My one-line summary is that this is probably the best exposition of Australia’s political history, over the period of market liberal reform, and from the viewpoint of the reformers, that we have seen, or are likely to. In particular, it’s better than the main rival, Paul Kelly’s End of Certainty.

The primary new source for the book is a series of interviews with five of the six prime Ministers whose terms in office encompass the period of transformation covered by the book. Gough Whitlam declined an interview, but allowed Graham Freudenberg to speak on his behalf. In addition, Megalogenis makes good use of declassified State Department cables, which report off-the-record discussions between US officials and Australian politicians, giving uncensored (if not always honest) observations both on policy issues and on their own colleagues. This is combined with Megalogenis’ own observations drawing on his long career as a political journalist.

Inevitably, the result is an insiders’ view of the Australian political scene. Given these sources, there is little room for critical perspectives on the dominant story of Australian policy, in which heroic reforms undertaken in the 1980s and 1990s laid the foundations for our current prosperity. This story is common ground for Hawke, Howard and Keating: the only dispute between them concerns how the credit should be allocated between them.

Moreover, while the 1980s reformers present themselves as making a sharp break with their immediate predecessors (Whitlam for Hawke and Keating, and Fraser for Howard) Megalogenis notes some important continuities. It was Whitlam, after all, who made the first break with key elements of what Paul Kelly called the Australian settlement including tariffs, White Australia and Imperial benevolence.). Fraser, in his time in office, was seen as a radical rightwing reformer, sympathetic to Ayn Rand and Milton Friedman, a fact somewhat obscured by his subsequent shift to the left.

Within the constraints imposed by the nature of his source material, and with the exception of his forays into generational cliché, Megalogenis has done a first-rate job. He makes judicious use of the inevitably self-serving accounts presented by his interviewees, balancing them in a way that makes for a convincing assessment. He’s also good in picking out the key events that have defined Australian politics over the last forty years, starting with the acute observation that, if Whitlam had won the ‘Don’s Party’ election of 1969, the course of events would have been entirely different, at least in terms of the political careers of Whitlam and his successors.

The main thesis of the book is embodied in the title, and represents an explicit counter to Donald Horne’s The Lucky Country, where the title is expanded to the observation ‘Australia is a lucky country, run mainly by second-hand second-rate people[1,2] who share its luck … According to the rules Australia has not deserved its good fortune.’ Megalogenis’ argument, widely shared among the elite is that the reforms of the 1980s and 1990s left us well placed to avoid the recession that engulfed much of the developed world.

I’ve criticised this view elsewhere, and won’t repeat myself. I would observe though, that the text of The Australian Moment is much less triumphalist than the title would suggest. Notably, Megalogenis observes that, despite outdoing us in the reform stakes, New Zealand has performed much worse in macroeconomic terms than Australia.

Like Gough Whitlam, I suspect Megalogenis’ book has appeared too late. If it had come out in 2009, when the successful macroeconomic stimulus that drove our escape from the crisis was generally endorsed, and when the leaders who designed and implemented it were still in place, the story would seem convincing. Now, we are faced with parties and leaders who will say anything and clearly believe in nothing, except the desirability of holding and dispensing the rewards of office.

It was purely a matter of luck that Rudd was in office at the time of the crisis, and that Turnbull, as Opposition Leader, was constrained by the need to present a policy alternative with some intellectual credibility. Given the way our political parties have evolved, Abbott and Gillard are far more typical examples of the leadership on offer. And, without saying anything against his successor, we were also very lucky to have Ken Henry in charge at the Treasury.

Still, even if you don’t accept the central thesis, and even if you have to swallow hard every time the word ‘generation’ appears, The Australian Moment is essential reading. However much we might deplore it, market liberalism has defined the past three decades and it must be understood if we are to do better in future.

fn1. I’m sure I remember reading ‘men’ for ‘people’ in the original edition, and this was accurate in 1964. But the Penguin website gives ‘people’ as the authoritative quote, and over the last decade or so, Australia has proved itself to be a land of equal opportunity as far as second-rate leadership is concerned.

fn2. Looking at our current situation, my only quibble is that, doubtless with the rosy view of hindsight, I would now want to substitute ‘third-rate’. I doubt that there has been any time in Australian history when the choice of leaders on offer has been so uninspiring. On the other hand, the leaders of whom Megalogenis is writing, from Whitlam to Rudd, offered a substantially higher level of ability,

The launch coincides with the US publication of a paperback edition, with a new chapter on Austerity. The Italian translation also came out recently, and there are versions coming in French, Greek, Portuguese, Korean and Simplified Chinese. Collect them all!

The education section of the Budget outlook sounds good. In fact, taken at face value, it might be called an education revolution. The headlines state

The Government’s education reforms are delivering real benefits to students from early childhood through to university.

The government is almost doubling the Commonwealth investment in schooling between 2009 and 2013, uncapping Commonwealth funding of undergraduate university places and providing an early childhood education place for every child in Australia.

Unfortunately, all of this requires the kind of close parsing that’s needed in dealing with contractual fine print. While all of these claims can be interpreted in way that makes them more or less true, the implication that the budget contains large new initiatives that will benefit education is entirely false.

Starting with the ‘real benefits’, an economist would assume that this entailed, at a minimum, an increase in real (that is, inflation-adjusted) expenditure per student.

This is hardly the case at the university level. As the Budget papers note, the uncapping of university places has increased the number of domestic undergraduates by 150 000 since 2007, when expenditure under the Commonwealth Grants Funding scheme was around $4 billion a year. Projected expenditure at the end of the Forward Estimates period in 2015 is just over $6 billion.

Allowing for inflation at an average rate of 20 per cent, that’s a real expenditure increase of 25 per cent, rather less than the growth in the number of students. And most of this increase occurred in the Rudd government’s first two years in office, when the idea of an education revolution was a genuine hope, rather than a tired joke.

Another dubious claim is that of the ‘$5.2 billion in extra Commonwealth funding between 2010 and 2015 to fund extra places’. That sounds impressive until you look at the baseline, which allows for no increases at all, even to offset inflation. Over the four years of the forward estimates, real higher education expenditure is projected to increase by a grand total of 3 per cent, or 0.75 per cent per year. With substantial growth in student numbers, that implies a real cut in funding per student.

The story is much the same with child care and early childhood education. There were some big increases in expenditure in the first year of the Rudd government, but since then expenditure has barely been maintained in real terms. When population growth and the inevitable cost increases in a labour-intensive activity are taken into account, service provision will be going backwards.

The really blatant piece of spin is the claim that the government is almost doubling the Commonwealth investment in schooling. On the face of it, this claim is directly contradicted by the Budget papers Schools expenditure was $10.7 billion in 2008-09 and is projected to be $12.9 billion in 2012-13, rising to $14.5 billion in 2014-15. That’s a real increase of around 20 per cent over six years, which would be just about enough to cover growth in student numbers and modest increases in real wages for teachers and other school staff.

It turns out that the claim has been justified by comparing schools spending for the four years from 2009 to 2013 with the four years from 2005 to 2008, and including the stimulus spending under the Building Education Revolution for the later period. Using the same basis of calculation, the government is actually cutting schools spending from a peak of $25 billion in 2009-10 to $15 billion in 2014-15.

In summary, as far as education is concerned, the 2011-12 Budget is claiming (indeed, overclaiming) credit for the past, but offering less than nothing for the future.

The first piece I wrote, over the fold, was about the implications of the European crisis

Is Australia prepared for a crisis?

The international economic environment is as threatening as it has been at any time since the Global Financial Crisis. The Chinese and US economies are faltering, Britain is in recession, and the eurozone is threatened with complete breakdown. A new global crisis is real possibility for 2012-13. How well, or badly, does the Budget help us to prepare for such a shock?

In purely fiscal terms, the strategy adopted by Rudd and Swan in the 2009-10 Budget, of a large stimulus followed by a steady return to surplus in 2015-16, was designed to give us the ‘fiscal space’ needed to allow another emergency response to a crisis like the one emerging in Europe. In that context, a more rapid return to surplus is helpful, since it gives us more room to turn around.

The problem is that the government’s rhetoric has shifted in ways that will make it much harder to achieve this turnaround.

The crisis response in 2008-09 involve a shift to strongly stimulatory fiscal and monetary policy in the short run, with the idea that fiscal and monetary policy would be tightened in parallel as the economy recovered.

The idea that fiscal and monetary policy should work together represented a return to the policy orthodoxy of the Keynesian era, for good reason. The policies of the market liberal era, in which governments aimed for consistent balanced budgets, leaving macroeconomic management central banks and monetary policy, had failed comprehensively, as Kevin Rudd acknowledged at the time.

Until about a year ago, the government’s policy and rhetoric were broadly consistent with this approach. The recovery turned out stronger than expected, and both monetary and fiscal policy were tightened accordingly. The announcement in the 2010-11 Budget, that the return to surplus would be achieved three years ahead of schedule, made perfect sense at the time.

Since then, however, the news has been generally bad, but the government has been trapped by its commitment to a 2012-13 surplus. Instead of fiscal and monetary policy moving in parallel, we have a combination of fiscal contraction and monetary expansion. The contradictions became acute last week when the Reserve Bank cut interest rates by 50 basis point, an indication of deep concern (if not some degree of panic) about the potential for a sharp downturn.

Changes in Swan’s rhetoric have reflected these contradictions. As recently as a few months ago, he was maintaining the line that the expenditure cuts simply reflected the logic that ‘if you are Keynesian on the way down, you have to be Keynesian on the way up’. But as it has become clear that the economy, with the exception of the mining sector, is no longer on the way up, Swan has effectively abandoned this position.

Instead, he is now taking the pre-Keynesian view that, if weak economic growth leads to lower government revenue, the appropriate solution is to cut spending even harder. Rather than seeing the opposite movements of fiscal and monetary policy as an indication of incoherence, he has returned to the pre-crisis orthodoxy that tight fiscal policy is good because it makes room for interest rate cuts.

All of this has weakened the government’s capacity to respond to the populism of the Abbott-led opposition, which combines a pre-Keynesian opposition to fiscal stimulus with opportunistic criticism of any measure that might improve the budget balance, and particularly of the kinds of long-term structural measures that are actually needed.

The return to orthodoxy is spelt out both in the Budget speech, where Swan advocates

Surpluses that provide a buffer against global uncertainty, and continue to give the Reserve Bank room to cut interest rates for families like it did just last week.

and in Budget Paper 1, which states

The return to surplus also recognises that fiscal policy should be set in a medium-term framework. In normal circumstances monetary policy should play the primary role in managing demand to keep the economy growing at close to capacity consistent with achieving its medium-term inflation target

There is some room to move in the qualification ‘in normal circumstances’, and in the observation in the Budget Outlook that the buffer created by the surplus will

‘provide the Government with more options to respond, if necessary, in the most effective way to unexpected changes in the domestic and global economy. ’

This may be read as code for the possibility of an emergency fiscal stimulus, should there be another crisis. But neither the Treasurer nor the officials I talked to was willing to actually speak the “S word”.

Having effectively conceded defeat to the conservatives in the argument over the stimulus, the government will find it very difficult to flick the fiscal switch if we are faced with another global crisis. The problem is exacerbated by the government’s general loss of credibility under Julia Gillard’s leadership. Somewhat unfairly, that loss in credibility has extended to her leading ally, Wayne Swan.

Probably the best hope for the government is that any renewed crisis might coincide with the return of Kevin Rudd to the Prime Ministership, presumably with a new Treasurer. That would permit a return to the bold policy approaches that saved us from the global crises in 2009, and might even save the government from the crushing defeat that now appears inevitable.

When I started reading George Megalogenis’ new book The Australian Moment I was stopped on page 1 by a piece of generation-game nonsense so silly I could scarcely believe someone as smart as GM would write it. Several people commented that it was unfair to judge a book by its first page[1], which is true, though I don’t see that there is anything wrong with commenting on the first page.

Anyway, after finishing a couple of other books that had jumped ahead in the queue (notably Red Plenty about the hopes for, and ultimate failure of, planning in the Soviet Union), I got back to The Australian Moment last night.

It started well. The discussion of the Whitlam government was excellent with some keen insights and use of declassified US State Department cables I hadn’t previously seen[2]. Then on p29, we get a quote from a young fogeyish Paul Keating in 1970, saying that “husbands have been forced to send their wives to work”. Graciously admitting that Keating is too old to be a baby boomer, Megalogenis nevertheless asserts that he “spoke for boomer men”.

Really? On the standard dating of the baby boom from 1946 to 1964, the youngest of them were six years old at the time, and even the oldest (at 24) were mostly unmarried. I doubt that many of them were worrying about household budgets. In any case, the terminology of “sending wives out to work” was crankily old-fashioned even in 1970. Keating was probably the last (in the sense of latest-born) person ever to use it in Australia. Boomer women joined the workforce as a matter of course when they finished school. The big problem for boomers entering the workforce in the 1970s wasn’t the need for two jobs but the lack of any.

At this point, I went to the index to check whether the generation-game stuff gets any better. It doesn’t. To take one of many examples, Megalogenis touts his own “generation W”[3] as responsible for punk rock, and, in particular the Sex Pistols (fronted by John Lydon, aka Johnny Rotten, born 1956), The Saints (Ed Kuepper, born 1955) and The Ramones, (formed in 1974, when most of Generation W was still unborn).

My point here isn’t that Megalogenis needs to redo his generation stuff with more accurate dating[4], though that would be better than nothing. It’s that any approach to political analysis that classifies people by birthdate is doomed to failure. As I pointed out more than a decade ago,

by the time the members of a given cohort reach their late twenties, their life courses have diverged so much that they cease to form a well-defined group with common experiences. The differences between men and women, rich and poor, workers and bosses, married and single, parents and nonparents count for much more than the commonality that comes from sharing a date on a birth certificate.

So what am I going to do here? If I could I would get Megalogenis to rewrite his book, deleting every reference to generations. Since that’s not possible, I will do the next best thing, and skip a couple of pages every time the word is mentioned. With that omission, the book promises to be a good read.

fn1. In reality, of course, given that it’s impossible to read more than a tiny fraction of the books that are printed every year, we all, quite literally, judge books by their covers most of the time.

fn2. No mention of the rumors, rife at the time, of CIA involvement in Whitlam’s dismissal.

fn3. An amalgam of Gens X and Y, consisting of those born between 1964 and the early 1990s. W stands for “Wogs and Women”.

fn4. If you are going to play this game at all sensibly, you need to split the Baby boom into the Vietnam generation, born before 1954 and therefore, if male, liable to conscription, and Generation Jones, born after 1954, who entered the workforce after the collapse of Bretton Woods. But the best thing to do is not to play the game at all.

The immediate reason for this post is the Crooked Timber discussion of my previous post on world meat supplies which morphed into a (mainly First World) arguments about cooking. But my bigger concern is the need for the left to offer a feasible utopian vision as an alternative to the irrationalist tribalism of the right.

My idea of feasible utopia is prosaic compared to some of the utopias that have grabbed attention in the past, but have led either nowhere or into disaster. On the other hand, it’s positively, well, utopian, compared to what’s on offer from Obama and Romney, or their counterparts in other  countries. In essence, it’s an extrapolation of the course we seemed to be on from the end of World War II to the early 1970s, a mixture of social democracy, feminism and environmental sustainability applied to ever broader spheres of activity.

The central element of my idea of utopia is that everyone should be able to live decently, without being forced to spend a lot of time doing crappy jobs. That brings us pretty directly to housework[1], something most of us spend quite a bit of time on, and which involves a fair amount of crappy work, literally and figuratively.

If my conditions for utopia are to be feasible we need two things to be true. First, the total amount of crappy work has to be small enough that the average amount per person is not too large. Second, the work has to be organized so that no one actually has to do a lot more than their share.

The second condition is the one that’s politically interesting, of course. But unless the first, primarily technological condition is satisfied, there’s no point in talking about utopian politics, at least in the way I want to talk about it. So, I’m going to focus on the technology of housework.

For any of the tasks we think of as housework, there are four possibilities I can think of,

(1) we can do it ourselves, as a crappy chore

(2) we can do it ourselves, as an enjoyable and fulfilling avocation

(3) we can do it using a technological solution that involves little or no labour

(4) we can contract it out to a specialist worker, who may in turn either (a) enjoy the work or (b) find it just as crappy as we do

In the case of cooking (or food preparation more generally), which caused a lot of angst in the previous thread, all four possibilities are easy to see.  I’ll spell them all out in comments if necessary, but for the moment it’s enough to treat the typical fast-food restaurant as the exemplar of 4(b). My view of utopia, contrary to quite a few people in the previous thread, that all of these possibilities except (1) and 4(b) are fine.

A lot of the angst around cooking concerned the idea of eating food produced through industrial processes that don’t involve much labour. It’s true that, under current circumstances, such food is likely to be unhealthy. But that doesn’t need to be the case – even now there are plenty of alternatives that make a point of being healthy.

Moreover, it’s easy to improve on the basics with a combination of the options. A typical low-effort dinner at our house might combine a meat item bought ready-to-cook from the butcher (say, a rolled roast, beef wellington, or kebab), microwaved vegetables (a combination of fresh and frozen) and baked vegetables (fresh onions and frozen potato mini-roasts). Someone who enjoys cooking and is willing to put in an hour or two of effort could doubtless do better. But I don’t see that I’m failing as a human being if I take the easy option I’ve described. And the effort required for the butcher to prepare the meat item is much less than the same job would take at home.

Looking a bit more broadly, the picture is mixed. The household appliances that first came into widespread use in the 1950s  (washing machines, vacuum cleaners, dishwashers and so on), eliminated a huge amount of drudgery, but technological progress for the next forty years or so was pretty limited. The only truly significant innovation I can date to this period is the microwave oven.

At the same time, the great decline in inequality freed lots of working class women from doing the chores of others, as well as maintaining their own homes. Those same tasks, eased by technology but still burdensome, were shifted onto middle-class women who would previously have employed servants.

How likely is it that new appliances will resolve the remaining problems of household labor? We just acquired a vacuum cleaning robot which is a real boon, and there are versions that are supposed to clean tiled floors as well.

In other cases, there are less direct solutions. Technological progress in the clothing industry means that it no longer makes economic sense to sew your own clothes, or even to mend them. So, these are now jobs that fit into category (2) – to the extent that we do them it’s because we enjoy them. Similarly, while the bugs still need to be ironed out of online shopping, particularly for groceries, it won’t be long before no one needs to visit a physical shop unless they enjoy the experience (once every three months is about optimal for me!).

That still leaves a number of inescapably physical and essentially crappy jobs, for which technology has yet to offer a solution. The obvious examples for me are cleaning (surfaces, baths, toilets etc) and ironing (not such a problem if, unlike me, you can do it while watching a video/TV). Something these tasks share, and which is true of a lot of crappy jobs, is that we do a lot more than is actually necessary.  Social standards inherited from the days of cheap servant labour dictate much more cleanliness than is required for hygiene, and practices like ironing for which there is no need at all.

So, a final part of my idea of utopia would be the institution of social norms that frown on unnecessary crap-work. In my utopia, a freshly ironed shirt would attract the same kind of response that is now elicited by a fur coat or an ivory brooch – a mixture of anachronistic admiration with disapproval of the process by which it was produced, with the latter element predominating over time.

I haven’t done the numbers yet, but it seems to me that with a bit of technological progress and a sensible attitude, we could get the requirement for household crapwork below an hour a day, which even utopians should be willing to live with.

fn1. For this post, I’m going to ignore childraising, which raises a whole lot more issues, and which seems to have changed a lot since I was directly involved.

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The Economist gets some well-deserved derision these days, but it still delivers lots of interesting data, illustrated by graphs that are usually well designed and informative. Via Kenny Easwaran I found this table (published by EconomistDailyChart, but I haven’t yet located the chart) of annual meat consumption per person by country. The data set has plenty of anomalous features, but looks accurate enough for my purposes.

I’ve previously argued that we can feed the world if we make the right choices. . More precisely, our current food system produces more per person than is needed for adequate nutrition, and can continue do so in future if the right policy choices are made. The key problem is distribution, not production.

But the meat consumption data leads me to a more surprising conclusion.  Using current technology and with no additional diversion of food grain, the world could produce enough meet to give everyone an intake comparable to that of the average person in the Netherlands[fn1].

Here are the numbers we need to start with from the data table. Current average annual world meat consumption is 9.5 kg beef, 15kg pork and 12.5kg chicken for a total of 37kg per person per year. Netherlands average is 70 kg.

Each kg of grain-fed beef requires about 8kg of grain, compared to 2kg for chicken, and the trade-off similar when cattle are pastured on land that could be used for grain. So, 5kg of beef could be replaced by 20 kg of chicken.

The other main user of grain (apart from human consumption) is ethanol production which now takes something like 140 million tonnes a year. Fed to chickens that would produce around 70 million tonnes or 10kg per person per year. 

That would give an average of 62kg per person per year, not far below the Dutch average. To fill the remaining gap, I’ll call on the usual suspects, reductions in inefficiency and waste.

The reduction in methane emissions from cattle would almost certainly outweigh any adverse impact from reduced ethanol production (numbers on both of these effects vary so wildly that I’m not going to attempt a calculation for now).

How feasible is all this? The use of food grain for biofuels is discredited as a policy, and even the US Congress has withdrawn some support. The shift towards chicken makes economic sense, and would be accelerated if carbon pricing were applied to agriculture, which might well happen in the next couple of decades. So, world meat production could increase steadily over the next few decades, well ahead of population growth.

That still leaves the crucial problem of distribution. People in some rich countries, notably the US and Australia consume much more than the Netherlands, and that the  billion or so poorest people in the world can’t afford enough grain to eat, let alone meat. Until this changes, increasing average meat production isn’t going to solve the problem. [2]

There’s no real answer to this within the current world order, except to wait for poor people to become richer, as they have done in much of South-East Asia and are now doing, in large numbers, in China and India.

But a large part of my reason for doing exercises like this one is to consider the feasibility of a better world, even if it might be considered utopian at present. The ability of the world to feed itself, and to do so with a diet that should satisfy any reasonable person, is an important precondition. Until recently it has not been met – the total food output of the world has been barely adequate in normal times, and quite inadequate in famine years. But now, as I’ve argued it’s entirely possible.

fn1. I’ve picked the Dutch because they are supposed to be the tallest people in the world, which implies an adequate diet.

fn2. Even in a world where everyone had enough, substantial differences would persist. For example according to the data in the table, meat consumption (I’m not sure if they have a good handle on fish) in Japan is very low by developed country standards, and obviously this reflects preferences and national policies, rather than poverty.

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I therefore need to revisit my previous conclusion on SMRs, namely, that none of them except the Westinghouse have any prospect of being in operation before 2020. First, I think it’s pretty clear that the designs that don’t make the DOE cut are finished – in a generally dire funding environment, who is going to back a horse that has already placed third or worse. Second, the DOE 2022 date is an aspirational target that is virtually certain to be missed, at least by SMRX. But, if things go well, 2025 is a possibility. So, by then we might have one conventional design and two SMRs in production on a serious scale.

Sharp tests of economic theories are rare and hard to find, particularly in macroeconomics. Any examination of particular episodes in economic history necessarily involves counterfactuals, and these provide room for endless dispute. As an obvious example, assessing the impact of the Obama Administration’s 2009 stimulus requires an estimate of how things would have gone without the stimulus, and that is obviously hard to do.

Similarly, arguments about unemployment in the US get bogged down in disputes over whether it is structural or demand-driven and the extent to which policies such as the extension of unemployment benefits to 99 weeks have contributed. 

There is, though, one way in which the current Great Recession/Lesser Depression provides a sharp test of a critical proposition in economics. All forms of classical economics involve, in one form or another, the claim that the causes of unemployment are to be found in labour markets, and not in  macroeconomic variables such as the level of aggregate demand. That’s equally true of the Say’s Law version of classical economics criticized by Keynes, the New Classical macroeconomics of Robert Lucas and the attempts by Real Business Cycle theorists like Kydland and Prescott to explain cyclical fluctuations in terms of labor market shocks.

The crucial problem for all these theories is that labor markets and the associated institutions operate mainly at the national level. Even within the EU, different countries have very different labor markets. So, it is essentially impossible for labor markets in many different countries to move together, except as the result of macroeconomic influences operating at an international level[1]. That means that the occurrence of a sharp and sustained increase in unemployment, taking place in many countries at once, is inconsistent with classical economics.

This point seems trivially obvious, but as far as I can tell hasn’t been made, or at least not clearly. Once it’s conceded, it seems impossible to avoid a view of the world that is basically Keynesian in its analysis of the macroeconomy.  It is possible to hold such a view and reject Keynesian policies on pragmatic grounds, as in Friedman’s critique of ‘fine-tuning’. But the longer and deeper the recession the harder it is to sustain this view.

This seems like a good time to plug the fact that a paperback edition of Zombie Economics will be out soon (May 6) with a brand-new chapter on Austerity, bits of which have been seen here. On 9 May, I’ll be launching an Australian edition, where the added material is a chapter on Economic Rationalism. And a week or two ago, I received some copies of the Italian edition

http://www.stampa.unibocconi.it/articolo.php?ida=9724&idr=6

fn1. Of course, you can cheat and label these macro influences “technology shocks”, then assume them to be internationally correlated. But in the ordinary meaning of technology, there is no plausible way in which economies as disparate as, say, the US and Greece can experience a common technology shock.

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In the wake of the meltdown last year at the Fukushima nuclear plant, the viability of nuclear power has been called into question yet again. The Japanese government has closed down all but one of the country’s nuclear plants (though there are plans to start reopening them), and Germany has abandoned a previous decision to keep existing nuclear plants operating. Concern about nuclear power has also increased in the United States, with most opinion polls now showing a majority opposed to further expansion of the industry.

On the other hand, some commentators have been struck by the fact that the disaster did not cause any direct loss of life and that estimates of the adverse health effects of the radioactive releases are very modest. A striking example is English writer George Monbiot. An opponent of nuclear power before Fukushima, Monbiot has switched to the view that nuclear power should be supported as a response to climate change.

Unfortunately, this debate has taken place without much attention to the economics of electricity production. The critical question is whether nuclear power can be a cost-effective alternative as compared to renewables, investments in energy efficiency or even such long shots as carbon capture and storage. A look at the economic cost of the Fukushima meltdown suggests that the path to a nuclear future is steeply uphill.

I’m too busy to referee another fight over nuclear power today, so I’m delaying opening comments here until tomorrow. The TNI post is open to comments there, so that will give everyone a chance to get started straight away.