Archive for September, 2014

Missing in action? Bill Shorten’s ‘small target’ strategy is his only option

September 29th, 2014 106 comments

That’s the title of my latest piece in The Guardian. Opening paras:

Throughout his first year as opposition leader, Bill Shorten has adopted a “small target” strategy, which has been the subject of considerable criticism. “Missing in action” has been among the kinder phrases used.

The criticism has only intensified with Shorten’s endorsement of the Abbott government’s commitment of troops to a new Iraq war, and Labor’s support for a slightly amended version of the government’s anti-terror laws, explicitly sold as reducing our freedom.

Much of this criticism misses the point, harking back to a largely imaginary past in which the big issues of the day were thrashed out in parliament, and particularly in the presentation of alternative policy platforms by party leaders.

In reality, some version of the small target strategy is effectively forced on the main opposition party by the way in which our political system and media now operate. This in turn means that serious criticism of government policy must come from elsewhere.

Categories: Oz Politics Tags:

Australian states are losing their AAA ratings. Should we panic?

September 29th, 2014 14 comments

That’s the title of my latest piece in Crikey. Paywalled, but I’ve reposted over the fold

Read more…

Categories: Economic policy, Oz Politics Tags:

Monday Message Board

September 29th, 2014 7 comments

It’s time for another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:

Two graphs that explain a lot

September 26th, 2014 36 comments

I could talk forever about these graphs (from IndexMundi), and may do so in the future. For now, I’ll just note that these are nominal prices. The US CPI has roughly doubled since 1989



Categories: Economics - General Tags:

The Go8 knows nothing about the US university system

September 25th, 2014 30 comments

I’ve just downloaded the submission of the Group of Eight (the body representing vice-chancellors and presidents of Australia’s leading research universities to the Senate Committee of Inquiry into the government’s higher education reforms. The core of the argument in favour of a shift to a US-style system is as follows

deregulation offers institutions a way of opening doors to the future. In the words of Professor Warren Bebbington, Vice Chancellor of the University of Adelaide

higher education in Australia could be transformed into the most dynamic system in the world. It would have the rich variety of the US university landscape, but without the crippling debts that American students suffer… In the US, nearly half of all students… attend teaching-only undergraduate colleges offering only Bachelor degrees. Without research programmes, these colleges do a first-class job of teaching: through small classes and an intense extra-curricular programme. Students have an unforgettable, utterly life-changing educational experience… [yet] such institutions are scarcely possible in Australia currently.

At a recent national press club address, Professor Ian Young, Vice Chancellor of The Australian National University and chair of the Group of Eight, spoke of a system where students contemplating university were offered a variety of choices, in terms of learning style, or aspirations, of practical skills or exploration of ideas, of social networks or intimate teaching styles, of research-intensive training or immediate vocational outcomes. A system that is well within our grasp if we have the vision to accept a more flexible approach to higher education

This is a truly stunning display of ignorance. The institutions described by Professor Bebbington are what is called in the US “liberal arts colleges”, elite private institutions educating a tiny fraction of the US student population, similar to the Ivy League and charging as much or more. A typical example is Wellesley, alma mater of Hillary Clinton, with 2000 students and annual tuition (including room and board) of $US 59 000 [^1]. The non-research institutions actually attended by nearly half of all US students are second-tier state universities along with a variety of private institution (for-profits like Phoenix, Christian colleges and so on), none of which offer “small classes and an intense extra-curricular programme”. They operate in old and overcrowded buildings relying heavily on overworked and underpaid adjuncts. Some do a great job under conditions of extreme financial stringency: others are disaster areas where the vast majority of students don’t complete their courses. Very few are comparable with even the bottom tier of the Australian public university system: former teachers colleges and CAEs that were converted to university status in the 1990s.

The fact that the vice-chancellor of a prominent Australian university can display this kind of ignorance about the US system is pretty startling, the fact that he is quoted with approval by a body representing the VCs of our eight leading universities even more so. Universities are (among other things) billion-dollar businesses, and their chief executives are paid accordingly. A basic part of any business is understanding the competition, especially if you plan to emulate them. Bebbington’s description of the US non-research university sector is as if a car company CEO were to describe the Trabant as an affordable German luxury car, and suggest marketing it in place of the drab offerings of Holden and Ford.

[^1]: Of course, hardly anyone pays full fare at these institutions. There are all kinds of schemes to offset the cost. Still, a middle class family thinking of sending a child to Wellesley would regard the much-discussed $100 000 degree as an incredible bargain.

Categories: Oz Politics Tags:

Political change and climate change

September 23rd, 2014 126 comments

Judging by the comments on my “derp and denialism” post, we seem to be mostly agreed on the proposition, amply demonstrated by economic studies, that the global economy could be decarbonized at a very modest cost in terms of foregone growth. On the other hand, it is equally obvious that the commitments made so far are nowhere near enough to achieve this goal[^1], and that the reasons for this lie in the operation of political systems, most importantly in the US, China and India. This raises several questions

(a) Why have political systems failed to yield the responses we need
(b) Can climate stabilization be achieved without fundamental transformation of political systems
(c) If so, what transformation do we need
(d) If not, what kinds of more limited change do we need

In this context, it’s only really necessary to look at the US, China and India. The EU may drag its 27 pairs of feet a little (it is the EU, after all) but will certainly match anything the US does. And, if the US were fully committed to climate change, denialists elsewhere in the developed world, like Harper in Canada and Abbott in Australia, would have the ground cut from under them.

In the US (and other English-speaking countries), the primary obstacle is not the entrenched power of interests that would lose from climate stabilization such as fossil fuel companies. The big global energy companies, like Exxon and BP, are perfectly capable of shifting their focus from oil to gas and if the market gets large enough, to renewables. In any case, they are balanced by potential losers from climate change like the insurance and finance sectors. Rather, the problem is the climate change denial is a rightwing culture war issue, which has became (one of many) Republican shibboleths.

Sustained action against climate change requires that the Republican party either be marginalized or replaced by something quite different (though it would probably still be called the Republican party). That’s a big challenge, but not impossible. A two-term presidency for Hillary Clinton, even without full control of Congress, would probably be enough to get things done through a combination of regulation and international agreements, the model currently being pursued by Obama. And four losses in succession would probably be enough to force a shift within the Republican party.

The situation in China is more opaque (to me, at any rate) but also more promising. Having been the worst of the spoilers at Copenhagen, and suffered a fair bit of opprobrium as a result, the Chinese leadership now seems willing to take a constructive role. Moreover, the pollution crisis in Chinese cities has led to a dramatic shift in sentiment against coal. So, it seems likely that renewables will be given a fair chance, including effective pricing of coal externalities, which is all they need.

Finally, there’s India. For a long time, Indian rhetoric on the issue was dominated by Third World grievance politics: the rich countries had burned lots of coal to get rich, and India had the right to do the same. But that seems to be changing, in part because most of the losers from climate change are also in the Third World, and in part because India’s coal sector is a total mess, making renewables more attractive. The new PM, Modi (from the deeply unattractive BJP, but that’s another issue) seems strongly committed to renewables. The historical arguments have shifted to the more productive terrain of arguing about how to share an emissions budget constrained by a 2 degree/450 ppm target.

At some level, all this is academic, in the pejorative sense of the term. Either existing political structures, with the kinds of changes I’ve discussed above, will manage decarbonization of the economy, or they won’t. There’s no chance that any kind of fundamental transformation of the political systems of the US, India and China[^1] will take place within the next 10-15 years, which is the time in which the necessary decisions need to be made.

To sum up this post and the previous one: even though the global climate could be stabilized at a very modest cost, the political obstacles are formidable. It may not be possible to overcome them in time, but we have no alternative except to try.

[^1]: I’m a little less confident in making this judgement about China. The apparent solidity of a one-party state can crumble quite fast. But the initial result of such a collapse would almost certainly be chaotic, and the outcome unforeseeable.

[^1}; There used also to be a lot of concern over whether these commitments would be met. While a couple of countries, such as Japan and Canada, have reneged, and Australia seems likely to follow, most of the big players are meeting their targets quite easily, reflecting both the softness of the targets and the low cost of decarbonization.

Categories: Environment, World Events Tags:


September 22nd, 2014 17 comments

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

Categories: Regular Features Tags:

Monday Message Board

September 22nd, 2014 21 comments

It’s time for another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Economics - General Tags:

From derp to denialism

September 21st, 2014 53 comments

Over the last couple of weeks, I’ve seen four major reports (details over the fold) from very different sources, all making the same point: decarbonizing the world economy will involve economic costs that are
(a) small; and
(b) far outweighed by the benefits
And, the empirical evidence so far is strong. The EU and US have both reduced CO2 emissions significantly, at negligible or even negative economic cost. The measures announced by Obama, including vehicle emissions standards and restrictions on coal-fired power stations appear set to achieve further substantial reductions, again while yielding net economic benefits.

Against the expectations of doubters, wind and solar PV are steadily increasing their share of electricity generation, to the point where they constitute the majority of new installations in many countries. Again, the costs have been trivially small: in Australia’s case, made up almost entirely of the reduction in asset value imposed on existing generators.

There is as far as I am aware, no credible analysis to support the opposite claim (call it the economic armageddon hypothesis) that decarbonization will involve economic costs sufficient to greatly reduce living standards, or, for poor countries, prevent catchup to the developed world. (Again, more detailed argument over the fold.

Nevertheless, past experience suggests that lots of people are sufficiently wedded to the economic armageddon hypothesis that neither this, nor any other evidence will change their minds. I have previously analyzed this unwillingness to respond to evidence in terms of Noah Smith’s Bayesian definition of “derp“: “the constant, repetitive reiteration of strong priors”.

But I no longer think this is sufficient. A central concept of Bayesian decision theory is the separation of preferences from beliefs. That is, your subjective belief about the probability that a proposition is true should be independent of whether (because you have bet on it, or for some other reason) you want it to be true. This is the opposite of what is often called “motivated reasoning” or, less politely, “wishful thinking”.

This, I think, is the central distinction between “derp” and “denial”. Both involve the rejection of factual evidence that would (to a person without strong preconceptions) be overwhelmingly strong. This must involve strong prior beliefs. Denial differs from derp in that these factual beliefs derive from preferences, and are unlikely to undergo any updating. If anything, denial may be strengthened by evidence of the proposition being denied.

This in turn suggests different possible cures. Derp may eventually, if very slowly, be overcome by an accumulation of evidence. By contrast, denial can only be addressed by changing the source of wishful thinking; for example, by convincing rightwingers to stop being rightwingers.

Read more…

Categories: Economic policy, Environment Tags:

Post-School Education in Australia: The Case against Deregulation

September 19th, 2014 8 comments

That’s the title of my submission to the Senate Education and Employment Legislation Committee inquiry into the Higher Education and Research Reform Amendment Bill 2014.

You can read it here

Categories: Economic policy, Oz Politics Tags:

Third time lucky ?

September 17th, 2014 139 comments

So, it seems, we are signed up for our third Iraq war in 20-odd years. Obviously, this isn’t because the last two turned out brilliantly. So, what is the reasoning here? More precisely, given that Australia’s policy is just to follow the US without question, what is the reasoning of the world leaders, most importantly Obama, who are pushing this war? There seem to be two main points here

* ISIS/ISIL are barbaric terrorists who behead hostages. That’s a good reason for trying to capture and try those responsible, and perhaps for trying to kill them if that’s not possible. But there’s nothing special about this particular group. There are plenty of barbaric terrorists out there. And one of our leading allies in the fight, Saudi Arabia, routinely beheads people for such crimes as apostasy and “sorcery”. None of this justifies a war that is going to cost tens of billions of dollars (Australia alone looks to be up for several billion, assuming a long war) and an unknowable, but potentially large, number of lives.

* ISIS/ISIL threaten to take over large non-Sunni areas of Iraq and undertake ethnic/religious cleansing. That threat looked like a significant a month or two ago. But some limited air support for Kurdish and Shia militias appears to have turned the tide. As far as I can tell, ISIS/ISIL are now confined to Sunni areas where they have a fair degree of popular support. Changing that will be a costly and bloody business.

I expect most readers here will agree with me, and don’t plan to argue about with those who haven’t learned from the past. But I would like a pointer to any serious analysis making the case for a new war.

Categories: World Events Tags:

This is the model ? (updated and corrected)

September 16th, 2014 14 comments

The QS World University Rankings have just come out, and, as you might expect the top places (11 of the to 20 and 17 of the top 50) are dominated by US universities. By contrast Australia has five universities in the top 50 (ANU, Melbourne, Sydney, UQ and UNSW) So, you might think, this is a pretty good argument for following the US model. You get a different story, however, if you look at undergraduate enrolments (conveniently listed in Wikipedia)

I calculate that the 15 US universities in the top 50 have a total undergraduate enrolment of 210 000 (that’s dominated by a few public universities: Michigan, UC Berkeley, UCLA and Wisconsin-Madison, as well as Cornell which is partly public). By contrast, the five Australian unis enrol 148 000.

Adjusted for population, Australian students are about ten times as likely as Americans to attend a top 50 university.

Of course, the figures should be adjusted for fee-paying international students, who constitute a much larger share of the Australian student population than in the US. On the other hand, international enrolments at the top US universities are also increasing. And since many of them haven’t increased enrolments since the 1950s, the number of places for domestic American students is actually declining.

Note: I previously used the 2013 rankings. I’ve updated to the 2014 list, which includes UNSW and two more US universities. The ratios don’t change significantly as a result.

Further note In comments, reader Aldonius points to more accurate enrolment stats than I got from Wikipedia

109K domestic undergrads; 135K total (80% domestic) for ANU, Melbourne, Sydney, UQ and UNSW
723K domestic undergrads; 926K total (78% domestic) For all Oz universities

Here’s my US list

MIT 4528
Harvard 7200
Stanford 6980
Yale 5414
Chicago 5134
CalTech 978
Princeton 5336
Columbia 8365
Cornell 13935
JHU 6023
Michigan 27979
Duke 6495
Berkeley 25951
Northwestern 8459
UCLA 28674
NYU 19401
Wisconsin 29504
Total 210356

And for Australia

ANU 10231
Melbourne 38000
Sydney 32393
UQ 34228
UNSW 33000
Total 147852

Categories: Oz Politics Tags:

Monochrome swans

September 15th, 2014 33 comments

I have a request[^1] for help from scientifically literate readers. A lot of my research work is focused on the problem of unforeseen contingencies, popularly, if ethnocentrically, described as “black swans”. In particular, I’m interested in the question of how you can prepare for such contingencies given that, by definition, you can’t foresee exactly what they will be. One example, with which I’m very pleased, is that of the precautionary principle. It seems reasonable to say that we can distinguish well-understood choices involving hazards from those that are poorly understood, and avoid the latter, precisely because the loss from hazard cannot be bounded in advance.

Anyway, I was thinking about this in relation to the actual case of black swans (or, from my own perspective, white swans). The question is: what principles would help you to avoid making, and acting on, the assumption “all swans are white (or, in my own case, black)”. It seems to me that the crucial fact here is that the shift from black to white, or vice versa, is, in evolutionary terms, a small one. So, if you used something like cladistics, you would avoid choosing feather color as a defining feature of swans, and birds in general. As I understand it, a phylogenetic approach starts with features that are very strongly conserved (body plans) and proceeds from there. But, rather than assume that my own understanding is correct, it seemed simpler to ask.

[^1]: There’s a blog-specific word for this, but I refuse to use it

Categories: Science Tags:

Go8: The empire strikes back

September 15th, 2014 9 comments

Michael Gallagher of the Go8 has put out a press release in reaction to my piece in The Conversation on higher education reform, accusing me of “an attack on a straw man”. It’s a fine example of John Holbo’s two-step of terrific triviality. Gallagher backs away from his previous advocacy of deregulation as a positive benefit to the much weaker position I mentioned in the article that it is “unpalatable but necessary response to cuts in funding”, or, in Gallagher’s words that “the status quo is not an option”.
Read more…

Categories: Economic policy Tags:

Monday Message Board

September 15th, 2014 14 comments

It’s time for another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:


September 12th, 2014 10 comments

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

Categories: Regular Features Tags:

Weekend reflections

September 12th, 2014 26 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:

From the ‘paperless office’ to renewable energy, change leaves its critics behind

September 12th, 2014 35 comments

That’s the headline for my piece in The Guardian. Unsurprisingly, given experience here, the comments section is a mountain of derp. Amusingly, it turns out that there are still paperless office sceptics about, despite ample evidence of that demand for office paper has been declining for years, and now seems set to plummet. The sceptics seem immune to the irony of posting comments in a digital-only newspaper asserting that paper will never die.

Given the extreme tightness of priors regarding energy issues, I expect our renewables sceptics to be even more diehard.

Categories: Environment Tags:

Three misguided beliefs of the Group of Eight universities

September 12th, 2014 8 comments

That’s the headline for a piece in the Conversation,looking at the arguments of the Group of Eight “sandstone” universities in favor of deregulation. Readers will be unsurprised to finde me in disagreement.

Categories: Oz Politics Tags:

Rawls, Bentham and the Laffer curve (cross-post at Crooked Timber)

September 9th, 2014 34 comments

The 1970s saw two important and influential publications in the long debate over justice, equality and public policy. In 1971, there was Rawls Theory of Justice, commonly described in terms like “magisterial”. Then in 1974, at lunch with Jude Wanniski, Dick Cheney and Donald Rumsfeld, Arthur Laffer drew his now-eponymous curve on a napkin. Of course there was nothing new about the curve: it’s pretty obvious that an income tax levied at rates of either zero or 100 per cent isn’t going to raise any money, and interpolation does the rest. What was new was the Laffer hypothesis, that the US at the time was on the descending side of the curve, where a reduction in tax rates would raise tax revenue.

I’ve always understood Rawls in terms of the Laffer curve, as arguing in essence that we should be at the very top of the curve, maximizing the resources available for transfer to the poor, but not (as, say, Jerry Cohen might have advocated) going further than this to promote equality.

A couple of interesting Facebook discussions have led me to think that I might be wrong in my understanding of Rawls and that the position I’ve imputed to him is actually far closer to that of classical utilitarianism in the tradition of Bentham (which is, broadly speaking, my own view).

Facebook has its merits, but promoting open public discussion isn’t one of them, so I thought I’d throw this out to the slightly larger world of blog readers.

Read more…

Categories: Economics - General Tags:


September 4th, 2014 1 comment

I’ll be at a session of Brisbane Writers Festival tomorrow talking on Advance Australia Fair (inequality and all that).

Also, with about 50 000 others, I’ll be running Bridge to Brisbane on Sunday.I haven’t got around to setting up my charity page for this, but please give to the good cause of your choice.

More events soon.

Categories: Life in General Tags:

Pushing back on productivity

September 3rd, 2014 15 comments

For the last twenty years, I’ve been engaged in a lengthy debate with advocates of microeconomic reform who claim that reforms produced a surge of productivity growth in the 1990s and that more such reforms are urgently needed. I argued that the apparent surge was the result of increased capital utilization and higher work intensity in the aftermath of the 1989-92 recession. Hardly anyone in the economics profession was convinced.

Their views were unchanged after 2000 when (as I had predicted) productivity growth tailed off and then turned negative as the fear of unemployment decelined and the work intensification of the 1990s was reversed. First, this decline was attributed to a range of special factors (drought, Y2K and so on). Then it was said to be a measurement problem associated particularly with mining (true, but why accept measurement error in the 2000s while denying it then 1990s). Finally, after 2008, it was blamed on the end of Workchoices.

As everyone on both sides of the debate understands (though some choose to deny it at times) “productivity” is code for “working harder”. Microeconomic reform is supposed to increase competitive pressure and thereby keep workers on their toes at all times. In addition, they are suppose to “work smarter” which essentially means “find ways of getting more work done with no additional resources”.

Now, at last, it seems that I’m not alone in casting doubt on all this. Ross Gittins, always more sophisticated than the majority of economic commentators, has picked up some remarks by Ric Simes and Mike Keating telling business leaders to stop complaining about their workers’ laziness and start doing what they are supposed to be paid for: promoting innovations that yield genuine improvements in productivity. I’ve quoted at length over the fold, but do go and read the full piece.

Read more…

Categories: Economic policy Tags:

Hoover channels LaRouche

September 2nd, 2014 10 comments

Despite my attempts at zombie-slaying, the myth that Rachel Carson advocated and caused a worldwide ban on DDT, leading to the deaths of millions, keeps being reanimated. I came across an example that is interesting mainly because of its provenenance. It’s by Henry I Miller of the Hoover Institute and Gregory Conko of the Competitive Enterprise Institute. CEI is hack central, so nothing it produces ought to surprise anyone. But Hoover boasts a Who’s Who of (what remains of) the right wing intellectual apparatus: Hnery Kissinger, Condi Rice, John Taylor and Harvey Mansfield, among many others. And Miller was apparently ” founding director of the FDA’s Office of Biotechnology”. So, the fact he can run this kind of thing is good evidence of total intellectual collapse on the right.

The two main authorities cited by Miller and Conko in their critique of Carson are “San Jose State University entomologist J. Gordon Edwards” author of “The Lies of Rachel Carson” and “Professor Robert H. White-Stevens, an agriculturist and biology professor at Rutgers University”. Unfortunately, Miller and Conko don’t reveal that Edwards’ piece was published (like much of his work on environmental issues) in the LaRouchite journal “21st Century News”. And, while describing White-Stevens academic affiliation (dating to the 1950s as far as I can tell), they don’t inform readers of the more relevant fact that, when he offered a patronising critique of “Miss Carson’s ideas”, he was a spokesman for American Cyanamid. That’s right: as refutation of Rachel Carson in 2012, this Hoover Institute Fellow is offering the PR put by a pesticide company in the 1960s, along with a screed by a far-right loony.

I suspect the reason these facts weren’t revealed is that Miller and Conko weren’t aware of them. Their piece looks to have been cobbled together from various bits of flotsam in the rightwing blogosphere.

I’d be interested to see if any of the rightwing luminaries associated with the Hoover Institute is willing either to criticise or endorse this piece. My guess is that tribal solidarity will preclude the former and residual intelligence the latter.

Categories: Boneheaded stupidity, Environment Tags: