Archive for February, 2013

The IPA: Less scruples than Billy Hughes

February 28th, 2013 95 comments

A prominent figure in Australian politics in the first half of last century, Billy Hughes, ‘the Little Digger’, was famous for his flexibility, having successively led the Labor Party, National Labor, the Nationalists and then the United Australia Party, before serving in Labor’s Advisory War Council and then joining the Liberal Party. According to legend, he was once asked why he had never joined the Country Party (now the National Party) and replied ‘You have to draw the line somewhere’.

Starting about the time Hughes retired, the Institute of Public Affairs has been similarly flexible, serving first as a Liberal Party slush fund, and then combining a high-minded line in free-market ideology with hackish advocacy on the part of all kinds of vested interests. But, unlike Hughes, the IPA has decided not to draw a line anywhere.

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PPPs take a long time to die

February 28th, 2013 27 comments

In the immediate aftermath of the GFC, I argued that the Public Private Partnerships model then in vogue was broken beyond repair, and that, even after the crisis we would be unlikely to see many more, though we might see deals wrapped up to look like PPPs, but with the public bearing most of the risk.

The recent failure of BrisConnections, the owners of the Airport Link Tunnel in Brisbane was no surprise. The AirportLink deal was one of the last pre-crisis PPPs, when investors were still optimistic enough to buy shares based on absurdly overstated traffic flows. In fact, they bought “partly paid” shares, a startling piece of financial engineering under which shares, trading at virtually zero, carried with them the obligation to come up with a payment of $2/share later on.

Because of the eagerness of private investors, the Queensland government bore little risk in the project. Former Treasurer Andrew Fraser’s description of the project as “a zinger of a deal for the public” displayed his customary tact, but was accurate enough considering the deal in isolation. The problem is that, after this and similar failures, it is highly unlikely that the pre-2008 PPP model can be revived in Australia.

For roads at least, there’s a simple alternative – road pricing based on congestion. I and other economists have been banging this drum for years, but politicians are terrified of even mentioning the idea. At one level, I can understand this – it’s tricky and likely to be controversial – but Queensland governments of both parties have adopted politically suicidal policies, largely motivated by the perception that they will free funds for capital investment.

First, Anna Bligh, along with Andrew Fraser reduced Labor to a seven-member rump with her pursuit of economically disastrous asset sales, exactly the opposite of what she had promised. Now, Campbell Newman has dissipated a huge volume of goodwill with savage cuts to public services, again a wholesale breach of promise, and is now pursuing privatisation. Compared to these electorally suicidal policies, road pricing ought to be a doddle.

Categories: Economic policy Tags:

Explaining democracy (crosspost)

February 26th, 2013 77 comments

Crooked Timber recently ran a book event on The Priority of Dem>ocracy by Knight and Johnson, which produced a lot of interesting discussion about various kinds of arguments in favor of democracy. I’d like to look at a couple of related questions: why does (representative) democracy exist, and why has it become the dominant form of government in the modern world? Here’s a two-part explanation, which doesn’t invoke any ideal theory or even much of a pragmatic case that democracy will produce good policies.

(A) Representative government, with elections and a party system is attractive to those competing for political power because it provides a peaceful way of displacing one set of rulers with another, and gives the losers the knowledge they will always have another chance. It’s stable because it provides a set of rules for succession that (nearly) always work

(ii) Representative systems tend naturally to universal suffrage, since both those who gain the suffrage and one faction of the existing electorate will always benefit from extension

An obvious question on (i) is why representative government took so long to emerge. I have some ideas but I’ll leave it to commenters to discuss if you want.

If the explanation I’ve given works to explain the existence and survival of representative democracy, it doesn’t say much about the character of that democracy. It’s obviously consistent with a duopoly made up of two more-or-less similar factions in an oligarchic ruling class, but it doesn’t preclude versions closer to the ideal where representatives actually represent their constituents.

I’m an econ-blogger, not a political theorist, so I won’t be surprised to learn that these thoughts are wholly unoriginal. But they seem to have some bearing on our recent discussion, and not to have been raised there, so I’m opening up to others.

Categories: Politics (general) Tags:

Monday Message Board

February 24th, 2013 20 comments

Another Monday Message Board, a few hours early for once. 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 24th, 2013 25 comments

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

Categories: Regular Features Tags:

Uranium exports: bonanza or bust?

February 23rd, 2013 173 comments

Note: The usual sitewide ban on discussions of nuclear power is lifted, for this post only

Queensland’s ban on uranium mining was lifted last year, and a committee is due to report soon on the conditions under which mining might be restarted. As recently as a year ago, the prospects for uranium exports looked bright, despite the Fukushima disaster. In March last year, the Bureau of Resource and Energy Economics predicted “prices close to $100 a pound between now and 2015, rising to $124 in 2016 and $141.6 in 2017, in constant 2011-12 Australian dollars.”

In reality, however, the price has fallen to $US43/pound in early 2013 and looks set to decline further. Looking ahead, the future of nuclear power looks bleaker than at any time since the industry began. That’s bad news for the global climate – cheap and safe nuclear power would be the ideal replacement for coal if it could be delivered – but there is no benefit in denying reality

Read more…

Categories: Environment Tags:

Is the tide turning?

February 22nd, 2013 61 comments

It’s easy to overestimate the significance of a single electoral cycle (look at the Repubs after 2010), but there really does seem to have been a big shift in US political debate. Of course, that’s from a position where centrists like (first-term) Obama were occupying the positions held by moderate Republicans 25 years ago. It’s reasonable to feel a bit ambivalent about ‘victories’ like repealing the most regressive bits of the wholly regressive Bush tax cuts. A couple of links of interest (a few weeks old, but I’m running behind on most things)

* The Hoover Institution’s Policy Review is ceasing publication, and its final issue includes a piece by longtime editor Tod Lingren who concedes defeat, at least for the moment, to what he calls Left 3.0. This is his name for the self-described “Democratic wing of the Democratic party” which has, in his view, absorbed and tamed the radical left, defeated the Clintonite New Democrats, and dominated the Republicans. Lingren is surprisingly sympathetic, essentially implying that the only thing wrong with Left 3.0 is that too much egalitarianism is bad for economic growth

* Michael Lind gives chapter and verse supporting a view that I advanced a while ago, that US politics is best understood by treating “Southern White” as an ethnicity. There’s an interesting comparison to the now-disappeared nativist movements among Northeastern Yankees in response to Irish and other European immigrants

If US politics does shift to the left, what effects will that have elsewhere? Even the most liberal Democrats would be centrist at best in most countries, and their most radical goals (single-payer health care, a progressive income tax, parental leave and so on) would be uncontroversial in most places, so there won’t be much direct effect. On the other hand, in Australia and other English speaking countries, a large slab of the right wing gets its talking points from the US Republican bubble, via the Murdoch press, and look to an idealised version of the US as a free-market model. If the Repubs are discredited at home, that will create some problems for their followers abroad.

Categories: World Events Tags:

Monday Message Board

February 18th, 2013 26 comments

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:

Who wants Abbott PM?

February 18th, 2013 152 comments

We’ve had quite a few debates here about the Labor leadership. While there are plenty of issues, there is one that, at this point in the cycle, trumps all the others. Of the two serious contenders, who is more likely to save Australia from the disaster of an Abbott-led coalition government? The answer to this question is so clear-cut that I find it impossible to believe anyone would dispute it: Julia Gillard has almost no chance of victory at this point, while Kevin Rudd has a chance. There’s certainly room for debate about how good Rudd’s chances are, but none, I think, as regards Gillard’s. And, whatever the stylistic differences, in substantive terms Gillard’s agenda is the one she inherited from Rudd.

The question now is whether we will have another three years to implement that agenda, or whether we have a Newman-style slash and burn assault on the public sector, the environment, science, women’s rights and, of course, the working class. The only thing likely to stop that is an immediate change of leadership.

Categories: Oz Politics Tags:

Weekend reflections

February 16th, 2013 37 comments

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

Categories: Regular Features Tags:


February 16th, 2013 5 comments

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

Categories: Regular Features Tags:

One in a million, or ten

February 13th, 2013 16 comments

In a slightly unfortunate juxtaposition, LinkedIn sent me a breathless message “John congratulations! You have one of the top 5% most viewed LinkedIn profiles for 2012!”

immediately followed by the news that “linkedIn now has more than 200 million members”. Do the math

Categories: Metablogging Tags:

Crusader Monckton

February 13th, 2013 119 comments

Ever since the Brisbane Institute cancelled my invitation to debate Christopher ‘Lord” Monckton a few years ago, I’ve followed his career with more than usual interest. His ‘Loony Lord M’ character, owing a lot to Screaming Lord Sutch, has been a huge hit here in Australia. By contrast, back in the UK, officials of the House of Lords have taken offence at his claims to be a member of that institution[1]. Some sniffy British Tories also seem to be upset by the claim that the UK government, along with Obama, Merkel and Gillard, are plotting to introduce a communist world government through a $20/tonne tax on CO2, and, of course, Agenda 21. Here in Australia, though, the fans love him for his ability to make the most absurd claims with a (sort of) straight face.

Given his obvious similarities to Sacha Baron-Cohen, it seemed reasonable to expect that Monckton would come up with a new character to keep his Antipodean fans amused. That expectation was proved correct when he turned up in Canberra as Crusader Monckton, endorsing pastor Danny Nalliah’s campaign against the oppressive rule of Shariah law in Australia, and the establishment of a new Judaeo-Christian political party. So far he’s getting rave reviews in advance press.

I’m a bit disappointed, though, that he doesn’t seem to be growing as an artist. Instead of making a clean break, he’s playing it safe, maintaining the previous climate delusionist shtick in parallel with the new one. And there isn’t really a lot of distance between the old character and the new one. Existing fans like Abbott, Albrechtsen, Bolt and, of course, Gina Rinehart will welcome the addition of the new Crusader persona, but there’s no way he can reach new audiences with such tired stuff. He really needs something more creative, like a campaign against gravity, or a claim that cancer is good for you.

Still, for those interested here’s the tour schedule

fn1. He ran at the first opportunity, receiving no votes. In emulation of the Monty Python Silly Party, he ran again, getting twice as many.

Categories: Boneheaded stupidity, Science Tags:

Eddie, obeyed

February 7th, 2013 132 comments

As last year drew to a close, it seemed quite possible that the Gillard government could be re-elected. The polls were going the right way, the reality of the carbon price had discredited the apocalyptic scare campaign of the Opposition, and the various real or alleged scandals surrounding the government seemed to be fading. The carbon issue is still going the right way, but everyhing else has turned around severely since then: even before the disasters of the last week, the polls had turned bad, pointing to an uphill struggle.

Last week was bad for the government in all sorts of ways, but the Obeid hearings before ICAC were in a league of their own. I was aware of the scandal, of course, but the evidence of Obeid’s total control over the NSW Right, and therefore of the state government, still surprised me. Even more out of the blue was the involvement of two federal ministers, Conroy and Burke. While taking free accommodation from Eddie Obeid looks a lot worse in retrospect than it would have at the time, his dubious reputation goes back a long way.

It’s hard to see how Gillard can credibly promise to clean up this mess. Her long reliance on Thomson and Slipper, the role of the NSW Right in sustaining her power, and, fairly or otherwise, the old allegations about her own career, all count against her. At this point, as Bernard Keane says (h/t Nancy Wallace)

‘If only Labor had an alternative leader who was fixed in the public mind as someone profoundly at odds with Labor powerbrokers …’

Obviously, he’s talking about Kevin Rudd. While it’s late for a shift, the case has become stronger in many ways. Of the people strongly identified with the personal attacks on Rudd last year, Roxon has gone to the backbench, Conroy and Burke are now liabilities, and Swan’s failed surplus push has greatly weakened him.

A simple change of leader would not be enough. Labor needs to excise the tumour that is the NSW Right. If restored to the leadership, Rudd should immediately push for a full-scale intervention into the NSW Branch removing all the existing officials, and putting someone credible like John Faulkner in charge. The whole faction system needs to be reformed or abolished, starting with the dissolution of the NSW RIght. And those compromised by their association with Obeid, Richardson and similar agents of corruption need to be expelled or permanently removed from any positions of power.

I don’t know if it’s too late to stop the election of an Abbott government. But it’s evident that Gillard is not the right person for the job.

Categories: Oz Politics Tags:

Emergencies and luxuries

February 3rd, 2013 85 comments

The floodwaters have receded[1] and the miserable task of cleaning up is beginning in Bundaberg, Laidley and other communities. Here in Brisbane we were lucky enough to avoid another flood. The remnants of Cyclone Oswald hit us in the form of a summer storm, bigger than usual, but a pretty regular event here. It wasn’t surprising that hundreds of thousands of people (including me) lost electrical power, or that repairs couldn’t start until the wind had subsided. Even so, the restoration of power was very slow – in many places slower than in 2011. It’s become evident that, like all areas of the Queensland public sector, the electricity distributors (Energex in the Brisbane region and Ergon elsewhere) have been subject to staff cuts that have hampered their ability to respond. The union was issuing warnings about this last year, and they have been proved right. In one startling case, workers were delayed from responding to the emergency in Bundaberg, so they could be briefed on their redundancy options.

Ergon and Energex are government-owned corporations, which are normally supposed to make their own commercial decisions. In this case, however, the shareholding ministers, Energy Minister Mark McArdle and Treasurer Tim Nicholls, have actively intervened to push for job cuts. The obvious explanation is that they are trying to boost profitability (at least in the short term) to prepare the enterprises for privatisation. The regulatory system is supposed to require Energex and Ergon to meet reliability standards, but it seems likely that it is vulnerable to gaming, possibly by excluding extreme (but not uncommon or unpredictable) events like this storm from the criteria (I plan to look into this).

The cuts in the electricity sector have been matched or exceeded across the entire public sector, including the services on which we all rely in an emergency. Meanwhile, Campbell and Nicholls are building themselves a brand new office tower, demolishing the aging but serviceable building in which they currently work. They are paying off their supporters with cuts in payroll tax, grants to racing clubs and so on. But if you want a symbol of this government, you can’t go past Jeff Seeney, who tried to get a government plane, currently used for organ transplants and similar emergencies, allocated for his personal use.

Categories: Oz Politics Tags: