Archive for June, 2011

Last day of the financial year

June 30th, 2011 4 comments

I’ve been travelling and going to meetings, hence slow posting. Light posting for a while to come, but I thought I’d throw in a last minute reminder that there’s still a few hours left in which to support the Queensland Cancer Council and claim a tax deduction in the process.

Categories: Economics - General Tags:

Thanks, everyone! More please!

June 26th, 2011 Comments off

I’ve been travelling, so I only just got around to putting in my $100 as promised for the fundraising appeal. By the time I got to it, we were well past $1000, which is great. But there’s still a long way to go to the target of $5000. And, I’ve got a fair bit of training to do if I’m going to run the implied time of 1:55. So keep the money rolling in and keep me motivated to train hard.

Once again, thanks to everyone who has donated so far. The fact that I can raise funds for good causes is one of the things that motivates me to keep blogging especially at those times when it feels a bit like the 15k mark in a half-marathon.

Categories: Life in General Tags:

Marxism without revolution: Crisis

June 26th, 2011 39 comments

I’m writing series of posts examining the question – what is left of Marxism, as a way to understand the world, and as a way to change it, once it is accepted that capitalism is not going to be overthrown by a working class revolution. Last time I talked about class. This post is about crisis. As before, the shorter JQ is “there are lots of valuable insights, but there’s a high risk of political paralysis.”

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June 23rd, 2011 4 comments

On the right hand sidebar you can see my latest fundraiser, a half-marathon run where I’ll be supporting the Queensland Cancer Council. It’s tax-deductible and there’s still time to donate before June 30, so you get the refund straight away (or, to think of it differently, you can give twice as much as you planned, and the government will pay half).

As I said last time, the deal with this fundraiser is that I’ll commit to a minute below two hours for each $1000 I can raise. We’re just about there for the first $1000, so to hurry things along, I’ll put in $100 of my own if the total gets past $900 by the end of tomorrow (Friday) evening.

Categories: Life in General Tags:

A soulless Labor vision

June 23rd, 2011 30 comments

My column from the Fin, on the latest call for Labor to abandon everything but the kitchen sink is over the fold.

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Categories: Oz Politics Tags:

Monday Message Board

June 20th, 2011 57 comments

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

Categories: Regular Features Tags:

Marxism without revolution: Class

June 19th, 2011 48 comments

I’ve mentioned Erik Olin Wright’s Envisaging Real Utopias a couple of times, and I’ve also been reading David Harvey’s Enigma of Capital and Jerry Cohen’s if You’re an Egalitarian How Come you’re so Rich. In different ways, all these books raise the question: what becomes of Marxism if you abandon belief in the likelihood or desirability of revolution[1]? To give the shorter JQ upfront, there are lots of valuable insights, but there’s a high risk of political paralysis.

I plan alliteratively, to organise my points under three headings: Class, Capital and Crisis, and in this post I’ll talk about class

Read more…

Categories: Politics (general) Tags:

The poor have ye always with you

June 17th, 2011 21 comments

There was a time when Labor’s aim for the poor and disadvantaged was to end poverty and disadvantage. Now the best they can hope for is “extending opportunity“. Even equality of opportunity is a step too far it seems.

Categories: Oz Politics Tags:

Families slugged by NewsCorp Innumeracy #NewsCorpFail

June 14th, 2011 58 comments

According to Steve Lewis in the Daily Telegraph

CONSUMERS will be slugged with price rises on everyday items like milk, cheese, chocolate and pizza’s as the carbon tax puts the squeeze on retailers and producers

(the apostrophe in pizza’s suggests News may have cut the subediting budget a bit too far). He illustrates with a picture of a mother of three who is currently paying $300 a fortnight for groceries.

Steve can’t say how much, and neither can his sources, though they are happy to give scary quotes. So, instead he quotes some big-sounding numbers derived from the Dept of Climate Change analysis. Woolworths, for example, will pay around $73 million a year in higher electricity costs. That certainly sounds like it would put a dent in the household budget. As the old saying has it, a million here, a million there, pretty soon you’re spending real money. That’s where Lewis leaves the story

But those of us capable of primary school arithmetic can take things a little bit further. There are 20 million or so people in Australia, so the cost amounts to aroun $3.50 a year, or 7 cents a week for us. For the archetypal (if unrepresentative family of four) that’s around 30 cents a week or 60 cents a fortnight (an increase of 0.4 per cent for the mother in the example). Looking at the illustrative photo, that’s rather less than the difference between the Kleenex tissues in the shopping trolley and the home brand alternative.

For a validity check on the impact, we could look at Woolies’ total sales of around $18 billion a year. A cost increase of $73 million is approximately 0.4 per cent. Of course, this doesn’t really get to the right answer either, because it doesn’t take account of changes in the wholesale cost of goods (so-called Scope 3 emissions).

But doing the analysis at an aggregate level fixes this pretty well. A tax at $26/tonne will raise around $10-$12 billion, depending on exemptions and particularly on the treatment of petrol. That’s about 2.5 per cent of total household expenditure on goods services, meaning that the gross impact of the carbon tax will be about a quarter that of the GST (note however, that the GST was offset, for goods, by the removal of Wholesale Sales Tax). The increase will be greater than this for energy services (electricity, gas and so on), and therefore must be less on non-energy goods. Overall, it’s safe to predict that the impact on grocery bills and similar items will be around 1 per cent.

Over the fold, I’ll do the cents per week exercise for all of Lewis’ examples when I get a moment

Categories: Media Tags:

Monday Message Board – Queens Birthday Edition

June 13th, 2011 33 comments

Time for another Monday Message Board, but we’re enjoying a long weekend, at least in Brisbane where the miserable weather of last week, forecast to continue for several days more, has disappeared. I’d welcome thoughts about the monarchy, honours lists and so on, and would also be interested to hear from readers affected by the volcanic ash clouds.

I’m tightening up on the civility rules and will, from now on, delete anything I regard as personal criticism of another commenter, along with coarse language. As usual, save long rants, extensive debates with other commenters, and repetition of old themes for an appropriate sandpit.

Categories: Regular Features Tags:

Reasons to be cheerful, part 2

June 11th, 2011 77 comments

There are plenty of reasons to be gloomy about the prospects of stabilising the global climate, but there are also some promising developments, so I’ve started a series on this topic.

I’ve been meaning to write this post for a while, but Stephen Lacey at Grist (via David Spratt on Twitter) has done much of the job for me, and better than I could have. The crucial point is that the cost of solar photovoltaic electricity has fallen dramatically and is almost certain to fall further. In particular reaching the point where it is the cheapest large-scale alternative to carbon-fuelled electricity generation, and competitive (at reasonable carbon prices and in favorable locations) with new coal-fired power.

This makes for some fundamental changes in the debate over climate change and mitigation, even as it reaffirms the central point that advocates of mitigation have made all along, namely that, with an appropriate policy response, the costs of drastic reductions in carbon emissions will be modest in relation to national or global income.

Read more…

Categories: Economics - General, Environment Tags:

Giving one per cent

June 9th, 2011 7 comments

While we are on the subject of charitable giving, a reader has sent in a link to the Giving one percent website of a non-profit group trying to create a culture of charitable giving. Well worth a visit!

Categories: Life in General Tags:

UnFunRun fundraiser

June 9th, 2011 13 comments

It’s been a while since we’ve had a fundraiser here, but a great opportunity has just come up. I’ll be attempting a half-marathon as part of the Brisbane Running Festival on 7 August, and there’s an associated fundraiser for the Queensland Cancer Council, which promotes research, awareness and support services. So, I’ve created a webpage for my effort here, where you can donate money (before June 30 if you want to claim it in this year’s tax return!).

A good fundraiser needs a good gimmick, so here goes. I completed my first[1] half-marathon run a week ago, in a time of 1:59:24, staying just ahead of the 2:00:00 pacerunner (someone who runs with a balloon or flag at a steady pace so others can keep pace) the whole time. I was pretty tired and sore by the time I finished – it’s not what you would call a fun run! This time, I want a commitment device to push me to run at 1:55 (or even better!). So, for each $1000 I can raise before race day, I’ll commit my best effort to stay a minute ahead of the 2:00:00 pacerunner. If I can raise $5000, I’ll run at the 1:55 pace as long as I can[2]. And, if there’s $10 000, I’ll try for 1:50, which will really push me to the limit.

I’ll start the ball rolling by promising to give $200 for each minute below 2:00 hours. So, you only need to give $800 to push my time down.

This is a great chance for everyone. If you enjoy the free commentary I’ve provided, please say thanks by giving whatever you can afford. If I’ve annoyed you, toss some money into the pot, and you can enjoy a Sunday morning lie-in thinking about me struggling to keep a punishing pace (at least for a middle-aged academic) over 21.1 km.

I’ll provide regular updates, and thanks to contributors, except for those who prefer to give anonymously.

fn1. I also did one in 2010, but I had to walk a fair bit, so I don’t think it counts.
fn2. No guarantees, as I’ll slow down if I’m feeling knee damage, but I’ll do my best to push on through exhaustion.

Categories: Life in General Tags:

Own goals

June 9th, 2011 15 comments

One great thing about soccer, at least for me, is that it is possible, and (by contrast with other sports where this can theoretically occur) relatively common, to score for the other side[1], thereby giving the language the phrase “own goal”. While not an own goal, I certainly had a missed shot with my prediction back in 2007 that the Liberals would never win another federal election. Technically, I’m still in the clear – the prediction that they would merge with the Nats before regaining office was right for the Queensland parties and may turn out correct at the national level – but the underlying analysis posited that Labor would remain politically dominant at both the Federal and State (except NSW) level for years to come. That prediction was derailed by a spectacular series of own goals on the part of the Labor Party, including

* WA Premier Carpenter’s decision to allow ministers to resume contact with Brian Burke
* The NSW government’s suicidal pursuit of electricity privatisation, thereby turning a defeat that was already inevitable (given past own goals) into a rout
* The Bligh government’s similarly suicidal program of asset sales
* Federal Labor’s dumping of the ETS, followed by the dumping of Kevin Rudd

While there is no particular disaster to explain the narrow defeat of the Victorian Labor government, spillovers from the Federal level probably did enough damage to make the difference.

But after only a short period in office, it seems that both the NSW and Victorian Coalition governments are scoring own goals on a regular basis. In Victoria (as at the Federal level) there have been huge blowups over senior ministers missing Parliamentary votes. And NSW Premier Barry O’Farrell, having campaigned as cuddly and unthreatening, made a huge mistake when he tried to retrospectively reduce the feed-in tariff paid to people who had, in good faith, invested in the previous government’s solar PV scheme. He followed that up by ramming through Parliament anti-union legislation that had not been mentioned in the campaign. Given how far Labor’s stocks have sunk, mistakes like this probably won’t be crucial. But a government that manages to mess up what should be its honeymoon period is unlikely to last for long.

For political analysis, the “own goals” phenomenon presents a serious problem. If you want to estimate things like election outcomes you have to work on the basis of things that are more or less predictable, like economic conditions, ideological positions and so forth. Implicitly, this assumes that politicians do the best they can to win, given the objective circumstances. But if political outcomes are driven primarily by unforced errors like those I’ve mentioned, then predictability goes out the window.

fn1. In Australian football, it is, for course, very common to rush the ball through your own goal for a behind, scoring 1 point for the other side, but preventing a goal worth 6 points.

Categories: Oz Politics Tags:

The innumeracy of the right

June 7th, 2011 37 comments

I wrote a while ago that most of the denialists touting the line that “there has been no statistically significant warming since 1995″ wouldn’t know a t-statistic if it bit them[1]. There’s an even better example in the Letters page of today’s Fin, where JL Goldsworthy of Woorim writes “A carbon tax will save about 0.00001 per cent of anthropogenic emissions, if that”.

We can easily check this estimate. Australia is currently responsible for about 2 per cent of global emissions, and the carbon tax is intended to reduce emissions to 5 per cent below 2000 levels (a target that Tony Abbott also ostensibly supports). Business as usual growth will be at least 25 per cent, so the policy goal is an emissions cut of 30 per cent. Primary school arithmetic tells us that 0.02*0.3 = 0.006 or 0.6 per cent. That is, JL Goldsworthy of Woorim is out by a factor of 60 000.

While this is an extreme case, it’s pretty much routine for the rightwing side of the climate debate. Ludicrous numbers like Goldsworthy’s can be found on just about any rightwing blog you care to visit. I’ve pointed out similarly massive errors by Andrew Bolt, Greg Hunt and Terry McCrann among others.

And they don’t care. The point of the debate is not to get things right but to keep up a steady supply of talking points so that those who have been sucked in by the delusions their opinion leaders spout never catch up with the refutations.

Update Unsurprisingly, this number appears to come from the ludicrous, but dangerous, Alan Jones, already notable for the corruption of Cash for Comment, and for his promotion of race riots, thankfully a rare phenomenon in Australia. It’s hard to say anything good about Jones. But the “respectable” right, exemplified by David Flint and John Howard, embrace and defend him. And not a single self-described “sceptic” has tried to correct this absurd and dishonest claim. If there is a single person on the anti-science side of the debate who cares in the slightest for truth, this is an ideal opportunity to step forward – Bob Carter, Ian Plimer, Don Aitkin and William Kininmonth come to mind as candidates.

fn1. The minority who do know what statistical significance means, and keep circulating this spurious (and now factually false) talking point are even worse. I’ll come back to them in another post.

Categories: Environment, Politics (general) Tags:

Neo- and post-

June 7th, 2011 22 comments

At afternoon tea yesterday, one of my colleagues raised the point that, particularly in Europe, the prefix neo- is automatically taken to be pejorative, with neo-liberal as the obvious illustration. It struck us that the corresponding, positively weighted prefix is post- , as in post-Keynesian, post-Communist and so on. [1]

My thought on this is it reflects an underlying progressivist assumption, shared even by many people who would reject explicit claims about historical progress. Given this assumption “post-X” is good, since it represents an advance on X, while “neo-X” is bad since it represents a reversion to X, implying the existence of some Y which must be post-X.

Feel free to provide counterexamples, contrary explanations and so on.

Categories: Life in General Tags:

When will US debt be downgraded? By how much?

June 5th, 2011 20 comments

The once unthinkable prospect that US government debt might lose its AAA rating has suddenly become a real possibility. In fact, it now seems about as likely as not. The problem is not so much “can’t pay” but “won’t pay”. The US, like quite a few other countries, has some fairly serious fiscal imbalances, but they aren’t pressing in the short run, and there is plenty of capacity to raise additional revenue or cut spending so as to stabilise the ratio of debt to GDP at a sustainable level.

The problem is that even with a stable debt/GDP ratio the total value of outstanding debt keeps growing and the US Congress requires periodic votes to approve this. They are usually the occasion for some grandstanding, but this time the Republican majority of the House of Representatives is seriously threatening a refusal, unless the Democrats agree to massive (and still unspecified) spending cuts. The due date for raising the debt ceiling passed a while ago, but an actual default is being staved off by some sharp accounting tricks, which will apparently work until 2 August. The other day, to prove they are serious, the Repubs introduced a motion for an increase in the debt ceiling, with the express purpose of voting unanimously against it, which they did.

At this point, loud alarm bells have started ringing for the big ratings agencies, Standard&Poors and Moodys. They will have to decide, well before August, whether to downgrade US government debt and if so by how much.
Read more…

Categories: Economics - General Tags:

Weekend reflections

June 3rd, 2011 54 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, and restatements of previous arguments, as opposed to substantive new contributions, to the sandpit(s). In particular, please post nothing related to nuclear energy. As always, civilised discussion and no coarse language please.

Categories: Regular Features Tags:

Giving up on the Murray Darling Basin

June 3rd, 2011 15 comments

The Risk and Sustainable Management Group, which I lead at the University of Queensland, launched our Annual Report for 2010 last night (link to large PDF coming soon). I’ll quote from the Foreword

As 2009 drew to a close, it seemed reasonable to expect that 2010 would see a resolution of the Australian political debate over the two environmental issues central to the work of the Risk and Sustainable Management Group: climate change and the management of the Murray–Darling Basin.

In the event, neither of these issues was resolved. The bipartisan agreement in support of an emissions trading scheme collapsed, and the policy was abandoned by the government. Following the August 2010 election, the government restated its support for a carbon price, but the main short-term focus was on the idea of a carbon tax.

Developments in water policy were equally confused. Under the Water Act 2007, passed by the Commonwealth Parliament with bipartisan support, the Murray Darling Basin Authority (MDBA) was required to produce a plan for the sustainable management of the Basin. The release of the Basin Plan was delayed by the election. The MDBA produced a Guide to the Proposed Basin Plan in October 2010 which met with a very hostile response, with copies of the Guide being burned at public meetings of irrigators. The Draft Plan is still under development.

I’m feeling a bit more hopeful about carbon prices than when I wrote that. Labor, Greens and the Independents seem to be holding together, and the public debate shows some increasing recognition that Abbott is an opportunistic hack and that while preferring prejudice to science may make for good talkback radio, it is not a good basis for public policy.

By contrast, the situation regarding the Murray Darling Basin has gone from bad to worse to pretty much hopeless. We had everything needed for a plan that made just about everyone better off: more water for the environment, a good deal for farmers who wanted to switch out of irrigation, no compulsory acquisition, and enough spare money sloshing into country towns to more than offset any reduction in agricultural output. Instead, the process was spectacularly mishandled, most notably by the Murray Darling Basin Authority, who managed to scare everyone into thinking the government was about to confiscate their water. That handed power back to the most reactionary irrigator lobby groups who just want to stay on the old, unsustainable, path as long as possible, while extracting as much money as they can from the public purse. The release yesterday of the Windsor Report suggests that they will get their wish. The central point of the report is that the government should abandon all “non-strategic” purchases of water, while pouring even more money into so-called “water-saving” schemes, which will cost 5-10 billion while delivering little if any additional water.

Perhaps there is a way back from this but I can’t see it at present. For the next couple of years, at least, I plan to give up (or at least scale down) my work on the Basin and focus on more tractable problems like stabilising the global climate, saving the Great Barrier Reef and fixing financial markets.

Categories: Economic policy, Environment Tags:

Why the global carbon price should probably be around $50/tonne (nerdy/wonkish, but not too difficult, I hope)

June 2nd, 2011 48 comments

One of the big frustrations with trying to follow the debate on climate change is that most of the key questions are best answered with large, complicated models. Learning enough to assess these models in one subject area, even in general terms, is a huge task, and learning the details of any particular model is a full-time occupation. But, if we are going to make any real progress, we need numbers we can understand. It seems hopeless, but it isn’t entirely so. One thing I learned very early on about modelling is that, for almost any large complicated model, there’s a small simple model that gives much the same answers to the key questions of interest, if you use it correctly, and choose input parameters consistent with those in the big model. The big model (if it’s a good one) imposes consistency conditions you might miss in a simple model, and also gives detailed answers to lots of more specific questions, but a lot of the time, you can do without that. I’m writing a paper at the moment, trying to answer some of the important in a way anyone can check without spending years mastering a big model.

The biggest question of the moment is: what is the right price for carbon? I’m going to look at this question for the world as a whole, disregarding national differences and so on. If you’ve read the title of the post, you’ll know what answer I reach.

Read more…

Categories: Environment Tags:

Garnaut summary and responses

June 1st, 2011 85 comments

I’m going to use this post to put down a summary and some responses to the final Garnaut Review as I read it. Comments welcome, but may become obsolete as the text changes.

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Categories: Economics - General, Environment Tags:

Unfair exchange

June 1st, 2011 21 comments

Ten years or so ago, the Australian dollar was worth about 50 US cents on foreign exchange markets. I bet a small amount with a colleague that within five years, $A would have achieved parity. My reasoning was simple, elegant and wrong. By most estimates, the Purchasing Power Parity exchange rate[1] is around $A1.00 = $US0.70, so the Australian dollar was undervalued by around 40 per cent. It seemed to me that, within five years or so, the deviation should have not only been corrected but overshot in the other direction, giving a rate near parity.

I should have considered more carefully the saying, apocryphally attributed to Keynes, that the market can stay irrational longer than you can stay solvent. If deviations from PPP corrected within five years, speculators would bet on this happening, and the deviation would not be sustained at all. So, if PPP is false, it must stay false for long periods.

And that’s what’s happened. The Australian dollar has been above parity for some months now, and shows no sign of falling.

That raises some interesting questions. I’ll put up a few over the fold, and maybe update them as I go

Read more…

Categories: Economics - General Tags: