Archive for October, 2011

Irresponsible bosses

October 30th, 2011 195 comments

I’m out of the country at the moment, and possibly missing some nuance. On the other hand, I’m old enough to remember the ill-will the unions built up in the 1970s, with snap stoppages designed to inflict maximum disruption on the public and thereby maximise pressure on employers to settle quickly and on the government to broker a solution. The announcement, without warning, of a lockout by Qantas seems to be straight out of the same disastrous playbook. Even if it works, it must surely kill off any political goodwill for Qantas in the future, or at least as long as the current management is in charge. That’s bound to be costly given the importance of political decisions on things like landing rights for airlines, and the favourable treatment Qantas has had in the past (partly a leftover of its days as a national flag carrier).

Can anyone make a case that Joyce’s action makes sense?

Categories: Oz Politics Tags:

Keeping the state out of your bedroom

October 29th, 2011 172 comments

A standard theme in (propertarian) libertarian thinking is that personal freedom in matters such as choice of sexual partners goes naturally with economic freedom, defined as the lack of state interference with property rights. To summarise this in a slogan, “If you want to keep the state out of your bedroom, you should support keeping it out of your (and others) business as well”.  But this is not only a false equivalence, it’s self-contradictory, as can be seen by example.

Suppose A rents a house from B, who requires, as a condition that no-one in class C (wrong race, religion, or gender) should share the bedroom with A. Suppose that A signs the lease, but decides that this contractual condition is an unreasonable violation of personal freedom, and decides to ignore it. B discovers this, and seeks the assistance (or at least the acquiesence) of the state in evicting A. On a propertarian/contractual view, B is in the right, and is entitle to call in the state into the bedroom in question.

And, this is the fundamental problem. Is it A’s bedroom or C’s? If we understand the phrase in its normal sense, no-one including a landlord, has the right to tell you what to do in your own bedroom. But, from a propertarian viewpoint, C’s ownership rights over the bedroom, derived from and ultimately enforced by, the state, trump all other considerations.

Of course, this example stands in for many others like this one

If you really want personal freedom, you can achieve it only by constraining property rights.

Posted via email from John’s posterous

Categories: Economics - General Tags:

Wrong turn for the right

October 29th, 2011 13 comments

That’s the title of my column in Thursday’s Fin, over the fold

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Categories: World Events Tags:

Expansionary austerity: some shoddy scholarship

October 25th, 2011 28 comments

I’ve just read ‘Tales of Fiscal Adjustment’ by Alesina and Ardagna, which appears to be the founding text for the idea of expansionary austerity. The level of scholarship, at least as it applies to Australia (which is their first illustration) is exceptionally poor, to the extent that it requires a rescuscitation of the ancient Internet tradition of Fisking. I’m going to quote excerpts from their text (about 50 per cent of the total), and intersperse them with my comments.

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Categories: Economics - General Tags:

The 6-6-6 plan

October 25th, 2011 37 comments

Inspired by Michelle Bachmann, I’ve been thinking about what a 6-6-6 response to Herman Cain might look like. Being multiply disqualified from seeking election to the US Presidency, I decided to put in as much work as Cain and his team appear to have done, but no more. Hopefully, the magic of crowdsourcing will turn this into a comprehensive blueprint. So, here are the basic goals, and over the page, some of those devilish details.

The aim of the plan would be
(a) Reverse pro-rich and anti-worker policy changes of the past three decades to reduce, by 6 percentage points, the share of market income going to the top 1 per cent.
(b) Increase, by 6 percentage points of national income, the personal income tax revenue raised from the top 20 per cent of the income distribution
(c) Reallocate, or use more efficiently, current public expenditure equal to 6 per cent of national income

The aim would be to raise post-tax incomes for those in the bottom 80 per cent of the income distribution by around 20 per cent, while making around 10 per cent of national income available for new or better public expenditure.

For reference, US national income is currently around $13 trillion, so 1 per cent is $130 billion.

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Categories: Economics - General Tags:

Has the US Defense Department killed a million Americans since 2001?

October 21st, 2011 54 comments

I’ve spent the day at a workshop on benefit-cost analysis where a lot of discussion is on valuing policies that reduce risks to life of various kinds.  US policy, for better or worse, is focused on  the idea of Value of a Statistical Life. Typically a policy that reduces  risks of death will be approved if the cost per life saved is below $5million, and not otherwise.  (There are similar numbers applied to publicly funded health care services, prescription  drugs and so on, usually per year of life saved).

A striking thing I found out is that anti-terrorism policies of the Department of Homeland Security are subject to  the same benefit-cost requirements as EPA  and Transport. But Homeland Security is only one way  the  US  government spends money with the aim of protecting Americans against attacks from terrorists and other enemies. Defense spending is far bigger and not subject to BCA, even though money spent on defense is money that can’t be spent on reducing terrorism risk through DHS or more reliably on reductions in environmental, health and transport risk

The numbers are quite striking. The ‘peacetime’ defense budget is around $500 billion a  year, and the  various wars of choice have cost around $250 billion a  year for  the last decade (very round  numbers here). Allocated to domestic risk reduction, that  money would save 150 000 American lives a year.

So, since 9/11, US defense spending has been chosen in preference to measures that would have saved 1.5 million American lives. That’s not a hypothetical number – it’s 1.5 million  people who are now dead but  who could have been saved. I think its fair to say that those people were killed by the Defense Department, or, more precisely, by the allocation of scarce life-saving resources to that Department.
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MLK and non-violent protest

October 19th, 2011 79 comments

Yesterday in DC, the Martin Luther King memorial was officially inaugurated. I was lucky enough to be invited to a lunch celebrating the event afterwards, where the speakers were veterans of the civil rights movement Andrew Young, John Dingell, and Harris Wofford. Video here

There were some interesting recollections of Dr King and his struggles, but not surprisingly, much of the discussion focused on the events of today, particularly the Occupy Wall Street movement. One of the speakers made the point that the Tahrir Square occupiers had been inspired by the example and ideas of Martin Luther King.

Now, of course, the circle has been closed with the example of Tahrir inspiring #OWS. There has been more direct inspiration too. When I visited the Washington occupation in McPherson Square to drop off some magazines for their library, I picked up a reproduction of a comic-book format publication of the civil rights movement (cover price, 10 cents!), describing the struggle and particular the careful preparation given to ensure a non-violent response, even in the face of violent provocation.

And that brings me to the question I want to discuss, one that is as relevant today as in the civil rights era.  When is violence justified as a response to manifest and apparently immovable injustice? My answer, with Martin Luther King is: Never, or almost never.[1]

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Categories: Economics - General Tags:

Tea Party didn’t mind bailing out Wall Street, only Main Street

October 19th, 2011 21 comments

My Fin column from last week is over the fold. It’s mainly about the Occupy Wall Street protests, but in this post I want to stress a misleading comparison with the Tea Party. It’s often suggested that the Tea Party arose in response to the bailout of Wall Street, and until I checked, I had somewhat accepted this claim, even if it was obvious that the protest served the interest of its supposed targets.
In reality, though, there is no truth at all to this claim. To quote from the article

The first Tea Party protests were held in February 2009, shortly after the inauguration of President Obama, and four months after the Bush Administration bailed out the banks. The event that did most to drive the Tea Party protests was a rant delivered by journalist Rick Santelli from the floor of the Chicago Mercantile Exchange. To the cheers of traders, Santelli denounced bailouts, but not the bailout of the financial sector. His ire was directed against attempts to help struggling homeowners refinance mortgages taken out during the real estate bubble.

I used to see the Tea Party as having had some genuine elements, but co-opted by Wall Street and the Repubs. Now, it’s clear that Repub activists ran the show from day one. Some individual participants may have been sucked in by anti-bailout rhetoric but the organizers were on the side of the 1 per cent all along.

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Categories: Economic policy, World Events Tags:

Money for nothing?

October 18th, 2011 91 comments

Whenever I write anything about public expenditure and taxation, I’m likely to get someone commenting that Modern Monetary Theory has shown that a government with its own currency does not need taxation to finance public expenditure. I’ve tried a couple of responses to this, but now I think I can explain better why this argument is
(a) wrong in terms of (what I understand to be) the central claims of MMT
(b) regressive in terms of taxation policy
(c) politically pernicious
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Categories: Economics - General Tags:


October 14th, 2011 340 comments

One of the most striking successes of the Occupy Wall Street movement has been the “We are the 99 per cent” idea, and more specifically in the identification of the top 1 per cent as the primary source of economic problems.

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Categories: Economics - General Tags:

Let’s hear it for a hung parliament!

October 14th, 2011 63 comments

Two great outcomes in successive days[1], and neither would have happened without a hung parliament. I never accepted the horror with which many commentators viewed the election results (after all, minority governments have been common at the state level and have generally worked fine), but now I’m a positive enthusiast. It would be a pity if the independents who supported the government are punished by their electors – I’d say we need more independents of all kinds as a check on the executive power of the PM and the majority party
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Categories: Oz Politics Tags:

A long time coming …

October 13th, 2011 62 comments

… but the legislation for a carbon tax/fixed price emissions scheme has finally passed the House of Representatives, and is assured of passage through the Senate. Assuming the government can survive that long, it will come into force at the beginning of 2012-13.

Before any analysis, some (qualified) congratulations are in order. The Greens (with my support at the time, for what that was worth) took a big gamble in rejecting the badly-compromised Rudd-Turnbull deal, and have contributed to the passage of a much better bill now. Still, it turned out to be a long-shot. If the Gillard government had either won an absolute majority or lost to Tony Abbott, there would be no carbom tax. Kevin Rudd laid a lot of the groundwork, but failed to call a double dissolution, which he would surely have won, when the first version of the emissions trading scheme was blocked. Malcolm Turnbull has been a voice of sanity throughout, but still voted the party line. Last but not least, Julia Gillard, having almost succeeded in killing the whole idea in 2010 demonstrated her skills in getting an exceptionally contentious piece of legislation through, despite disastrous polls and the most fragile conceivable majority.

Now, a bit of a look towards the future

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Categories: Environment, Oz Politics Tags:

Gillard on equal marriage rights

October 8th, 2011 117 comments

In the event that Julia Gillard lasts as PM until December, she’ll presumably be faced with a resolution making equal marriage rights part of Labor policy. Gillard’s handling of this issue is emblematic of her disastrous leadership in general – simultaneously unprincipled, unconvincing and politically unsuccessful.

Unlike our PM, I’m just old enough to remember when the phrase “living in sin” could be used with a straight face to describe living arrangements like hers. So, I find it hard to believe that her stated opposition to equal marriage rights is sincere (unlike with Kevin Rudd). Rather it’s the result of the kind of political calculation standard on the right wing of the Labor Party (see also Kristina Kenneally), in which the ‘real’ Labor voter is typecast as an aspirational bogan[1] whose views on social issues are unchanged since the 1950s. The key text here is Michael Thompson’s Labor without Class. There’s no evidence for this – views on social issues in Australia are largely uncorrelated with social class.

Allowing that some Labor voters are socially conservative, Gillard’s strategy is still politically stupid. Given the desperate state of the polls, she can’t hope to win by caution on an issue like this. It’s probably too late now, but a strong stand in favor of equal marriage rights might have done something to stop the drift of Labor voters off to the Greens, independents or the kind of apathy that makes it easy to shift to the Liberals, given an attractive promise or two.

fn1. To be boringly clear, I don’t use or endorse the term “bogan” to describe anybody. But the stereotypical image of a bogan coincides perfectly with the Labor Right view of Labor voters.

Categories: Oz Politics Tags:

Wegman plagiarism case: GMU jury out to permanent lunch

October 8th, 2011 36 comments

It’s been eighteen months since George Mason University began an investigation into allegations of plagiarism by Edward Wegman and his co-author Yasmin Said. Wegman and Said became famous for writing, at the invitation of anti-science Republican Joe Barton, an attempted takedown of the work of Mann and others on the “hockey stick” increase in global temperatures observed over the 20th century. Along with the statistical “analysis’, the report included a ludicrous foray into network analysis. Unfamilar with the field, Wegman and his co-authors cribbed extensively from Wikipedia, something that has turned out to be common pattern in his work.  They were silly enough to submit it for publication in a journal with a friendly editor, leading to a highly embarrassing retraction.

Now there’s yet another piece of Wikipedia cribbing, reported by Dan Vergano in USA Today, with more from Andrew Gelman and Deep Climate who, along with the redoubtable John Mashey, have done most of the hard work in this case

The big question is how long GMU can keep on getting away with doing nothing. They ignored a critical editoral in Nature in May, and it looks as though they will keep on doing nothing unti some external agency forces them to move (or perhaps Wegman will decide to retire and render the case moot for them).

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Categories: Economics - General Tags:


October 7th, 2011 34 comments

Another sandpit. You know the drill.

Categories: Regular Features Tags:

Weekend reflections

October 7th, 2011 8 comments

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please

Categories: Regular Features Tags:

Time for a Tobin tax

October 5th, 2011 63 comments

There’s been a lot of discussion about the need for concrete demands from the #AmericanAutumn #OccupyWallStreet protests.

I just want to toss up the wholly unoriginal idea of a tax on financial transactions, originally proposed by James Tobin (he focused on international transactions, but the distinction is no longer meaningul). I’ve seen a sign advocating this on one of the videos of the protest, but I think it deserves more attention, for a bunch of reasons

* It’s directed squarely at Wall Street

* It’s global in its orientation

* It doesn’t require complicated structural change, as would a return of Glass-Steagall

* There’s an existing global movement supporting it

* It’s on the elite policy table right now, with support from the EU

* It would potentially raise substantial revenue, while greatly reducing the volume of short-term financial transactions

Here’s a  a piece I wrote about not long ago in Politics and Society and an older article on the Tobin tax, and over the fold some notes I prepared for our Parliamentary Library a few years back

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Categories: Economics - General Tags:

Tahrir in Wall Street

October 3rd, 2011 55 comments

It’s time to talk about the Occupy Wall Street movement. As with the movement itself, I have more enthusiasm than analysis to offer at this point. I’m in Washington DC at present and i went to a (very small) meeting [1] a couple of weeks ago which was part of the planning for a similar protest starting on 6 October (more info here). Things have certainly grown since then, and it could be quite a big event.

In the generally undirected spirit of the movement, here is an open thread for your comments, predictions and so on.

fn1. As a visitor to the US, I’m not actually involved in the organization, but I was interested to hear about it and sympathetic to what I heard. Those at the meeting seemed more ordinary, and of all ages, compared to the media images of ragtag youth at the Wall Street protest.

Categories: World Events Tags:


October 3rd, 2011 2 comments
Categories: Economics - General Tags:

Cut your energy bills in half

October 1st, 2011 46 comments

A newspaper story I once read (almost certainly apocryphal) claimed that advertisement to this effect asked for a small payment in return for a guaranteed method of cutting energy bills in half. If you paid up, you received, by return mail, a pair of scissors.

A more serious version of this question occurred to me in relation to yet another dispute about the allegedly special character of energy as a commodity. It occurred to me to ask the following question: suppose that my family and I had to reduce my personal energy consumption, immediately and permanently by 50 per cent. How feasible would it be, and how much worse off would we be? So, assuming we attempted it evenly across the board, this would mean

* Reducing car travel by 50 per cent, until we could get a more fuel-efficient car, or share rides
* Reducing lighting by 50 per cent, until we could get more energy-efficient lightbulbs
* Reducing air travel by 50 per cent, until airlines introduced more fuel-efficient planes
* Reducing use of airconditioning and central heating by 50 per cent, either by turning it off half the time or by adjusting thermostats
* Reducing use of existing consumer durables and purchase of new ones by 50 per cent, until substitutes with less lifecycle energy use became available

To make it a bit tougher, we might try to achieve bigger reductions in these areas, to offset various forms of indirect energy use, such as the energy used in food production.

My assessment is that this would be very difficult. But do some comparisons, and it looks easy.

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Categories: Environment Tags: