Archive for May, 2009

Refuted/obsolete economic doctrines #7: New Keynesian macroeconomics

May 9th, 2009 35 comments

I’m writing a review article about Akerlof and Shiller’s new book, Animal Spirits. In doing so, it struck me that I had most of a new entry for my list of refuted economic doctrines, except that the target this time has not been refuted so much as rendered obsolete by events. I’m talking about New Keynesianism an approach to macroeconomics, to which Akerlof and Shiller have made some of the biggest contributions, but which they have now, on my interpretation, repudiated.

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Categories: Economics - General Tags:

Politic religion (crosspost)

May 8th, 2009 47 comments

[I posted this at Crooked Timber a day or two ago and got quite a lively response].

While the aesthetic defence of religion offered by Terry Eagleton might appeal to a small fraction of the intelligentsia, a far more common belief is that, regardless of truth value, religious belief makes people better citizens, and should therefore be encouraged.

Although this claim has various components, the most obvious social benefits of religious belief, and the biggest source of concern about the adverse consequences of unbelief, is the doctrine of an afterlife in which good actions will be rewarded and bad ones punished. Back in the 19th century, lots of people were really worried about this and, even in the 21st it’s a common theme in US discussions of religion.

But do we really need religion for this?

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Categories: Economics - General Tags:

Debate presentation

May 6th, 2009 26 comments

I didn’t actually present this in my debate with Henry Ergas last night, since he wasn’t using Powerpoint, but readers might find it interesting.

3Mb PDF or 2 Mb Keynote file

Categories: Economics - General Tags:

Conditional and unconditional targets

May 5th, 2009 58 comments

There’s been a striking divide in reactions to the government’s changes to the ETS, with most of the major environmental groups supporting it, while the Greens (and most commenters here) seeing only negatives. The headline change (a one-year delay in the start date) is so minor that it’s not worth discussing, but it seems to have set the tone for a lot of responses. And some responses have taken it for granted that the government is acting in bad faith, but on that assumption, there is no point in arguing the specifics of policy.

Coming to substantive issues, a major complaint appears to be that the unconditional target of a 5 per cent reduction is not enough. Those making this complaint seem to me to be influenced by an error that’s the mirror-image of the doolittle-delay claim that, since Australia only accounts for 2 per cent of global emissions, we may as well do nothing.

The element of truth in the doolittle-delay line is that, in the absence of a global agreement, the planet is done for. That means that, when offering a conditional and an unconditional target, the crucial requirement for a defensible policy is a conditional target consistent with a global agreement to stabilise the climate. The unconditional target is important only insofar as it helps to achieve such an agreement, and a higher unconditional target is not necessarily a better one.

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Categories: Environment Tags:

Big report on electricity generation options

May 5th, 2009 25 comments

In the grid parity discussion, reader Salient mentioned a report on energy generation options including solar thermal. There was a lot of interest, and Salient has kindly sent me the report, which is available here (7.5 Mb PDF).

Categories: General Tags:

May Day Monday Message Board

May 4th, 2009 41 comments

Its time once again for Monday Message Board, and also the May Day/Labour Day holiday here in Brisbane. Post comments on any topic. As usual, civilised discussion and no coarse language.

buy The Lord of the Rings: The Two Towers

Categories: Regular Features Tags:

Bogus journal alert

May 4th, 2009 37 comments

In case any readers are medical practitioners, I’d like to alert them to this startling story. Apparently Merck and Elsevier have produced something called the Australasian Journal of Bone and Joint Medicine which looks like a peer-reviewed journal but is actually a marketing exercise for Merck. If you receive any marketing material citing this “journal” you should consign it to the circular file, and consider whether it is sensible to prescribe medicines that need such snake-oil tactics in their marketing.

This is utterly inexcusable, and no-one involved can retain any credibility in either academic or medical terms. Following on from the arms fair fiasco

Feast the movie

a while back, this exercise is forcing me to consider, again whether publishing in Elsevier journals can be justified.

Categories: Life in General Tags:

25 per cent by 2020

May 4th, 2009 29 comments

Media coverage of Rudd’s announced changes in the ETS scheme has focused on the one-year delay in the starting date. But the big news is that the government will now offer emissions reduction target to up to 25 per cent of 2000 levels by 2020, if an international agreement is made later this year in Denmark to keep global emissions under 450 parts per million.

This is significant good news. It’s obviously necessary to look at the fine print, but a 25 per cent reduction would be consistent with a global contract and converge agreement which could achieve climate stabilization. In the context of such a commitment, a delay in the start date for the scheme (inevitable in any case given the situation in the Senate) is a small price to pay, as is the temporary cap on permit prices.

Also, the government seems to have responded to criticisms about the ineffectiveness of voluntary action

Mr Rudd has also announced that households and businesses will be able to contribute to cutting Australia’s emissions through an Australian Carbon Trust comprising of an energy efficiency trust and an energy efficiency savings pledge fund.

Households would be able to calculate their energy use and then make donations to fund which would then buy and cancel carbon permits.

The scheme may not be perfect, but, on the face of it, the changes are sufficient for me to conclude that the Greens ought to be backing it, and seeking some further improvements, rather than holding out in the name of purity.

For Your Consideration divx

Categories: Environment Tags:

Grid parity

May 3rd, 2009 56 comments

I’ve been following discussions of solar energy on-and-off for quite a while, and it has always seemed as if it would be quite a long time, even assuming an emissions trading scheme or carbon tax, before solar photovoltaics could be a cost-competitive source of electricity without special support such as capital subsidies or feed-in tariffs set above market prices.

But looking at the issue again today, I’m finding lots of claims that this “grid parity” will be achieved in the next few years, and even one company, First Solar, that claims to be already at grid parity with a 12 MW plant in Nevada completed last year . Obviously, Nevada is a particularly favorable location, and there is plenty of room for judgement in cost estimates. Still, looking at a lot of different reports, it seems clear that, with a carbon price of say $50/tonne (about 5 cents/kwh for black coal and 7 cents/kwh for brown coal), solar will be cost-competitive with coal for most places in Australia without any need for fundamental technical improvements.
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Categories: Environment Tags:

Austrian Business Cycle Theory

May 3rd, 2009 361 comments

I’ve long promised a post on Austrian Business Cycle Theory, and here it is. For those who would rather get straight to the conclusion, it’s one I share in broad terms with most of the mainstream economists who’ve looked at the theory, from Tyler Cowen , Bryan Caplan

and Gordon Tullock at the libertarian/Chicago end of the spectrum to Keynesians like Paul Krugman and Brad DeLong.

To sum up, although the Austrian School was at the forefront of business cycle theory in the 1920s, it hasn’t developed in any positive way since then. The central idea of the credit cycle is an important one, particularly as it applies to the business cycle in the presence of a largely unregulated financial system. But the Austrians balked at the interventionist implications of their own position, and failed to engage seriously with Keynesian ideas.

The result (like orthodox Marxism) is a research program that was active and progressive a century or so ago but has now become an ossified dogma. Like all such dogmatic orthodoxies, it provides believers with the illusion of a complete explanation but cease to respond in a progressive way to empirical violations of its predictions or to theoretical objections. To the extent that anything positive remains, it is likely to be developed by non-Austrians such as the post-Keynesian followers of Hyman Minsky.

Update There’s a fascinating discussion linking to this post here. In French, but clear and simply written. Anyone with high school French and a familiarity with the issues should be able to follow the main points.

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Categories: Economics - General Tags:

Pearson and the parallel universe

May 2nd, 2009 70 comments

The Oz has published another response to my piece in the Fin, this time from Christopher Pearson. Unlike with William Kininmonth, I can’t complain about misquotation: Pearson gives extensive and fairly representative quotes from the article.

Pearson cites my observation that conservative political activists have constructed a parallel intellectual universe and goes on to say

This is precisely the kind of analysis I apply when trying to explain what sociologists call the plausibility structures that serve to underpin the twilight world of the warmists. Quiggin is fighting fire with fire, in much the same way that Marxist and Christian apologists used to try and encompass and thus explain away one another’s world views

Analytically, this is about right. Parallelism is a symmetric relationship, so Pearson’s view of my intellectual universe (and that of, among others, the US National Academy of Science, the Royal Society, NOAA, CSIRO and well over 95 per cent of active climate scientists) is much the same as my view of his (where these roles are filled by bodies like, among others, the Competitive Enterprise Institute, the Lavoisier Group, and experts such as those on Senator Inhofe’s list of 650-odd dissenters

– note the presence of such eminent Australian scientists as Louis Hissink and Alan Moran of the IPA).

I’ve always managed to maintain civil terms of debate with Pearson, and I hope to continue that, but of course discussions between parallel universes tend not to result in much in the way of serious engagement. I will however, restate my point that the problems with the parallel universe go well beyond climate change. An example is the way Pearson fell for the bogus claim that environmentalists had banned the antimalarial use of DDT, a claim propagated by now-discredited tobacco industry hack Stephen Milloy, and circulated through the parallelosphere by such authorities as Bjorn Lomborg and Michael Crichton. I had a to at it here and parasitologist Alan Lymbery did a thorough demolition here

. Pearson didn’t AFAIK revisit the DDT myth (and even refers to it as a human health hazard here), but neither has he learned any lessons about the reliability of sources like Lomborg and Crichton.

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Categories: Environment Tags:

Weekend reflections

May 1st, 2009 20 comments

It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

Categories: Regular Features Tags:

Boswell ballistic

May 1st, 2009 26 comments

As I hinted in my post on the Senate Committee on Emissions Trading, Senator Ron Boswell went pretty much ballistic when I said that people who rejected the science of climate change had nothing useful to contribute to the debate. I was a bit surprised at his vehemence, but it turns out there was a good reason. Along with Barnaby Joyce, Boswell is launching Ian Plimer’s latest contribution to the delusionist literature

Comments from me, David Karoly, Ian Lowe and Ben McNeil .

To restate the conclusion of my last Fin column,

Until conservatives adopt a reality-based approach to climate change, as they have done in Europe and the UK, they cannot be taken seriously as an alternative government.

fn1. I don’t think anyone has yet had the patience to work through and identify all the errors in this deplorable work, but Tim Lambert has identified a couple of dozen Made of Honor hd . For anyone willing to be convinced, the fact that Plimer includes a graph from Martin Durkin’s ‘Great Global Warming Swindle’ which was so obviously wrong that even Durkin had to withdraw it is a pretty good measure of the level of scholarship Plimer has devoted to this.

Categories: Environment Tags: