John Quiggin

A showdown over the ALP leadership, and therefore the Prime Ministership, has been inevitable for some time, and Kevin Rudd has finally brought it on, resigning as Foreign Minister in the face of direct personal attacks from Simon Crean (himself, apparently, a covert contender for the top job) and others.

Readers won’t be surprised to learn that I support Rudd. I have two reasons for this.

First, whatever his problems with interpersonal relationships and administration, Rudd is a serious leader with ideas for Australia’s future. Gillard has shown herself to have no ideas worth the name. Her policy agenda has consisted, almost entirely, of implementing policies introduced by Rudd.

Second, Gillard has totally lost the trust of the Australian people and if she leads the government to the next election, there is no chance whatsoever of a Labor victory. The result will be the election of Tony Abbott, someone who matches Gillard in terms of a lack of any consistent principles or concrete achievements, but adds to it a reactionary ideology and determination to undo the policies brought forward by (Rudd) Labor. Labor’s only chance of retaining office is to go back to Rudd.

Anyway, feel free to have your say

Robert Carling and Stephen Kirchner have a letter in today’s Fin, responding to my piece last week, which restated points I’ve made on the blog (for completeness, it’s over the fold). The letter is notable for not responding to any of my criticisms of Alesina, and for backing away from his previously unimpeachable authority.

John Quiggin’s criticism of us (“Tales of austerity ring hollow”, Opinion, February 16) warrants a response. We referred to Alberto Alesina’s work not because it is the only or last word on this topic, but because it is an example of a much larger literature in support of fiscal austerity (or less pejoratively, “fiscal consolidation”).

It is incorrect to suggest that the case for consolidation “rests largely on the work of Alberto Alesina”. We could also have cited a lot of other empirical as well as theoretical work, as indeed does Alesina himself.

A full examination of the International Monetary Fund and Organisation for Economic Co-operation and Development literature over the years reveals a more nuanced view than Quiggin suggests (not that the IMF or the OECD are the final arbiters anyway). We recognise nuances that we could not canvass in a 600-word article.

One is that the arguments about fiscal consolidation have to be tweaked depending on country circumstances and the credibility of the policymakers. Greece, for example, will suffer from fiscal consolidation, but that is partly the fault of the exchange rate straitjacket they are in.

But, in general, we stand by our basic proposition that fiscal consolidation is essential to the economic rehabilitation of countries with large budget deficits and unsustainable public debt burdens.

The only point worth noting is that the “pejorative” term “fiscal austerity” isn’t mine, it’s from the title of Alesina and Ardagna’s 1998 paper “Tales of fiscal consolidation: can austerity be expansionary”. If austerity is now a pejorative it’s because people know what it means, while “fiscal consolidation” remains a vaguely defined euphemism. Readers with a long memory may recall the US Repubs and Cato dumping “social security privatisation” in favor of “social security choice”

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It’s 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.

There’s not a lot new to be said about the leak of documents from the Heartland Institute, revealing that the Institute was channeling funds from far-right billionaires and corporations to a large number of self-described sceptics, notably including our own Bob Carter, who’s apparently on a monthly retainer, despite his prior claims of independence. Carter is of course, linked to the IPA, which has a long history of rejecting science for cash, most notably in its decades of work (still continuing) for the tobacco industry.

A few points might be worth restating, though:

* As regards the way in which the documents came into the public domain (still unclear, but Heartland alleges they were tricked into emailing them to the wrong person), Heartland and most of their supporters have shown themselves, unsurprisingly, to be stinking hypocrites. Heartland was among the leaders in publicizing and promoting the use of misleading excerpts from private emails in what they and others called “Climategate”. Now they scream about “stolen” documents, backed up by lots of the usual suspects. There’s an amusing response, with which I agree entirely, from some of the scientists victimised by Heartland and its criminal allies in the past.

* There is no such thing as an honest climate sceptic. Those who reject mainstream science are either conscious frauds or gullible believers. I can confidently predict that of the thousands of “sceptics” who made great play of the CRU email hack, no more than a handful will change their views, either on the substantive issue or on the credibility of people like Carter and institutions like Heartland, over this. Those who aren’t, like Carter, on the payroll are credulous dupes. While many low-information “sceptics” have simply been misled by reading the wrong material on the Internet, or trusting the wrong sources, the great majority of active opponents of climate science are complicit in their own deception, preferring to believe obvious lies because it suits their cultural and political prejudices.

* It may be worth restating the absurdity of the claim that genuine scientists (unlike Carter) are motivated by money. Leaving aside the absurdity of the suggestion that the scientists make their career choice because they were after a highly-paid job, there’s the fact that mainstream climate science has the overwhelming endorsement of scientists in all fields. It’s certainly true that the global warming problem has meant more funding for climate science, but there’s only so much in the budget, and much of this money has come at the expense of other fields which are no longer given priority status.

Blogs have played a significant role in expanding access to public debate on all sorts of issues. But, by the nature of blogging, the contributions have tended to be spasmodic, depending on the time, interest and access to relevant information of individual bloggers. A group of us, kicked off by Mark Bahnisch and others at Larvatus Prodeo, and with hosting from Crikey, have started a project to provide information and a forum for discussion about Coal Seam Gas in the context of the Queensland election, where it’s likely to be a hot issue.

You can get more info, and donate to support the project, here

To try and avoid scatter, I’m not allowing comments on this post. Ideally, wait for the site to go up at Crikey. I’ll foreshadow, though, that I don’t support a position of blanket opposition to CSG, which is likely to be something of a minority view in this context.

Yesterday’s Fin ran a piece from Stephen Kirchner and Robert Carling of the Centre for Independent Studies, under the headline “Give austerity a chance” which was a pretty accurate summary of the contents. It’s paywalled, but you may be able to read it by clicking here. The piece relies almost exclusively on the work of Alberto Alesina and his colleagues, promoting the zombie idea of expansionary austerity. As I pointed out here, the most influential of these pieces by Alesina and Ardagna, is riddled with errors, at least as it applies to Australia.

Although Kirchner is a blogger himself, he and his co-author could be forgiven for missing my post. But Alesina’s work is probably the most-refuted piece of economic analysis put out (though never published in a peer-reviewed journal) in recent decades. It’s been demolished not only by the usual suspects like Krugman and DeLong (and me), but by the Economist, the IMF and even by one of Alesina’s own co-authors, Roberto Perotti.

Charitably assuming that Kirchner and Carling had managed to miss just about every publication on the question of austerity in the last year, could they not have spent 30 seconds with Google before hitting “Send”? A search on Alesina+austerity reveals a torrent of criticism, none of which they mention.

It is hard to know which is worse – the possibility that Kirchner and Carling, presented by the CIS as expert economists, were ignorant of all this, or the alternative hypothesis that they knew it and decided not to mention it. Either way, it’s an appalling breach of elementary standards of research.

I’m pretty sure the facts have been brought to the attention of Kirchner and Carling. The honest thing to do would be to write to the Fin pointing out that the work on which they relied was, at best, highly controversial. If Kirchner, Carling and the CIS are unwilling to do this, we can draw the conclusion that they cannot be trusted in anything they write.

Update Sinclair Davidson at Catallaxy has a lengthy reply, but the sole substantive criticism is that contrary to my parenthetical remark, Alesina and Ardagna did finally publish a peer-reviewed paper in 2010. But the work that was actually influential was done back in the 1990s. I’ll republish my blog post pointing out what a shoddy job that paper in describing developments in Australia. Davidson’s piece is notable for the lack of any substantive defence of Alesina’s work, and also for this , offered in response to my observation that the research in question had been comprehensively demolished by the IMF among many others

Fancy that – cutting edge research into a highly politicised aspect of public policy is “controversial”. Does Quiggin think AFR readers are so dumb they wouldn’t realise that?

So, next time you read an opinion piece from the CIS you can safely assume the caveat lector “This research is probably discredited, the authors almost certainly know it, but, if so, they’re not going to tell you”.

No one expects opinion pieces to be “fair and balanced”, but if you are going to rely on work that has been subject to serious and credible criticism, you should at least point out the main criticisms and (if possible) say briefly why you think they don’t stand up. As an example, Wilkinson and Pickett’s The Spirit Level produces some striking evidence of relationships between inequality and bad social outcomes.. This work has been subject to a lot of criticism, not fatal in my view, but enough that it needs to be mentioned. I did this when I cited the work in Zombie Economics and then at greater length here

Further update While still not disputing any of the substantive points I’ve raised, Davidson digs deeper on the question of whether the original Alesina and Ardagna work was published in a peer-reviewed journal. The work was published in Economic Papers, which does not take unsolicited submissions. Rather the editors commission pieces, or you can propose a piece to them. That is, this is, as the webpage says, a policy forum, not an academic journal. Standard practice for publications of this kind is for the editors to approve (or return for revision, or, very rarely, reject) the pieces they’ve commissioned. This isn’t peer-review in the normal sense. I’ve always assumed that Economic Papers follows the standard practice in this respect, but Davidson is welcome to check it out, if he cares enough.

As a PS, I couldn’t resist checking a 700-comment thread on the US elections. I shouldn’t link, but I will. While there is plenty of not-so-innocent amusement to be had, what struck me was that most of the commenters appear to be creationists – the handful holding up the flag for evolution are getting hammered.

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

It’s past 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 haven’t been paying much attention to the Oz since it went behind the paywall, but I happened to pick up a copy of today’s paper edition, and came across a fascinating piece by Christian Kerr (who, IIRC, used to write for Crikey as “Hillary Bray”). Trying to talk up public opposition to equal marriage as a reason for Labor hesitancy to push hard on the issue, he cites a survey showing that around 25 per cent of Australians agree with the proposition homosexuality is immoral. Conscious that 25 per cent is, well, a minority, he decides to look at individual electorates.

What’s really striking is Kerr’s discovery that ‘In 80 of the 150 federal electorates, an above-average number of people support the proposition’. I did some quick math of my own, and it turns out that 80 is almost exactly half of 150. So, next time you see a sample estimate that doesn’t suit your case, be sure to check subsamples. You, too, may find that half of them are above the average.

I’ve just read ‘Tales of Fiscal Adjustment’ by Alesina and Ardagna, which appears to be the founding text for the idea of expansionary austerity. The level of scholarship, at least as it applies to Australia (which is their first illustration) is exceptionally poor, to the extent that it requires a rescuscitation of the ancient Internet tradition of Fisking. I’m going to quote excerpts from their text (about 50 per cent of the total), and intersperse them with my comments.

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It’s 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.

In a piece that pretty much writes off Julia Gillard as PM, Laurie Oakes reports

ALP polling has produced a finding that has startled those around the prime minister.

It shows that, while only 30 per cent of voters plan to vote for the Gillard Government, 38 per cent describe themselves as Labor people.

The conclusion drawn from this is that the Government has to be seen as ‘more Labor’. It has to show more concern about, and become more identified with, things that are regarded as `Labor issues

Wow, how could anyone have predicted that?

As usual with my Fin columns, Catallaxy was straight out of the gate with a response yesterday. It was perhaps unsurprising as my piece mentioned climate change, and the Catallaxy crew includes a self-described “prominent scientist”, Alan Moran, a signatory of public letters attacking mainstream climate science.

In Catallaxy terms, however, Moran seems to be the designated hitter for those occasions when I write about the US political scene. Last time out, he was criticising me for “anointing” Romney as the likely winner – he preferred to discuss the bold tax plans of Herman Cain and Rick Perry. Now, he’s upset that I’ve “anointed” Jon Huntsman as the only Republican contender who seemed likely to beat Obama, ruled out because of his heretical (that is, pro-science) views on climate change.

Anyway, the column is over the fold.

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Every year, Club Troppo econoblogger Nicholas Gruen organizes a group subscription to Crikey. If you’re interested, check it out here

http://clubtroppo.com.au/2012/02/02/crikey-group-subscription-2/

The date for the Queensland election is now set. Last year, when it was clear the Bligh and Fraser were going to push on to their end with their appalling plans for privatisation, I said that I planned to put Labor last, behind the LNP. Nothing much has changed with Labor, but the choice of Campbell Newman as the LNP leader has led me to revise my views. Newman was a terrible Lord Mayor of Brisbane, pushing through a bunch of uneconomic PPP projects like the Go-Between Bridge. He’s even more addicted to hard hats than Bligh (admittedly, he’s an engineer, so I would be happy for him to wear a hard hat if he had stuck to that line of work).

So, I’m going to take advantage of the marvellous institution of optional preferential voting. I’ll give the Greens my first preference, followed by any acceptable independent or minor party candidate. Labor and the LNP won’t get anything from me this time.

Looking at the latest TV news I have mixed feelings. On the one hand, I’m sick of the confected outrage surrounding the Australia Day incident. On the other hand, if this is what it takes to make the Labor Party realise they have to go back to Kevin Rudd, and sooner rather than later, then I suppose I can live with it.

It’s 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.

That’s the title of my piece in the Fin last week. As with my previous column, Catallaxy was out with a comment long before I got around to posting here, but it seemed to me to miss the point fairly comprehensively.

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Gillard’s abandonment of pokies reform means, as far as I can see, that she has reached the end of the set of reforms she promised as the price of independent support after the 2010 election. Most of the agenda she inherited from Rudd has similarly been either implement, or put on the road to implementation, (typically in a watered-down form) or else abandoned. A visit to the ALP website seems to me to confirm this impression. There are plenty of glossy pictures, but the ideas seem mostly to be taken from Rudd, though drastically watered down in most cases, for example, “School Reform” in place of “Education Revolution”. The only thing that sounds more like Gillard than Rudd is “Trade Cadetships” which reads like a rebadging of Howard’s “New Apprenticeships”.

Can anyone point to any genuinely new initiatives taken by this government (that is, not forced on it, or inherited)? It would be nice to think that there is something more on offer than “Not Abbott”.

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

It’s 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.

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

Update With brilliant timing, I wrote this post the day before Gillard announced that she was in fact breaking her promise, and would not bring the legislation to a vote. Presumably she had already signalled this to the media, which was why the accusations of a broken promise were being made, accurately if a little prematurely. Yet again, Gillard has lived down to my lowest expectations, while Abbott has (of course) been even worse End Update

Regular readers will know that I’m no fan of our current PM and a strong supporter of legislation to limit the damage caused by pokies and other forms of gambling that rely primarily on problem gamblers for their viability. And, having been overseas for much of last year, there may be some political nuances I’m missing.[1]

Still, I can’t see how Gillard can be accused of breaking a promise to Andrew Wilkie on pokies on the basis that she has failed to get the numbers for it. On that basis, for example, Rudd broke his promise on an ETS, not when he dropped the idea under pressure from Gillard and the NSW right, but when the Senate rejected the legislation. And every government in recent history has made election promises then had their proposals rejected in the Senate (the silly idea of a mandate, supposed to require the Senate to acquiesce in government legislation, never had any effect on this). Occasionally, such rejections lead to the PM being criticised for lacking negotiation skills. But I’ve never before seen such a case treated as a broken promise.

fn1. Most obviously, it might be that the government is secretly encouraging other independents to oppose the law. I haven’t seen any suggestion to this effect, but it’s about the only thing that would make sense of the “broken promise” claim.

Last week I got an urgent request from the Fin for a quick-turnaround piece on the latest plan to save the car industry. I got it done within a few hours, and planned to post it here. Alas, I was as slow in doing this as I had been fast in writing the original piece (over the fold)

In the meantime, Sinclair Davidson at Catallaxy took exception to my observation that the mining industry’s nearly-free access to minerals under both private and public land was a bigger subsidy than anything the motor vehicle industry got. In support of the miners, he quoted Mitch Hooke of the Mining Council as saying

He said the proposed new tax would hit the mining industry with such a sledgehammer that it would destroy value, deter investment, reduce growth, and affect every mum and dad who has shares of equity or provides goods.

Of course, if you deleted “tax” and put in “tariff cut”, that’s exactly the same as what the representative of every industry demanding continued tariffs or subsidies has said.

What’s striking about this is the tribalism involved. As I demonstrate in the article, as far as economic efficiency is concerned, the effects of current levels of assistance to the car industry are third-order. Yet the political/cultural right denounces the car industry, while defending rent-seekers like Hooke.

This is part of a more general phenomenon on the right that I will post more on later. It’s taken for granted on the cultural right that some technologies and industries (nuclear power, oil, finance) are good and others (wind energy, electric cars, Hollywood) are evil – essentially a mirror image of what they think we on the left think. For people who are supposed to believe in the free market, this is a big problem.

Argument stuck in second gear

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It’s 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.