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Archive for December, 2010

Natural units

December 31st, 2010 22 comments

As part of my not-very-successful quest to keep abreast of the latest developments in science, I just finished Einstein’s Relativity:The Special and the General Theory which was, as you’ll recall was a big hit when it came out around 1915. Right towards the end, you get the famous formula E=mc^2. Reading this, I recalled someone pointing out that, in a sensible system of units, c (the speed of light in a vacuum) would be set at 1, so the equation would just say Energy=Mass.
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Categories: Science Tags:

NSW Labor Headed For Defeat

December 29th, 2010 131 comments
A nice piece from Rod Tiffen. Equally applicable to Queensland, unfortunately.

Posted via email from John’s posterous

Categories: Economics - General Tags:

The military failure machine — Crooked Timber

December 28th, 2010 37 comments

Nicholas Kristof has a column in the NYT putting forward the heretical idea that the US should spend less on the military and more on diplomacy and education. The argument is obviously right as far as it goes, but it leaves one big question unasked. An obvious reason for the focus on military spending is that Americans have massive confidence in their military and much less in their education system, particularly the public school systems.

Yet judged by results, the opposite should surely be the case. Why is this so?

The US military has fought five large-scale wars in the past fifty years, resulting in a draw in Korea[1], a defeat in Vietnam, and three inconclusive outcomes in Iraq (twice) and Afghanistan. That’s a record that makes the worst inner-city public school look pretty good. At least the majority of students, even at the worst schools, end up more or less literate.

The US military does an excellent job in defeating anyone silly enough to put a conventional army in the field against it. But, as a result there aren’t many adversaries so silly (even Saddam didn’t expect war when he invaded Kuwait and did his best to avoid it in 2002-03). Potential opponents either try to acquire nukes or fight with IEDs and suicide bombers.

Kristof is right that even where the use of military power is successful in its own terms, it is unlikely to be cost-effective – his striking observation on this is that the cost of one US soldier in Afghanistan is the same as that of 20 schools. Similarly, Greg Mortensen observes that sending back 243 troops would be enough to finance the entire Afghan higher education system [2].

But the striking thing about military expenditure is that its failure rate is so high. More or less by definition, it’s impossible for both sides to win an armed conflict, but it’s certainly possible (and probably the par outcome) for both sides to lose. So, the US success rate since 1950 is probably about what would be expected. As I’ve mentioned previously, US experience of war (apart from the Civil War) before 1950 was by contrast exceptionally favorable – even the War of 1812 was claimed as a win

Moreover, in all sorts of respects the self-image of the US (as a land of opportunity and social mobility, a generous giver of foreign aid, a beacon of democracy in a generally undemocratic world and so on) seems in most respects to have been set in concrete by 1950. The failure to learn anything from a string of military failures and disappointments seems to fit with this.

I’m talking here mostly about the views of the American public, but these views are even more predominant among the policy elite and the Foreign Policy Community. I don’t think this is primarily because either the elite or the capitalist class they might be regarded as representing benefit from wars. It’s true that there is not much of a penalty for advocating disastrous wars, but as long as you steer clear of a handful of topics, there is not much of a penalty for anything in the US policy elite, once you are regarded as “serious”. And while some businesses obviously benefit from, and lobby for, war, there are plenty more who would prefer to make money trading with putative enemies like Iran and Iraq.

At least, the majority of Americans regard the Iraq and Afghan wars as mistakes where the costs have outweighed the benefits. If that (correct) judgement could be generalised into a recognition that military force rarely generates unequivocal victory, and is rarely worth the cost even when it does, arguments like those of Kristof might begin to prevail.

fn1. In fact, it would probably be more accurate to break the Korean War into two parts: a brief and victorious defensive war in 1950 in which the North’s invading army was thrown back across the border, and a counter-invasion of the North which resulted in a disastrous defeat, and three years of bloody struggle ending in the status quo ante. October 1950 marks the point when US military policy (at least as regards large-scale international conflicts) shifted from reluctant involvement in wars started by others to an increasing preference for pre-emptive military action.

fn2. I think this is an overestimate. Mortensen is estimating the cost of keeping a US soldier in the field at $1 million a year, but taking account of support costs and deferred costs, it’s probably closer to $5 million, which implies that withdrawing a single platoon would be enough.

Posted via email from John’s posterous

Categories: Economics - General Tags:

CRA sandpit

December 26th, 2010 32 comments

A special sandpit for debate on the Republican Party claim that the global financial crisis was caused by some combination of the Community Reinvestment Act, Fannie/Freddie, and the stranglehold on US political power held by the Clintons in the early 2000s. I guess I’ve made my views on this clear enough, and I don’t propose to engage in further discussion.

Categories: Regular Features Tags:

In the name of God, go!

December 24th, 2010 146 comments

If I could have one big present for Xmas, it would be to wake up and discover that Keneally and Bligh had both proffered their resignations, and devoted their lives to undoing some of the damage they have done to the Labor movement.

Categories: Oz Politics Tags:

Explaining the persistence of zombie ideas

December 22nd, 2010 39 comments

As Paul Krugman notes in a piece where my book, Zombie Economics gets a nice plug

Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.

Why have the zombie ideas that caused the global financial crisis been so rapidly re-animated.

I think there are quite a few different things going on here. I’ll talk about some, and maybe add some more as the post develops

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Categories: Economics - General Tags:

Total core meltdown

December 20th, 2010 40 comments

Anyone who’s spent time in the blogosphere has seen it happen, and most of us have been on the wrong side of it once or twice. A blogger or commenter says something silly, gets called on it and doubles down. Before long, they are engaged in meta-disputes about who said what about whom. As the flame war escalates, all sense of proportion is lost, and innocent remarks produce threats of litigation. Somewhere along the way, Godwin’s Law comes into play. If the process runs its full course, the blog in question is taken down (but of course the Internet never forgets), or the commenter identity is abandoned, leading to suspicions of sockpuppetry when someone with similar style and opinions turns up.

Of course, most of us stop before it gets that far. The wisest and most gracious recognise error, thank those who set them straight and may even emerge with an enhanced reputation. Those of us not quite as sensible stump off in a huff before making complete fools of ourselves.

But some go all the way. That’s sad for a blogger, but disastrous in the case of a national newspaper.

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Categories: Media, Metablogging Tags:

Weekend reflections

December 17th, 2010 44 comments

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. In keeping with my attempts to open up the comments to new contributors , I’d like to redirect discussion, as opposed to substantive new contributions, to the sandpit(s). As always, civilised discussion and no coarse language please.

Categories: Regular Features Tags:

Realistic utopianism for 20-year olds (cross post from Crooked Timber)

December 17th, 2010 62 comments

Looking at the debate over UK protests over the tripling of tuition fees, it seems to me that this is an occasion where realistic utopianism (I’m paraphrasing Erik Olin Wright here) is needed, and is currently in short supply. The present ways in which modern societies determine the life choices available to 20 year olds are unsatisfactory and inequitable, and the British system is (or seems from a distance) to be more inequitable than many, perhaps most. So, defending that system against change, even change that will make things worse, is difficult and problematic. Rather than ask what incremental reforms might make things better, it seems like a good idea to ask how we might design a set of institutions from scratch, and then think about the implications for existing systems.

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Categories: Economic policy Tags:

Service difficulties – Resolved I hope

December 16th, 2010 1 comment

Update It appears that the problem may have been related to the server, and fixed by some emergency maintenance at Joyent. If anyone is still experiencing errors or slow loading, please advise me (assuming you have enough access to read this). Conversely, I’d appreciate confirmation in comments from readers for whom the problems have been fixed.

Problems with access to the blog have re-emerged. I will post via http://johnquiggin.posterous.com until they are resolved. Posts should propagate here in due course, but readers may prefer to visit the posterous blog.

Categories: Metablogging Tags:

New sandpit

December 16th, 2010 115 comments

Another sandpit thread

Categories: Regular Features Tags:

Another tragedy at sea

December 15th, 2010 Comments off

It is too early to say much about this latest tragedy, but I wanted to mark it.

Categories: Life in General Tags:

Zombies and T-shirts and Posters

December 15th, 2010 10 comments

Get your Zombie-Econ t-shirts and posters from Zazzle!

Apparently, a reader wrote in to Princeton University Press asking for a poster of the cover, which isn’t standard issue for university press books. But thanks to the Internet, all things are possible these days, and within hours, they have been made available.

Categories: Dead Ideas book Tags:

Internet made me a radio star? — Crooked Timber

December 15th, 2010 7 comments

I’m going to be on the Peter Schiff Internet Radio show, Thursday at 6:35 PM EST, talking about Zombie Economics. It should be interesting. A while ago, I had quite an interesting chat with Russ Roberts, whose views are, I think, fairly similar to Schiff’s, so i’m hoping for some creative interaction on the Keynesian and Austrian approaches to thinking about financial crises and depressions. I planned a full scale post on this, but haven’t had time yet.

Posted via email from John’s posterous

Categories: Economics - General Tags:

Monday Message Board

December 13th, 2010 53 comments

It’s time again, once again, for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpit, please.

Categories: Regular Features Tags:

State of Innovation

December 10th, 2010 13 comments

In discussions about markets and innovation, I’ve repeatedly made the point that the biggest single innovation of recent decades, the Internet, was not produced by markets at all. It started in the university sector (aided by a little seed money from the US Defense Department) and was developed by amateurs and volunteers for a couple of decades before it was handed over to the dotcommers, who proceeded to waste a trillion dollars or so on silly get-rich-quick schemes.

I’ve never had the time to go much beyond that, but a recent book, State of Innovation, edited by Fred Block and Matthew Keller takes a close look at the process of innovation in the US and the role of government funding. The key conclusion

over the last four decades, government programs and policies have quietly become ever more central to the American economy. From “basic research” to commercialization, the fingerprints of government can be found in virtually every major industrial success story of the late 20th and early 21st century.

At least in part, this reflects the disappearance of big corporate R&D outfits like Bell Labs, and the conversion of General Electric into a finance company. But there are lots more interesting details about the relationship between startups, venture capital and public funding. Well worth reading.

Billions down the drain

December 10th, 2010 69 comments

That’s the headline on my opinion piece in yesterday’s Fin, over the Fold

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Categories: Environment Tags:

Canberra University stands up for academic freedom

December 9th, 2010 57 comments

Oz editor Chris Mitchell’s defamation action against academic Julie Posetti is so obviously baseless that his only hope can have been that Posetti would not have the resources to fight. Fortunately[1] Canberra University, where she works, has taken a stand in support of academic freedom, and is defending the action. The letter of reply to Mitchell’s lawyers, posted here, is good reading, including the observation

We note also that, while we appreciate that what is published in The Australian (of which your client serves as editor in chief) may not necessarily always reflect your client’s own personal views and is not determinative of the position, it is nevertheless somewhat telling that the “Media diary” article titled “The Posetti tapes” appearing in the online version of The Australian on 30 November 2010 suggested that the “Tweets are a fair summary of what Wahlquist said”.

The line of defence taken by the lawyers is the correct one of fair reporting of a matter of public interest, but I hope they also do discovery for a truth and public benefit defence – we might find out how it is that News Ltd journalists all know what line to take on so many issues.

fn1. One might suppose this to be a given. Sadly, plenty of corporate universities in Australist have done their best to stifle academics who annoy powerful interests, not to mention those who criticise their own administration.

Categories: Media Tags:

A tender model for carbon pricing

December 9th, 2010 13 comments

My UQ colleagues Lynette Molyneaux, John Foster and Liam Wagner have produced a paper arguing for a Tender-Price Allocation Mechanism for reductions in carbon emissions. I haven’t had time to consider the proposal in detail, and I don’t entirely agree with the paper’s characterization of the ETS and carbon tax alternatives (I currently lean to the carbon tax, mainly because the CPRS ended up such a dog’s breakfast that it would be better to restart from scratch). But, I think it’s useful to look at all the alternatives.

Categories: Economic policy, Environment Tags:

Assessing Australia’s Declining Economic Growth: Guest post from Hannah McKale

December 7th, 2010 37 comments

I’ve been given the following guest post by Hannah McKale. Please discuss, remembering that the usual standards of courtesy and civilised discussion apply with extra emphasis for guest posters – JQ

The effects of the global economic crisis have been wide reaching and dramatic, having an impact on almost all industries, stocks, and housing prices in most developed nations. The fall of Lehman Brothers in September of 2008 was a predominant trigger of economic catastrophe, as it was a sign of just how tumultuous things had gotten in the financial markets. While it would take a degree from any of a number of political science schools to fully grasp the full range and depth of the economic crisis, it is easy to see that the tightening of credit markets, plummeting housing prices, and unprecedented uncertainty in the financial markets started on that cold day in September. As it spread around the world at a fast pace, it was clear that the economies of major developed nations are all intertwined and exert an enormous amount of influence on each other. By May of 2009, twenty-nine of the thirty OECD (Organization for Economic Co-operation and Development) nations were officially experiencing a recession, defined by two straight quarters of financial decline and negative growth. The 1 country that did not enter into a recession, and is experiencing growth at faster levels than all of the other OECD nations, is Australia. While Australia has experienced declines in certain areas of their economy, most notably during the December quarter of 2009, they immediately bounced back in the next quarter, (March 2010), holding off a full recession at a time when all of their economic peers were in the midst of one. It is worth asking the question: how is Australia remaining economically strong at a time of such widespread economic weakness and uncertainty?

Much of its solvency can be attributed to Australia’s ample mineral resources coupled with a lucrative trading partnership with China. While also in the midst of a recession, China’s manufacturing sector is growing at a break-neck pace, though it has slowed in recent months to a growth rate of 10.6%, down from a first quarter growth rate of 11.9%. However, growth statistics like these are enough to make US investors salivate, as US manufacturing output has been growing at a much slower rate of between 3 and 5% for the past 16 months. Australia is the number 1 exporter of iron ore to China, which translates to billions of dollars in revenue and hundreds of thousands of jobs. Australia took a proactive step against the initial financial crisis before it even hit their shores by passing a $42 billion stimulus package dubbed the Nation Building and Jobs Plan. This plan mandated that the money be used for road and rail maintenance projects, updating schools and technologically equipping them for the 21st century, and maintaining social housing projects. Before the Nations Building and Jobs Plan was passed, Australia’s GDP declined sharply by 5.88% in the 2008-09 fiscal year. The passage of this stimulus helped to raise Australia’s GDP by 2 ¾ percent in the 2009-10 fiscal year and looks to have been instrumental in another 1 ½ percent raise in 2010-11. Thus, Australia actually added 210,000 jobs when most nations were losing theirs by the millions.
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Categories: Economics - General Tags:

Monday Message Board

December 6th, 2010 27 comments

It’s time again, once again, for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpit, please.

Categories: Regular Features Tags:

New media, old media, older media

December 6th, 2010 33 comments

Much of the discussion of the Australian’s vendetta against Julie Posetti has focused on the novelty of a lawsuit involving Twitter the latest manifestation of new media. But the real story here is about changes in old media, and particularly those media owned by Rupert Murdoch. Murdoch has revived an approach to journalism that flourished in the 19th and early 20th centuries, the newspaper as propaganda sheet.

As others have noted, Chris Mitchell’s bizarre decision to sue an audience member on the basis of a brief but accurate summary of statements made in public by a former employee, and then widely disseminated, has distracted attention from the actual issue raised by those statements. The Australian has ceased to be a newspaper in the widely accepted sense of a publication in which factual reporting is clearly distinguished from statements of opinion based on those facts. Rather the two are inextricably mixed – what is presented as news is politically-driven advocacy, while much of what is presented as opinion consists of unsustainable factual claims.

These developments are most obvious in relation to climate change, the subject at issue in the attack on Julie Posetti, but the same tendency is evident on any topic that presses the political and cultural hot buttons of the right. The same process is at work throughout the Murdoch empire, but most fully developed at Fox News.

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Categories: Media Tags:

Bet with Bryan Caplan, Year 2

December 5th, 2010 23 comments

Back in 2009, I made a bet with Bryan Caplan, with the winning condition for Caplan being that “the average Eurostat harmonised unemployment rate for the EU-15 over the period 2009-18 inclusive should exceed that for the US by at least 1.5 percentage points”, my interpretation being that the difference offsets the effects of the high US rate of incarceration. The EU-15 average rate was slightly below the US rate for 2009, and slightly above the US in 2010, so, for the first two years, the difference averages out to near zero.

If I were looking only at labor markets, I’d be grimly confident at this point. Although the eurozone encompasses some very different economies, overall, eurozone labor markets dealt with the immediate consequences of the global financial crisis relatively well. Meanwhile, the performance of the US labor market has been disastrous. The employment-population ratio has plummeted, back to the levels of 1970 before the large-scale entry of women into the labor market, while long-term unemployment is far above any previous level. Unsurprisingly, this is the time the Republicans have chosen to throw the long-term unemployed off benefits[1]. Meanwhile, the collapse of the housing market has greatly reduced labor mobility. The adverse effects of these developments are likely to persist for years, and the 2010 election outcome forecloses any hope of active policy response.
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Meltdown continues at the Oz: good faith reporting no defence

December 3rd, 2010 37 comments

The meltdown at the Oz continues, with an “offer you can’t refuse” from editor-in-chief Chris Mitchell to academic and twitterer Julie Posetti. Conceding that Posetti accurately reported statements by former environment reporter Asa Wahlquist in two brief tweets, Mitchell is nonetheless demanding an apology, and now offers a re-educational tour of the News Ltd newsroom as part of the deal.

This behavior would be beyond bizarre even from an ordinary corporation. To sue a private individual for reporting, in good faith, a statement made in public represents a threat that could be applied to just about anyone. It’s worth bearing in mind that there is no longer any distinction in Australian law between libel and slander, so the law applies equally to someone who repeats, down at the pub, something they heard at a public event. A company that tried such a thing (the only comparable case I can recall is the Gunns fiasco in Tasmania) would rightly be derided.

But for a newspaper, and one that has repeatedly pushed the bounds of defamation in its dealings with critics (see the sidebar for a relatively mild example), to undertake such actions is a spectacular assault on freedom of speech, one that only the Murdoch press, or maybe the state-controlled media in places like Singapore, would be capable of. It’s hard to see how any self-respecting journalist can continue to work for this deplorable operation.

In this context, it’s striking that Mitchell has apparently not sued Wahlquist or obtained a retraction (he has received a denial of claims that were never made, such as that he personally called or emailed her). Presumably, at least Oz journalists who have been happy to join the hunt against tweeters and bloggers are not yet ready to take on their own colleagues in this way.

Categories: Boneheaded stupidity, Media Tags:

Kennys on Superfast: Some quick responses

December 1st, 2010 18 comments

I’ve now had a look at the study by Chris and Robert Kenny, Superfast: Is It Really Worth a Subsidy?. Some immediate responses

* The study starts from a presumption that broadband policy is an intervention, which may be compared to a putatively natural market outcome. This assumption is clearly inapplicable to Australia, where Telstra used as a regulatory bargaining chip its monopoly position as the only plausible supplier of new broadband infrastructure on a large scale. The NBN was the only way to move forward

* The study finds a variety of reasons to discount estimates of the benefits of superfast broadband, without giving any basis for lower estimates

* (Very important, I think) The study lacks any sense of quantitative magnitudes. Looking at the (upper bound) estimate of $40 billion for the NBN, what would be a reasonable social return? Allowing for fairly rapid depreciation (say a 10-year lifetime) and a 5 per cent real rate of return, we would want a net service flow of $6 billion per year, about 0.5 per cent of GDP (the right measure in this case, since depreciation is taken into account). If we assume the network is implemented over 5 years, we need additional growth of 0.1 percentage points per year. The estimates criticised in the report are far higher then this

* While the report discounts various possible sources of demand (eg home nursing) it trivialises the obvious commercial benefits of faster and sharper video-on-demand, video telephony, immersive gaming and so on, and disregards the point that, on the basis of past experience, we can expect new uses of high-speed internet even if we can’t yet identify them

Categories: Mac & other computers Tags:

Epic Oz Meltdown

December 1st, 2010 25 comments

The periodic meltdowns at the Oz (see here and here) have been growing ever more bizarre. But it will be hard to top this episode, where editor-in-chief Chris Mitchell threatened to sue academic Julie Posetti for defamation. Posetti’s supposed defamation consisted of two Twitter posts summarising a speech by Asa Wahlquist, for many years the leading environmental reporter at the Oz. As Posetti summarised it Wahlquist found working for the Oz under Mitchell “excruciating” … “torture”, because of the paper’s anti-science stance

I’m a bit behind on this – as usual, Tim Lambert is the go-to guy, and there are more reports at Crikey, LP and the ABC.

What is most amusing here is the way in which a string of Oz journalists spontaneously line up to write articles saying that Chris Mitchell would never tell anyone what to write.

What is most significant, looking at the Murdoch press more generally, is Murdoch’s willingness to trash the credibility of his media assets, built up over a long period, in the pursuit of ideological agendas and (perhaps) short-term profits. The Oz was never a great paper, but it used to be a good one, even if it was pretty reliably conservative. More strikingly, the same process is going on at The Times (of London), once regarded as the world’s ultimate journal of record. The same is true of the Wall Street Journal – before Murdoch took over the general view was that even if the Op-Ed pages were barking mad, the news was always accurate. Now the distinction between news and opinion is disappearing fast.

And the same can be said for the political right as a whole. Their eagerness to see plain issues of fact (WMDs in Iraq, global warming, the existence of a DDT ban) as subjects for political debate hasn’t done them much harm in the short term. But as the “epistemic closure” fuss a while back shows, everyone is increasingly aware that truth and falsehood are no longer meaningful terms for those on the right. This will, I think, entail some big costs for them in the long run.

Categories: Media Tags: