Archive for February, 2012

Death wish

February 29th, 2012 67 comments

A couple of days after Labor united behind Julia Gillard, allowing her to implement her commitments, we get
this (somewhat belatedly denied) and

Meanwhile, in Queensland, Labor is marching towards a defeat that has been inevitable ever since Bligh’s post-election announcement, in 2009, of a massive, and economically unjustified program, of asset sales. Despite the fact that most of them are going to lose their seats, and that the policies violates both election commitments and Labor policy, hardly a single member of the Labor Caucus has opposed this, or even dissented from the retribution dealt out to the ETU and others who did stand up.

Categories: Oz Politics Tags:


February 28th, 2012 58 comments

A new sandpit for long side discussions, idees fixes and so on.

Categories: Regular Features Tags:

Monday Message Board (on Tuesday)

February 28th, 2012 7 comments

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

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Lasciate ogni speranza

February 28th, 2012 58 comments

In the wake of the Labor leadership ballot, I tried to think a bit about new directions for public policy in Australia. My conclusion, in short, is that there aren’t any. I’ve hammered the point that Gillard is a policy-free zone, and even her supporters haven’t pushed back on this. I have to concede though, that while Rudd’s challenge speech was impressive in many ways, he also failed to produce much in the way of new ideas.

The problem isn’t just one for social democrats and Labor supporters. Abbott is the worst kind of poll-driven populist, and Turnbull, the only person on the conservative side of politics who has anything resembling a clue has been permanently marginalized.

Finally, there’s the policy elite represented by the Fin, the Oz and the various establishment thinktanks and policy talkfests. After thirty years, they haven’t come up with anything better than the tired old 80s agenda of market-oriented reform, competition and productivity, encapsulated in Workchoices, rejected by the Australian public in 2007 and totally discredited by the GFC.

The Greens are the best shot, but under current conditions they can’t hope to do much better than their current role of supporting a minority government and/or holding the balance of power in the Senate. That gives them the chance to make a small number of non-negotiable deamnds (eg carbon price), and to exercise some influence. But in broader areas like economic policy, they remain marginal. Even though they have some good ideas, they aren’t treated as serious players in this field.

The best that can be said is that, as long as the terms of trade continue to boom, the cost of missed opportunities will not be all that great. Australia remains a lucky country, run by second-rate men (and now also women) who share its luck.

By contrast, US politics seems to be opening up to the ideas of the left, at the same time as the Repubs are spiralling off into the Delta Quadrant. All in all, a lot more color, interets and hope than the drab prospects before us.

Categories: Oz Politics Tags:

Rudd + Gillard = Rudd*

February 23rd, 2012 159 comments

A couple of points that have emerged in the debate over the Labor leadership need a response

First, there’s the claim that there are no policy differences between Rudd and Gillard. This is often presented as if the two had independently arrived at the same position. In fact, as the equation in the post title implies, it’s because Gillard is a policy-free zone. Her independent ventures into policy making amount to a disastrous set of pre-election moves on carbon policy (no tax promise, consultative assembly, cash for clunkers) and a series of failed attempts to resolve the asylum seeker problem. Now that the Rudd agenda has mostly been passed or abandoned, Gillard has no policies whatsoever, a point I made some time ago. Her abandonment of the Gonski report, which she used as an excuse for doing nothing when she was Education Minister, is typical.

Second, and with somewhat more justification, there’s the fact that Gillard has been successful in getting policy passed where Rudd failed. The unusual circumstance of a House of Reps minority has led most people to overstate the relative difficulty of Gillard’s task. She has needed the Greens and three of five independents, normally being Wilkie, Oakeshott and Windsor. Rudd needed the Greens, Xenophon and Fielding, which was obviously harder. It’s true that Rudd made the mistaken choice of freezing out the Greens and trying to negotiate with the Liberals, which made no sense given that the Greens were bound to hold the balance of power sooner or later. A more comparable test is that of asylum seekers, where Gillard has done no better than Rudd, arguably worse.

*This equation was allegedly written by a notable, but somewhat obscure economist with his own name in the place of Rudd, and that of a better-known researcher in the same filed in the place of Gillard

Categories: Oz Politics Tags:

It’s on

February 22nd, 2012 70 comments

A showdown over the ALP leadership, and therefore the Prime Ministership, has been inevitable for some time, and Kevin Rudd has finally brought it on, resigning as Foreign Minister in the face of direct personal attacks from Simon Crean (himself, apparently, a covert contender for the top job) and others.

Readers won’t be surprised to learn that I support Rudd. I have two reasons for this.

First, whatever his problems with interpersonal relationships and administration, Rudd is a serious leader with ideas for Australia’s future. Gillard has shown herself to have no ideas worth the name. Her policy agenda has consisted, almost entirely, of implementing policies introduced by Rudd.

Second, Gillard has totally lost the trust of the Australian people and if she leads the government to the next election, there is no chance whatsoever of a Labor victory. The result will be the election of Tony Abbott, someone who matches Gillard in terms of a lack of any consistent principles or concrete achievements, but adds to it a reactionary ideology and determination to undo the policies brought forward by (Rudd) Labor. Labor’s only chance of retaining office is to go back to Rudd.

Anyway, feel free to have your say

Categories: Oz Politics Tags:

Non-response on austerity

February 20th, 2012 36 comments

Robert Carling and Stephen Kirchner have a letter in today’s Fin, responding to my piece last week, which restated points I’ve made on the blog (for completeness, it’s over the fold). The letter is notable for not responding to any of my criticisms of Alesina, and for backing away from his previously unimpeachable authority.

John Quiggin’s criticism of us (“Tales of austerity ring hollow”, Opinion, February 16) warrants a response. We referred to Alberto Alesina’s work not because it is the only or last word on this topic, but because it is an example of a much larger literature in support of fiscal austerity (or less pejoratively, “fiscal consolidation”).

It is incorrect to suggest that the case for consolidation “rests largely on the work of Alberto Alesina”. We could also have cited a lot of other empirical as well as theoretical work, as indeed does Alesina himself.

A full examination of the International Monetary Fund and Organisation for Economic Co-operation and Development literature over the years reveals a more nuanced view than Quiggin suggests (not that the IMF or the OECD are the final arbiters anyway). We recognise nuances that we could not canvass in a 600-word article.

One is that the arguments about fiscal consolidation have to be tweaked depending on country circumstances and the credibility of the policymakers. Greece, for example, will suffer from fiscal consolidation, but that is partly the fault of the exchange rate straitjacket they are in.

But, in general, we stand by our basic proposition that fiscal consolidation is essential to the economic rehabilitation of countries with large budget deficits and unsustainable public debt burdens.

The only point worth noting is that the “pejorative” term “fiscal austerity” isn’t mine, it’s from the title of Alesina and Ardagna’s 1998 paper “Tales of fiscal consolidation: can austerity be expansionary”. If austerity is now a pejorative it’s because people know what it means, while “fiscal consolidation” remains a vaguely defined euphemism. Readers with a long memory may recall the US Repubs and Cato dumping “social security privatisation” in favor of “social security choice”

Read more…

Categories: Economics - General Tags:

Monday Message Board

February 20th, 2012 34 comments

It’s time for another 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:


February 19th, 2012 100 comments

There’s not a lot new to be said about the leak of documents from the Heartland Institute, revealing that the Institute was channeling funds from far-right billionaires and corporations to a large number of self-described sceptics, notably including our own Bob Carter, who’s apparently on a monthly retainer, despite his prior claims of independence. Carter is of course, linked to the IPA, which has a long history of rejecting science for cash, most notably in its decades of work (still continuing) for the tobacco industry.

A few points might be worth restating, though:

* As regards the way in which the documents came into the public domain (still unclear, but Heartland alleges they were tricked into emailing them to the wrong person), Heartland and most of their supporters have shown themselves, unsurprisingly, to be stinking hypocrites. Heartland was among the leaders in publicizing and promoting the use of misleading excerpts from private emails in what they and others called “Climategate”. Now they scream about “stolen” documents, backed up by lots of the usual suspects. There’s an amusing response, with which I agree entirely, from some of the scientists victimised by Heartland and its criminal allies in the past.

* There is no such thing as an honest climate sceptic. Those who reject mainstream science are either conscious frauds or gullible believers. I can confidently predict that of the thousands of “sceptics” who made great play of the CRU email hack, no more than a handful will change their views, either on the substantive issue or on the credibility of people like Carter and institutions like Heartland, over this. Those who aren’t, like Carter, on the payroll are credulous dupes. While many low-information “sceptics” have simply been misled by reading the wrong material on the Internet, or trusting the wrong sources, the great majority of active opponents of climate science are complicit in their own deception, preferring to believe obvious lies because it suits their cultural and political prejudices.

* It may be worth restating the absurdity of the claim that genuine scientists (unlike Carter) are motivated by money. Leaving aside the absurdity of the suggestion that the scientists make their career choice because they were after a highly-paid job, there’s the fact that mainstream climate science has the overwhelming endorsement of scientists in all fields. It’s certainly true that the global warming problem has meant more funding for climate science, but there’s only so much in the budget, and much of this money has come at the expense of other fields which are no longer given priority status.

Categories: Environment Tags:

CSG: Behind the seams project

February 17th, 2012 Comments off

Blogs have played a significant role in expanding access to public debate on all sorts of issues. But, by the nature of blogging, the contributions have tended to be spasmodic, depending on the time, interest and access to relevant information of individual bloggers. A group of us, kicked off by Mark Bahnisch and others at Larvatus Prodeo, and with hosting from Crikey, have started a project to provide information and a forum for discussion about Coal Seam Gas in the context of the Queensland election, where it’s likely to be a hot issue.

You can get more info, and donate to support the project, here

To try and avoid scatter, I’m not allowing comments on this post. Ideally, wait for the site to go up at Crikey. I’ll foreshadow, though, that I don’t support a position of blanket opposition to CSG, which is likely to be something of a minority view in this context.

Categories: Environment, Metablogging Tags:

The zombie economics of austerity in Australia (updated again)

February 16th, 2012 128 comments

Yesterday’s Fin ran a piece from Stephen Kirchner and Robert Carling of the Centre for Independent Studies, under the headline “Give austerity a chance” which was a pretty accurate summary of the contents. It’s paywalled, but you may be able to read it by clicking here. The piece relies almost exclusively on the work of Alberto Alesina and his colleagues, promoting the zombie idea of expansionary austerity. As I pointed out here, the most influential of these pieces by Alesina and Ardagna, is riddled with errors, at least as it applies to Australia.

Although Kirchner is a blogger himself, he and his co-author could be forgiven for missing my post. But Alesina’s work is probably the most-refuted piece of economic analysis put out (though never published in a peer-reviewed journal) in recent decades. It’s been demolished not only by the usual suspects like Krugman and DeLong (and me), but by the Economist, the IMF and even by one of Alesina’s own co-authors, Roberto Perotti.

Charitably assuming that Kirchner and Carling had managed to miss just about every publication on the question of austerity in the last year, could they not have spent 30 seconds with Google before hitting “Send”? A search on Alesina+austerity reveals a torrent of criticism, none of which they mention.

It is hard to know which is worse – the possibility that Kirchner and Carling, presented by the CIS as expert economists, were ignorant of all this, or the alternative hypothesis that they knew it and decided not to mention it. Either way, it’s an appalling breach of elementary standards of research.

I’m pretty sure the facts have been brought to the attention of Kirchner and Carling. The honest thing to do would be to write to the Fin pointing out that the work on which they relied was, at best, highly controversial. If Kirchner, Carling and the CIS are unwilling to do this, we can draw the conclusion that they cannot be trusted in anything they write.

Update Sinclair Davidson at Catallaxy has a lengthy reply, but the sole substantive criticism is that contrary to my parenthetical remark, Alesina and Ardagna did finally publish a peer-reviewed paper in 2010. But the work that was actually influential was done back in the 1990s. I’ll republish my blog post pointing out what a shoddy job that paper in describing developments in Australia. Davidson’s piece is notable for the lack of any substantive defence of Alesina’s work, and also for this , offered in response to my observation that the research in question had been comprehensively demolished by the IMF among many others

Fancy that – cutting edge research into a highly politicised aspect of public policy is “controversial”. Does Quiggin think AFR readers are so dumb they wouldn’t realise that?

So, next time you read an opinion piece from the CIS you can safely assume the caveat lector “This research is probably discredited, the authors almost certainly know it, but, if so, they’re not going to tell you”.

No one expects opinion pieces to be “fair and balanced”, but if you are going to rely on work that has been subject to serious and credible criticism, you should at least point out the main criticisms and (if possible) say briefly why you think they don’t stand up. As an example, Wilkinson and Pickett’s The Spirit Level produces some striking evidence of relationships between inequality and bad social outcomes.. This work has been subject to a lot of criticism, not fatal in my view, but enough that it needs to be mentioned. I did this when I cited the work in Zombie Economics and then at greater length here

Further update While still not disputing any of the substantive points I’ve raised, Davidson digs deeper on the question of whether the original Alesina and Ardagna work was published in a peer-reviewed journal. The work was published in Economic Papers, which does not take unsolicited submissions. Rather the editors commission pieces, or you can propose a piece to them. That is, this is, as the webpage says, a policy forum, not an academic journal. Standard practice for publications of this kind is for the editors to approve (or return for revision, or, very rarely, reject) the pieces they’ve commissioned. This isn’t peer-review in the normal sense. I’ve always assumed that Economic Papers follows the standard practice in this respect, but Davidson is welcome to check it out, if he cares enough.

As a PS, I couldn’t resist checking a 700-comment thread on the US elections. I shouldn’t link, but I will. While there is plenty of not-so-innocent amusement to be had, what struck me was that most of the commenters appear to be creationists – the handful holding up the flag for evolution are getting hammered.


February 14th, 2012 40 comments

A new sandpit for long side discussions, idees fixes and so on.

Categories: Regular Features Tags:

Monday Message Board (on Tuesday)

February 14th, 2012 42 comments

It’s past time for another 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:

Not Lake Wobegon

February 14th, 2012 26 comments

I haven’t been paying much attention to the Oz since it went behind the paywall, but I happened to pick up a copy of today’s paper edition, and came across a fascinating piece by Christian Kerr (who, IIRC, used to write for Crikey as “Hillary Bray”). Trying to talk up public opposition to equal marriage as a reason for Labor hesitancy to push hard on the issue, he cites a survey showing that around 25 per cent of Australians agree with the proposition homosexuality is immoral. Conscious that 25 per cent is, well, a minority, he decides to look at individual electorates.

What’s really striking is Kerr’s discovery that ‘In 80 of the 150 federal electorates, an above-average number of people support the proposition’. I did some quick math of my own, and it turns out that 80 is almost exactly half of 150. So, next time you see a sample estimate that doesn’t suit your case, be sure to check subsamples. You, too, may find that half of them are above the average.

Categories: Boneheaded stupidity, Oz Politics Tags:

Further adventures on Intrade

February 11th, 2012 38 comments

As I mentioned last time I wrote about my adventures on Intrade, I’m sceptical of the claim, a special case of the (semi-strong version of the) Efficient Markets Hypothesis, that the odds in betting markets provide the best estimate of the probability of political outcomes. I managed to double my small stake betting on Newt Gingrich, and might have made more if I had not overestimated the efficiency with which the Republican electorate processes information. I sold on the news of his work for Fannie Mae, and thereby missed the peak of the market when he won South Carolina.

Having made my point and learned a bit about the practical operation of markets, I meant to cash out my winnings, but that turned out to be a complicated process, and I couldn’t resist another flutter. Rick Santorum was trading at 100-1, and while I didn’t think much of his chances, those are pretty good odds in a four-horse race, especially one with no particularly attractive candidates.

He’s now 17.9 per cent (nearly 4-1 in the old language, if I recall it correctly), so I’ve now made a pretty substantial gain. There’s a bit of a cognitive consistency problem here – I didn’t really mean to make money backing Santorum, so now I need some suggestions as to an appropriate use for the money, one which would offset any damage done by backing him when he was down where he belonged. Orientation can be US, Australian or global.



Posted via email from John’s posterous

Categories: Economics - General Tags:

Expansionary austerity: some shoddy scholarship (repost)

February 10th, 2012 37 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.

Read more…

Monday Message Board

February 7th, 2012 25 comments

It’s time for another 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:

Startling news from the polls

February 5th, 2012 29 comments

In a piece that pretty much writes off Julia Gillard as PM, Laurie Oakes reports

ALP polling has produced a finding that has startled those around the prime minister.

It shows that, while only 30 per cent of voters plan to vote for the Gillard Government, 38 per cent describe themselves as Labor people.

The conclusion drawn from this is that the Government has to be seen as ‘more Labor’. It has to show more concern about, and become more identified with, things that are regarded as `Labor issues

Wow, how could anyone have predicted that?

Categories: Oz Politics Tags:

Republican idiocracy

February 5th, 2012 46 comments

As usual with my Fin columns, Catallaxy was straight out of the gate with a response yesterday. It was perhaps unsurprising as my piece mentioned climate change, and the Catallaxy crew includes a self-described “prominent scientist”, Alan Moran, a signatory of public letters attacking mainstream climate science.

In Catallaxy terms, however, Moran seems to be the designated hitter for those occasions when I write about the US political scene. Last time out, he was criticising me for “anointing” Romney as the likely winner – he preferred to discuss the bold tax plans of Herman Cain and Rick Perry. Now, he’s upset that I’ve “anointed” Jon Huntsman as the only Republican contender who seemed likely to beat Obama, ruled out because of his heretical (that is, pro-science) views on climate change.

Anyway, the column is over the fold.

Read more…

Categories: Boneheaded stupidity, Environment Tags:

Crikey Group Subscription

February 3rd, 2012 Comments off

Every year, Club Troppo econoblogger Nicholas Gruen organizes a group subscription to Crikey. If you’re interested, check it out here

Categories: Metablogging Tags:

Just vote 1: NO

February 1st, 2012 72 comments

The date for the Queensland election is now set. Last year, when it was clear the Bligh and Fraser were going to push on to their end with their appalling plans for privatisation, I said that I planned to put Labor last, behind the LNP. Nothing much has changed with Labor, but the choice of Campbell Newman as the LNP leader has led me to revise my views. Newman was a terrible Lord Mayor of Brisbane, pushing through a bunch of uneconomic PPP projects like the Go-Between Bridge. He’s even more addicted to hard hats than Bligh (admittedly, he’s an engineer, so I would be happy for him to wear a hard hat if he had stuck to that line of work).

So, I’m going to take advantage of the marvellous institution of optional preferential voting. I’ll give the Greens my first preference, followed by any acceptable independent or minor party candidate. Labor and the LNP won’t get anything from me this time.

Categories: Oz Politics Tags: