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The socialisation of economists (crosspost from Crooked Timber)

December 10th, 2014 74 comments

I’m following up Henry Farrell’s post on the superiority or otherwise of economists, and Krugman’s piece, also bouncing off Fourcade et al, with a few observations of my own, that don’t amount to anything systematic. My perspective is a bit unusual, at least for the profession as it exists today. I didn’t go to graduate school, and I started out in an Australian civil service job in the low-status[^1] field of agricultural economics.

So, I have long experience as an outsider to the US-dominated global profession. But, largely due to one big piece of good luck early on (as well as the obligatory hard work and general ability), I’ve done pretty well and am now, in most respects, an insider, at least in the Australian context.
Read more…

Categories: Economics - General Tags:

Monday Message Board

December 8th, 2014 67 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:

Weekend reflections

December 6th, 2014 34 comments

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

Categories: Regular Features Tags:

Broken promises and budget anger …

December 4th, 2014 108 comments

this chaotic mess won’t be fixed with the usual political script

That’s the headline for my latest piece in The Guardian. It’s over the fold

Read more…

Categories: Oz Politics Tags:

Truth in Labelling: Universities Australia edition

December 3rd, 2014 25 comments

A while ago, I suggested that bodies like Universities Australia should dissolve themselves and make way for a body that actually represents universities as communities of scholars (students and academics) and the workers (professional and administrative) who support them. I see I’ve been joined by Stephen Parker from the University of Canberra who describes UA support for deregulation as a “suicide ritual”. Meanwhile, Pyne is quoting the support of UA and its elite subset the Go8 as evidence of “consensus” in favor of his reform, treating the support of 30-odd individuals as more important than the overwhelming opposition of hundreds of thousands of students and staff.

Since these organizations appear determined to drag out their useless existence, can I at least ask for some honesty in labelling. How about

University Senior Management Australia and
Group of Eight University Senior Managers Who Are Better Than All The Others.

Seriously, it’s obvious that, while students, academics, other staff and senior managers have some common interests, they also have lots of conflicting interests. That’s true of universities, just as its true of the workers, bosses and customers of any industry in the private sector. The idea that a policy supported by top managers must be good for universities as a whole is on a par with the old claim that “what’s good for General Motors is good for American”

Categories: Economic policy Tags:

Deficit fetishism

December 1st, 2014 39 comments

As the Mid-Year Economic and Fiscal Outlook approaches, talk about the budget deficit is approaching panic. This piece from Deloitte, warning that “the budget is burning” is typical. It predicts a 2014-15 budget deficit of $34.7 billion, and future deficits “as far as the eye can see”.

Billion dollar numbers are big and scary, but some perspective is useful. Australia’s GDP is currently $1.6 trillion dollars per year, so the massive deficit is about 2 per cent of GDP. On Deloitte’s current “disastrous” predictions, the deficit should be below 1 per cent of GDP by 2017-18.

But wait, there’s more. Australian government debt is currently about 20 per cent of GDP. It has been around this ratio, varying with the business cycle, for many years. Since GDP grows at around 5 per cent a year in nominal terms, the debt/GDP ratio stays unchanged if debt also grows by 5 per cent, that is, if deficits are equal to 1 per cent of GDP (that is, 5 per cent of 20 per cent).

Simply put, the budget is so close to balance that it doesn’t matter. In the absence of the terms of trade shock from coal and iron ore, it would have made good sense to aim for a surplus. As it is, the sensible short-term macro strategy is to take a modest hit to the deficit and cushion the economy from contraction, a point that has been made by the OECD.

As always, there are long term problems that need to be addressed. But absurd panics about whether a (necessarily arbitrary) budget measure is a little above or a little below zero don’t help.

Categories: Economic policy Tags:

The strengthening economic case for fossil fuel divestment

December 1st, 2014 23 comments

That’s the title of my latest piece in The Conversation. The bottom line

Leaving aside the ethics of divestment and pursuing a purely rational economic analysis, the cold hard numbers of putting money into fossil fuels don’t look good.

Unless universities are willing to bet on the destruction of the planet they have committed themselves to understanding and preserving, divestment from fossil fuels is the only choice they can make. Forward-thinking investors of all kinds would be wise to follow suit.

Categories: Economics - General, Environment Tags:

Sandpit

December 1st, 2014 7 comments

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

Categories: Regular Features Tags:

Monday Message Board

December 1st, 2014 20 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:

Coal and China

November 26th, 2014 32 comments

Among the sceptical reactions to China’s part of the joint announcement on climate policy made by the US and China, two were particularly prominent

* The statement didn’t require China to do anything until 2030
* The statement simply reflected “business as usual”

These arguments were almost immediately refuted when China announced, in its http://thediplomat.com/2014/11/in-new-plan-china-eyes-2020-energy-cap/ that it would cap coal consumption at 4.2 billion tonnes by 2020, with total primary energy consumption (including oil and gas) held below 4.8 billion tonnes of coal equivalent. By contrast, in 2013, the estimate was for 4.8 billion tonnes of coal alone. Back in 2010, the US Energy Information Administration was predicting continued growth in Chinese coal assumption to 2035 and beyond.
Read more…

Categories: Economics - General, Environment Tags:

Sandpit

November 21st, 2014 41 comments

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

Categories: Regular Features Tags:

50 years later

November 20th, 2014 15 comments

I once read a remark about the kind of bank advertisement that shows a proud young couple outside their first home, to the effect that it would be better to show them middle-aged, making the final payment on their 25-year mortgage, at which point the home would truly be theirs.

I have the same kind of reaction to the Queensland government’s (publicly funded, I believe) ads showing “ordinary Queenslanders” celebrating the fact that our public assets are going to be leased rather than sold under the government’s plan. Most of those in the ads are young (20s and 30s, I’d say). Even so, many of them will have passed on by the time the lease first comes up for renewal in 2064.
Read more…

Categories: Oz Politics Tags:

Subsidising coal

November 18th, 2014 41 comments

I was going to post on the Newman government’s announcement of subsidies to development of new coal mines in the Galilee Basin, but this piece by Michael West says it all. Key observation

The very day after the G20 concluded, with its recommendations about ending government subsidies to fossil fuels, it appears the Queensland government is poised to ramp up its subsidies for the humungous Galilee Basin coal project.

Read more: http://www.smh.com.au/business/mining-and-resources/wise-investment-or-fossil-fools-queensland-backs-coal-as-g20-moves-the-game-on-20141117-11odkq.html#ixzz3JM8yeHsw

Categories: Economic policy Tags:

Monday Message Board

November 18th, 2014 204 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:

A policy lesson from G20

November 14th, 2014 47 comments

After spending months warning us of terrorists, rioters, and (most fearsome of all) thousands of political minders roaming the streets of the Brisbane CBD, warning us to reconsider our need to travel and giving us a long weekend, Brisbane Lord Mayor Graham Quirk is upset with us for taking off to the beach or staying home and waiting the whole thing out. He has been roundly mocked. It’s now clear enough that, except for high-end hotels and restaurants, G20 is going to be an economic disaster for Brisbane.

There is a broader lesson here. Paying substantial amounts to attract an event where the audience is mostly going to regard the venue as interchangeable with lots of others (car races being a prime example) is almost never going to be a sensible economic policy. The inflow of event visitors will mostly be offset by the deterrence of other potential visitors and by an exodus of locals. And the idea that events like this “put Brisbane on the map” is silly.

We won’t be lining up for another international summit any time soon, but the Commonwealth Games will be in the Gold Coast in 2018. I’m confident that an analysis after the fact will reveal very little to show for the $2 billion we are spending on them.

I’ll qualify the above by saying that it’s a different story with mass participation events. Noosa Triathlon for example, attracted 14 000 participants and 50 000 spectators (mostly family members, I think). The local tourism council tipped in $250k. Assuming a similar amount from Tourism Queensland, that’s a subsidy of $10/head. The event could probably have gone ahead without any subsidy: the main contribution for this kind of event is organizing road closures and crowd safety.

Categories: Economics - General, Sport Tags:

Planet saved … in Brisbane!

November 12th, 2014 104 comments

It’s hard to overstate the significance of the agreement announced today by Barack Obama and Xi Jinping to limit US and Chinese greenhouse gas emissions. The limits are significant in themselves: not enough to guarantee stabilization of greenhouse gas levels at the agreed target of 450 ppm, but enough that we can get there just by ratcheting up an existing agreement rather than by looking for something new.

I’ll write more later, but I wanted to note this event as soon as I could

Categories: Environment Tags:

Remembrance Day

November 11th, 2014 59 comments

Every year on this day, I post on the futility of war, arguing that wars and armed revolutions are almost never justified. I haven’t convinced anyone, and there are probably more wars, frozen conflicts and insurgencies now than there were when I started blogging.

And I realise I haven’t even convinced myself. Intellectually, I know that wars will always turn out badly, but still when a new conflict erupts, I find myself picking sides and cheering for the good (less bad) guys.

Why do we fall for the spurious appeal of a simple, violent solution to complex and intractable problems? And why is it so hard to end a war once it has started? I have some half-formed ideas, but I’ll leave it to others to discuss.

In the meantime, Lest we Forget.

Categories: Life in General Tags:

Monday Message Board

November 3rd, 2014 151 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:

Brands of nonsense

October 31st, 2014 56 comments

That’s the title of a piece of mine the Chronicle of Higher Education ran a little while ago. It’s paywalled but they have graciously given me permission to republish it here.

Read more…

Categories: Life in General Tags:

Eyes of the world on Brisbane (G20), Department of the Absurd

October 29th, 2014 49 comments

Channel 9 News yesterday had a story about how the massive worldwide TV audience for G20 news coverage will discover that

* Brisbane has graffiti
* Roma St Transit Centre is ugly.

In reality of course, they will discover that we have a Convention Centre and hotels, providing backdrops for political leaders to pontificate about nothing much.

Categories: Life in General Tags:

Wouldn’t know if their a**e was on fire

October 28th, 2014 156 comments

As I type this, it’s currently 35 degrees, at 9am on an October morning in Brisbane. And, while one day’s temperatures don’t prove anything, a string of studies have shown that the increasingly frequent heatwaves in Australia can be reliably attributed to global warming. We haven’t had an El Nino yet, but according to NOAA, the last 12 months have been the hottest such period on record.

It will be interesting to see what the denialists come up with in response to this combination of record breaking local and global warming. We can safely rule out anything along the lines of “as a sceptic, I like to wait for convincing evidence before accepting a new hypothesis. But, with the steady accumulation of evidence I’m now convinced”. I suspect we’ll get more along the lines of

* Graham Lloyd, reporting a new study by Jennifer Marohasy, showing that the communists at the Met Bureau are artificially pumping hot air through Australian cities to cover up the fact that they rigged the data to show exactly this warming

* The Telegraph, with a front-page story of an old codger saying something like “You think this is hot? Back in ’23, we had heat waves in July so bad that concrete footpaths melted”

* Andrew Bolt will readjust the start dates so he can continue to claim “no significant warming for the past x years”, omitting the crucial word “statistically”

Categories: Environment Tags:

Monday Message Board

October 27th, 2014 18 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:

Three things the US has (just about) seen the last of [Crooked Timber Crosspost]

October 27th, 2014 121 comments

Here’s an assorted list of things that once seemed archetypally American, but have pretty much reached the end of the line. More precisely, there are no new ones, or hardly any, and the existing examples look increasingly down at heel

    Shopping malls
    Nuclear power stations
    Republican intellectuals

Feel free to discuss, deny, add to the list and so on.

Categories: Life in General Tags:

Sandpit

October 26th, 2014 45 comments

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

Categories: Regular Features Tags:

The G20: A bonanza for tourism?

October 24th, 2014 26 comments

I was contacted by a journalism student here who would some commentary on the rosy projections being made about how the G20 meetings will put Brisbane on the world tourism map, assisted by such initiatives as a month of cultural celebrations (beginning tomorrow) along with “Team Brisbane” and “Global Cafe”. I offered the following response

G20 will provide a short-lived but substantial boost in demand for accommodation and restaurant services in the Brisbane CBD, associated with the arrival of thousands of delegates and media representatives. This will be offset by a negative effect on all other kinds of tourism, not only because of the difficulty of obtaining accommodation but because of the lockdown and other security measures associated with the event, and perhaps with fears of terrorism.

Longer-term effects on tourism, economic growth, and so on will be negligible. International news coverage of G20 will focus on staged events in the CBD, such as media conferences, held in settings indistinguishable from those of any other CBD. Viewers will scarcely be aware that the event is being held in Brisbane, let alone that there are associated cultural celebrations or that Brisbane is a desirable place to visit. A Google search on “G20 cultural celebrations” reveals zero coverage outside (greater) Brisbane, even though the event is starting today.

As regards “Team Brisbane” and “Global Cafe”, I was entirely unaware of these marketing efforts. I suspect that I am typical of the world’s population in this respect.

Categories: Economic policy Tags:

Gough Whitlam

October 23rd, 2014 62 comments

More than any other Australian political leader, and arguably more than any other political figure, Gough Whitlam embodied social democracy in its ascendancy after World War II, its high water mark around 1970 and its defeat by what became known as neoliberalism in the wake of the crises of the 1970s.

Whitlam entered Parliament in 1952, having served in the Royal Australian Air Force during the War, and following a brief but distinguished legal career. Although Labor had already chosen a distinguished lawyer (HV Evatt) as leader, Whitlam’s middle-class professional background was unusual for Labor politicans

Whitlam marked a clear break with the older generation of Labor politicians in many otherrespects. He was largely indifferent to the party’s socialist objective (regarding the failure of the Chifley governments bank nationalisation referendum as having put the issue off the agenda) and actively hostile to the White Australia policy and protectionism, issues with which Labor had long been associated.

On the other hand, he was keen to expand the provision of public services like health and education, complete the welfare state for which previous Labor governments had laid the foundations, and make Australia a fully independent nation rather than being, in Robert Menzies words ‘British to the bootstraps’.

Coupled with this was a desire to expand Labor’s support base beyond the industrial working class and into the expanding middle class. The political necessity of this was undeniable, though it was nonetheless often denied. In 1945, the largest single occupational group in Australia (and an archetypal group of Labor supporters) were railwaymen (there were almost no women in the industry). By the 1970s, the largest occupational group, also becoming the archetypal group of Labor supporters. were schoolteachers.

Whitlam’s political career essentially coincided with the long boom after World War II, and his political outlook was shaped by that boom. The underlying assumption was that the tools of Keynesian fiscal policy and modern central banking were sufficient to stabilize the economy. Meanwhile technological innovation, largely driven by publicly funded research would continue to drive economic growth, while allowing for steadily increasing leisure time and greater individual freedom. The mixed economy would allow a substantial, though gradually declining, role for private business, but would not be dominated by the concerns of business.

The central institution of the postwar long boom, the Bretton Woods system of fixed exchange rates, was already on the verge of collapse by the time Whitlam took office in 1972. The proximate cause of its collapse was the inflationary surge that had begun in the late 1960s and reached its peak with the oil price shock of 1973.

So, Whitlam was living on borrowed time from the moment he took office. His ‘crash through or crash’ approach ensured that he achieved more in his first short term of office (eighteen months before being forced to an election by the Senate) than most governments did in a decade. The achievements continued in the government’s second term, but they were overshadowed by retreats and by a collapse into chaos, symbolized by the ‘Loans Affair’ an attempt to circumvent restrictions on foreign borrowing through the use of dodgy Middle Eastern intermediaries.


The dramatic constitutional crisis of November 1975, and the electoral disaster that followed, have overshadowed the fact that, given the economic circumstances, the government was doomed regardless of its performance. The Kirk-Rowling Labour government in New Zealand, also elected in 1972 after a long period of opposition, experienced no particular scandals or avoidable chaos, but suffered a similarly crushing electoral defeat.

Despite his defeat, and repudiation by succeeding leaders of the ALP (and of course his conservative opponents), it is striking to observe how much of Whitlam’s legacy remains intact. Among the obvious examples (not all completed by his government, and some started before 1972, but all driven by him to a large extent)

* Aboriginal land rights
* Equal pay for women
* Multiculturalism
* Greatly increased Commonwealth spending on school education
* Medibank (now Medicare)
* The end of colonial ties to Britain
* Welfare benefits for single parents
* Extension of sewerage to Western Sydney
* Reduction of the voting age to 18
* No fault divorce

In all of this Whitlam is emblematic of the social democratic era of the mid-20th century. Despite the resurgence of financialised capitalism, which now saturates the thinking of all mainstream political parties, the achievements of social democracy remain central to our way of life, and politicians who attack those achievements risk disaster even now.

With the failure of the global financial system now evident to all, social democratic parties have found themselves largely unable to respond. We need a renewed movement for a fairer society and a more functional economy. We can only hope for a new Whitlam to lead that movement.

Categories: Oz Politics Tags:

Gough Whitlam open thread

October 22nd, 2014 118 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 98 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: