John Quiggin

It’s safe to say that, little as I expected of the Newman government, the reality has generally been worse. Still, I’m going to give them credit on whenever it seems due, and here’s the first thing they’ve done that I can happily support. Following the recommendations of a study commissioned by the previous Labor government, it’s planned to drop the reverse parking component of the Queensland driving test. Ever since I failed my first driving test on this score 40 years ago, I’ve regarded it as a piece of utter stupidity. Why should anyone else be concerned whether I can reverse park, any more than they should care whether I can change my own oil? If anything, the worse I am at parallel parking, the better for everyone else – not only do I leave more spots for them, but they don’t face the risk of being jammed in a spot by someone who has skilfully parked their car with millimetres to spare.

This seems absolutely obvious. But, to give the contrary view, I turn the mike over to Paul Turner from motoring body RACQ, who manages to ignore the obvious contradictions in his statement.

“What we want is safer drivers, so we think the more it leans to a strengthening of the licensing system, the better,” Mr Turner said.

He said although reverse parking did not carry a high crash risk, it was still a “technical skill” that deserved a place in the driving test.

I’d suggest that a more relevant “technical skill” would be a stiff test in formal logic. That would clear an awful lot of bad drivers off the road.

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

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

I just downloaded the Queensland government’s paper announcing, but not spelling out, a 30-year electricity strategy to be developed in the course of this year. I started with healthy scepticism about this, but scepticism turned to bemusement when, on page 5, I ran into one of the worst graphs I have ever seen.

This graph, taking up half a page, contains a total of six data points (energy intensity and gross state product for three states). The relevant data, such as it is, is contained in the three yellow bars. The legend describes them as “Electricity use (KwH) per $ of state product”, while the axis label claims that the measure is “Energy use (Mj) per $ of state product” Since a joule is a watt-second, it’s easy to check that a kilowatt-hour is 3.6 megajoules, but the difference isn’t large enough to work out which one is correct. It’s a fair bet, though not sure, that the quantity being measured is electricity use, and not all energy use. The only information conveyed is the unsurprising fact that Queensland’s economy is more electricity-intensive (or maybe more energy intensive) than those of NSW and Victoria.[1]

The real joke, though, is the second measure, of total state product. This is of no interest at all, since it just reports the well known fact that NSW has a larger economy than those of Victoria and Queensland. But the thing that would make Edward Tufte turn in his grave (if he were dead, which Wikipedia tells me he is not) is that this irrelevant information is reported in a line graph, making it appear that there is some sort of relevant order here.

The rest of the graphics are almost, but not quite, as bad. There’s an amusing one describing the “engagement and accountability model”. Three Venn-style intersecting circles representing market, government and customer are overlaid with an equilateral triangle, the vertices of which are labelled “Engaged”, “Efficient” and “Effective”. All stakeholders are invited by the government to “get on board and challenge current thinking”.

Eager as usual to be a team player, I’ll be contributing some thoughts on the failure of electricity market reform to the Guardian, hopefully appearing tomorrow. I will certainly challenge current thinking and look forward to being welcomed on board by the Newman government.

fn1. Since no more explanation is given, I’ll take a stab at explaining the significance of these numbers. Assuming the Kwh measure is correct, and taking an average price of 15c/KwH, electricity amounts to around 3.3 per cent (0.15*0.22) of the total Queensland economy. That sounds about right to em.

The NY Times has an interesting, but unsatisfactory, article, on government attempts to promote urbanization in China, with a target of 70 per cent by 2025. The story is mostly about farmers whose land has been acquired by fiat, which fits into well-established journalistic frames. The bigger issue, buried right near the end, is the fact that, under the hukou system of registration, people classed as rural can’t legally live in the city. So, while about 35 per cent of the population is legally urban, the true figure is more like 53 per cent. That makes nonsense of the figures quoted at the beginning of the article, and the suggestion of forced urbanization on a historically unparalleled scale. In reality, the announced target implies a modest slowdown in rural-urban migration, which has occurred despite official disapproval.

The big question, at least from the viewpoint of rural Chinese, is whether China can shift to a universal social welfare and retirement income system to replace the workplace-based system of social welfare, of which hukou was part, and which made sense with comprehensive state ownership. This topic is touched on in the NYT article, but in a fragmentary and confusing way, and it’s one about which I know little. I’d be grateful if anyone could point to a more comprehensive treatment.

From an Australian point of view, the continued construction of high-rise apartment buildings, highlighted in the article, is a big deal, since it drives much of the demand for steel, and therefore iron ore and coking coal, that has underpinned our amazing run of good economic fortune, along with the willingness of both Australian and Chinese governments to implement large-scale fiscal stimulus at the time of the global financial crisis.

Update Paul Romer makes much the same points, from a more informed perspective than mine.

… from blogging.

I’ve been off-air for quite a while. First, I was travelling in Europe, mainly based in Paris, doing some joint work with colleagues there and attending conferences on decision theory. I made some good progress on my main project, on the role of unforeseen contingencies in financial crises, which hope will lead to some interesting posts in the future.

I got back a couple of weeks ago, with a week to spare before I went to the Cairns Adventure Festival, where I entered in the 70.3 (Half Ironman) event. I was the last person to finish within the stated cutoff time of 8 hours, though a few crossed the line after that. Still, I finished, which pleased me a lot given that two weeks in Paris would be suboptimal for training even if it hadn’t been wet and cold enough that I caught a nasty cold there.

That was a week ago, and I’ve been catching up on unfinished business, and planning a return to regular blogging. The state of Australian politics is so depressing that I plan to avoid the topic altogether[1], which will give me a chance to talk about some of the broader issues we face.

fn1. Let’s see if I can hold myself to this, or whether I get so annoyed I need to vent

In August 2012, the US House of Representatives voted 414-0 against governments trying to control the Internet

The House resolution calls on U.S. government officials to tell the ITU and other international organizations that it is the “consistent and unequivocal policy of the United States to promote a global Internet free from government control.”

I wonder if we will see more resolutions like this. It wouldn’t surprise me.

I have a new piece out in the National Interest, explaining why gold, unlike Bitcoins, will remain valuable for many years to come. In essence, gold has an intrinsic value derived from its industrial and decorative uses, and this value is enhanced by the demand for gold as a store of value, and by the belief (mistaken in my opinion, and certainly not an option I would favor) that gold-backed currencies may be restored.

By contrast, in my view, this piece by Robert Murphy misses the crucial distinction. Monetary demand can enhance intrinsic value, but it can’t make an intrinsically worthless asset valuable. He also fails to state the crucial point about fiat money. The “fiat” comes from the fact that a state can demand taxes can declare (“fiat”) that its money is acceptable in payment of those obligations. Hence, as long as the state can enforce its demands, its money has real value.

I see from my Twitter feed that the viewpoint I expressed a year or so ago is becoming more widespread. Of course, it’s too late now for anything but damage mitigation.

Repost follows:

How Gillard could win for Labor

By resigning gracefully. If I were advising Gillard on how best to secure her place in history, I’d suggest waiting until the 1st of July and then making a speech along the following lines

The carbon price, legislated by my government is now in place. It will soon become obvious that the scare campaign run by Mr Abbott and the Opposition has no basis in reality and that our plan will achieve cost-effective reductions in carbon emissions, while making most Australian households better off. I am proud of my government’s achievements in this and other areas. Nevertheless, I recognise with sadness that I am not the best person to take this message to the Australian public. I have therefore decided to resign the office of Prime Minister and advise my Labor colleagues to support the return of Mr Kevin Rudd to this position. Mr Rudd and I have had substantial disagreements over matters of managerial style, but we are agreed on the need for a Labor government with Labor values, and on the need for action in key areas including the carbon price, the mineral resource rent tax and the successful management of the Australian economy. I will give the new PM my enthusiastic support, and work for the re-election of a Labor government.

Would this work? I’m not really sure. But given Abbott’s failure to achieve any popular support at a time when Labor has plumbed unheard of depths of popular support, it would have to be worth a shot. At a minimum, it would help avoid the Queensland-style wipeout that is currently on the cards. And if it worked, history would certainly look kindly upon a PM willing to give up the job for the sake of her party and, more importantly, in the best interests of the country.

I ran this up yesterday, but have only just had time and Internet access to post it

Despite the usual attempts to shift blame to the previous Labor government, Queensland Treasurer Tim Nicholls’ budget speech shows that the real problem is inadequate tax revenue. The boost provided by the housing and mining booms has passed, but the demand for public services continues to grow. Attempts to solve the problem by cutting staff, supposedly without reducing services, are doomed to failure, as is already becoming apparent.

Because it is the lowest taxing state in Australia, Queensland’s difficulties are even worse than those of other states. The Budget contains some belated recognition of this, with the deferral of the irresponsible proposal to raise the payroll tax threshold, already the highest in Australia, even further. Scrapping this proposal altogether would do more to ensure the fiscal sustainability of the state budget than the unsustainable cuts imposed last year.

Ultimately, however, the solution to this problem must be found at the national level. While the Budget’s complaints about the meanness of the Federal government strike a familiar chord, in the present context they are fully justified

I’m back in Australia, catching up on a few things, and getting ready to resume normal blogging in a week or so. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

There’s been a spate of recent articles looking at a group of US political writers referred to as “conservative reformers”.

The term ‘reformers’ is misleading since it tends to imply a shift in the direction of liberalism, which is not what the members of this group are hoping to do. More importantly, it implies the existence of a body of orthodox conservative thought against which the reformers are reacting. In reality, US conservatism has returned to the state identified by Trilling ‘ a series of irritable mental gestures. The ‘reformer’ label covers all those self-identified conservatives who would like to present some sort of intellectually coherent policy platform. These days, that’s a surprisingly small set – the typical list includes Douthat, Salam, Ponnuru, Barro, Brooks, Levin, and Dreher.

There used to be many more people in this group. But one by one, they’ve either abandoned ship and moved to the left (Lind, Sullivan, Frum, Bartlett, Ornstein) or descended into outright hackery, an absolute requirement for employment at any of the main rightwing thinktanks (and it’s hard to recall, but there was a time when people like Glenn Reynolds and the Volokhs seemed like serious intellectuals).

Looking at the remaining group, it’s pretty clear that Barro and Dreher are well on the road to apostasy, while Brooks and Levin are now reliable hacks, if they weren’t always. So, that leaves three reformers (Douthat, Salam and Ponnuru) still on the island.

The reactions of the remaining three reveal the pressure they are under. Salam more or less openly shills for the party line from time to time, as in his (now-deleted) attack on the DREAM Act. It seems pretty clear that he will stick with the team, come what may.

Ponnuru responded with the plaintive observation that, to accept the positions being urged on him from the left, he would have to concede that the majority of US conservatives were crazy. But, if craziness is assessed on the basis of stated views, this is evidently true, as Ponnuru surely knows.

Pluralities of US conservatives believe, or at least claim to believe, that:

The President of the US is a socialist Muslim, born in Kenya
The earth is less than 10 000 years old
Mainstream science is a communist plot
Armed revolution will likely be necessary in the near future

Ponnuru hopes that he can engage in serious policy discussion with conservatives while treating such delusional statements as mere shibboleths – harmless assertions of tribal identity

Most interesting is this piece by Ross Douthat, setting out what he sees as the reform conservative policy program. As he observes, it’s not designed to appeal to (US) liberals, and its full of arguments that have been demolished repeatedly by the left.

OTOH, as Douthat admits, there’s no sign that the Republican party has any interest in a program of this kind. More importantly there’s nothing there that would seriously upset a moderate conservative like Obama, or either of the Clintons. It’s well to the left of the revealed preferences of someone like Rahm Emanuel.

Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

Sunday was Mother’s Day in Paris, and also the occasion of a big demonstration against equal marriage, titled “Manif Pour Tous”, presumably with the unspoken reservation “sauf homos”. I ran into a bit of the crowd, coming back from this event [^1], and they were certainly loud and boisterous. The idea that this was a rightwing version of a “Paris Spring” occurred to me, and also to this commentator in Le Monde.

I’ve seen it suggested that resistance to equal marriage is stronger in France, because there’s no legal recognition for church marriages – everyone has to go through the same civil ceremony. I’d be interested in other thoughts on that.

Overall, the real appeal of the right still seems to me to lie in anti-immigrant rhetoric and, within Europe, on attempts to blame the people of one country or another for a crisis of the entire global system of financial capitalism. The backlash against equal marriage seems to me to be the last gasp of the cultural right, rather than the basis for a sustained upsurge. But then, what I know about social developments in France would fit comfortably on a restaurant menu, so I’d be interested in what others have to say on this..

[^1]: I’m actually in town for this conference, where I’ll be talking about bounded rationality and financial crises. Essentially a preliminary attempt to describe the “Black Swan” problem in terms of formal decision theory, with the hope that this will lead to a more developed theory of financial bubbles and busts.

I’m travelling, so posting will be light to non-existent for a while yet. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

There’s been a lot of excitement about the discovery of two Earth-like[^1] planets, a mere 1200 light years away. Pretty soon, I guess, we’ll be thinking about sending colonists. So, I thought it might be worthwhile to a little bit of arithmetic on the exercise.

I’m going to assume (generously, I think) that the minimum size for a successful colony is 10 000. The only experience we have is the Apollo program, which transported 12 astronauts to the Moon (a distance of 1 light second) at a cost of $100 billion or so (current values). So, assuming linear scaling (again, very generously, given the need to accelerate to near lightspeed), that’s a cost of around $100 trillion per light-second for 10 000 people. 1200 light-years is around 30 billion light-seconds, so the total cost comes out roughly equal to the value of current world GDP accumulated over the life of the universe.

Even supposing that technological advances made travel possible over such distances possible, why would we bother. By hypothesis, that would require the ability to live in interstellar space for thousands of years. A civilisation with that ability would have no need of planets.

[joke alert on] On behalf of my fellow Australians, I’m going to make a counter-offer. For a mere $10 trillion, we can find you an area of land larger than a typical European country, almost certainly more habitable than the new planets, and much closer. We’ll do all the work of supplying water and air, build 10 000 mansions for the inhabitants and guarantee a lifetime supply of food. I’m hoping for a spotters fee of 0.01 per cent.[joke alert off]

On a related point, what should we be wishing for here? The fact that no-one has sent a detectable signal in our direction suggests that intelligent life forms similar to humans are very rare. If habitable planets are very rare, then this is unsurprising – interstellar distances preclude both travel and any kind of two-way communication. If on the other hand, the emergence of intelligent life is common, then the evidence suggests that its disappearance, through processes like nuclear war, must also be common.

[^1] Where Earth-like means somewhere between Venus-like and Mars-like.

The Final Report of the Queensland Commission of Audit, headed by Peter Costello, has been released. It largely abandons the claims made in the Interim Report, suggesting that the state’s fiscal problems are the result of irresponsibility on the part of the previous government. To its credit, the Commission identifies the real problem, namely, the long-term tendency for the share of expenditure going to human services such as health and education to rise over time. Since these services are largely provided or funded by governments, they can’t be provided, on the scale people would like, without increasing taxation.

Unfortunately, that’s where the credit stops. The core of the problem, identified by William Baumol in 1967, is that, for obvious technological reasons, productivity in these services tends to grow more slowly than in other sectors, most notably goods-producing sectors. The Commission’s proposed solution is breathtaking in its simplicity – if we could raise the rate of productivity growth in the human services sector, the problem would go away. Yes, and if wishes were horses, beggars would ride.

My response, which got a run in today’s Courier-Mail, is here.

Back in the early days of this blog, I was working on the idea of a new political dictionary, and made a start with a “Word for Wednesday” series. One of them is relevant to this comment from Megan, about whether we should put scare quotes around the word “reform”, to describe policies, advocated as beneficial reforms, but which we believe to be harmful. My general practice on this blog is not to use scare quotes, and I explain why.

As Raymond Williams points out in his excellent little book Keywords, from which I got the idea for this series, reform originally meant ‘restore the original form’ of something. In particular the Reformation was supposed to sweep away the abuses of the Papacy and restore the church to its original purity. As this example indicates, the worldview associated with this usage was one of decline rather than progress. The best one could hope for was to get back to things as they were in the good old days. This view was dominant in Western thinking from Plato to the 17th century.

From the 18th century onwards, reform underwent something of a reversal, since it now typically implied forming something new. But since the associated worldview was now one of progress, the assumption remained that reform entailed change for the better.

From the 18th century to the 1970s, the term reform was typically used to describe policies favored by the moderate left, in opposition to advocates of revolutionary change on one side and of conservatism and reaction on the other. From the 1970s to the end of the 20th century, though, the direction of policy change was reversed, with the rise of neoliberalism. However, the term reform continued to be used, even when the policies it described consisted of the dismantling of earlier reforms.

As a result, critics of neoliberal policies have frequently resorted to the use of “scare quotes”, as in my recent reference to ‘workplace reform’, or to similar alerts like “so-called”. While the automatic assumption prevails that the term reform applies only to desirable changes, such devices are necessary.

Where it’s feasible though, the best approach is to define reform as “any program of systematic change in policies or institutions” and make it clear that there is no implication of approval or disapproval.

I’ve been meaning to post about the Australian Energy Market Operator’s report on the feasibility of a 100 per cent renewable electricity supply system for Australia (H/T commenter Ben). In the meantime, Brian Bahnisch at LP has done a detailed summary, so I’ll refer you there and make a few points of my own.

First, this study should kill off, once and for all, claims made here and in many other places (notably, at Brave New Climate) that the intermittency of renewable electricity is an insuperable problem.[1] The AEMO is the body that manages the electricity market on a minute-to-minute basis, so it has the expertise to assess this claim, unlike the many amateurs who have tried their hands. And, since it might have to do the job, it has no reason to understate the difficulties of a renewables-based system.

Second, the estimate cost of $111 to $133 per megawatt-hour represents an increase of $60-80/MwH on current wholesale prices, or 6-8c/Kwh on retail prices. That’s much less than the increase we’ve seen thanks to the mishandling of electricity market reform. If we wound back those costs, we could actually end up with both 100 per cent renewables and cheaper electricity.

Third, although the study envisages a role for electric vehicles, it doesn’t present a full-scale program for decarbonization. But once you have a scalable, fully renewable electricity supply, everything else is comparatively easy.

Finally, if we take Tony Abbott at his word in wanting direct action to deal with climate change, this report provides him with a blueprint. If we want to, we can eliminate the great majority of domestic CO2 emissions simply by mandating renewable technology and electric vehicles. The cost would be substantial in dollar terms ($250 billion for the electricity component). But, over a couple of decades, it would be a barely detectable deduction from growth in national income.

Update As it turns out, there’s a response at Brave New Climate from Martin Nicholson. Nicholson reports on a study of his own, in which nuclear is included in the mix. On Nicholson’s estimates, this substantially reduces capital costs, a point of which he makes a big deal. But obviously, renewables have much lower operating costs and Nicholson estimates the levelised cost for his system at $124/MWh to $126/MWh. As he says:

As this is in the middle of the AEMO range, wholesale prices are likely to be similar with or without nuclear

Given that very few current-generation nuclear plants have been built, cost estimates for nuclear are speculative. The obvious inference for Australia is that we should push along with renewables, and take a “wait and see” position on nuclear, observing developments in the UK, US, France and China. If they can deliver nuclear safely and at low cost, we can add it to the mix (say, after 2030).

Sadly, I think most of the BNC readership are locked into a position that nuclear must be the answer, which requires them to believe that renewables won’t work. Even a comprehensive demonstration that renewables can deliver a 100 per cent solution at a cost comparable with optimistic estimates for nuclear isn’t going to shift them.end update

fn1. This is part of a rhetorical manoeuvre aimed at pushing the conclusion that nuclear is the only feasible zero-carbon option. Once it’s admitted that 100 per cent renewable electricity is feasible, nuclear advocates need to present a case based on comparative costs. In the Australian context, it will be very hard to make that case, given the need to set up a complete nuclear infrastructure from scratch.

Crikey asked me to write 1000 words or so on my ideal budget. I didn’t respond exactly in those terms, looking instead at the strategy for the medium term. Crikey ran it today, and I’m doing the same (over the page).

Read more…

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

Another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

Apparently, a new survey shows that Millennials (more precisely, US high school students interviewed between 2005 and 2007, and therefore born in the early 1990s) are lazy and entitled. More precisely, as textbook worker-consumers are supposed to, they would like nice stuff, but not if they have to work long hours to get it. I’m too bored to link to it, but you can easily find it.

The best that can be said for this kind of thing is that it relieves the monotony of boomer-bashing. Apart from that it is a repeat of the formulaic denunciation of adolescents that has been applied (in my memory) to Gen Y (insofar as this group differs from the Millennials) Gen X (Slackers), Boomers (hippies) and the Silent Generation (the original teenagers). Then there were the Lost Generation and so on back to the (apocryphal, I think) rant often attributed to Socrates. Only those who have the good fortune (?) to come of age in a time of full-scale war miss out on this ritual denunciation.

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

Ever since the Hawke government announced the “Trilogy” commitments in 1984, promising no increase in the revenue and expenditure shares of national income, Australian politics has been, in effect, a conspiracy of silence about the central issue of economic policy, that of the appropriate balance of private and public expenditure. The steady growth in demand for services like health and education has ensured that no reduction in the public sector share has been feasible, while the market liberal dogma enshrined in the Trilogy has prevented any increase.

In retrospect, it’s striking that Hawke’s commitment came just after the reintroduction of Medicare, funded (in part) by a levy on all incomes. Medicare’s success has made it politically untouchable. On the other hand, it has been assumed (though without much supporting evidence) that any increase in taxation (not matched by offsetting cuts) is politically impossible.

The Gillard-Swan government was, until yesterday, ruled by this doctrine. With their unfortunate habit of making categorical commitments out of aspirations, both Gillard and Swan had repeatedly ruled out a levy to fund the National Disability Insurance Scheme (by contrast, “conservative” state premiers like Newman were happy with the idea) But, as a recent Grattan Institute report has made clear, there is no way of meeting the needs for health and education without a substantial increase in revenue (as well as cuts in low-priority direct expenditures and tax expenditures).

So Gillard has announced a proposal for a 0.5 percentage point increase in the Medicare levy, raising $3 billion a year. Abbott has equivocated so far, but has stated his support for the NDIS, which leaves him no honest options except to go along.

If we could achieve consensus on paying for improved services through higher taxation in this case, we might finally have a serious debate about what, as a community, we are willing to pay for.

The full version of the Costello Commission of Audit Report has finally been released, along with the Newman government’s responses. As it turns out, the “Interim” report was the Commission’s last word on most of the big issues, such as the state’s debt position and fiscal outlook. The Final Report consists of

* A general discussion of the role of government, which is just a restatement of the market liberal orthodoxy of the 1980s and 1990s, proposing privatisation, competitive tendering and contracting and so on
* The specific claim that Queensland can deal with the problem of rising demand for health, education and similar services in coming decades by permanently raising the rate of productivity growth in those sectors.
* Detailed discussion of all areas of government activity.

Of these, the second is the important one. The fact that productivity grows more slowly in human services than in other sectors of the economy, and that this implies relative growth of the public sector, has been known since the work of Baumol in the 1960s. This pattern is unlikely to be changed by the kinds of measures being proposed by the Commission.

The Australia Institute has a report out making the point that the growth in the administrative and marketing costs of electricity companies, following the reforms of the 1990s, has added more to electricity prices than has the carbon price.

Also, the Centre for Policy Development has a nice piece on solar PV coming out soon. Look for it.

Finally, here’s a piece I wrote for the The Economic and Labour Relations Review in 2001. Conclusion over the fold. I think it stacks up pretty well, certainly compared to the gushing praise for reform that was commonplace at the time.

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I appeared at a Senate inquiry into the Minerals Resource Rent Tax yesterday. Given the virtual certainty that the tax will be abolished after the election, I tried to focus on the future. Here’s my opening statement

Read more…

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

Thinking about Anzac Day, with the inevitable mixed emotions, I was struck by the resemblance of the Anzac legend to that of the Charge of the Light Brigade in the Crimean War – the same incredible bravery of ordinary men commanded by bungling leaders to undertake a doomed and futile mission.

There’s another, even more tragic, echo here. Both the Crimean War and the Gallipoli campaign arose from the same cause – the decline of the Ottoman Empire, and the struggle over its partition. But in the Crimean War, the British and French were on the side of the Turks against the Russians. In the Great War, the imperial alliances had shifted, and the Russians formed part of the Triple Entente, while the Turks were on the side of the Germans.

Whatever the justice of the Allied cause in the Great War as a whole, the war with Turkey was nothing more than a struggle between rival imperialisms. The British and French governments signed secret treaties with each other, and with the Russian Czar, promising to divide the spoils of victory. At the same time, they made incompatible promises of independence for the Arabs and of a homeland in Palestine for the Jews.

There are no consolations to be had here. The Great War did not protect our freedom, or that of the world. Rather, it gave rise to the horrors of Nazism and Bolshevism, and, within Turkey, to the Armenian genocide. The carve-up of the Ottoman empire created the modern Middle East, haunted even a century later by bloodshed and misery.

As we reflect on the sacrifices made by those who went to war nearly 100 years ago, we should also remember, and condemn, the crimes of those, on all sides, who made and carried on that war.

Lest we forget.

Back in the 1980s, there was a constant stream of international delegations to Wellington, seeking to learn from the “New Zealand miracle”, in which a group of radical free-market reformers turned around a sclerotic welfare state. While the results had yet to show themselves, everyone was confident that NZ would soon surpass Australia, where the political system threw up many more obstacles to reform. Everyone knows how that turned out. After 100 years of economic parity, NZ GDP per person has fallen to around 60 per cent of the Australian level. The gap closed a little when NZ abandoned radical reform (from the first MMP election to the end of the Clark Labor government) but is now widening again.

And, just in the last week, the intellectual foundations of austerity polices have been cut away with the discovery that the influential paper of Reinhart and Rogoff, predicting disaster when public debt levels exceed 90 per cent of GDP, was based on a coding error (not to mention some dubious statistical choices). That follows the demolition of the even more influential work of Alesina, Ardagna and other co-authors, some of which I criticised in Zombie Economics

Against this background, it’s truly bizarre to see the Australian right (IPA, CIS and Tony Abbott) presenting New Zealand as a model, on the basis that the budget has been returned to surplus. Apparently, it doesn’t matter that the economic outcomes have been consistently appalling, as long as the ideology is right.

I have a simple suggestion which I hope will appeal to everyone. Since the new NZ government came in, deluded Kiwis have been voting with their feet in large numbers. The resulting imbalance could be addressed if the CIS, IPA, Parliamentary Liberal Party and their keenest supporters moved across the Tasman to try out the marvels of free-market reform for themselves.