Gough Whitlam open thread

October 22nd, 2014 67 comments

I’m hoping ot write an appreciation of Gough Whitlam’s contributions to Australian society soon. But in the meantime, I’ll open this thread for general discussion. I’m happy to entertain discussion of failures as well as successes, but I don’t welcome personal attacks on the recently departed in general, and certainly not in Gough’s case, so please keep discussion respectful.

Categories: Regular Features Tags:

Time to terminate Cormann

October 19th, 2014 94 comments

The flap about Mathias Cormann’s Schwarzeneggerian description of Bill Shorten as a “girlie man” isn’t too significant in itself. But in the context of other developments, it suggests a couple of patterns that represent big problems for the Abbott government.

First, Cormann has joined Joe Hockey and Arthur Sinodinos in making an idiot of himself. There’s now no-one among the key economic ministers who has any real credibility left. Add to that the hopelessness of the key spending ministers (Andrews, Dutton and Pyne) and it becomes clear that the Budget fiasco was, as they say, no accident.

At this point, it’s hard to see how the government can turn the economic debate around, even given a radical reshuffle of the existing team. Their best hope is probably that attention will remain focused on foreign policy.

Second, coming on the heels of a string of similarly disastrous statements from prominent rightwing figures (Barry Spurr, Alan Moran, Aaron Lane) it’s a pretty clear indication of how the Australian right talks when they think no one is listening, or forget that they are on record, and how far out of touch they are with today’s social mores.

Essentially, they are living in a bubble where they imagine that media figures like Andrew Bolt, Miranda Devine and Alan Jones represent the views of the majority of right-thinking people. In reality (most obviously in the case of Jones, but equally true of Bolt and Devine) these are people who make a good living by taking the views of the most bigoted 10 per cent or so of the Australian population (AFAICT, Australia is no better or worse than most other countries in terms of the prevalence of bigotry), and reflecting them back to the same audience in a more-or-less coherent form.

Except in rare and much resented cases like libelling people on account of their race, the Bolts and Devines are protected by the rules of free speech and the fact that they serve the interests of the Murdoch press. But that’s not true for politicians, thinktankers or participants in public inquiries. In these venues, as I know from my own experience, anything you say can and will be used against you. Unfortunately, for the Australian right, the racist, sexist and generally nasty stuff that goes down a treat at Young Liberal meetings and similar can no longer be laughed off when it gets out in public.

Categories: Oz Politics Tags:

BBC News Hour

October 16th, 2014 58 comments

My piece on the incoherence of US and Australian policy in the Middle East, suggesting that we should leave the people of the region to sort out their own problems, attracted a fair bit of interest, including a discussion on the BBC. You can listen to it here (about 31:55) for the next few days. I’ll try to replace this with a permanent podcast link.

Categories: World Events Tags:

Independents to block asset sales in Qld

October 16th, 2014 9 comments

The ABC reports that eight independent and minor party MPs in the Queensland Parliament have agreed to vote against the government’s asset sales plan (spuriously called a lease). This has several implications

* Most obviously, if neither major party wins a majority at the next election, the asset sales won’t go ahead
* Since most voters don’t like asset sales, this increases the likelihood of existing independents holding their seats and perhaps of others winning seats, so that a minority government becomes more likely
* Polling isn’t very helpful here, since the “two-party preferred” measure isn’t relevant in these circumstances, and the sample size is too small too tell us about which seats will go which way
* In the event of neither party winning a majority, the chance of a Labor minority government is enhanced by the fact that asset sales will be a key issue
* Everything is further complicated by the fact that, if the LNP lose their majority, Campbell Newman will almost certainly lose his seat in the process

I don’t bet on elections any more after I couldn’t collect my winnings from Intrade (long story), but a bet on Annastacia Palaszczuk as the next premier looks a lot more promising than it did yesterday (of course, there’s always the truly bizarre possibility that some other Labor MP could challenge here – they need to rule it this kind of nonsense ASAP)

Categories: Oz Politics Tags:

Legal reasoning (crosspost from Crooked Timber)

October 15th, 2014 28 comments

Not surprisingly, the US Supreme Court’s non-decision on equal marriage has caused plenty of debate, including John Holbo’s smackdown of NR’s Matthew Franck.

The discussion got me thinking about the broader problem of legal reasoning, at least in its originalist and textualist forms, and also in precedent-based applications of common law. The assumption in all of these approaches is that by examining (according to some system of rules) what was legislated or decided in the past, lawyers and judges can determine the law as it applies to the case at hand. There are all sorts of well-known difficulties here, such as how words written a century ago should apply to technologies and social structures that did not exist at the time. And it often happens that these approaches produce results that seem unacceptable to most people but for which a legislative or constitutional fix is impossible for some reason.

It’s always seemed to me, though, that there is a much bigger problem with this approach, namely the implicit assumption that “the law” actually exists. That is, it is assumed that, if the appropriate procedure is used to interpret the inherited text, and applied to the problem at hand, it will produce a determinate answer. But why should this be true? The same law might contain contradictory clauses, supported by contradictory arguments, voted in by different majorities, and understood at the time of its passage in contradictory ways. Most notably, the same constitution might grant universal freedoms in one place, while recognising slavery in another.

At a minimum, such contradictions mean that there is no determinate law on the particular points of difference. But the problem is worse than this. The law rarely prescribes an exact answer in a specific case. The standard view of legal reasoning is the principles can be extracted from case law, then applied to new cases. But contradictory laws and contradictory cases produce contradictory principles. The ultimate stopping point is the paradox of entailment: a contradiction implies anything and everything.

I don’t have a fully worked out answer to this problem but I think it underlies a lot of the disquiet so many people feel about legal reasoning (apart from the ordinary disappointment when the answer it produces isn’t the one we want).

r > g

October 15th, 2014 26 comments

A standard piece of advice to researchers in math-oriented fields aiming to publish a popular book is that every equation reduces the readership by a factor of x (x can range from 2 to 10, depending on who is giving the advice). Thomas Piketty’s Capital has only one equation (or more precisely, inequality), at least only one that anyone notices, but it’s a very important one. Piketty claims that the share of capital owners in national income will tend to rise when the rate of interest r exceeds the rate of growth g. He suggests that this is the normal state, and that the situation prevailing for much of the 20th century, when r was less than g, was an aberration.

I’ve seen lots of discussion of this, much of it confused and/or confusing. So, I want to offer a very simple explanation of Piketty’s point. I’m aware that this may seem glaringly obvious to some readers, and remain opaque to others, but I hope there is a group in between who will benefit.

Suppose that you are a debtor, facing an interest rate r, and that your income grows at a rate g. Initially, think about the case when r=g. For concreteness, suppose you initially owe $400, your annual income is $100 and r=g is 5 per cent. So, your debt to income ratio is 4. Now suppose that your consumption expenditure (that is, expenditure excluding interest and principal repayments) is exactly equal to your income, so you don’t repay any principal and the debt compounds. Then, at the end of the year, you owe $420 (the initial debt + interest) and your income has risen to $105. The debt/income ratio is still 4. It’s easy to see that this will work regardless of the numerical values, provided r=g. To sum it up in words: when the growth rate and the interest rate are equal, and income equals consumption expenditure, the ratio of debt to income will remain stable.

On the other hand, if r>g, the ratio of debt to income can only be kept stable if you consume less than you earn. And conversely if r < g (for example in a situation of unanticipated inflation or booming growth), the debt-income ratio falls automatically provided you don’t consume in excess of your income.

Now think of an economy divided into two groups: capital owners and everyone else (both wage-earners and governments). The debt owed by everyone else is the wealth of the capital owners. If r>g, and if capital owners provide the net savings to allow everyone else to balance income and consumption, then the ratio of the capital stock to (non-capital) income must rise. My reading of Piketty is that, as we shift from the C20 situation of r <= g to one in which r>g the ratio of capital to stock to non-capital income is likely to rise form 4 (the value that used to be considered as one of the constants of 20th century economics) to 6 (the value he estimates for the 19th century)

This in turn means that the ratio of capital income to non-capital income must rise, both because the capital stock is getting bigger in relative terms and because the rate of return, r, has increased as we move from r=g to r>g. For example if the capital-income ratio goes from 4 to 6 and r goes from 2 to 5, then capital incomes goes from 8 per cent of non-capital income to 30 per cent[^1]. This can only stop if the stock of physical capital becomes so large as to bring r and g back into line (there’s a big dispute about whether and how this will happen, which I’ll leave for another time), or if non-capital owners begin to consume below their income.

There’s a lot more to Piketty than this, and a lot more to argue about, but I hope this is helpful to at least some readers.

[^1]: Around 20 per cent of GDP is depreciation, indirect taxes and other things that don’t figure in a labor-capital split, so this translates into a fall in the labor share of all income from a bit over 70 per cent to around 50 per cent, which looks like happening.

Categories: Economics - General Tags:

A simple route to climate disaster

October 12th, 2014 251 comments

I’ve mentioned quite a few times the spurious calculations offered by Ted Trainer of the Simplicity Institute, purporting to prove that renewable energy can’t sustain a modern lifestyle. But I haven’t looked hard at the other side of the coin; the idea that ‘degrowth’ could provide us with a sustainable, low-tech but still comfortable way of living, based on local self-sufficiency.

Samuel Alexander, also of the Simplicity Institute, has a piece in the Conversation, making this claim. Presumably, unlike energy technology, this is an area where the Institute ought to have some special expertise. Sadly, this does not appear to be the case.
Read more…

Categories: Environment Tags:

Rabbitohs and memory

October 11th, 2014 52 comments

In the course of a recent minor tiff on Twitter, accused of bandwagon jumping, I asserted that I had not only supported the Rabbitohs since (just) before their last premiership, but that I was old enough to remember actual rabbitohs, that is, itinerant sellers of rabbit meat. Now I’m wondering whether I’m conflating rabbit as an occasional treat with bottle-ohs, early recyclers who, as the name implies, went door to door collecting bottles. I can definitely remember a bottle-oh with a horse-drawn cart (this would have been around 1960 in Adelaide).

Any other readers of a certain age want to weigh in?

Also, is there a word for Twittertiffs?

Categories: Life in General Tags:

Black Swans, Financial Crises and more

October 10th, 2014 19 comments

I’ve spent the last couple of days in Sydney at a conference organized by the Paul Woolley Centre for the Study of Capital Market Dysfunctionality. It’s striking that this is the only research group of which I’m aware that takes dysfunctionality, rather than the Efficient Markets Hypothesis as a starting point.

Various people have asked me about the paper and slides, so I’m putting them up for download.

Black Swans and Financial Regulation (presentation

Unawareness and financial innovation presentation and paper)

Categories: Economic policy Tags:

Give to MS research, or asylum seekers

October 10th, 2014 1 comment

I have about a week to go before my MS Swimathon, and haven’t yet heard the voice of the public on whether I should go the full Tony in my post-event photo. I’m going to set the default to “No”, and require five Yes votes, accompanied by $20 (or more) donations to change that.

If you’d rather give to an activist cause, I’ve been asked to advertise Esther Gyorki’s half-marathon run supporting the Asylum Seeker Resource Centre.

Categories: Life in General Tags:

Pyne on the American model

October 8th, 2014 16 comments

I appeared yesterday before the Senate Committee inquiring into the government’s proposed higher education reforms. I focused on criticism of the US model being advocated by the government and the Go8, and was ready with quotes from the Go8 submission. I was unprepared, however, for the line of questioning I got from LNP members of the Committee, who denied that the government, as distinct from the Go8, was pushing the US model. My iPhone wasn’t up to the job of producing a definitive statement on the spot, but I have now located the source I wanted, in which Pyne, speaking to the Policy Exchange group in the UK says (emphasis added)

We have much to learn about universities competing for students and focussing on our students. Not least, we have much to learn about this from our friends in the United States. They have developed a diverse array of institutions encouraging prospective students to pick and choose their futures and where they are going to study, immerse themselves in enriching extra-curricular activities, and make life-long friends. Students routinely chase a range of options as to where they study, whether that’s at home or in a place known as college. Going to college is a rite of passage for American high school graduates. And it is a gift that keeps on giving.

The competitive nature of American tertiary education breeds the sort of focus on competition for students that Glyn Davis referred to. It breeds loyalty and devotion to one’s alma mater – and we know that American colleges leave us for dead when it comes to attracting philanthropic support from their graduates.

Another Australian Vice Chancellor, Professor Warren Bebbington of the University of Adelaide, wrote last week in The Times Higher Education supplement, and I quote:

higher education in Australia could be transformed into the most dynamic system in the world. It (could) have the rich variety of the US university landscape but without the crippling debts that American students suffer.
This should be the focus of a fundamental community-wide debate.

He opined that:

the debate has been largely contained thus far, and has taken place in terms incomprehensible to the average person. Even worse, some of the most influential academic voices seem intent on preventing Australians ever benefitting from what is proposed.

In the US, nearly half of all students do not go from high school to a public university of the Australian type, but instead 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.

He continued that:

this huge array of highly-individual undergraduate colleges is one of the glories of American higher education.

Such colleges do not exist in Australia. Ours has been a highly constrained system of universities with limited scope for universities to shape their own offerings to students.

As I’ve previously pointed out, Bebbington’s claim is ludicrously wrong. He’s describing liberals arts colleges that educate perhaps 2 per cent of the college-age cohort in the US, charge around $50 000 per year and have endowments of the order of $1 million per student. The second-tier state universities, community colleges and for-profits actually attended by half or more of the student population are nothing like this.

Clearly, Pyne (like the Go8) doesn’t have a clue about the model he is pushing. This whole package should be scrapped: If the government wants to make changes, it should do some research first.

Categories: Economics - General Tags:

Yesterday’s enemies, today’s allies … and tomorrow ?

October 7th, 2014 39 comments

When a militarily powerful country tries to govern the affairs of millions of people on the other side of the planet, we shouldn’t be surprised that chaos results …

That’s of the grab from my latest piece in Inside Story, commenting on the utter incoherence of US (and therefore Australian) policy in the Middle East. An extended version:

How could it be otherwise? A rich and militarily powerful country has taken it upon itself to govern the affairs of millions of people on the other side of the planet, of whom it knows nothing. Its emissaries routinely elevate particular individuals, ethnic groups, religious sects and political parties as favourites, then just as quickly dump them in favour of new friends. Its tools vary randomly from overwhelming force to plaintive exhortation, with no clear or consistent rationale.

The key observation is that, with the exception of slavish obedience to the whims of the Netanyahu government, the US has switched sides on almost every conflict in the Middle East in the space of a couple of years.

My policy recommendation to the US is

an announcement that, from now on, the people of the Middle East would be left to sort out their problems for themselves. In particular, it would be useful to state that the United States has no strategic concern with Middle Eastern oil, and that energy policy is a matter for individual countries to determine according to their own priorities.

Inside Story doesn’t appear to take comments so read there (lots of other interesting stuff) and comment here.

Categories: World Events Tags:

Sandpit

October 6th, 2014 41 comments

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

Categories: Regular Features Tags:

Monday Message Board

October 6th, 2014 34 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:

My dear Mr Quiggan …

October 6th, 2014 42 comments

… so begins this comment on a recent thread. I don’t have to read any further to know that the subsequent comment will be both hostile and silly.[^1]

My surname is mis-spelt fairly often, reasonably enough in the case of people who’ve only heard it and have to guess at the unstressed vowel. But it happens surprisingly often when all that is needed is to transcribe the text in front of them.

Likewise, I occasionally get people addressing me as “Mr” because they feel the need for a title and choose the default.

Neither, by themselves guarantees hostility and stupidity. But in ten years of blogging, I’ve never seen an exception to the rule that together, they imply exactly that.

Is this just me? Do other bloggers and commenters find that particular forms of address predict the content of comments? And, if so, which ones?

Read more…

Categories: Metablogging Tags:

Render unto Caesar (crosspost from Crooked Timber)

October 6th, 2014 5 comments

Of the three Jews described by George Steiner as, in Corey Robin’s summary, having formulated a great and demanding ethics/politics, Jesus is to me the most interesting.[^1] That thought struck me while reading Jerry Cohen’s Self-ownership, freedom and equality, a Marxist response to Nozick. As Cohen observes early on, Marxists seem to have a lot more difficulty responding to Nozick than do (US) liberals or social democrats. That’s because the notion of self-ownership central to Nozick’s argument is closely allied to the Marxian idea that capitalism inherently involves exploitation (that is, extraction of surplus value from labor). Nozick’s claim was that the same is true of taxation, or any kind of claim on private property imposed by the state.

I’ll come back to self-ownership in a little while. The more interesting point, to me, is that Nozick’s argument was refuted in advance by Jesus when he was asked by Pharisees (arbiters of the law laid down by Moses) whether it was lawful for Jews to pay taxes to the Romans. This was, of course, a trap, since he could be arrested for saying No and discredited for saying Yes. Jesus showed them a coin with the emperor’s head on the obverse and said “Render unto Caesar the things that are Caesar’s; and unto God the things that are God’s”. And “when they had heard these words, they marvelled, and left him, and went their way.”

Jesus’ point is just as valid if the coin is replaced by paper currency bearing the picture of a president, or rent from a land title issued by a state, or a dividend coupon from a corporation established under state law. All of these things were initially obtained from states under conditions that (in most cases, explicitly) involved the obligation to pay taxes as determined by the legal processes of those states. Someone who takes Caesar’s coin and then repudiates the associated obligation to pay taxes is, quite simply, a thief (of course, theft implies property, and vice versa).

Read more…

Categories: Philosophy, Politics (general) Tags:

MS Swimathon Appeal

October 5th, 2014 4 comments

I’m doing another of my fundraisers, this time for Multiple Sclerosis. I’m in a team of six people who will do a 12 hour swim relay in a couple of weeks. So, I get to swim two hours, which I’ve never done before. I’m a bit worried about foot cramps, which tend to be the biggest constraint on my swimming (apart from my appalling technique). But, if that happens, I’ll do the two hours in separate stages. So, you can be fairly sure of getting your money’s worth.

As an added inducement, anyone who donates at least $20 gets to vote on the “Tony Abbott question”. Should I post a pic in budgie-smugglers after the event. Feel free to debate, but only those who donate get a say, just like in real life politics.

Form letter, with details, over the fold

Read more…

Categories: Life in General, Sport Tags:

Medicaid Expansion Lets Convicts Rob the Elderly and Vulnerable of Health Care

October 1st, 2014 2 comments

Since we’re on the topic of appalling and bizarre things said by rightwingers, here’s a US entry, from this morning’s inbox, with the headline above. It’s from the Foundation for Government Accountability, a Florida thinktank closely linked to ALEC (it also has some overlap with Cato and the State Policy Network).

The “argument” is that the expansion gives health care to poor people “many of whom (35 percent) with a record of run-ins with the criminal justice system”. This is illustrated with a “light-hearted” YouTube cartoon of convicts (riding in Cadillacs, naturally) pushing old ladies out of the line to get into the luxurious health care club that is Medicaid.

Given the catchy use of percentages (the 35 per cent figure is applicable to any assistance given to the poor), we can expect to see this one resurface in the Repub memepond on a regular basis. Paging Mitt Romney.

Categories: Boneheaded stupidity Tags:

Tinfoil hats

October 1st, 2014 120 comments

The Oz has been running a string of articles accusing the Bureau of Meteorology of a conspiracy to falsify temperature data to promote the theory of global warming. The latest (no link) is by Maurice Newman, chair of the Prime Minister’s Business Advisory Council.

The ultimate source of this nonsense is Jennifer Marohasy, formerly a Senior Fellow at the IPA, well known to long term readers here. She has pushed all kinds of anti-science nonsense on her blog, even running to attacks on the Big Bang theory. Her material got so crazy that even the IPA had to let her go.

Newman’s tinfoil hat antics have attracted a lot of attention and criticism, given his prominent role in advising the Abbott government. It’s obvious enough that this kind of delusional thinking can’t be confined to one topic.

The problem is that this kind of lunacy is the rule, not the exception on the political right, and particularly in the Newman demographic (conservative older males). The more “hardheaded” they imagine themselves to be, the more prone they are to idiotic self-delusion. Examples such as Nick Minchin, Alan Oxley, Don Aitkin, Peter Walsh, and Dick Warburton come to mind .

In fact, I can’t immediately think of anyone fitting this profile (60+ politically active conservative male) who isn’t a member of the tinfoil hat brigade. It’s little wonder that the Abbott government is so disconnected from economic reality, when its thinking is informed by people like this.

Categories: Boneheaded stupidity Tags:

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

coal

ironore

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:

Sandpit

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: