable Management Group. Now, thanks to the marvel of cameraphones, here are the pics



Categories: General Tags:

The secret case for privatisation

March 18th, 2008 75 comments

Ross Gittins had a piece in the SMH yesterday offering an intriguing line of defence for the privatisation proposals of the Iemma government, in the face of attacks from me and Nicholas Gruen. As Gittins concedes Iemma’s arguments, based on the idea that the sale will protect the states AAA rating and allow for new investment in infrastructure, don’t stand up to scrutiny.

He starts off promisingly enough

You don’t have to be very bright to pick holes in the arguments Morris Iemma and Michael Costa have been using to sell their plan to privatise electricity.

But it seems you have to be wiser than some of our brightest economists to comprehend the deeper issues involved … Various economists, including Professor John Quiggin of Queensland University and Dr Nicholas Gruen of Lateral Economics, lost no time in blowing these arguments out of the water. But it doesn’t seem to have occurred to my learned friends that they’ve been busy demolishing a straw man. They may be economic geniuses, but they have more to learn about the politics of economics.

The line implied here and spelt out later on is that, while the ostensible case for privatisation is nonsense, there are deeper reasons which Iemma can’t acknowledge, but which provide a compelling case. It sounds promising. Unfortunately, Gittins makes rather a rhetorical mess of things.

Read more…

Categories: Economics - General Tags:

White knights

March 17th, 2008 98 comments

It’s just been announced that JP Morgan will buy Bear Stearns for $2 a share, implying a value of about $250 million. Given that the company headquarters is said to be worth about $1.2 billion, that gives the BS banking business a value of negative $1 billion. And that’s only after the Fed agreed to take on $30 billion worth of toxic waste from the BS portfolio, politely described as “less-liquid assets.â€?

Clearly, under any normal circumstances, a company like this would have been left to go bankrupt. The problem is that this would jam up the entire credit market because BS is a counterparty in a vast range of transactions with other banks. (We debated this issue a month ago here and at CT with a number of commentators arguing that the problem of counterparty risk was not such a big deal).

Some light relief is provided by the announcement by Standard & Poors, the day before Bear imploded, that the worst was over. This will go down with Irving Fisher’s comment in late 1929, that the stock market had reached “what looks like a permanently high plateau”. But at least Fisher wasn’t being paid to judge the stock market. Surely it’s now time to kill off the quasi-official role of the ratings agencies, as Justin Fox has just argued in Time

Looking ahead, the limits of the white knight strategy employed in this case must be approaching. JPM will take a while digesting this mess, and Bank of America has already done its bit when it agreed to rescue Countrywide. The other big banks have their own problems. Any future maidens in distress will have to look directly to Uncle Sam for a rescue.

Update Readers used to the natural order of things might be concerned by the implication that with such a giveaway price, the top brass at BS might be forced to bear the financial consequences of events that were obviously beyond their control. Never fear. According to this Reuters report in the Guardian, while most employees up to junior executive levels will lose both their jobs and the shares they were encouraged to buy, with no “golden parachutes”:

JPMorgan Chief Financial Officer Mike Cavanagh late Sunday said taking over Bear would generate about $6 billion in merger-related costs.
JPMorgan has not broken down those figures, but much of that will be earmarked for severance pay and potential exit packages for top executives like Schwartz.
A person familiar with the transaction told Reuters that roughly $1 billion of those costs would be earmarked for severance and retention.

Categories: Economics - General Tags:

Monday Message Board

March 17th, 2008 24 comments

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Metablogging Tags:

The Liberal brand

March 16th, 2008 54 comments

The Liberal party finally has something to celebrate, with their most senior elected official, Brisbane Lord Mayor Campbell Newman winning re-election easily and the Liberals getting a majority on the City Council for the first time in many years. But despite this story in the Oz, the news is not all good for the Liberal brand.

* Newman’s success was largely a reflection of his personal popularity. A good point for the Libs is that this popularity is largely due to his promise to fix traffic congestion through road and tunnel projects, an issue the Liberals probably have an advantage on in general. A less good point is that it remains to be seen if the plans will work – this approach hasn’t been hugely successful elsewhere

* In Townsville, Labor copped a hiding but the conservative candidate Les Tyrell didn’t run under the Liberal label

* In the Gold Coast mayoral election, the Liberal Party spent a fortune but their candidate finished third with 26 per cent of the vote. There’s an outside chance that he could get up thanks to the vagaries of preferences but it looks pretty unlikely. Joe Hockey calls this a “great result” but if so, I’d hate to see a bad one.

All of this is relevant to the issue of whether the Liberals and Nationals should merge under a new name. I suggested the day after the election that this was inevitable, and copped some flak for it, but the idea of a merger is certainly alive now.

The remaining objection to a merger with a new name is that it would lose the value attached to the Liberal “brand”. My reading of the council election results is that this value is either zero or negative. Popular conservative candidates can win without the Liberal name. On the other hand, even in natural Liberal territory like the Gold Coast, the party label alone can barely attract a quarter of the votes even with a big advertising push.

Given general agreement that the obvious choices of NatLib and LibNat are uninspiring at best, I’ll throw it open to readers to suggest a new name for the merged party. The winning entry as judged by me will be announced in a later post.

Categories: Oz Politics Tags:

The one-hoss shay

March 16th, 2008 20 comments

The Fed’s bailout of Wall Street investment bank Bear Stearns has, unsurprisingly, been discussed in terms of the domino theory. A more appropriate metaphor is The Wonderful One-Hoss Shay . This was a carriage constructed on the theory that a system always fails at its weakest spot.

he way t’ fix it, uz I maintain, Is only jest T’ make that place uz strong uz the rest”.

On the Fed’s current approach, the system is unbreakable, provided that “too big to fail” protection is extended to every significant firm in the system. The result of this protection is that the kind of crisis where the failure of one firm leads to a cascade of failures elsewhere is prevented. But then

First a shiver, and then a thrill, Then something decidedly like a spill,– And the parson was sitting upon a rock, At half-past nine by the meet’n'-house clock,– Just the hour of the Earthquake shock!

–What do you think the parson found, When he got up and stared around? The poor old chaise in a heap or mound, As if it had been to the mill and ground! You see, of course, if you ‘re not a dunce, How it went to pieces all at once,– All at once, and nothing first,– Just as bubbles do when they burst.

Weekend reflections

March 15th, 2008 4 comments

It’s time once again for weekend reflections.Feel free to write at greater length than for a standard comment thread. As always, civilised discussion and no coarse language.

Categories: Regular Features Tags:

Great Australian Shave, Mark II

March 14th, 2008 2 comments

I couldn’t repeat last year’s huge success, but I did volunteer to have my hair coloured to raise money for the World’s Greatest Shave. The result is that I look like a Troll, which I guess is appropriate given my frequent dealings with this category of humanoid. I didn’t take a camera, but no public embarrassment escapes photographic recording nowadays, so pictures will be coming soon, somewhere.

Categories: Life in General Tags:

Peter Cullen has died

March 14th, 2008 5 comments

Peter Cullen, a leading figure in Australia’s water policy debate for many years, has died at the age of 65. I knew Peter mainly through his work, which made a huge contribution to improving public understanding of the problems we face in managing scarce water resources, and of the possibly policy responses, and through the establishment of the Wentworth Group, which was a big step forward My occasional social interactions with him were always enjoyable. He will be much missed.

Categories: Life in General Tags:

Dead heats and democracy

March 13th, 2008 32 comments

I can’t resist a racing metaphor to describe the problem that’s now facing the US Democrats, but one that is a more-or-less generic problem for democracy. In any system of government, there is a problem of succession, which has a large contingent element. In monarchies, for example, the absence of an adult male heir can produce crises of all kinds (in England, this problem recurred in different forms for all the Tudors from Henry VIII onward). Dictators rarely nominate a capable successor until the last possible moment, so their sudden death often brings about the collapse of the regime. To avoid this, it’s common to see a quasi-hereditary succession which rarely works well for more than one generation.

In democracy, unexpectedly close election results can cause big problems, since there is always a range of uncertainty in which normally unimportant procedural decisions or rule violations become critical. Obvious recent examples include the Bush-Gore race in 2000, the Mexican election of 2006, the recent election in Kenya and now the Democratic nomination race. Such close races inevitably produce a lot of bitterness and can lead to disaster. At the moment it seemed as if the threatened breakdown of democracy in Kenya has been averted, but it’s by no means certain that the power-sharing agreement there will hold. And it’s far from clear that the closeness of the race between Obama and Clinton won’t produce a vicious contest that sinks the eventual winner.

It’s tempting, and sometimes correct, to argue that the sharp divisions that emerge at times like these were there all along. But often this is no more valid than the kind of analysis which ascribes civil strife to “ancient ethnic hatreds” when these are, in reality, little more than rationalisations of contemporary power politics. Certainly, in the case of the Democratic nomination, it’s clear that the vast majority of Democrats would be happy with either candidate and likely that the majority would prefer an immediate end, regardless of the choice, to a continued contest.

Rather than reflecting deeper underlying problems, to a large extent, these succession crises really are problems of institutional design. Some kinds of institutions manage succession problems better than others. Confining attention to democratic systems (broadly defined), I’d argue that there are substantial benefits to simple and definite procedures. If US national elections (including primaries) were based on popular vote (whether first-past-the-post or instant runoff) the likelihood of a result so close as to permit serious dispute would be very small. By contrast, when the result is reached from 50 state ballots, each operating under local and variable rules, the only surprise is that crises can be averted.

Categories: Politics (general) Tags:

The truth will set you free?

March 12th, 2008 64 comments

There’s been a lot of discussion here about genetically modified foods and related issues. My view has been that the current state of scientific evidence does not support a general ban on GM foods but that consumers may reasonably want to be informed about whether the food they are consuming has been produced using technologies they may object to, either on ethical grounds, or because they are unconvinced about the safety of GM technology. In this respect, I’ve been very critical of Monsanto, which pushed hard to get GM foods onto the US market without any labelling requirement. Among other things, I thought this likely to be a counterproductive strategy, intensifying hostility to GM technology.

Some of my more free-market readers have argued against me on labelling suggesting that, if consumers want this information, market processes will ensure the emergence of a GM-free label. Thinking about it in the abstract, this will be true if the consumer preference for non-GM food is strong enough. And if consumers don’t care at all, then labelling won’t make any difference. There’s an intermediate zone where the choice of labelling regime might make a difference, and this has led me to support compulsory labelling.

These speculations can now be confronted with some real-world experience, with some very interesting results. As well as GM foods, Monsanto markets Posilac, a synthetic version of bovine growth hormone for cows that increases milk yields. Farmers producing milk without Posilac have advertised the fact, and have been very successful in capturing market share.

As a result, Monsanto, through a front group, Afact, is now lobbying legislatures to ban the advertising of non-BST milk. Their argument is that, since there is no scientifically demosntrable difference between the two products, advertising the way in which they are produced can only mislead consumers. So now it’s the pro-GM side who are arguing for intervention to suppress information they think consumers can’t handle.

Read more…

Categories: Environment Tags:

Two economies

March 11th, 2008 71 comments

The Australian economy is still booming, but the shadow of the global credit crisis is growing longer every day. Some items

* Most observers now agree the US is in recession
* With negative real interest rates in the US for terms up to five years (you can actually buy negative-rate inflation-protected bonds) commodity price inflation seems bound to continue. This is good for the Oz economy while it lasts
* It now seems clear that someting like half of all subprime mortgages will eventually go into default (many have already been foreclosed and 20 per cent are currently delinquent
Much the same is true for Alt-A and other limited-doc loans. The big question now is whether mortgages guaranteed by the quasi-public Fannie Mae and Freddie Mac are in fact secure. As with all implicit guarantees, the assumption that the Federal government stands behind these corporations is marvellously effective until it is actually tested.

Can we keep on growing while all these processes and more work themselves out? I don’t know and I doubt that the Reserve Bank does either. But if I were setting monetary policy, I’d be very cautious about any further increase in interest rates.

Categories: Economics - General Tags:

Monday Message Board

March 10th, 2008 27 comments

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Metablogging Tags:

After the ratings agencies

March 8th, 2008 53 comments

Among the likely casualties of the emerging financial crisis, the ratings agencies (Moody’s, Standard & Poor’s, Fitch) have to be near the top of the list. The crisis has exposed fundamental weaknesses in the way in which ratings are determined and adjusted. The privileged position held by these agencies can no longer be justified. it’s far from clear how these problems could be resolved, but I’ve set out some tentative thoughts below.

Read more…

Categories: Economics - General Tags:

Do we need a (surface) navy ?

March 7th, 2008 92 comments

The government has just scrapped one of the many troubled defence projects it inherited: the Sea Sprite helicopter. It may yet cancel Brendan Nelson’s Super Hornets. But with budget pressure still tight, it might be worth looking at more radical options. The obvious candidate is to abandon the long-standing tradition that our armed forces should include a surface navy.

It’s been argued ever since the development of the submarine in the late 19th century and the airplane in the early 20th (along with torpedoes and mines) that surface fleets were obsolete, being vulnerable to much cheaper attackers. This argument has been repeatedly vindicated by events, and just as repeatedly ignored by the makers of defence policy.

Update: My point is pretty much proved by this report that the Navy has dropped the ball on training and retaining submarine crews. By contrast, the general tone of many comments seems to be based on the notion “why not have it all?” with no consideration of budget constraints, let alone benefit-cost analysis.
Read more…

Categories: Oz Politics Tags:

The Republican War on Science: Tierney and Bethell

March 6th, 2008 152 comments

One of the big problems with talking about what Chris Mooney has called The Republican War on Science is that, on the Republican side, the case against science is rarely laid out explicitly. On a whole range of issues (evolution, passive smoking, climate change, the breast-cancer abortion link, CFCs and the ozone layer and so on) Republicans attack scientists, reject the conclusions of mainstream science and promote political talking points over peer-reviewed research. But they rarely present a coherent critique that would explain why, on so many different issues, they feel its appropriate to rely on their own politically-based judgements and reject those of mainstream science. And of course many of them are unwilling to admit that they are at war with science, preferring to set up their own alternative set of scientific institutions and experts, journals and so on.

So it’s good to see a clear statement of the Republican critique of science from John Tierney in this NY Times blog piece promoting global warming “skepticism”. The core quote is

climate is so complicated, and cuts across so many scientific disciplines, that it’s impossible to know which discrepancies or which variables are really important.
Considering how many false alarms have been raised previously by scientists (the “population crisis,� the “energy crisis,� the “cancer epidemic� from synthetic chemicals), I wouldn’t be surprised if the predictions of global warming turn out to be wrong or greatly exaggerated. Scientists are prone to herd thinking — informational cascades– and this danger is particularly acute when they have to rely on so many people outside their field to assess a topic as large as climate change.

Both this quote and the rest of Tierney’s article are notable for the way in which he treats science as inseparable from politics, and makes no distinction between scientific research and the kind of newspaper polemic he produces. Like most Republicans, Tierney takes a triumphalist view of the experience of the last thirty years or so, as showing that he and other Republicans have been proved right, and their opponents, including scientists, have been proved wrong. Hence, he argues, he is entitled to prefer his own political judgements to the judgements (inevitably equally political) of scientists.

Read more…

Categories: Science Tags:

Buying back water

March 4th, 2008 33 comments

My Fin column last Thursday was on the Rudd government’s announcement of a tender to buy irrigation water rights, with the resulting water to be managed for environmental flows. This is a long overdue step

Read more…

Categories: Economics - General, Environment Tags:

Gitmo and Gulag

March 4th, 2008 39 comments

My namesake, Canadian terrorism expert Tom Quiggin, takes a look at the Guantanamo Bay trials, and notes their adherence to the principles laid down by Stalin’s chief prosecutor, Andrey Vyshinsky.

Quiggin notes that

According to Col. Morris Davis, who is a former chief prosecutor of the military commissions, it appears that the plan was made ahead of time to have no acquittals, no matter what the evidence was to reveal. General counsel William Haynes is quoted as saying (according to Col. Davis) “We can’t have acquittals. If we’ve been holding these guys for so long, how can we explain letting them get off? … We’ve got to have convictions.”

As Australian readers will recall, Davis resigned his position in disgust after the only trial to reach court, that of David Hicks, was shut down after the Australian government intervened to secure a plea bargain, with Hicks pleading guilty in return for a sentence that saw him returned to Australia then kept in prison just long enough to ensure his silence for the election.

Hicks’ guilty plea led to his being described by the Howard government’s fan club as a “self-confessed terrorist”. Of course, the same description applies to many of those convicted in Stalin’s show trials, where charges of sabotage and terrorism were a routine part of the rap sheet (as with all show trials, some may even have been guilty, but their confessions prove nothing).

Categories: Oz Politics, World Events Tags:

Monday Message Board

March 3rd, 2008 44 comments

It’s time once again for the Monday Message Board. Please post your thoughts on any topic. Civilised discussion and no coarse language, please.

Categories: Metablogging Tags:

The other shoe

March 2nd, 2008 21 comments

There’s been a fair bit of discussion of the recent announcement of Volume Two of The Fabrication of Australian History: The “Stolen Generation”.

What doesn’t seem to have been mentioned is that the topic of this book bears no relation to the Volume Two that was announced in 2002, with a projected publication date of 2003, dealing with frontier violence in Queensland. In 2006, it was due out “within the next twelve months”. There was also to be a Volume 3 on Western Australian due out in 2004, of which nothing has been heard for quite a few years. His most recent statement on the subject, in May 2007, suggested that a multi-volume work would be forthcoming “eventually“.

Searching Windschuttle’s site it appears that none of the vast body of material he claims to have amassed on these topics has ever been published. In fact, he barely seems to have mentioned Queensland in recent years, apart from briefly restating his longstanding, and long-refuted attack on Henry Reynolds’ estimates of frontier deaths.

At this point, Windschuttle ought either to put up or shut up.

Categories: Books and culture, Oz Politics Tags:

A lot or a little, part 2

March 2nd, 2008 7 comments

This CT post on Stiglitz and the cost of the Iraq war reminded me to get going on one I’ve had planned for some time, as a follow-up to this one where I pointed out that the $500 billion in aid given to Africa over the past fifty years or so is not, as is usually implied, a very large sum, but rather a pitifully small one, when considered in relation to the number of people involved, and the time over which the aggregate is taken.

What are the sums of money worth paying attention to in terms of economic magnitude. I’d say the relevant order of magnitude is around 1 per cent of national income[1], say from 0.5 per cent to 5 per cent. Smaller amounts are important if you’re directly concerned with the issue at hand, but are impossible detect amid the general background noise of fluctuations in income and expenditure. Anything larger than 5 per cent will force itself on our attention, whether we will it or not.

To get an idea of the amounts we’re talking about, US national income is currently about 12 trillion a year, so 1 per cent is $120 billion a year. A permanent flow of $120 billion a year can service around $6 trillion in debt at an interest rate of 4 per cent, so a permanent 1 per cent loss in income is equivalent to a reduction in wealth by $6 trillion.

For the world as a whole, income is around $50 trillion, so the corresponding figures are $500 billion and $25 trillion.

What kinds of policies and events fit into this scale?
Read more…