Archive for April, 2017

Videocast questions?

April 29th, 2017 11 comments

Continuing on the multimedia theme, I did a video presentation for the TAFE section of the Australian Education Union a few weeks ago. I’ve always been keen on this as an alternative to air travel, and I got great help from the multimedia people in our faculty, but I’m still not sure how best to make use of this.

The videofile is here, but it’s 640 Mb, so I don’t suppose many people will want to download it. What’s the best way to distribute it so that lots of people can get access?

Update: Thanks to reader Peter Bayley a 58Mb version is now up on YouTube

Categories: Mac & other computers Tags:

Where did all the money go?

April 29th, 2017 10 comments

That’s the title of a podcast I did recently. University of Melbourne Vice-Chancellor Glyn Davis has a regular podcast called The Policy Shop, and he was talking to me and Judith Sloan. That might have been a recipe for a slanging match, given that we don’t agree on much, but it actually worked pretty well.

Categories: Economic policy Tags:

Alternatives to Adani

April 29th, 2017 14 comments

Westpac’s announcement of a new policy that appears to exclude funding for the development of mines in the Galilee Basin appears likely to sound the death knell for Adani’s proposed Carmichael Mine and rail line. Westpac was the last of the four big Australian banks to announce such a policy. It joins at least 17 global banks, notably including Standard Chartered, which had previously been a major source of finance for Adani

In these circumstances, the proposed $900 million loan from the government’s Northern Australia Infrastructure Facility would involve a high risk of loss, and would therefore be an improper use of public funds. The same is true, admittedly to a lesser extent, of the rival proposal for a rail line put forward by Aurizon (the privatised business formerly known as Queensland Rail).

But if the NAIF doesn’t fund coal railways, how should its resources be allocated? And, what about the jobs promised by the Adani project that will not now be created? Obviously, these two problems are inter-related.

On the evidence of Adani’s own experts, the Carmichael project would create around 1000 jobs (despite this, the discredited figure of 10 000 jobs continues to be touted). So, the proposed NAIF loan would involve an investment of nearly $1 million of public money for every new job created. It shouldn’t be too hard to match that.

But what’s really needed is an alternative to the outdated developmentalism that has characterized not only the Adani proposal but the whole idea of a Northern Australia policy. What are the real economic and social needs of the people of the region, including indigenous people, who are directly affected by the Adani proposal? I’m planning more work on this soon.


Categories: Economic policy, Environment Tags:

Renationalise energy

April 27th, 2017 14 comments

Looking at the Turnbull government’s move to limit gas exports, I can’t do better than quote Bernard Keane in Crikey (paywalled, but here’s the bit that matters)

A while back I suggested Turnbull had been “mugged by reality” on energy policy. But he’s far from the only one. All of us who have advocated free markets and the primacy of the private sector in delivering essential services have copped the same mugging; now we need to accept that liberalisation has dramatically failed in energy. A mystifyingly complex market was designed for private sector operators with the intent of freeing up government capital and driving greater efficiency. And while the Coalition’s climate denialism created investor uncertainty that proved a key factor in the crisis, it’s the relentless opportunism of industry players to game the system and exploit every opportunity to jack up prices, and Santos’ truly spectacular bungling, that has led to this. As you sow, so shall you reap. Back to hardline regulation.

I was in the minority in a recent economists poll on this topic, supporting gas reservation, though not with any great enthusiasm. My statement

Energy policy in Australia is a mess. Prices don’t reflect economic or climatic costs. Availability of some low-cost gas would obviously improve the situation here, in particular allowing an adjustment away from coal. I don’t know whether the opportunity cost of forgoing overseas sales is accurately reflected by the export price.

The policy announced by the Turnbull government amounts to a partial nationalisation, since the government has taken control of our gas reserves back from the supposed private owners. But it’s a half-baked and half-hearted step. What we need is properly national, publicly owned energy grid, in which the role of private ownership is to fill gaps left by the public.

Categories: Economic policy Tags:

Too cheap to meter

April 26th, 2017 26 comments

Reading about the UK National Grid recently, I came across the interesting concept of demand turn up. Unlike the usual form of demand side management, where users are paid to cut usage in periods of excess demand, demand turn up involves making small payments to users willing to increase demand when the supply from renewables exceeds demand.

This looks strange at first sight, but it simply reflects the fact that, once the capacity is installed, the marginal cost of renewable electricity is zero. In the short run, taking account of the costs of shutdown and startup, the marginal cost of electricity from an operating renewable generation source is negative*.

So, demand turn up is just an application of marginal cost pricing, the same as off-peak pricing for coal-fired power.

The broader point is that claims that the electricity supply system must have a large component of coal-fired to meet “baseload demand” reflects the assumption that the system must meet the demands generated by a pricing system set up for coal (or nuclear which is broadly similar).

Categories: Economics - General, Environment Tags:

Lest we forget

April 25th, 2017 16 comments

For my Anzac Day post today, I’ll quote the man most directly responsible for the disaster, describing the war of which it was a part (H/T Daniel Quiggin)

Germany having let Hell loose kept well in the van of terror; but she was followed step by step by the desperate and ultimately avenging nations she had assailed. Every outrage against humanity or international law was repaid by reprisals often on a greater scale and longer duration. No truce or parley mitigated the strife of the armies. The wounded died between the lines; the dead moldered into the soil. Merchant ships and neutral ships and hospital ships were sunk on the seas and all on board left to their fate, or killed as they swam. Every effort was made to starve whole nations into submission without regard to age or sex. Cities and monuments were smashed by artillery. Bombs from the air were cast down indiscriminately. Poison gas in many forms stifled or seared the soldiers. Liquid fire was projected upon their bodies. Men fell from the air in flames, or were smothered, often slowly, in the dark recesses of the sea. The fighting strength of armies was limited only by the manhood of their countries. Europe and large parts of Asia and Africa became one vast battlefield on which after years of struggle not armies but nations broke and ran. When it was all over, Torture and Cannibalism were the only two expedients that the civilized, scientific, Christian states had been able to deny themselves: and these were of doubtful utility.

As it turned out, even this assessment was too optimistic. The second phase of the great world war saw the end of the few limits that had been observed in the first.

To pay respect to the Anzacs and those who followed them, we should stop repeating the mistakes and crimes of those who sent them to their deaths.

Categories: Life in General Tags:

Monday Message Board

April 24th, 2017 21 comments

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:


April 22nd, 2017 40 comments

I’ve been on holiday over Easter, going to the National Folk Festival in Canberra, which is why I haven’t posted for a while. One thing that struck me during my break was the Easter editorial in the Oz. In place of the usual vague pieties, it was a full-scale blast of Christianism, demanding that Australians respect the specifically Christian nature of the holiday. This was followed up by Nikki Savva (not someone who has ever struck me as showing any religious feeling) denouncing Bill Shorten for desecrating this sacred holiday with mundane politics.
Read more…

Categories: Life in General Tags:

An unhappy coincidence?

April 10th, 2017 11 comments

The other day my incoming email included an invitation from an Olla Galal, special issue developer at Hindawi publishers, to be the Lead Guest Editor for a Special Issue of Occupational Therapy International. Nothing too surprising in that, although my knowledge of occupational therapy would barely extend to a paraphrase of the name. I’m always getting invitations like this, and while I had the impression that Hindawi was a cut above the kind of predatory publishing house that does this kind of thing, I wasn’t too sure. (I have received previous invitations of this kind from them, but in fields where I could at least be a plausible candidate.

What made me pay attention was this

In June 2016, Wiley and Hindawi entered into a new publishing partnership that converted nine Wiley subscription journals into Open Access titles. The journals will be published under both the Wiley and Hindawi brands and distributed through Hindawi’s online platform

So, if this is accurate, I could become a guest editor for a Wiley journal in a field in which I am totally unqualified. More seriously, authors of papers in the old version of Occupational Therapy International “very well respected in its field with an impact factor of 0.683” according to Olla Galal, will now be associated with the new one.

Having got this far, I thought I should check Beall’s list of predatory journals, only to discover that it went dark on 17 January* for unexplained reasons. This is certainly depressing. It seems that even supposedly reputable academic publishers are now engaged, with only the fig leaf of a “partnership”, in seriously predatory behavior. How long before we see them pandering to the demand for “alternative fact” journals to give proper credibility to creationism, climate science denial, antivax and so on, if they are not already?

* Only a couple of days before Trump’s inauguration. Coincidence?

Categories: Science Tags:

Burden of proof

April 10th, 2017 81 comments

Ted Trainer, with whom I’ve had a number of debates in the past, has sent me an interesting piece claiming that “no empirical or historical evidence that demonstrates that [100 per cent renewables” systems are in fact feasible”. The authors, at least those of whom I’m aware, are “pro-nuclear environmentalists” (Ben Heard, Barry Brook, Tom Wigley and CJ Bradshaw) The central premise is that, given that renewables won’t work, and reductions in energy demand are unrealistic, we need to get cracking on nuclear (and also carbon capture and sequestration).

It’s paywalled, but the abstract is sufficient to get the main point. In fact, the whole piece is summarized by its title “Burden of Proof”. To give the shorter version: Unless every possible detail of a 100 per cent renewable system can be proved to be workable decades in advance, we must go nuclear.

The longer version is in these paras from the abstract

Strong empirical evidence of feasibility must be demonstrated for any study that attempts to construct or model a low-carbon energy future based on any combination of low-carbon technology.

The criteria are: (1) consistency with mainstream energy-demand forecasts; (2) simulating supply to meet demand reliably at hourly, half-hourly, and five-minute timescales, with resilience to extreme climate events; (3) identifying necessary transmission and distribution requirements; and (4) maintaining the provision of essential ancillary services.

This list is mostly notable for what’s not in it: adequate year-round power supplies, at an economically feasible cost. That’s because it’s now obvious that solar PV and wind, combined with one of a number of storage technologies (solar thermal, batteries, pumped hydro) and a bit of smart pricing, can deliver these goals. So, instead we get demands for the precise details in the list above. To lift the burden of proof a bit more, it’s not good enough to address them separately, they all have to be done at once in a single study. Unsurprisingly, no one has yet produced a study that meets all of these demands at once.*

And this is where the burden of proof works so brilliantly. Renewable technologies are well established, with annual installations of 100 GW a year a more, and a record of steadily falling costs. But, according to our authors, they haven’t met the burden of proof, so we have to put tens of billions of dollars into technologies that are either purely conceptual (Gen IV nuclear) or hopelessly uneconomic on the basis of current experience (CCS and generation II/III nuclear).

To be fair, this use of the burden of proof, while more blatant than usual, is very common. One any policy issue, most of us would like to compare an idealised model of our preferred solution with the worst case scenario (or, at best, the messy and unsatisfactory reality) for the alternatives. But it’s important to avoid this temptation as much as possible. On any realistic assessment, renewables + storage (with the path to 100 per cent smoothed by gas) offer a far more plausible way of decarbonizing electricity generation than nuclear or CCS>

Clarification: In comments, Ben Heard points out that the authors counted two publications from closely related studies together.

Categories: Environment Tags:


April 10th, 2017 28 comments

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. As an example, alternative theories about the gas attack in Syria belong here.

Categories: Economics - General Tags:

Monday Message Board

April 10th, 2017 53 comments

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:

Cognitive consistency

April 8th, 2017 25 comments

One of the few points on which I agreed with Donald Trump during the election campaign was on his statements to the effect that the US should not get involved in Middle Eastern wars. Of course, Trump being Trump, he made the contradictory promise to “have a plan to defeat ISIS within 30 days.” (There some ambiguity as to whether the 30 days was the time taken to produce the plan, or whether he already had the plan and would have ISIS beaten in 30 days. As of day 78, it scarcely matters). But one point that came across reasonably clearly was that Trump wasn’t going to do anything about removing Bashir Assad from power, and was going to increase co-operation with Putin, Assad’s patron.

All that has now gone by the board, but it is unclear what is going to replace it. Following the horrific poison gas attack a few days ago[1], Trump responded in thoroughly Trumpish fashion. His missile attack was big enough to mark a clear, and possibly irreversible, escalation of US involvement, but not big enough to have any military effect. A day after their airbase was attacked, Syrian Air Force planes were flying out of it to launch more strikes against their opponents.

I don’t have a solution to the current mess other than the Irish advice “if I were you, I wouldn’t start from here[2]”. But, at least I now have the cognitive consistency of knowing there is now no policy issue of importance on which I agree with Trump.[3]

fn1. Very probably, though not certainly, undertaken by Assad’s regime. I don’t want to be derailed by this and will delete, with prejudice, any comments seeking to ventilate alternative theories.

fn2. Obvious wrong turnings on the way to where we are start with the Sykes-Picot agreement in 1915 and go all the way to the Iraq war.

fn3. I was happy that he refused to sign TPPA. But it’s now clear he’s pursuing the standard corporate agenda on trade, including ISDS and strong IP.

Categories: World Events Tags:


April 5th, 2017 40 comments

Like most people, I don’t like being suckered. But I was well and truly suckered by Aaron Patrick of the Australian Financial Review today. Patrick wrote to me saying he was doing a feature article on penalty rates and I gave him a long interview setting out my position. In particular, I made the point that, if (say) a 10 per cent reduction in wages produced only a 1 per cent increase in hours of work demanded by employers, the average worker would end up doing more work for less money. This is a standard point in the analysis of minimum wages.

As it turned out, I was wasting my breath. All Patrick wanted was the concession that lower wages might produce some increase in employment, thereby justifying the Gotcha! headline ‘Even union economists accept cutting penalty rates creates jobs’.

Given my history with the Fin, I shouldn’t have been surprised, I guess. But my general experience, even since Michael Stutchbury became editor, has been that most AFR journalists are straightforward professionals.

Also, most journalists these days understand that the game has changed with the rise of blogs and social media. Twenty years ago, the only response to a shoddy smear like Patrick’s would be a letter to the editor, which might or might not get published long after the event. Now, I can respond here and on Twitter, Facebook and so on. My readership might not be as big as the measured circulation of the AFR, but, after you deduct all the people who only look at the business pages, it’s not that different.

In any case, Patrick and the Fin are on a hiding to nothing with this one. Most people work for a living, and most have worked out by now that when the bosses talk about flexibility and productivity, they mean “work more for less”.


April 4th, 2017 14 comments

We’re all used to the fuss that takes place when the Reserve Bank cuts interest rates and banks don’t follow suit. On the other hand, when rates go up, the increase is almost always passed on rapidly and in full. But does this matter in the long run, or does competition sort things out. In this context, my wife Nancy pointed me to this interesting graph from the Housing Industry Association.

It seems pretty clear here that bank margins have increased steadily over the past ten years. I haven’t checked the data, but at least for mortgage rates, the current numbers look right to me.

China, me old China

April 4th, 2017 22 comments

One of the reasons I like blogging and opinion writing is that I’m better at thinking up ideas than at the hard work needed to turn them into properly researched journal articles, which is the core business of being an academic. So, it’s great when an idea I’ve floated in a fairly half-baked form in a blog or magazine article gets cited in a real journal article. Even better when it’s a colleague or, in this case, former colleague who cites me.

James Laurenceson, formerly of UQ and now Deputy Director of the Australia-China Relations Institute at UTS, has an article just out in the Australian Journal of International Affairs (paywalled, unfortunately, but well reading if you can get access), on Economics and freedom of navigation in East Asia, which cites a short piece I wrote last year and reproduced here. My key points were
* Contrary to many claims, China has no interest in blocking trade in the South China Sea, since most of it goes to and from China
* For the smaller volume of trade between other countries, the cost of taking a more roundabout route is so small that China could not exert any significant leverage by restricting access to the South China Sea
* There’s nothing special about this case. The whole idea that navies are vitally needed to keep sea lanes open is nonsense

Where I based the first two claims on a bit of Google searching and a couple of academic papers, James has developed the argument in convincing detail, addressing a wide range of possible counterarguments. If I could find someone to do the same thing for my third claim, I’d be very happy.

Categories: Economics - General, World Events Tags:

Monday Message Board

April 3rd, 2017 42 comments

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:

Generation Trump

April 1st, 2017 19 comments

For years now, I’ve been railing against the generation game, that is, the practice of labelling people born in some period of 15-20 years or so as a ‘generation’ (Boomers, X, Millennials and so on ) then making various claims about their supposed characteristics. A generation or so ago, I made the point that

most of the time, claims about generations amount to no more than the repetition of unchanging formulas about different age groups ­ the moral degeneration of the young, the rigidity and hypocrisy of the old, and so on

But this, and a stream of similar articles and blogposts have had no impact that I can see. Since I can’t beat the generation gamers, I’ve decided to join them. And, rather than wait for a new generation to leave school and enter the workforce, as is usual, I’ve decided to jump ahead and identify Generation Trump, consisting of those born after Donald Trump announced his candidacy for the US Presidency.

The crucial thing about this generation is that their character is formed entirely in Trump’s image. They are hedonistic, totally self-centred, have a short attention span, are prone to mood swings, and are almost entirely ignorant of the world beyond their own immediate concerns. On the other hand, they can be loving and affectionate, and many are totally family-oriented.

Astute readers will observe that, in a slightly toned down form, this is very similar what is now being said in contemporary depictions of Millennials, and was said about the ‘Slackers’ of Generation X when they were in their late teens and early 20s. That’s great for me, since it means I should be able to pump out marginal variants of the same cliches about Generation Trump until they mature into boring middle-aged adults. That is, of course, unless Trump himself does so first.

Categories: Life in General Tags: