Origami

August 13th, 2014 29 comments

The NY Times is running a debate on whether (home) 3-D printers are the Next Big Thing. My guess is not, partly for reasons advanced in the debate (making plastic shapes is limited, handling other materials is messy and dangerous) and partly from the observation that home 2-D printers have proved pretty much transitory. I suppose most people have one or two sitting around, but I only use mine when someone makes a mistake: typically sending me a non-editable PDF that needs to be printed out, filled in, signed and scanned. This happens rarely enough that I usually need to download a new driver, which is a real pain (honestly, after 30 years, we still need drivers!?). My guess is that if 3D printing becomes a Big Thing, it will be on the basis of same-day delivery from a special-purpose facility to which we send our customised product requests.

But what really interested me was a sceptical piece premised on bagging out the paperless office as a precursor of 3D printing hype. The line was that it was first predicted in the 1970s, but that US businesses are using more paper now than they did then. This struck me as probably true but misleading for two reasons
(i) the population has grown, as has the proportion of workers who deal with text in one form or another
(ii) the two point comparison conceals a rise and fall.

Point (i) is obvious. A quick check reveals that (ii) is also correct. Paper consumption peaked in the late 1990s and has fallen sharply since 2005. Consumption per person is the lowest on record (going back to 1965). I’m pleased with this because back in 2007, I noted that the much-mocked “paperless office” was become a reality, and predicted that the trend would accelerate (reprinted over the fold)>

Read more…

Categories: General Tags:

We forgot to tell you we were tapping your metadata

August 11th, 2014 40 comments

The Abbott government has reached the stage where it can’t take a trick, even with things that ought to be surefire winners for a conservative government. We saw this not long ago with the attack on dole bludgers. And it’s emerged again with the attempt to cover the retreat on Section 18C with new anti-terror measures (or, in the government’s telling the dumping of 18C to secure support for the anti-terror measures).

After the Brandis fiasco, the government wheeled out the chiefs of ASIO and the AFP to explain that there was nothing to worry about: police were already storing and searching our metadata on a massive scale (300 000 requests last year) and just wanted to ensure this continued.

Unfortunately, the environment has changed since the revelations made by Edward Snowden and others on the extensive (and, in aspiration, total) surveillance of communications by the US NSA. It seems likely that the end result of this will be a rolling back of the extreme surveillance powers grabbed by the authorities over the last decade.

And, while I’m at it, can we stop talking as if we are facing a massive existential crisis because of the threat of terrorism. For most of the 20th century we were threatened with invasion or nuclear annihilation, and we managed to maintain our liberties. We should do the same this time.

Categories: Boneheaded stupidity, Oz Politics Tags:

Sandpit

August 11th, 2014 33 comments

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

Categories: Regular Features Tags:

Monday Message Board

August 11th, 2014 45 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:

IPA unsure about free speech

August 10th, 2014 26 comments

The reaction of the Institute of Public Affairs to the Abbott governments backdown on the race-hate proviions Section 18C has been, by its own admission, intemperate (“white hot anger” is the description they used; I think I also saw “ice-cold rage”.

By contrast, the IPA has been much more ambivalent on freedom of speech. I noted a while ago, this piece suggesting that environmentalists who questioned the viability of the coal industry could be prosecuted either under securities legislation or as an illegal secondary boycott. This view isn’t unanimous however. Following some Twitter discussion (must get Storify working properly for things like this) Chris Berg pointed to a piece he’d written arguing against such a use of secondary boycott legislation (and against such legislation in general).

I was, naturally interested in how Freedom Commissioner and former IPA fellow Tim Wilson would respond to proposals to suppress free speech coming from his former organization. However, my Twitter interactions with him were thoroughly unsatisfactory. His initial response to my suggestion that he had been silent was rather snarky

um, go and read the transcript of the last senate estimates I appeared at

I did so, and found only a brief statement that he would be looking at the secondary boycott issue. Pressed, he said the issue would be discussed at the the Free Speech 2014 conference. The day came and I couldn’t find anything relevant in reports of Wilson’s remarks. So, I tweeted again and got the response “Mark Dreyfus just talked about it!

Indeed Mark Dreyfus (Shadow Attorney General) gave a great speech. But I was still interested in what Wilson had to say on the topic. Alas, my tweet on this went unanswered. Judging by a previous response, Wilson intends to duck the issue.

Categories: Oz Politics Tags:

Three cheers for Stephen Parker

August 9th, 2014 35 comments

The last time I heard news of Stephen Parker, Vice-Chancellor of the University of Canberra, he was standing up to the Oz and its editor Chris Mitchell who had threatened to sue journalist and UC academic Julie Posetti for accurately reporting remarks made by a former Oz journalist in a public conference. That episode is worth remembering any time anyone suggests that the Oz is a newspaper (in the traditional sense of the term), let alone an advocate for free speech. It is, as I’ve said many times, a dysfunctional blog that is, for some reason, printed on broadsheet paper.

In this instance, Parker was doing exactly what you would expect of a university leader: defending an academic doing her job from outside interference. Sadly, in Australia these days, that can’t be taken for granted. The rise of managerialism has thrown up a number of VCs (or now, in the US mode, Presidents) who would instinctively side with Chris Mitchell in such a dispute.

That kind of outright betrayal of university values is still not the norm. On the other hand, given the financial pressure under which all universities have been operating for years, it is unsurprising that most VCs have been keen to support proposals for “deregulation” of fees, even though, as is inevitable with this government, they are poorly thought out and certain to be inequitable in practice. The lead, as I mentioned, has been taken by Ian Young of ANU. Others have their doubts, I think, but have kept quiet.

I’m happy to say that Parker has been the first to break ranks on this issue, writing in The Age that

An earlier generation of vice-chancellors would have stood up for students. I say, reject the whole set of proposals, on their behalf, and then let’s talk.

I hope his bravery leads others to follow.

Categories: #Ozfail, Oz Politics Tags:

Reagan and the Great Man in History

August 8th, 2014 23 comments

The latest controversy in the US about Rick Perlstein’s new book is an opportunity to post a couple of thoughts I’ve had for a long while.

First, the outsize Republican idolatry of Reagan is explained in part by the fact that there’s no one else in their history of whom they can really approve. The Bushes are a bad memory for most, Ford was a non-entity and Nixon was Nixon. Eisenhower looks pretty good on most historical rankings, but he’s anathema to movement conservatives: Eisenhower Republicans were what are now called RINOs. Going back a century, and skipping some failures/nonentities, Theodore Roosevelt is problematic for related but different reasons. Going right back to the beginning,and skipping more nonentities and disappointments, some Repubs still try to claim the mantle of the “party of Lincoln” but that doesn’t pass the laugh test. As many others have observed, the “party of Jefferson Davis” is closer to the mark. So, they have little choice but to present Reagan as the savior of the nation.

Something of the opposite problem is found on the left. I haven’t read Perlstein yet, but a lot of the discussion is based on an implicit or explicit assumption that the shift to the right in the US since the 1970s can be explained by the successful organizing efforts of movement conservatism, culminating in Reagan’s 1980 election victory. That’s an explanation with a lot of contingency attached. Suppose, for example, that the attempted rescue of the Iranian embassy hostages in April 1980 had been a success. That, along with some fortuitous good economic news, might have been enough to propel Carter to victory. By 1984, Reagan would have been too old to run as a challenger, and Bush senior would probably have been nominated.

I don’t think, however, that this would have had a huge effect on economic-political developments in the US. Other English-speaking countries, with very different political histories followed much the same route, ending up, by the late 1990s, with a hard-line rightwing conservative party driving policy debate and a “Third Way” centre-left alternative trying to smooth off some of the rough edges. The election of Carter, a conservative by the standards of the times, was a step towards that outcome.

I don’t want to overstate the determinism here. Individuals matter, and national circumstances differ. Still, I think we are talking about variations on a common theme, driven by global economic events, rather than a US-specific story beginning with Reagan’s 1964 address in support of Goldwater.

Categories: Books and culture, World Events Tags:

Team Australia

August 7th, 2014 84 comments

George Brandis’ spectacular live meltdown over metadata retention has distracted attention from the abandonment of the government’s plans to repeal Section 18C of the Racial Discrimination Act, prohibiting the kind of racial abuse dished out by the likes of Andrew Bolt and Fredrick Toben. Abbott’s rationale is that a purist attitude to freedom of (racially divisive) speech is something we can’t afford, given the need to unite against terrorism.

Obviously, neither Bolt nor Toben is a member of Team Australia[1]. Each makes it their primary business to stir up hatred, in Toben’s case against Jews and in Bolt’s case against (among many others) the “muslims, jihadists, people from the Middle East” he sees as responsible for Abbot’s backdown. The striking conflation of religion, geographical origin and terrorism is typical of Bolt’s approach.

Horrible as he is, though, Toben is not a serious problem. His Holocaust denialism is universally reviled, and it is a sign of strength, not weakness, in our democracy that he is free to walk the streets. Repealing the constraints imposed on him by 18C would only emphasise this.

Bolt is another story. It is his case that led the government to seek the repeal of 18C, and that motivated George Brandis’ gaffe (that is, a politically inconvenient statement of an actual belief) that people have a right to be bigots. Far from being reviled, Bolt has been embraced and coddled by the government, to the point of having exclusive access to the Prime Minister. He enjoys a well-rewarded position in the Murdoch Press. Even casting the net wider among our so-called libertarians, I’ve can’t recall seeing a harsh word against Bolt. He’s a tribal ally and his bigotry is either endorsed or passed over in silence.

It’s impossible in these circumstances, for the government to be taken seriously when they mouth the (apocryphal) Voltaire line about defending to the death speech with which they disagree. The repeal of 18C was clearly intended as an endorsement of Bolt, and not a statement of bare toleration. That position is now untenable, and it’s too late to switch back to Voltaire.

In summary, those on the right lamenting the continued existence of 18C ought to reflect on the fact that it’s their own overt or tacit endorsement of bigotry that’s brought this about. If they cleaned house, and dissociated themselves from the likes of Bolt, their claims to be supporting free speech might acquire a little more credibility.

fn1. I was going to add Sheikh Hillaly to this list. But based on this report, he seems to have joined the Team.

Categories: Economics - General, Oz Politics Tags:

100 years on

August 4th, 2014 23 comments

It’s a century since Australia entered the maelstrom of the Great War, not by deliberate choice but as an automatic consequence of Britain’s declaration of war on Germany. I had a piece on this tragedy in the International New York Times last week. Quite a bit of editing between my draft and the final version but I was very pleased with how it came out.

Categories: World Events Tags:

Sandpit

August 4th, 2014 67 comments

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

Categories: Regular Features Tags:

Monday Message Board

August 4th, 2014 63 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:

Trickling down

August 4th, 2014 58 comments

Among the zombie ideas refuted in my book, Zombie Economics, “trickle down” economics is the one that dare not speak its name. Even those who believe, or are paid to say, that favored treatment for the rich will benefit the poor mostly avoid the term “trickle down”, preferring bromides like “a rising tide lift all boats”.

But that didn’t deter Ian Young, Vice-Chancellor of ANU and head of the Group of 8 Universities (basically, those established first, which have, as elsewhere in the world, gained a permanent high-status position as a result). As I predicted not long ago, he wants to raise fees and reduce the number of students at elite universities, including ANU, allowing them to offer a more personalised education.

Young’s argument is that students excluded from the Go8 will “trickle down” to lower-status universities, giving them a chance to both increase numbers and raise standards. But this suggestion doesn’t stand up to the most cursory examination. Both logic and historical evidence suggests that all or most universities will follow the lead of the Go8. In both the UK and Australia, whenever universities have been given option to increase fees or hold them steady, nearly all have gone for the maximum increase.

Think about this from the position of a university in the tiers immediately below the Go8 in the prestige hierarchy, the 1970-vintage unis like Griffith and Macquarie, and the Universities of Technology. Both groups can fill all the places they have, and both, like all Australian universities are straining at the seams in terms of both physical space and overloaded staff. They could not possibly take in more students with their current finances. It makes perfect sense for them to do the same as the Go8, raise fees a lot, and pass on some of the benefits in the form of smaller classes.

There’s a cumulative effect here. Suppose the Go8 institutions reduce their student intakes by 30 per cent. A few of those will give up on uni altogether, deterred by higher fees, but most will try a second-tier uni, displacing other students who would otherwise have been accepted. On top of that, there will be less places in those uni, say another 30 per cent. So, something like 60 per cent of the students formerly admitted to these unis will be excluded.

At the bottom of the status scale, the hard-pressed regional universities and former CAEs probably won’t be able to raise their fees as much as the Go8. But they will still be in a position to raise fees and entry standards at the same time, and, if they choose, to reduce their numbers as well. This isn’t so much trickle down as a cascade effect.

Of course, if you believe the increasingly silly Business Council of Australia, this is all to the good. Its head, Catherine Livingstone (BA, Macquarie) thinks we need less university students. Her members clearly don’t agree, judging by their hiring patterns. The unemployment rate for university graduates is estimated at 3.3 per cent, about half that for non-graduates. Wages and participation rates are also higher.

Categories: Dead Ideas book, Economic policy Tags:

To help poor people, give them money

August 1st, 2014 87 comments

The Oz (no link) is touting a campaign by Andrew Forrest to introduce an Australian version of the US “food stamps” system, replacing cash payments with a card that can only be used to buy an approved list of items. This is yet another step in the abandonment of economic rationalism by the political right. I’d be surprised if Forrest could get the support of any economist for this (though the recent performances of the IPA crew give me some pause). Free market advocates, following Milton Friedman, have long sought the replacement of in-kind benefits with cash. To those on the left, even where enthusiasm for markets is more qualified, the conclusion is reinforced by the obvious class warfare involved here. At best, someone like Forrest can be seen as a paternalist, hoping to protect the poor from themselves. But it’s obvious that the Murdoch press, and its target audience, want to punish the poor, not protect them.

As it happens, my slowly-progressing book has a section on just this issue, presenting the standard arguments of Friedman and others as part of the case for why markets work so well (when they do)

Read more…

Categories: Books and culture, Economic policy Tags:

Job search, yet again

August 1st, 2014 64 comments

I got lots of very helpful responses to my recent post on the search theory of unemployment, here and at Crooked Timber. But it has occurred to me that I haven’t seen any answer to one crucial question: How many offers do unemployed workers receive and decline before taking a new job, or leaving the labour market? This is crucial, both in simple versions of search theory and in more sophisticated directed search and matching models. If workers don’t get any offers, it doesn’t matter what their reservation wage is, or what their judgement of the state of the market. Casual observation and my very limited experience, combined with my understanding of the unemployment benefit rules, is that very few unemployed workers receive and decline job offers, except perhaps for temporary work where the loss of benefits outweighs potential earnings. Presumably someone must have studied this, but my Google skills aren’t up to finding anything useful.

And, on a morbidly humorous note, it’s a sad day for the LNP when efforts to bash dole bludgers actually cost them support. But that seems to be the case with the latest plans, both expanded work for the dole and the requirement for 40 job applications a month. I’ll leave it to Andrew Leigh to take out the trash on work for the dole (BTW, his new book, The Economics of Almost Everything is out now).

The 40 applications requirement has already been the subject of some amusing calculations. I want to take a slightly different tack. Suppose (to make the math simple) that the average job vacancy lasts a month. There are roughly five unemployed workers for every vacancy, so meeting the target will require an average of 200 applications per vacancy. The government will be checking for spam, so lets suppose that all (or a substantial proportion) of the applicants take some time to talk about how they would be a good fit with the employer and so on. Dealing with all these applications would be a mammoth task. One option would be to pick a short list at random. But, there’s a simpler option. In addition to the 200 required applications from unemployed people, most job vacancies will attract applications from people in jobs. A few of them may be looking for an outside offer to improve their bargaining position with their current employer (this is a big deal for academics), but most can be assumed to be serious about taking the job and in the judgement that they have a reasonable chance of getting it. So, the obvious strategy is to discard all the applications except for those from people who already have jobs. What if there aren’t any of these? Given that formal applications are going to be uninformative, employers may pick interviewees at random or may resort to the informal networks through which many jobs are filled already.

Trying to relate this back to theory, the effect of a requirement like this is to negate the benefits of improved matching that ought to arise from Internet search. By providing strong incentives to provide a convincing appearance of looking for jobs for which workers are actually poorly suited, the policy harms both employers and unemployed workers who would be well suited to a given job.

Update I found the following quote widely reproduced on the web

On average, 1,000 individuals will see a job post, 200 will begin the application process, 100 will complete the application,

75 of those 100 resumes will be screened out by the Applicant Tracking System (ATS) software the company uses,

25 resumes will be seen by the hiring manager, 4 to 6 will be invited for an interview, 1 to 3 of them will be invited back for final interview, 1 will be offered that job and 80 percent of those receiving an offer will accept it.

Data courtesy of Talent Function Group LLC

Visiting the TFG website, I couldn’t find any obvious source. The numbers sound plausible to me, and obviously to those who have cited them. But, if the final number (80 per cent acceptance) is correct, then it seems as if the search theory of unemployment is utterly baseless. Assuming independence, the proportion of searchers who reject even three offers must be minuscule (less than 1 per cent).

The end of economic rationalism …

July 30th, 2014 38 comments

… and the new age of entitlement.

That’s what we are getting under the Abbott government. It’s striking how suddenly the elite consensus in favor of free market policies has collapsed now that we have a tribalist pro-business government. Some examples:

* The Institute of Public Affairs, which once treated irrigation projects like the Ord River scheme as the worst kind of boondoggle now lobbies for them, and for special tax breaks, on behalf of their new owner major sponsor, Gina Rinehart

* The Business Council of Australia wants a strategy of “growing those sectors of our economy that can win on a global scale and make the greatest contribution to lifting our national wealth.” Of course, they deny that this involves “picking winners” or “national champions”, but this is just an example of the euphemism cycle at work

* The Financial Review today runs a piece (paywalled) from Danny Price of Frontier Economics, combining absurd alarmism about the supposed cost of a carbon price (already refuted by experience) with advocacy of the nonsensical and dirigiste “Direct Action” policy

* Finance Minister Matthias Cormann has rejected cost-benefit analysis in favor of a “nation building” approach to infrastructure (the subtitle of Michael Pusey’s book on economic rationalism was “A Nation Building State Changes its Mind”

Economic rationalism had both strengths and weaknesses. The crony capitalism emerging under this government has no redeeming features.

Categories: Economic policy Tags:

Uncle Tom’s Cabin

July 29th, 2014 30 comments

The concept of self-ownership came up in discussion at Crooked Timber as a result of my passing slap at Nozick in the post on Austrian economics and Flat Earth geography. I’ve been planning posting on some related issues, but I realise there are some critical points I need to clarify first, most notably on the relationship, if any, between self-ownership and property rights.

I’m inclined to the view that there is no such relationship, or more precisely that our inalienable rights over our own bodies represent a constraint on the legitimate scope of property rights, rather than forming a basis for such rights. But, there’s lots that I know I don’t know about this, and, presumably, more that I don’t know I don’t know.

The problems for me start with language. As far as I know, no one has ever remarked on the title of Harriet Beecher Stowe’s anti-slavery classic Uncle Tom’s Cabin. Yet the core of the book is that Tom owns neither the cabin nor himself: both are the property of his owner. And that brings up another striking feature of language (at least English). We use the possessive case to refer to Tom’s owner, but, obviously the owner was not Tom’s possession whereas, legally, the reverse was true.

The abolition of slavery hasn’t resolved the contradictions here: for wage workers, it’s natural to divide the hours of the day into “company time” and “my time”, while for house workers the common complaint is the absence of any “time of my own”.

So, some questions to start off with

First, how universal is the linguistic conflation of the possessive case with possession in the sense of ownership (Wikipedia suggests that there may be some exceptions, but the distinctions described are not precisely the ones I mean). And, if there is such a linguistic universal, what conclusions should we draw from it?

Second, have political philosophers looked at the question in this light: that is, on the relationship between the broad use of the possessive to denote relationships of all kinds and the particular use to denote property ownership. If so, what is the relationship between self-possession and self-ownership?

Categories: Philosophy, Politics (general) Tags:

Sandpit

July 28th, 2014 93 comments

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

Categories: Regular Features Tags:

Monday Message Board

July 28th, 2014 57 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:

Austrian economics and Flat Earth geography

July 28th, 2014 51 comments

One of the striking features of (propertarian) libertarianism, especially in the US, is its reliance on a priori arguments based on supposedly self-evident truths. Among[^1] the most extreme versions of this is the “praxeological” economic methodology espoused by Mises and his followers, and also endorsed, in a more qualified fashion, by Hayek.

In an Internet discussion the other day, I was surprised to see the deductive certainty claimed by Mises presented as being similar to the “certainty” that the interior angles of a triangle add to 180 degrees.[^2]

In one sense, I shouldn’t be surprised. The certainty of Euclidean geometry was, for centuries, the strongest argument for the rationalist that we could derive certain knowledge about the world.

Precisely for that reason, the discovery, in the early 19th century of non-Euclidean geometries that did not satisfy Euclid’s requirement that parallel lines should never meet, was a huge blow to rationalism, from which it has never really recovered.[^3] In non-Euclidean geometry, the interior angles of a triangle may add to more, or less, than 180 degrees.

Even worse for the rationalist program was the observation that the system of geometry (that is, “earth measurement”) most relevant to earth-dwellers is spherical geometry, in which straight lines are “great circles”, and in which the angles of a triangle add to more than 180 degrees. Considered in this light, Euclidean plane geometry is the mathematical model associated with the Flat Earth theory.

Read more…

Categories: Economics - General Tags:

Old men behaving badly (repost from 2011)

July 26th, 2014 61 comments

John Howard’s endorsement of Ian Plimer’s children’s version of his absurd anti-science tract Heaven and Earth has at least one good feature. I can now cut the number of prominent Australian conservatives for whom I have any intellectual respect down from two to one.[1] Howard’s acceptance of anti-science nonsense shows that, for all his ability as a politician, he is, in the end, just another tribalist incapable of thinking for himself. [2]

Although not all the tribal leaders are old men, an old, high-status man like Howard is certainly emblematic of Australian delusionism . Like a lot of old, high status men, he stopped thinking decades ago, but is even more confident of being right now than when he had to confront his prejudices with reality from time time. Like other delusionists, Howard has no scientific training, shows no sign of understanding statistics and almost certainly hasn’t read any real scientific literature, but nonetheless believes he can rank clowns like Plimer and Monckton ahead of the real scientists.

The situation in the US is similar but even more grimly amusing, with the sole truthteller in the entire Republican party, Jon Huntsman, recently reduced to waffling (in both US and UK/Oz senses of this term) because he briefly looked like having a chance to be the next non-Romney. This tribal mindlessness is reflected in the inability of the Republican Party, at a time when they ought to be unbackable favorites in 2012, to come up with a candidate who can convince the base s/he is one of them, but who doesn’t rapidly reveal themselves as a fool, a knave or both.

And, as evidence of the utter intellectual shamelessness of delusionism, you can’t beat the campaign against wind power, driven by the kinds of absurd claims of risk that would be mocked, mercilessly and deservedly, if they came from the mainstream environmental movement.

The global left is in pretty bad shape in lots of ways. Still, I would really hate to be a conservative right now.

fn1. Now down to zero. Turnbull has proved he lacks any real substance.

fn2. I’m not saying that all Australian conservatives are mindless tribalists. There’s a large group, epitomized by Greg Hunt and now Malcolm Turnbull, who understand the issues quite well, but are unwilling to speak up. Then there is a group of postmodern conservatives of whom Andrew Bolt is probably the best example, who have passed the point where concepts of truth or falsehood have any meaning – truth is whatever suits the cause on any given day.

Categories: Economics - General Tags:

CCS AWOL?

July 25th, 2014 65 comments

As recently as the Stern Review in 2006, carbon capture and storage from coal-fired power stations was seen as the most promising clean energy technology on offer. This was before the huge decline in the cost of solar PV and the more modest, but still substantial progress on wind energy. Since then, the technology has dropped off the radar, to the point that many reports don’t even mention it. But I just got an invite to a conference on the subject, so I thought I would take another look.

The blurb refers to a number of projects “Callide and Surat Basin in Queensland, CarbonNet in Victoria, and South West Hub in Western Australia”. A quick survey suggests that these are mostly at “proof of concept” stage, rather offering a technology that could actually be implemented on a large scale. Globally, the site says

The Global Status of CCS Report: February 2014 states that there are 12 large-scale CCS projects in operation globally and nine under construction. Overall, these 21 projects have a total capture capacity of almost 40 million tonnes of CO2 a year.

If my arithmetic is right, the entire global effort is about equivalent to the impact of Australia’s Renewable Energy Target:the large scale component calls for 41 000 GWH a year by 2020: my rule of thumb is 1MWh = 1 tonne CO2.

There’s also a report on CCS in the New York Times, which is optimistic, but very vague on cost.

That’s disappointing: from Australia’s point of view, a cheap, safe method of CCS would have resolved the climate change problem, at least as regards electricity, with no adverse impact on our coal industry. I’d be interested in comments from more informed readers.

Categories: Environment Tags:

Hazlitt and the glazier’s fallacy

July 24th, 2014 21 comments

I’ve been working for quite a while now on a book which will respond to Henry Hazlitt’s Economics in One Lesson a book that was issued just after 1945 and has remained in print ever since. It’s an adaptation of the work of the 19th century French free-market advocate Frederic Bastiat for a US audience, specifically aimed at refuting the then-novel ideas of Keynes.

My planned title is Economics in Two Lessons. In my interpretation, Hazlitt’s One Lesson is that prices are opportunity costs[1]. My Second Lesson is that, in the absence of appropriate government policy, private opportunity costs (market prices) won’t reflect social opportunity costs. Here’s a central piece of the argument, responding to Hazlitt’s exposition of Bastiat’s glazier’s fallacy.

Read more…

Categories: Economics - General Tags:

Productivity yet again

July 23rd, 2014 24 comments

The ABC has yet another story about economists warning on the need for more productivity. It’s a mixed bag. First up, this from Professor James Giesecke from Victoria University’s Centre for Policy Studies

“We’re going to need a growth rate in multi-factor productivity more like the rates that we saw back in the ’70s and ’80s, about 0.7 per cent per annum, in order to begin increasing per capita living standards going forward

appears to mark an abandonment of the mythical 1990s productivity surge, though he goes on to talk about micro-economic reform. More clearly positively, a bit of attention paid to bloated and lazy management rather than telling the rest of to “work harder and smarter” Many economists are turning their eyes to the business sector to take the productivity baton from the labour market to galvanise growth. Finally, there’s this from Peter Harris of the Productivity Commission who has

nominated energy, health and education and other parts of the non-traded sector as candidates for reform. (emphasis added)

Wow! I would have thought that, 20 years after the Hilmer report, the Australian energy sector has been as thoroughly reformed as it can possibly be, short of going back to oil lamps. We’ve had corporatisation, privatisation, pool markets and full retail competition. And of course, the results are evident for all to see. Apparently, though, we are in need of more.
Read more…

Categories: Economic policy Tags:

Macrofoundations of Micro

July 22nd, 2014 4 comments

I was very pleased with my post on this topic, making the point that standard microeconomic analysis only works properly on the assumption that the economy is at a full employment equilibrium.

But, it turns out, exactly the same point, using the same title, was made by David Colander 20 years ago

Colander (1993), The Macrofoundations of Micro, Eastern Economic Journal, Vol. 19, No. 4 (Fall, 1993), pp. 447-457

And he wasn’t the first. The term and the idea have a long history, including a contribution by my UQ colleague Bruce Littleboy

The term macrofoundations, I suspect, has been around for a long time. Tracing the term is a paper in itself. Axel Leijonhufvud remembered using it in Leijonhufvud [1981] . I was told that Roman Frydman and Edmund Phelps [1983] used the term and that Hyman Minsky had an unpublished paper from the 1970s with that title; Minsky remembered it, but doubted he could find it and told me that he used the term in a slightly different context. I was also told by Christof Ruhle that a German economist, Karl Zinn, wrote a paper with that title for a Festschrift in 1988, but that it has not been translated into English. I suspect the term has been used many more times because it is such an obvious counterpoint to the microfoundations of macro, and hence to the New Classical call for microfoundations. While he does not use the term explicitly, Bruce Littleboy [1990], in work that relates fundamentalist Keynesian ideas with Clower and Leijonhufvud’s ideas, discusses many of the important issues raised here.

Categories: Economics - General Tags:

Monday Message Board

July 22nd, 2014 52 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:

Stafford by-election

July 20th, 2014 32 comments

Another big loss for the Newman LNP government here in Queensland, with a swing of nearly 19 per cent in the Stafford by-election. I did my little bit for this, speaking at a public forum on asset sales. However, since only the Labor and Green candidates showed up, and no-one in the crowd seemed inclined to vote for the LNP or Family First anyway, I doubt that my contribution to margin was noticeable.

Like Newman’s previous drubbing, this by-election was caused by the resignation of the sitting LNP member. However, whereas in the previous case, the resignation resulted from personal financial scandals, the member for Stafford was a doctor who resigned as a result of disagreement with Newman’s health policy. So, the outcome may fairly be interpreted as a rejection of the government’s approach, both in terms of policy substance and authoritarian style.

There is so much disillusionment with politics at present that just about anything can happen. My own guess is that the state election, due in March next year, will see Newman lose his own seat of Ashgrove (held on a margin of 5.7 per cent) and that no party will secure a majority. After that, who knows? Informed or uninformed speculation welcome.

Categories: Oz Politics Tags:

Move over, Roger Bannister

July 19th, 2014 25 comments

So, I finally broke 4:00 in training. In fact, I managed 3:54. Admittedly, I have a lot of advantages. Training methods, nutrition and shoes have all improved a lot since Roger Bannister first ran the four-minute mile

Read more…

Categories: Sport Tags:

Finance: global or international ?

July 19th, 2014 9 comments

I have a piece in The National Interest, looking at various recent events including the latest round of the Argentinian debt crisis, in which a New York court ruled in favor of a group of ‘vulture’ investors, led by a New York billionaire, and the agreement of the US Department of Justice and Citibank, involving a financial settlement to avoid a lawsuit over bad mortgage deals and CDOs in the pre-crisis period.

My central observation is that while legal forms are being observed, these are obviously political processes, with outcomes reflecting relative political power rather than any kind of neutral application of the law. So, the world financial system is part of international power politics: it matters a lot that Citibank is a US bank, while BNP Paribas is French and so on. This is very different from the picture of a global financial system independent of, and standing in judgement on, national governments that seemed to be emerging in the 1990s.

As an illustration, I found this ad put out by the ‘vultures’. To see my point, try interchanging “US” and “Argentina” throughout and assuming an adverse judgement by an Argentinian court against the US government.

ATFA-Full-Image

Categories: Economics - General Tags:

Condemned by history

July 17th, 2014 192 comments

So, after some farcical manoeuvres, the Senate has passed Abbott’s legislation removing the carbon price. I hope and believe that this outcome will be reversed in due course, but those who brought it about will stand condemned by history.

It’s not merely that this is a bad policy, which will impose large and increasing costs (depending on how long it takes us to get back on track) on Australia and the world into the future. Even more damning is the fact that this action is entirely based on conscious lies, embraced or condoned by everyone who has actively supported it.

First, and most obvious, no one (least of all Tony Abbott) believes that the government’s “Direct Action” policy is a superior alternative to the carbon price, one that will deliver emissions reductions more rapidly and at lower costs. It is, as everyone knows, a cynical ploy put forward simply to allow the government to say that it has a policy.

In reality, Abbott and the rest want to do nothing, and the motives for this desire are entirely base. For a minority of the do-nothing group, it is simply a matter of financial self-interest associated with the fossil fuel industry. For the majority, however, it is the pursuit of a tribal and ideological vendetta. Their position is driven by Culture War animosity towards greens, scientists, do-gooders and so on, or by ideological commitment to a conservative/libertarian position that would be undermined by the recognition of a global problem that can only be fixed by changes to existing structures of property rights.

Most of these people would describe themselves as climate “sceptics”. There is no such thing. That is, there is no one anywhere who has honestly examined the evidence, without wishful thinking based on ideological or cultural preconceptions, and concluded that mainstream science is wrong. Most “sceptics”, including the majority of supporters of the conservative parties, are simply credulous believers in what their opinion leaders are telling them. Those opinion leaders are engaged, not in an attempt to determine the truth, but in a cultural vendetta against their enemies or in an ideologically-driven attempt to justify a predetermined do-nothing position.

This is a sad day, but one that will come back to haunt those who have brought it about.

Categories: Environment Tags:

Zombie DDT myth reanimated

July 14th, 2014 7 comments

A large part of my blogging career has consisted of attempts at zombie-slaying: finding ideas that have been refuted by the facts, but that remain undead. Zombies are hard to kill, but one I thought had been permanently dealt with – the myth that Rachel Carson brought about a worldwide ban on DDT, leading to millions of deaths from malaria[1]. Although quite a few people helped to show that this wasn’t true, the lion’s share of the credit, at least in the blogosphere, goes to Tim Lambert (who stopped blogging a while back, though his site still runs a montly open thread). Tim and I laid out the facts in a 2008 piece in the English magazine Prospect which made the following points

* DDT has never been banned in anti-malarial use
* The failure of DDT to eradicate malaria was due to resistance, promoted by overuse in agriculture and elsewhere, exactly as Carson warned. Bans on agricultural use of DDT helped slow the growth of resistance
* The attacks on Carson were undertaken by tobacco industry lobbyists, seeking (among other things) to pressure the World Health Organization not to undertaking anti-smoking campaigns in poor countries

Our primary targets were Steven Milloy and Roger Bate‘s Africa Fighting Malaria organization.

Whether due to our efforts or not, the DDT ban myth seems mostly to have died. Milloy, whose links to tobacco have thoroughly discredited him, seems to be out of the pundit business altogether. He still has an adjunct perch at the Competitive Enterprise Institute but his web page there shows only two opinion pieces since 2008. AFM is also quiescent – its website doesn’t show any research activity since 2011 and its staff all appear to have paying jobs in free-market thinktanks, suggesting a zombie organization.

But the zombie plague always recurs and just now I’ve seen (via Ed Darrell) another instance, oddly enough in an environmentalist magazine Greener Ideal. The author, one Mischa Popoff is described as ” former organic farmer and USDA-contract organic inspector” and repeats the standard DDT myth before a segue into a defence of GMOs. But, as Ed Darrell points out, Popoff is being a bit cute here. DuckDuckGo reveals that he is in fact a Policy Advisor for The Heartland Institute and a Research Associate for The Frontier Centre for Public Policy (the latter being apparently a Canadian version of Heartland, as is the IPA in Australia. The site is down now, so I can’t check).

As long as Heartland lives, zombie ideas will never truly die.

fn1. As usual, the Australian right commentariat bought this one hook line and sinker. Miranda Devine excelled herself, but Blair, Bolt, Quadrant, the CIS and the IPA were all along for the ride.

Categories: Environment Tags: