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Perils of prediction

March 26th, 2012

The observation “Prediction is risky, especially about the future”, attributed to US baseball legend Yogi Berra, is true for more reasons than one. The obvious risk is that events may prove you wrong. But there’s a also the risk that your prediction may be misrepresented, a risk that’s particularly severe when you have enemies like the Murdoch Press. I courted this risk by being too cute with my prediction after the 2007 election, which began

The Liberal Party will never again win a federal election.

I followed up immediately with

This isn’t a prediction of unending Labor rule, rather an observation that the Liberal and National parties are in such dire straits that they can’t continue as they are. They haven’t got enough support, parliamentary representation or ideas for one party, let alone two.

The obvious option is a merger

but the damage was done.

The first sentence has been quoted by various rightwing bloggers, and most recently in the Daily Telegraph[1], as a suggestion that the conservatives would never get back in.

So, contrary to the claims of the Tele, the fact that the merged Liberal Nationals won in Queensland is a confirmation the prediction in the post. The post also predicted the defeat of the NSW Labor government in 2011, but I thought it unlikely, unless “things go badly wrong for Rudd or for one of the state governments” that the conservatives would win before then.

In fact, of course things have gone very badly for Rudd, and Labor has made catastrophic mistakes at every level. Nevertheless the prediction wasn’t far off the mark with Labor winning five state and territory elections and (by the narrowest of margins) one federal election, and losing two over the relevant period.

At the federal level, the idea of a merger seems to have died, though the current situation is absurd . The National Party leaders in both the House and Senate are members of the merged LNP in Queensland. Still, it seems likely that this misshapen coalition will win the next Federal election. If that happens, I will gracefully admit that my prediction was wrong. But until then, to use another US sporting catchphrase, “It ain’t over till the fat lady sings”.

Since people don’t follow links, I’ll reproduce the entire post here

For once, my electoral predictions haven’t turned out too badly, so I’ll offer one more before we get back to policy: The Liberal Party will never again win a federal election.

This isn’t a prediction of unending Labor rule, rather an observation that the Liberal and National parties are in such dire straits that they can’t continue as they are. They haven’t got enough support, parliamentary representation or ideas for one party, let alone two.

The obvious option is a merger, but there may be other, more radical realignments in the wings. With no incumbent governments, there’s no real obstacle to a merger, except for entrenched interests in the party machines. But, in many ways, it would be better for the conservatives to start a completely new party, leaving their toxic existing structures to collapse.

I’d welcome this. Governments need to be kept in check. That requires an effective opposition, and a serious prospect of losing office. We’re already feeling the lack of this at the state level.

Update Apparently, Peter Costello agrees.

Further update Some commenters have objected that this is too strong a call to make on the basis of one 53-47 election. But of course that’s only part of it. The picture at the State level is far worse. The conservatives haven’t won a state or territory election this century, and have suffered landslide defeats at the hands of Labor governments, some of which have been mediocre at best. Of course, things could go badly wrong for Rudd or for one of the state governments. But if they don’t, it’s hard to see the Libs getting back in anywhere before the next NSW election due in 2011, and that depends on the most dysfunctional party organisation in the country getting its act together

Why did I present the prediction in a way that was so open to misrepresentation? I was following up a 2004 post on the Queensland election, when I wrote “Even though the Nationals have held office for most of the past fifty years, I don’t think we’ll ever see another National Party premier” and followed up with “barring disasters, it will take three more elections for Labor to lose. The Liberals need one to become a credible party rather than a trivial joke, a second to become the leading opposition party, and a third to beat Labor.” Except for omitting the possibility of a merger, which didn’t seem to be on the cards at the time, this has turned out exactly correct

Overall, then, my predictions on this have been reasonably accurate. And, looking at the current performance of the Liberals and Nationals, I don’t see any reason to change my assessment of them. But of course, that’s small consolation when you look at the utterly suicidal and electorally disastrous things Labor has done – privatisation in NSW and Queensland, reopening links with Brian Burke in WA, and the Gillard coup at the Federal level (the real damage here was done when Gillard and Swan forced Rudd to dump the CPRS, but the coup is what people remember).

fn1. I thought perhaps the Tele had got the quote at second hand, which would be semi-excusable, but they quote another sentence from further down the post, so they are deliberately lying, which is par for the course.

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  1. TerjeP
    March 26th, 2012 at 07:02 | #1

    John – my apology. I did not see your comment on the Saturday discussion as I had moved on. However now that you point it out and I’ve had a look it does seem my recollection was at fault. My recollection was that you said the Liberals would not win anywhere in the nation ever again but it seems you actually confined that to winning a national election. As I read it now you are predicting that the Liberal National coalition will have to become one party before they will win a federal election. I would think your prediction is now pretty uncertain. I can’t see the Liberals starting federal merger talks with the Nationals at this point in the cycle and I predict the Liberal / National coalition will win the next federal election.

    However my recollection was wrong and I retract the assertion that your prediction has already been rendered incorrect. Time will tell.

  2. John Quiggin
    March 26th, 2012 at 07:11 | #2

    Thanks for that, Terje. I’ve edited the post accordingly.

  3. TerjeP
    March 26th, 2012 at 07:13 | #3

    It does seem that your predictive powers are sometimes quite sharp. From the update on your original post as quoted above:-

    “Of course, things could go badly wrong for Rudd or for one of the state governments.”

  4. Ken_L
    March 26th, 2012 at 09:40 | #4

    As I argued in the last thread, conservative interests will always be prepared to devote resources to ensuring effective political representation. The financial implications of public policy are too significant not to. The Libs are the only convenient vehicle for doing that so the Liberal Party is always likely to remain a viable contender, regardless of temporary setbacks.

    Labor, however, not so much. In fact hardly at all. It was founded and sustained for a century by the union movement but the union movement is in terminal decline. There are no other significant interest groups which regard the ALP as their natural political representatives, especially since Labor has gone out of its way to antagonise traditional support bases in the public sector by trying to corporatise everything. The result is that Labor has to rely for institutional support on professional careerists, and for community support on tribalism. Neither will be enough. That’s why I don’t expect the ALP to win another election in my lifetime, barring gross incompetence on the part of the conservatives (never totally unlikely of course – see WorkChoices).

    I was hopeful non-conservative voters would migrate to the Greens once they realised Labor’s cause was lost, but the Queensland election results put paid to that idea, despite all the spin in some quarters trying to say otherwise. I therefore agree completely with one sentence in your old post provided you change a few words: ‘But, in many ways, it would be better for progressives to start a completely new party, leaving Labor’s toxic existing structures to collapse.’

  5. BilB
    March 26th, 2012 at 11:47 | #5

    JQ, I doubt that there is much can be done about the missrepresentation issue, and it is not to do with prediction. Putting more than two words together one after another exposes anyone to the possibility of miss representation by the Murdoch media from my observations. And it is not just the alleged devious intentions, it as much that their journalists have little attention spans and cannot cope with long sentences so they break these up into the phrases that they can cope with to report little bit at a time.

    I think that the problem originates from the top as evidenced in the kinds of responces that Murdoch supplies himself. He is most often quoted making discources such as “I did not do that.”, and “I have no recollection of that”. Very deep.

  6. James
    March 26th, 2012 at 16:32 | #6

    I seem to remember John Faine on ABC 774 after the 2007 election stating: ” perhaps the question should now be; should all institutions be purged of Conservatives”? [sic].

    It strikes me as unsurprisiing that the public is reacting to Labor in the fashion it is. Apart from a general failure to properly articulate policy and lack of judgement in implementing poor policies, it is also the arrogance being expressed in such comments from the moment of the election win right up until the present moment (“Convoy of No Confidence” anyone?). This of course is nothing new, a sense of indisputable self righteousness, a innate self belief in a moral superiority (which I think people scratch their heads trying to genuinely work out how and why) goes back to Whitlam, through to Keating and now this current Labor government. The problem is further enlarged when it becomes apparent that Labor genuinely doesn’t see or recognise it, this of course will mean the arrogance will never be cured. Labor doesn’t see it but the public certainly does. That alone is the best reason to not take the view that your general punter is stupid and that is now being proved. Perhaps the smartest thing for the PM to do was to leave for South Korea so as to avoid questions on the QLD election?

  7. Doug
    March 26th, 2012 at 17:08 | #7

    Arrogance isn a failing not confined to any one political party. It is a moral failing that can pop up just about anywhere. Bet cure for it is to a confess our failure when it is pointed out to us by others.
    Why I believe arrogance can be detected in your above account of ALP arrogance. There is a devastating certainty in your account of your perception of ALP arrogance and not even a hint of the possibility that you might just barely conceivably be wrong and that their might be other explanations for the outcome of the elections in Queensland. (I think there were a variety of factors – life is complex)

    Your all purpose account is disputable in that “the public” refers in this case to those who voted for the LNP. The fifty percent of Queenslanders who didn’t vote for the LNP are presumably not part of the public as they didn’t discern the arrogance.

  8. Freelander
    March 26th, 2012 at 17:59 | #8

    The federal labor party did make a mistake in not purging the Howard hacks. K Rudd managed to do one worse in handing out jobs to they likes of Downer. Fat lot of gratitude for that. Let’s face it most labor pollies are simply on the make. The loss of membership simply reflects public recognition of the fact.

  9. Ikonoclast
    March 26th, 2012 at 20:00 | #9

    I predict that nobody will remember I made this prediction.

  10. BilB
    March 26th, 2012 at 20:45 | #10

    I remember Ike.

  11. Dan
    March 26th, 2012 at 23:06 | #11

    I’d forgotten but I just saw it again.

  12. Freelander
    March 26th, 2012 at 23:28 | #12

    The Greens could pick up what was they Labor vote but first they have to shake the ‘flakey’ image. To do that they have to stop being flakey.

  13. March 27th, 2012 at 00:52 | #13

    Some contemporary/current examples of Green ‘Flakiness’ you suggest they should stop?

    With links, if possible (news.com.au doesn’t count, of course – their own flakiness is legend).

  14. rog
    March 27th, 2012 at 06:08 | #14

    Unless I have got the wrong end of the stick the loss by the ALP in QLD is a repudiation of free market economics, particularly privatisation. A quick glance at LNP policies seem to indicate that the LNP are not your free market neo libertarian types and the electors want someone to just fix things up ie Big Govt. How the LNP are going to influence foreign exchange and foreign markets (ie restore tourism and resources sectors) is a mystery to me.

    Whatever the outcome federal Libs must be feeling uneasy with their bucolic coalition partners.

  15. Ikonoclast
    March 27th, 2012 at 07:21 | #15

    @Freelander

    (Irony Alert On)

    Yeah, gee the Greens are so flakey they;

    (1) believe that finite quantities of non-renewable resources are exhaustible;

    (2) base their policy on scientific evidence instead of hearsay and short term self-interest;

    (3) understand that if the environment is destroyed then there will be no economy at all;

    (4) Oppose the cover up on CSG by proposing the evidence be made public.

    “A Government-commissioned study into the climate impacts of coal seam gas remains secret, after the Labor, Liberal and National parties today voted down a Greens motion to make the Wilkenfeld study public.” – Greens web site.

    (5) Oppose the immiseration of single parents and young people to give a social policy example.

    “The Australian Greens have once again taken a stand against the Government’s punitive agenda, this time with proposed legislation set to severely impact the income support payments of around 100,000 single parents and young people.” – Greens web site.

    Yeah gee, it’s so flakey to care for the environment and people. It’s much better to use, abuse and destroy the environment AND people. After all, they are only here to be exploited, despoiled and totally trashed. This latter is precisely the position of the old parties, the fossil parties, the dinosaur parties.

  16. James
    March 27th, 2012 at 08:51 | #16

    (Irony Alert On)

    - Liberals’ web site

  17. Chris Warren
    March 27th, 2012 at 09:27 | #17

    Capitalists love to raille against predictions, and provided you can always have an increased population and increased per-capita-debt, the rich can look forward to getting richer forever.

    According to this inane theory, the 1987 crash was a blip, the systemic breakdown of 2009 has been averted, and we need more derivatives and more capitalism.

    Here is “Newsweek” trying to bedazzle everyone with the glitter of capitalism:

    Consider our track record over the past 20 years, starting with the stock-market crash of 1987, when on Oct. 19 the Dow Jones lost 23 percent, the largest one-day loss in its history. The legendary economist John Kenneth Galbraith wrote that he just hoped that the coming recession wouldn’t prove as painful as the Great Depression. It turned out to be a blip on the way to an even bigger, longer boom. Then there was the 1997 East Asian crisis, during the depths of which Paul Krugman wrote in a Fortune cover essay, “Never in the course of economic events—not even in the early years of the Depression—has so large a part of the world economy experienced so devastating a fall from grace.” He went on to argue that if Asian countries did not adopt his radical strategy—currency controls—”we could be looking at the kind of slump that 60 years ago devastated societies, destabilized governments, and eventually led to war.” Only one Asian country instituted currency controls, and partial ones at that. All rebounded within two years.

    Each crisis convinced observers that it signaled the end of some new, dangerous feature of the economic landscape. But often that novelty accelerated in the years that followed. The 1987 crash was said to be the product of computer trading, which has, of course, expanded dramatically since then. The East Asian crisis was meant to end the happy talk about “emerging markets,” which are now at the center of world growth. The collapse of Long-Term Capital Management in 1998—which then–Treasury secretary Robert Rubin described as “the worst financial crisis in 50 years”—was meant to be the end of hedge funds, which then massively expanded. The technology bubble’s bursting in 2000 was supposed to put an end to the dreams of oddball Internet startups. Goodbye, Pets.com; hello, Twitter. Now we hear that this crisis is the end of derivatives. Let’s see. Robert Shiller, one of the few who predicted this crash almost exactly—and the dotcom bust as well—argues that in fact we need more derivatives to make markets more stable.

    A few years from now, strange as it may sound, we might all find that we are hungry for more capitalism, not less.

    See: http://www.thedailybeast.com/newsweek/2009/06/12/the-capitalist-manifesto-greed-is-good.html

    So how does this tally with life in Portugal, Spain, Greece, Italy, Ireland, Iceland …. or in food stamp America? Which factory in China, Mexico, Bangladesh or Indonesia would he send his kids?

    The only capitalism, capitalists look at is the top peaks, – this goes for most Australian jounalists, commentators, politicians and economists as well.

    Luckily we can make predictions, based on science. Economic science says one thing, economic reality based on countervailing tendencies says another. The last thing a capitalists wants is science.

  18. James
    March 27th, 2012 at 11:12 | #18

    “So how does this tally with life in Portugal, Spain, Greece, Italy, Ireland, Iceland …. or in food stamp America?

    Try the welfare state, early retirement, big government, government intervention, government social policy. China is correct in saying the European social democractic model has failed. Capitalism allows people the opportunity to stand on their own two feet. The model is there for the individual to realise their full potential but they must have the will, state handouts destroy that will, it is as they say “clogs to clogs”, that is; one generation makes the wealth, the next builds on it and the third becomes lazy wasting it as they have relied to much on the handouts from the previous generations. The same can be said of welfare. Take Hong Kong. Without a siphisticated welfare model, people just go out and work and small business thrives with lower taxes and minimal regulation to compensate and encourage people to do so. Hong Kong people laugh and look down on the Australian addiction to welfare and the hate the “haves” mentality here … they like Americans celebrate the “Haves”, not envy them. It is always easy to blame capitalism, but lying back and waiting for the state to simply dole out money eventually produces sloth and waste and a loss of sight as to the value of money particularly when it’s other peoples. The Australian economy derives most of its wealth from small business, regardless of how much big business contributes. Can you say that the Governments 3% super increase which is basically a government mandated handout to employees is good … it’s just more welfare, which is a transfer from those engaging in capitalism to support themselves whilst hopefully employing others also. Will a decrease in the corporate tax rate of 1% in a small business really compensate for an increase in a super increase of 3% to its employees? Furthermore, this supposed tax cut only applies to those who are incorporated and not the sole proprietor who pays tax at the individual rate and therefore doesn’t receive it. I don’t really know as all the details are not yet released of this package, but seeing as the sole proprietor must under legislation register there business name we will have to wait and see if they will be subject to the mandatory superannuation increase. Yes, indeed capitalism is good, greed is not always bad, handouts and social welfare are though. In any event what other model is being proposed here? Furthermore, the mining sector does contribute they already pay royalties to the state which ultimately is used to provide services and build infrastructure, the fed government simply wants more and they are trying to cuckold the average punter into believing it is just another way of providing more to other Australians by subsidising a corp tax cut and increasing super, not true. By threatening the states if they increase their royalties they are saying that is our money and we want it to increase our bottom line so that we return to surplus … that to me just sounds like basic political expediency dressed up as another political lie.

  19. Chris Warren
    March 27th, 2012 at 11:55 | #19

    James

    I think there may have been a few typos in you post.

    Never mind – I have fixed them for you.

    Capitalism allows people the opportunity to stand on their own two feet.

    Capitalism allows some people to stand on their own two feet plus garner the wealth of others. otherwise it is not capitalism.

    There are many models in which individual realise their full potential but they must have the will, state handouts assist that will, it is as they say “clogs to clogs”, that is; one generation makes the wealth, the next builds on it and the third becomes lazy wasting it as capitalism always terminates or passes costs onto future generations.

    Take Hong Kong. Without a siphisticated welfare model, and where capitalist exploitation is extreme (min wage = 19% per cap GDP), people must go out and work and small capitalists thereby thrive with lower taxes and minimal regulation to compensate and “encourage(!)” people to do so. Australians laugh and look down on the Hong Kong inhumanity and wage slavery the hate the capo mentality there … they like Americans celebrate the “Haves”, not envy them. It is always easy to blame the state, but lying back and waiting for capitalism to simply share out money eventually produces huge debt and depressed regions where sloth and huge waste soread like cancer as capitalists lose sight as to the value of money particularly when it’s other peoples. The Australian economy derives most of its wealth from small business, regardless of how much big business contributes. Obviously the Governments 3% super increase which is basically a government mandated handout to employees is good … because it’s just more welfare, which is a transfer from those engaging in capitalism to enrich themselves whilst hopefully exploiting others also. Will a decrease in the corporate tax rate of 1% in a small business really compensate for an increase in a super increase of 3% to its employees? Furthermore, this supposed tax cut only applies to those who are incorporated and not the sole proprietor who pays tax at the individual rate and therefore doesn’t receive it. Naturally I don’t really know as all the details are not yet released of this package, but seeing as the sole proprietor must under legislation register there business name we will have to wait and see if they will be subject to the mandatory superannuation increase. Yes, indeed capitalism is good for the few bad for most, capitalist greed is always bad, handouts and social welfare are needed. In any event what other model is being proposed here? Furthermore, the mining sector does contribute they already pay royalties to the state which ultimately is used to provide services and build infrastructure, the Australian people simply wants more and they are trying to serve the average punter via this other way of providing more to other Australians by subsidising a corp tax cut and increasing super. By threatening the states if they increase their royalties they are saying that is our money and we want it to increase our bottom line so that we return to surplus … that to me just sounds like basic political expediency dressed up as another democratic policy.

  20. Tom
    March 27th, 2012 at 12:14 | #20

    @James

    It’s not difficult to watch newspapers and be blinded by ideologies.

    I have a Chinese background and I got lots of friends from Hong Kong. They migrate because simply do not see any possibility for them to live a normal life in Hong Kong anymore. Have you ever heard of anyone that took a Chinese class and said that “It’s useless more than half the Chinese in Australia don’t understand what I say because they are all from hong Kong instead of Mainland China”? I have family relatives in Hong Kong and they are in the top 1% in Hong Kong but all their kids are now living in another country with foreign nationality and when I told them I’m studying economics, they said to me: “there is something very wrong about modern economics”. Recently in China and Hong Kong, more and more people don’t consider migrating to US anymore and aims for Australia and Canada. Sure there are people who prospered and lived a good middle-class life in Hong Kong and China as well and I personally know them. However I know a lot more young generations whom completed teritary education in the most famous university in China and working full time but can’t even afford to rent out with their 2000-3000 RMB per month income (rent cost more than half and living expense such as food cost 3 times more in dollar amount in China than in Australia).

    And no, Europe failed because they listened to all those rubbish the IMF and the neoclassical economist telling them to do. The Nordics whom still lives in a mixed economy of capitalism and social democratic welfare state and world’s largest unions as a percentage of workforce, and the highest level of tax in the world came out of the GFC in a much better shape than US and the rest of Europe.

  21. Tom
    March 27th, 2012 at 12:35 | #21

    Corrections – “The Nordics whom still lives in a mixed economy of capitalism and social democratic welfare state…” it should be “The Nordics except Iceland whom still lives in a mixed economy of capitalism and social democratic welfare state…”

  22. TerjeP
    March 27th, 2012 at 13:20 | #22

    A quick glance at LNP policies seem to indicate that the LNP are not your free market neo libertarian types and the electors want someone to just fix things up ie Big Govt.

    I suspect this is true. However when the circle turns and they finally lose office in a decade or two some wag will be on hand to announce that it is a repudiation of free market libertarianism. That’s what happened when Howard lost in 2007.

  23. James
    March 27th, 2012 at 13:33 | #23

    Thanks Chris, however, I think i’ll stay with the adult version.

  24. Chris Warren
    March 27th, 2012 at 15:26 | #24

    James :Thanks Chris, however, I think i’ll stay with the adult version.

    I recommend no less. Its surprising what a bit of data shows – isn’t it.

  25. James
    March 27th, 2012 at 17:15 | #25

    @Chris Warren

    “Its surprising what a bit of data shows – isn’t it.”

    Chris,

    The mimimum wage is $28 h/r. Roughly to the US exchange rate that is approx $4 h/r, not much I agree, however in the US hospitality staff work for approx $5 an hour. I admit the US has a genuine tipping culture, however, in HK tipping is also largely expected. I suppose that’s the data you mention? I would very much doubt that even the convenience store chains would only pay that much (at a guess), perhaps to a very junior person, but you also need to take into account that many Hong Kong children continue to live with their parents even when married. That of course I know does suggest other economic issues, however, as this is a blog i’ll keep it short.

    The point I was making and that I think was largely missed is: “so what other model is being proposed here”? The context was within the current paradigm, it’s about the best we have. I don’t for a moment suggest that no attempt should be made not to create a more equitable society and to share the wealth more, however, perhaps within a free market economy it can be done in a more efficient way and that welfare is using the wrong tools for the problem or is a misdiagnosis when the system should be utilised by all in order to create a fairer and more equitable society. Furthermore, perhaps this would also serve to strengthen democracy by allowing everyone to make a truly informed decision as to who is really best serving their needs, this could be achieved by people actively engaging in the capitalist system and utilising it for all its worth. Hope that clears up your original misunderstanding?

    BTW: Yes, I can probably be classified as conservative but I do generally see myself as a centrist who believes in a fair go for all provided people are encouraged to participate within the current model. As it stands I don’t think Australia’s current welfare system encourages that but rather serves to act as a disincentive instead.

  26. rog
    March 27th, 2012 at 20:48 | #26

    The greatest stuff up must be the privatisation of Telatra – after flogging it off to whoever was willing to pay the various prices taxpayers are now having to pay for a new network, one that ostensibly serves the customer not the shareholder (and as a shareholder I now benefit from the taxpayer payments to TLS for some of the copper).

  27. Freelander
    March 27th, 2012 at 22:03 | #27

    Yes, Telstra was an amazing stuff up. Plenty insiders and outsiders made a lot of money out of the process, but the public got a substandard telecommunications system years behind what it ought to have been. So much for the clever country.

  28. Freelander
    March 27th, 2012 at 22:07 | #28

    Electricity is another muck up that we are paying an increasingly heavy price for.

  29. Ken Fabian
    March 28th, 2012 at 16:40 | #29

    The Liberals will be around and doing fine for a while yet; the willingness of Australian voters to choose illusions over science based reality looks to be boundless. Even when the mining Ponzi schemes run their course those Green/Left ‘Flakes’ will be there to blame and the solution – to continue to do what can’t work for the long term but do it even harder – will be as popular as ever.

  30. Danny
    April 5th, 2012 at 21:37 | #30

    You can’t be serious. Your comment was not in the least open to misrepresentation. The most charitable construction of it to yourself is that the conservative parties could never again win an election without the most radical overhaul, and the beginning of it would be a merger (presumably of the Liberal and National parties, but that is again a benign interpretation).
    Your prediction was of course laughably wrong, and your attempt to cover it up is pathetic, risible.

    Are you, like Robert Manne and Clive Hamilton, a soi-disant intellectual?

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