Capabilities as menus: A non-welfarist basis for QALY evaluation (Crosspost from Crooked Timber)

March 9th, 2014 9 comments

This is a contribution to a discussion of Sen’s capability approach, taking place at Crooked Timber. It’s a bit too wonkish for the CT readership, it seems, and maybe the same here, but I’ll toss it up anyway.

Most of the discussion of capabilities has concerned poor/developing countries. Moreover, most of it has been qualitative rather than quantitative. One consequence is that, although the idea of capabilities has been around for a while now, its impact on the policy process in developed countries has been modest at best.

My own work on capabilities, represented by an article[1] published last year in the Journal of Health Economics has also had a modest impact, but for very different reasons. While not strictly quantitative, it’s mathematical, more so than the average reader of JHE tends to be comfortable with, and its direct relevance to policy is limited by the fact that we are, at least to start with, not addressing distributional issues.

The main objective is to explore the idea that capabilities can provide a basis for allocating health care resources based on the QALY (Quality-Adjusted Life Year) measure. in previous work, we looked at the “welfarist” idea that policy should be based on maximizing lifetime expected utility. It turns out that, considered purely as a technical problem, this can’t be done, except in very special cases. The appeal of capabilities is that they provide a non-welfarist (or at least ‘extra-welfarist’ in that it is more than a simple expected utility maximization) rationale for policies involving scarce resources like health care.

Read more…

Categories: Economics - General Tags:

Reef saved?

March 9th, 2014 29 comments

Following a similar announcement last week by Lend Lease, and earlier announcements by BHP Billiton annd Rio Tinto, mining company Anglo American has withdrawn its proposal to take part in the expansion of the Abbot Point coal terminal. That leaves only two proposals, both from Indian companies owned by billionaire entrepreneurs reminiscent of Bond, Skase and other Australian heroes of the 1980s. Both Adani and GVK are heavily indebted conglomerates of the type that invariably emerge when money is cheap, and mostly collapse when the tap is turned off.

It’s not surprising that these companies have not yet abandoned their bids. Doing so would involve booking huge losses on their mining prospects in the Galilee Basin. But, it’s hard to believe anyone is going to lend them the billions required, not just for the port expansion, but for a 500km rail line and the mine itself. The price of coal is well below the level required to cover the costs of extraction and transport, let alone to provide a return on capital. And if Adani and GKV don’t build the rail lines, the development of the entire Basin will grind to a halt.

The end of the Abbot Point expansion and the proposals to mine the Galilee Basin would be a huge win for the Barrier Reef and the entire planet. The port expansion will involve the dredging of millions of tonnes of waste, to be dumped in the Great Barrier Reef Marine Park. But far more dangerous is the Galilee Basin itself, containing at least 25 billion tonnes of coal. That would produce around 50 times as much CO2 as Australia currently generates every year.

And, unsurprisingly, both Gina Rinehart and Clive Palmer hold big stakes (though Rinehart wisely offloaded much of hers). So, as well as saving the Reef and the planet from some imminent threats, the abandonment of the Abbot port expansion and rail line will clip the wings of some very unappealing billionaires. Here’s hoping.

Categories: Environment Tags:

Don’t blame me: I voted for Kodos

March 6th, 2014 55 comments

Former Queensland Transport Minister Rachel Nolan (whose argument for privatisation I discussed here) has a piece in the Brisbane Times attacking the Electrical Trades Union (disclosure: I produced a report on electricity privatisation for the Victorian branch of the union). The headline is “The ETU is nobody’s friend“, and that pretty much sums up the article – Nolan’s complaint is that the ETU has had the temerity to attack both the previous Labor government and the current LNP government over the same issues, broken promises and support for asset sales.

As Nolan admits, Labor suffered from a

a widely perceived breach of trust – the fact that Labor went to the 2009 election on a slogan of “Jobs, not cuts” and then announced a program of asset sales seemingly as soon as the result was declared

With the exception of the weasel words “widely perceived” and “seemingly”, this is spot on. And the voters reacted long before the ETU had a chance to mount a campaign. Labor’s support plummeted in the polls and, with the exception of a brief blip after the 2011 floods, never recovered.

Now, Nolan complains, the ETU is doing the same thing to the LNP government whose victory they assisted by campaigning against the asset sales. Why? Well,

LNP members’ willingness to stand by the ETU[1], hands on hearts telling us they didn’t believe in Labor’s asset sales, is an act of breathtaking hypocrisy – perhaps bettered only by the pre-election reassurances they gave public servants – with which they now have to live.

So, the crime of the ETU is not to criticise asset sales or dishonesty. It would be fine, according to Nolan, if they made these criticisms of one side (preferably the LNP) and ignored similar actions by the other. But to attack both sides indiscriminately is to undermine the very foundations of the two-party system.

All of this makes sense in Nolan’s world view. As she says in her Monthly article “ Australians have little philosophical grasp of the (rightful) diminution of governmental power which deregulation has brought”. Hence, it is necessary for the two major political parties to lie at election time, in order to secure office and implement the policies on which they both agree. A good friend, in Nolan’s world is a person who picks one of the interchangeable teams, and sticks to it.

And finally, there’s this little gem where Nolan (Ipswich Girls Grammar and UQ alumna) makes clear her contempt for ordinary workers, and for hard-won working conditions, abundantly clear

It might be fun for the bruvvers to chant on their RDO before heading off for a few beers but most people aren’t just troglodytes who are opposed to everything – they do not share the distorted world view of the ETU.

Perhaps if she rechecked the results of the last election, she might conclude that “most people” with whom she mixes are not a particularly representative sample of the Queensland public, and that the “bruvvers” are actually a bit closer.

fn1. As far as I can tell, the claim of “standing by the ETU” is bogus. To the best of my knowledge, the ETU never gave the LNP any support or expressed any faith in their promises. But, thanks to the two-party system, attacking one party is seen as equivalent to supporting the other.

fn2. Thanks for alerts on this from my wife Nancy and from commenter Megan.

.

Categories: Oz Politics Tags:

Identity Crisis

March 5th, 2014 32 comments

In the latest issue of Gerard Henderson’s Sydney Institute Quarterly, Adam Creighton, economics correspondent at the Oz, “explains why most Australians pay no net tax”. That’s a striking conclusion, so I checked it out. Creighton has discovered that most Australians get about as much back in transfer payments and public services as they pay in taxation. The poor get a bit more, and the rich a bit less.

To save Creighton some work in future, can I suggest he consider the budget identity constraint “Expenditure = Income”. Since the government spends on services and transfer payments roughly the same amount as it raises in tax revenue[1], it’s obvious that, for the average Australian the same identity must hold, with income renamed as “tax paid” and expenditure as “transfer payments and public services”.

Next up: Why there is no net travel into the CBD

fn1. Taking account of the seignorage from inflation, returns on assets, intertemporal transfers through debt etc, this rough equality becomes an identity. Please, no arguments about deficits, and especially about MMT. The point of this post is a really simple, and doesn’t need this kind of complication.

Categories: #Ozfail, Boneheaded stupidity Tags:

Bolt: Every word he says is a lie, including “and” and “the”

March 5th, 2014 38 comments

Andrew Bolt (no link) has repeated the lie that I drastically overestimated the impact of a carbon tax on global warming. In fact, it was Bolt who was out by a factor of 100 (Full details here). Rather than rehash this dispute, I’d thought I’d list some of Bolt’s greatest hits, or rather misses.

* Here he is, confusing the stratosphere and the troposphere, and claiming to have disproved climate science as a result

* Here, being fooled by a David Rose claim so absurd that even the Mail on Sunday had to retract it

* Here, denying the fact that Arctic ice is disappearing fast, a fact that is now regularly proved by sailing through the previously impassable Northwest Passage, and by the intense international negotiations about sovereignty over the newly opened waterways

* Here, claiming the carbon tax would be “ruinous”

* Here, claiming that radioactivity is good for you

* Here, unable to understand the meaning of the word “average”

* Here, defaming the Bureau of Meteorology, and lying about it

* Here, being fooled by a LaRouchite conspiracy theory on DDT

That’s just from my blog and just for the last five years. I haven’t even got to the Iraq war, where he combined credulous faith in repeated announcements of victory with vicious denunciations of all who predicted, correctly, that the war would be disaster, and documented that disaster as it unfolded.

Anyone who believes anything Bolt says is a fool. But I suspect that, like Bolt himself, most of his fans know he is talking nonsense and don’t care. He’s a tribal ally, and he’s good with snark and slander, and that’s good enough for them.

Categories: #NewsCorpFail, Boneheaded stupidity Tags:

Quiggin and Catallaxy vs Newman and Bligh

March 1st, 2014 25 comments

I’ve had a few responses to my recent report on the history of electricity privatisation and market reform in Australia. There’s one here from Lynnette Molyneux, who’s with another research group in my own school, and one from the Electricity Supply Association (doesn’t seem to be online, I’ll post a link shortly). Most interestingly, one from Sinclair Davidson at Catallaxy[1] who starts with a couple of points of agreement.

A couple of thing where we agree:

Economists, at least when they were thinking clearly and speaking honestly, were as one in rejecting the most popular political reasons for privatisation: as source of cash for governments or a way of financing desired public investments without incurring public debt.

I made a similar argument recently in New Zealand.

Then he is critical of Public-Private Partnerships. I am too – albeit for different reasons. All too often, I suspect, they are financing mechanisms looking for infrastructure to finance, as opposed to being a positive NPV infrastructure project looking for financing.

before going on to quibbles and more substantive criticism.

I’ll try to present a proper rejoinder to the criticisms later, but for now I want to observe the striking fact that the point on which Davidson and I, and (AFAICT) all Australian economists, agree is also the focus of agreement between Campbell Newman and his predecessor, Anna Bligh, along with Peter Costello, Barry O’Farrell, and the great majority of Australian politicians[2]. The only problem is that the politicians agree on a view exactly opposite to that of the economists

Read more…

Categories: Economic policy, Oz Politics Tags:

Toxic projects

March 1st, 2014 10 comments

The announcement that Lend Lease is pulling out of a joint venture bid with Aurizon (the former Queensland Rail freight arm) to participate in the expansion of the Abbot Point coal terminal comes shortly after the Great Barrier Reef Marine Park Authority has approved a proposal to dump dredge spoil from the Abbot Point coal terminal expansion in the marine park area. (The government’s go-to guy for “independent” ethical clearances, Robert Cornall[1], assures us that there were no conflicts of interest arising from the presence of coal companies executives and employees on the Board. Then he had to rush off to whitewash investigate the conduct of the government and its agents on Manus Island).

On normal commercial calculations, this decision ought to have made the project more appealing. But the Lend Lease statement withdrawing from the project included the slightly gnomic observation that “Lend Lease remained committed to applying “rigorous due diligence” and considering the environmental impacts of all it projects,” it’s reasonable to infer that the decision made the project more toxic rather than less. The obvious reasons
* Coal projects are attracting more and more opposition, but it’s always possible for the proponents of one project to say that if theirs didn’t go ahead, another, possibly worse one, would. By contrast, when a government that’s busy revoking World Heritage Status announces that the project will involve dumping waste in a sensitive marine park, any company that cares about its public image is going to run a mile
* Given the obvious PR costs, the fact that the proponents went for this, rather than looking for a more expensive but less politically toxic approach to waste disposal suggests that the project is economically marginal, an inference supported by the earlier abandoment of a more ambitious version involving Rio Tinto and BHP.

An obvious follow-on project is: who is financing these projects. It looks as if all the major Australian banks are involved to some extent. Westpac is already running into trouble in New Zealand for financing coal mines in sensitive areas. As major international banks, particularly development banks, start dumping toxic projects like this, the Oz banks are likely to find themselves with a lot of undiversifiable risk.

fn1. Breaking usual protocols, I’ve linked to the Oz. When the Murdoch press calls someons a “Howard defender” and strongly implies that he’s stooge, I think it’s safe to say that the appearance of independence is compromised.

Categories: Economic policy, Environment Tags:

The uselessness of privatisation “safeguards”

March 1st, 2014 16 comments

Telstra is lining up behind Qantas for the removal of restrictions on foreign ownership. It’s worth mention that these annoying “restrictions” were marketed to the public as “safeguards” when these enterprises were privatised in the 1990s. As I said at the time

Based on past experience, it seems unlikely that restrictions on foreign ownership will ultimately be effective. The effect of the ‘safeguards’ in the Telstra (Dilution of Ownership) Bill will be to reduce the sale price obtained by taxpayers while obscuring the fact that the ultimate outcome of privatisation will probably be either a foreign-controlled monopoly in telecommunications or a duopoly consisting of two foreign-owned firms.

Current and recent proposals for the sale of state-owned electricity assets have been pushed with safeguards of this kind, which achieve nothing. If it’s OK to privatise a business, it’s OK, and indeed obligatory, to sell it to the highest bidder. For obvious reasons, this will usually a foreign multinational in the same line of business.

Categories: Economic policy Tags:

Dr Johnson on private affluence and public squalor

March 1st, 2014 4 comments

It is surely not without just reproach, that a nation, of which the commerce is hourly extending, and the wealth encreasing, denies any participation of its prosperity to its literary societies; and while its merchants or its nobles are raising palaces, suffers its universities to moulder into dust.

A JOURNEY TO THE WESTERN ISLANDS OF SCOTLAND by Samuel Johnson
(ST. ANDREWS)

Categories: Books and culture Tags:

Sandpit

February 24th, 2014 59 comments

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

Categories: Regular Features Tags:

Monday Message Board

February 24th, 2014 156 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:

Pot, meet kettle

February 20th, 2014 80 comments

Andrew Bolt has a column (no link) in which he attacks a number of Marxist academics on the basis that they are morally responsible for all the crimes committed by Marxist regimes, regardless of their personal attitude to those regimes. Rather than explore the problems with this kind of cliam, I’ll point out that

* The Iraq war, launched on the basis of lies, resulted in the deaths of hundreds of thousands of people, and left millions homeless

* Bolt eagerly supported the war and propagated the lies told to justify it

* Bolt derided and defamed those who correctly predicted its disastrous consequences

* Even when it was obvious that the death toll from the war was huge, and certain to grow further, Bolt continued to lie, and offered no apology to those he had defamed

* To this day, Bolt has continued to defend the war, and failed to acknowledge the falsehood of the claims he made in its support

Bolt is in exactly the same moral position as an unrepentant apologist for Stalinism or Maoism.

Categories: Boneheaded stupidity, World Events Tags:

Electricity privatisation in Australia: A record of failure (updated with link)

February 20th, 2014 41 comments

That’s the title of a report I’m releasing at Parliament House in Brisbane today, commissioned by the Victorian branch of the Electrical Trades Union. It’s essentially a synthesis of 20 years of work on this topic, going back to my book Great Expectations: Microeconomic Reform and Australia and including case studies of the various states where privatisation proposals have been put forward, with varying results. As well as privatisation, I look at the related market reform process which gave rise to the National Electricity Market. I view the reforms as having been fundamentally misconceived, relying on prices to perform a range of incompatible functions, while leaving retail prices largely unrelated to the actual cost of electricity generation and distribution.

Here’s a link to the report

Categories: Economic policy Tags:

Unmasking Austerity

February 16th, 2014 57 comments

I’ll be at Unmasking Austerity in Adelaide on Tuesday. I’m going to talk about Commissions of Audit and the following question occurred to me.

Have such Commissions ever achieved anything of the kind you might expect from auditors, that is, detecting and fixing Fraud, Inefficiency and Waste? In this context, I’m not interested in proposals to kill government programs the Commissioners don’t like, privatise public assets, contract out public sector work and so on. I am interested in work showing that public programs are being defrauded and proposing checks that would fix the problem, cases of duplication between agencies and levels of government that can be fixed with substantial savings, cases where governments are wasting money by paying obviously excessive prices for services etc.

Categories: Economics - General Tags:

The tooth fairy and the traditionality of modernity

February 15th, 2014 67 comments

Salon magazine reports another instance of CP Snow’s observation that all ancient traditions date from the second half of the 19th century. This time, it’s the Tooth Fairy. As you would expect, the Tooth Fairy turns out to be a codification and modification of a bunch of older local practices, many involving a mouse or rat.

This seemed like a good time to rerun one of my posts that stirred up plenty of trouble at the time, making the point that we are “now living in a society that’s far more tradition-bound than that of the 19th Century, and in some respects more so than at any time since at least the Middle Ages”.

I’ll just add that CP Snow was writing in the 1950s, pretty much equidistant between the late 19th century and the present day, strengthening my observation that the “invention of tradition” is now something of a traditional concept (though the phrase itself, due to Hobsbawm and Ranger, is a mere 30 years old).
Read more…

Categories: Life in General Tags:

Alanna Skelly petition

February 13th, 2014 48 comments

Also, reposting this petition appeal from Alanna Skelly, who used to comment here as “Alice” and “Alanna Hardman”. Please keep discussion thoughtful and civil

Hello!

I’ve started the petition “Tony Abbott: Stop all our banks accommodating BITCOIN transactions.” and need your help to get it off the ground.

Will you take 30 seconds to sign it right now? Here’s the link:

http://www.change.org/petitions/tony-abbott-stop-all-our-banks-accommodating-bitcoin-transactions

Here’s why it’s important:

Please stop BITCOIN in Australia because our youth are using this method to buy drugs from online sites across the globe. The drug sellers are mushrooming becausing BITCOIN is operating a tumbler style of making the ultimate recipient of the drug money untraceable. Our children are dying. Children in the US are dying. Please support this petition because I have just lost my twenty one year old son to the online drug trade. Its not the little fish the police need to go after. First stop BITCOIN from hiding these criminals. Make it illegal for any Australian financial institution to deal with BITCOIN accounts. Without the might and IT expertise of BITCOIN these criminals who despatch toxic substances can not hide themselves. The beautiful kind hearted boy in this photo has died before he should have. This petition has been written by his mother.

You can sign my petition by clicking here.

Thanks!
Alanna Skelly

Categories: Life in General Tags:

Crikey group subscription

February 13th, 2014 Comments off

I’ve been a bit slow linking to Nicholas Gruen’s joint Crikey subscription offer, but hopefully not too late.

Categories: Media Tags:

Work and beyond (crosspost from Crooked Timber)

February 10th, 2014 27 comments

A little while ago, Ross Douthat tweeted a link to this Aeon article of mine, reflecting on Keynes ‘Economic Possibilities for our Grandchildren’, which gave rise to some interesting discussion (Memo to self: Find out about Storify). Now he’s addressed the topic in the New York Times, linking directly to Keynes essay. There’s some interesting food for thought here. Unfortunately, it’s mixed up with some silly stuff reflecting his job as the NY Times token Republican, in which capacity he has to do some damage control over the exposure of the latest Repub lie saying that Obamacare will cost 2.5 million jobs. As Douthat delicately puts it “this is not exactly right”. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons, or, in an even less-felicitous defence, mean-spirited and inaccurate but justified by the success of Reaganism thirty years ago.

More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while many at the bottom end of the income distribution, particularly poorer men have withdrawn from the formal labour force altogether (presumably, relying on disability benefits or scraping a living in the informal economy). One possible solution to this problem, is simply to give the poor more money, for example, in the form of a basic income, and not worry about whether they choose to work. Douthat isn’t too happy about this idea, saying

Both “rugged individualist” right-wingers and more communitarian conservatives tend to see work as essential to dignity, mobility and social equality, and see its decline as something to be fiercely resisted. The question is whether tomorrow’s liberals will be our allies in that fight.

But this position elides a bunch of crucial issues.

First, while work may be necessary to “dignity, mobility and social equality” in a market society, it certainly isn’t sufficient. For unionised US workers in the mid-20th century, earning middle-class incomes in relatively secure jobs and expecting better for their children, work was, arguably both necessary and sufficient to achieve a fair measure of these things. But an at-will employee, juggling two or three tenuous jobs that pay $7.25 an hour, and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

Equally importantly, market work isn’t the only kind of work people can do, and certainly not the most valuable. Most obviously, there’s the raising of children. The US the developed countries that does not provide any kind of paid parental leave, and even the legislative provision for unpaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) is incredibly stingy. The idea that the ‘rugged individualists’ who block any improvements to these conditions actually care about the dignity of the working class is simply laughable.

I don’t need to tell Douthat any of this. It’s all in his book Grand New Party with Reihan Salam, notably including a proposal for a full year of paid parental leave. The book received cautiously respectful reviews from many in the centre and centre-left, but fell entirely flat with its intended audience in the Republican Party.

I’ll have a bit more to say about the kind of technological determinism that seeks to explain labour market polarisation as arising from computers and the Internet a bit later. For the moment, I’ll repeat the conclusion of my Aeon essay that a response to technological change that will preserve the link between work, dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return

Read more…

Categories: Economics - General Tags:

Macroeconomics made easy?

February 10th, 2014 10 comments

In my book, Zombie Economics, I started the account of macroeconomics with the observation

Macroeconomics began with Keynes. Before Keynes wrote The General Theory of Employment, Interest, and Money, economic theory consisted almost entirely of what is now called microeconomics. The difference between the two is commonly put by saying that microeconomics is concerned with individual markets and macroeconomics with the economy as a whole, but that formulation implicitly assumes a view of the world that is at least partly Keynesian.

Long before Keynes, neoclassical economists had both a theory of how prices are determined in individual markets so as to match supply and demand (“partial equilibrium theory”) and a theory of how all the prices in the economy are jointly determined to produce a “general equilibrium” in which there are no unsold goods or unemployed workers.

I went on to observe how the pre-Keynesian approach had been revived by the “New Classical” school, and how the apparent convergence with “New Keynesian” economics had been shown to be illusory after the failure of Dynamic Stochastic General Equilibrium models to deal with the 2008 financial crisis and the subsquent, still continuing, depression.

With all of this, though, I still never thought of academic macro, in either saltwater or freshwater form, as being a simple reversion to the pre-Keynesian notion of general equilibrium, with no concern about aggregate demand or unemployment, even in the short run. It turns out that, at least for a large segment of the profession, this is quite wrong. I’ve just received a book entitled Big ideas in Macroeconomics: A nontechnical view by Kartik Athreya, an economist at the Richmond Federal Reserve who made a splash a few years back with a piece entitled Economics is Hard. Don’t Let Bloggers Tell You Otherwise, which, unsurprisingly, did not endear him to bloggers. As a critic of mainstream macro, I’m briefly mentioned, and I just got a review copy.

The new book is an attempt to simplify things, and indeed it has proved enlightening to me and also to Herb Gintis who contributes a blurb on the back, commending it as an accessible and accurate description of the dominant way of thinking about macroeconomics.

The easiest way to see why the book is so striking is to list some topics that do not appear in the index (and are not discussed, or only mentioned in passing, in the text). These include: unemployment, inflation, recession, depression, business cycle, Phillips curve, NAIRU, Taylor Rule, money, monetary policy and fiscal policy.

Read more…

After the car industry (revised and updated)

February 10th, 2014 67 comments

Quicker than I expected, Toyota has announced that it will be abandoning motor vehicle manufacture in Australia by 2017. That presumably will flow through to components manufactures of all kinds.

The impending end of the car industry constitutes the effective end of large scale manufacturing in Australia, at least as the term is ordinarily understood. The remaining manufacturing sector consists mainly of basic processing of agricultural and mineral products for export, along with food and beverages for the domestic market. Elaborately transformed manufactures, on which such high hopes were pinned in the 1980s and 1990s have been declining for years, and will be confined to niche markets once we stop exporting automotive products.

An immediate policy implication of the end of car production is that it’s time to drop a bunch of policies whose rationale was to support the domestic industry. The most obvious candidate is the FBT concession, just reinstated by the Abbott government. But there’s also the maintenance of some of the worlds weakest fuel efficiency standards, driven by the desire not to tilt the playing field against Falcons and Commodores. More generally, a whole range of pro-car policies will need to be reassessed, given that they increase our dependence on imports and therefore our vulnerability to terms of trade shocks.

The other big policy implication is that there is no longer any reason for Australia to have fuel efficiency standards much weaker than those in the rest of the world. The original rationale was to protect local icons like the Falcon and Commodore. Now that all cars will be important, we should demand that they meet the same standards as in their home markets.

Finally, in political terms, the Abbott government’s toughminded attitude on the end of manufacturing represents a striking contrast with its eagerness to help favored groups like the financial sector (including the salary packaging industry) and primary industry. This produces bizarre contradictions. For example, as Peter Touhey of the Victorian Farmers Federation recently noted, the Coalition government is spending more than $1 billion to upgrade privately owned irrigation infrastructure in the Goulburn valley region, but is then unwilling to come up with $25 million to keep the processing end of the industry open.

Categories: Economic policy Tags:

A conversation with Arthur Gietzelt

February 8th, 2014 165 comments

There’s been quite a lot of discussion about the political views of former Senator Arthur Gietzelt, who died recently at the age of 93, and in particular about claims[1] that he was a secret member of the Communist Party.

Although it’s scarcely conclusive, this is one of the few occasions when I have some direct evidence to contribute to a discussion of this kind. In the aftermath of 1975, I formed the view (ill-advised in retrospect) that I could help fix Australia’s problems by becoming a Labor party staffer. I wanted to move to Sydney, so I applied to all the shadow ministers based there, receiving replies only from Doug McClelland and Arthur Gietzelt.

I can’t remember much about McClelland, or even for sure if I met him. As I recall, he was associated with the Right, but didn’t have the thuggish persona that generally went with that group, especially after the rise of Graham Richardson.

But, although I didn’t get the job, I did have a brief conversation with Gietzelt, who said something to me along the following lines “When I was your age [I was in my early 20s at the time], we all thought the Soviet Union was the way of the future. But you young people will have to find a different way forward”. My politics then were much as they are now, on the left, but strongly anti-communist, and of course, I was puzzled as to how the left should respond to the resurgence of neoliberalism/market liberalism, represented at the time by Malcolm Fraser(!). So this resonated with me in a number of ways, and I’ve never forgotten it.

I took it to mean that Gietzelt had once been a communist sympathizer (whether a party member or ‘fellow traveller’) but had ceased to be so. That wouldn’t be totally inconsistent with an association with the then Communist Party of Australia, which had broken from Moscow after the invasion of Czechoslovakia in 1968, but that wasn’t the impression I had: I assumed that his views had changed well before that, presumably in the wake of the Hungarian invasion and Kruschchev’s secret speech.

As I say, this is scarcely decisive evidence, but Gietzelt had no reason to mislead me, and no need to say anything at all to me along these lines: in all probability we were never going to meet again, and we didn’t.[2] So, my own guess is that, if Gietzelt was ever a member of the Communist Party, it was well before he entered the Federal Parliament.

[fn1] Made most prominently, I think, by Mark Aarons, who, however, wasn’t drawing on personal knowledge but from a reading of ASIO files – scarcely a reliable source as anyone who remembers the ASIO of the Cold War era will attest

[fn2] It was a long time ago, and it’s possible that I was still a candidate for the job. But presumably, in that case, a secret CPer would be dropping hints in the other direction, to see if I was likely to be OK with the idea.

Categories: Oz Politics Tags:

Some thoughts on energy storage

February 3rd, 2014 107 comments

A lot of the discussion of my last post on energy issues was devoted to discussion of energy storage. Rather than get involved in that, I thought I’d collect my own thoughts on this. Broadly speaking, Here are some observations, labelled for convenience and partly derived from this study by the US Department of Energy

(a) Any reversible energetic process represents a potential storage technology. Reversibility entails that some energy is stored (as potential or chemical energy) when the process goes one way, and released when it goes the other. Of course, the Second Law of Thermodynamics implies that we will always add entropy (that is, lose useful energy) in this process
(b) Any technical or social change that shifts the time at which energy is finally used replicates the effects of storage
(c)Energy storage is in much the same position as renewable electricity generation was, say, 15 years ago.
(d) There are a lot of potential approaches, most of which have been developed in niches where particular characteristics are required. For example, car batteries need to store a lot of energy for given weight, household batteries need to store energy for a long time and so on. The needs of a renewable-dominated electricity system are very different and will require substantial modifications of these technologies
(e) With one big exception, there is currently no price incentive, in most jurisdictions to use storage technologies and therefore none are used
(f) The big exception is off-peak hot water. Coal and nuclear systems generate baseload supply when it is not needed for consumption. Price incentives are used to encourage people to store the resulting excess energy in the form of hot water
(g) There’s no technological obstacle, given the availability of smart meters, to changing the timing of hot water systems to reflect actual availability of excess electricity rather than reflecting the assumptions of a coal-based system
(h) All of this applies to electric cars. Even ignoring the possibility of feeding power back into the grid, the economics of electric cars would be drastically improved if they could be charged using low-cost power in times of excess supply (in the case of solar PV, around midday when lots of cars are sitting in parking lots)
(i) Something I just found out from the DoE study: Electric car batteries are considered unfit for services when they fall to 80 per cent of their original charge capacity (recall that energy density is critical for car batteries). But they still have a long potential life as static storage devices. This enhances both the economics of electric cars (since the battery has resale value) and of storage (since the opportunity cost is zero)

Here’s an older post, with a really simple example of how the argument works, once you get away from the fixation on replicating the characteristics of a coal-fired system.

Categories: Economic policy, Environment Tags:

Monday Message Board

February 3rd, 2014 69 comments

Last week was pretty much a blur for me, with loads of work and other commitments. It’s already time for another Monday Message Board. Post comments on any topi. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please

Categories: Regular Features Tags:

The anti-science right on wind farms

January 27th, 2014 130 comments

So, Tony Abbott is going to hold another inquiry into utterly spurious claims about adverse health effects from wind farms. Credulous belief in these effects, or silent acquiescence in claims about them, is now compulsory on the political right, particularly among those who, absurdly, describe themselves as “sceptics” on climate science and, more generally, on scientific evidence about actual health risks from genuine environmental hazards. The extreme example, chosen by the Oz to lay down the party line, is James Delingpole whose denial extends beyond climate change to include rejection of the health effects of passive smoking (based on the bogus and discredited research of tobacco-funded “researchers” Enstrom and Kabat). Despite claiming that there is no risk in inhaling a toxic mixture of dozens of carcinogens, Delingpole has no difficulty in believing that noise levels quieter than those of a public library will cause all manner of health risks, including “night sweats, headaches, palpitations, heart trouble”. [fn1]

It’s easy to multiply examples of this kind (Miranda Devine, Jennifer Marohasy, Christopher Booker). What’s more striking is the silence of those who know this stuff is nonsense, but don’t want to offend their allies and supporters

Andrew Bolt is particularly interesting here. He obviously knows that the claims about health risks are nonsensical, and is careful (AFAICT) to avoid mentioning them, while writing in a way that hints at support. So, we get a favorable link to the Delingpole piece, but the pull quote refers to economics not to health issues. Of course, if the politics were such as to demand support for wind, Bolt would make mincemeat of the nonsense Delingpole is putting forward.

A couple of takeaways from this

1. To the best of my knowledge, there is not a single climate denialist anywhere in the world who has the minimal consistency and honesty needed to reject nonsense arguments from their own side, even when they take a form (NIMBY claims about unproven health risks) that they routinely denounce when put forward by misguided environmentalists. That can be extended to the entire political right in Australia – I’m not aware of a single person on the right who has called Abbott out on this nonsense. Active liars like Delingpole, and enablers like Bolt are representative of the entire right, even those who would like to appear rational and reasonable.

2. It’s crucial for the left to reject this kind of argument whenever it appears, even when the proponent takes the correct stance on other issues.

[1] This article earned a rebuke from the Press Council, but that merely perpetuates the notion that Delingpole is a journalist and that the Oz is a newspaper. These 20th century categories have ceased to be applicable – the Oz is better understood as a lunar right blog that, for historical reasons, is printed out on broadsheet paper every day.

Categories: Boneheaded stupidity, Environment Tags:

Monday Message Board

January 27th, 2014 93 comments

Another Monday Message Board. Post comments on any topic, but Australia Day is an obvious discussion starter. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please

Categories: Regular Features Tags:

Sandpit

January 25th, 2014 99 comments

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

Categories: Regular Features Tags:

Greenpeace splits on GM sabotage

January 23rd, 2014 75 comments

Andrew Revkin of the NY Times has an interesting interview [Youtube with no transcript :-( ] with Phil Radford, departing chief executive of the US branch of Greenpeace. The main focus is on the energy issues that have been debated at length in this blog, and on these issues I broadly agree with Radford’s take. Two points of interest

* While correctly arguing that new nuclear power is uneconomic, he concedes that a transition to 100 per cent renewable energy may involve some nuclear plants continuing to operate over future decades

* He gives an unequivocal condemnation of the Greenpeace Australia sabotage attack on CSIRO GM foods, which I discuss here.

Read more…

Categories: Environment Tags:

New Old Keynesianism (crosspost from Crooked Timber)

January 23rd, 2014 13 comments

The term “New Old Keynesian” was coined by Tyler Cowen a couple of years ago, to describe the revival of the view that the Keynesian analysis of recessions caused by lack of aggregate demand is relevant, not only in the short run (in this context, the time taken for wage contracts to reset, say 2-3 years) but in the long run (5 years or more) as well. When Cowen was writing, in September 2011, the New Depression could still, just about, be seen as a short run phenomenon[1]. In particular, the anti-Keynesian advocates of austerity in the US, UK and Europe were predicting rapid recovery.

As 2014 begins, it’s clear enough that any theory in which mass unemployment or (in the US case) withdrawal from the labour force can only occur in the short run is inconsistent with the evidence. Given that unions are weaker than they have been for a century or so, and that severe cuts to social welfare benefits have been imposed in most countries, the traditional rightwing explanation that labour market inflexibility [arising from minimum wage laws or unions], is the cause of unemployment, appeals only to ideologues (who are, unfortunately, plentiful).

So, on the face of it, Cowen’s “New Old Keynesianism” looks pretty appealing. But what are the alternatives? Leaving aside anti-Keynesian views for the moment, the terminology suggests four logical possibilities: Old Old Keynesianism, Old New Keynesianism, New Old Keynesianism and New New Keynesianism.

But do these logical possibilities correspond to actual viewpoints, and, if so, whose?

Read more…

Putting their worst foot forward

January 22nd, 2014 64 comments

I don’t usually watch much TV, which doubtless hampers me in keeping in touch with the mood of the Australian electorate, most of whom still get much of their political news from this source. But, over the summer break, I tend to take things easier which means watching more TV, and taking less interest in politics. So, I don’t think the following observations are way out of line with general public reactions

* When it limped into the end of its first session, the talk coming out of the Abbott government’s media cheer squad was that they would let us watch the cricket in the hope that we’d forget the fiascos of their first few months. Instead, they’ve generated more and worse political coverage than I can ever remember for this time of year, floating trial balloons, rerunning culture wars and so on

* As I remember them from Opposition a fair few of our new rulers are reasonably personable types. But the government’s media strategy has been to keep them all in the background, and to push the most appalling thugs and fools (Pyne, Morrison, Bernardi, Newman (Campbell and Maurice), Andrews) to the forefront. Or maybe there is no strategy, and they are just letting everyone do what comes naturally

But perhaps there is a brilliant plan here, and I’m missing it. Any thoughts?

Categories: Boneheaded stupidity, Oz Politics Tags:

A few more observations on nuclear power

January 18th, 2014 300 comments

I thought I should respond to the latest suggestions from Department of Industry and others that nuclear power is an option worth considering for Australia. While I’m at it, I’ll add some updates on global developments.

* The most striking feature of recent Australian discussion, beginning with the Australian Energy Technology Assessment from 2011 is the claim that “small modular reactors” represent an appealing option for Australia. AETA listed these as being one of the cheapest options for 2020. with an estimated levelised cost of between $75 and $125/MWh. That’s both ambitious and remarkably precise for a technology that does not yet exist, even in prototype form. Leaving aside niche technologies like the Russian proposal to adapt nuclear sub reactors as floating platforms, the only serious contender in this field is the US, where the Department of Energy has provided grants for the development of two pilot plants. The target date (almost certainly over-optimistic) for these to begin operation is 2022. To get any idea of economic feasibility, it would be necessary both to undertake commercial deployment (in the US, obviously) and to to accumulate some years of operating experience. To get this done by 2030, or even 2035 would be an ambitious goal, to put it mildly. Again assuming everything goes well, Australia might be in a position to undertake deployment of SMRs by, say, 2040. But obviously, if we are going to reduce emissions on anything like the scale we need (80 per cent by 2050), we need to phase out most fossil fuel electricity well before that. Obviously, all these points apply in spades to proposals that exist only as designs, with no active proposals even for prototype development, such as the Integral Fusion Reactor. As I’ve argued before, to the extent that nuclear power makes any contribution to reducing CO2 emissions on a relevant time scale, it will have to be with current technology, most likely the AP1000.

* Talking of the AP1000, the builders four plants under construction at two sites in the US have just announced another 6 months delay, pushing the operations date out to 2017 or 2018 (release from FoE, but links to originals)

* Most interesting of all are projections released by the International Atomic Energy Agency last year for the period to 2050. Currently nuclear power accounts for around 11 per cent of global electricity. The IAEA “low’ projection has that falling to 10 per cent by 2030 and 5 per cent by 2050. The “high” projection, which includes steady growth in both North America and Western Europe as well as spectacular growth in Asia, has the share remaining roughly stable. So, even on the most optimistic projections of the world’s leading nuclear agency, nuclear power won’t play any significant role in decarbonising the electricity sector, let alone the economy as a whole.

I’ve come to the conclusion that nuclear power advocates, like climate delusionists (virtually all climate delusionists are nuclear fans, though not vice versa) are essentially immune to empirical evidence. So, I’d prefer no comments from our usual advocates (hermit, Will B etc) unless they have something genuinely new to say.

Categories: Environment Tags: