Keeping Sea Lanes Open: A Benefit Cost Analysis

March 20th, 2016 21 comments

Whenever I raise the observation that navies are essentially obsolete, someone is bound to raise the cry “What about the sea lanes”. The claim that navies play a vital role in protecting trade routes is taken so much for granted that it might seem untestable. But it turns out that most of the information needed for a benefit cost analysis is available. Unsurprisingly (to me at least), the claimed benefit of keeping sea lanes open doesn’t stand up to scrutiny. I’ve spelt this out in my latest article in Inside Story, reprinted over the fold.

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Categories: Economics - General, Oz Politics Tags:

A better system of voting for the Senate

March 19th, 2016 30 comments

After a fractious debate, the LNP and Greens have combined to push through changes to the system of voting in the Senate. The primary change is to introduce something like optional preferential voting above the line, replacing the system where party apparatchiks got to allocate preferences. While not perfect, this is an improvement on the old system.

It points the way to a much simpler system. I suggest scrapping the below/above distinction, and moving to a standard optional preferential system, except that we would vote for named party lists. Independents could pick a party name describing their objectives, or just run under their own names.

The main objection to this system is that it rules out the option of voting for (say) Labor candidates in an order different to that of the party ticket, which is currently possible below the line. But, as far as I know, in nearly 100 years with the current system, no candidate has ever been elected ahead of someone higher up their own party list.

Against that, it would be simple, familiar and easy to count, with a greatly reduced risk of accidental informal votes.

Categories: Oz Politics Tags:

Political Bourbonism

March 16th, 2016 23 comments

Laura Tingle had an interesting piece on political memory. in Quarterly Essay recently, and my response (over the fold) was published in the latest issue (paywalled)>. Tingle is the most insightful observer of Australian politics writing in the mass media, but she has always taken the inevitability and desirability of market liberal reform for a granted. I detect a bit of a shift in the latest piece, but that may be wishful thinking on my part.

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Categories: Oz Politics Tags:

Sandpit

March 12th, 2016 84 comments

A new sandpit for long side discussions, idees fixes and so on. Discussions about climate policy and related issues can be posted here, along with the usual things.

Categories: Regular Features Tags:

Repeal Taft-Hartley (crosspost from Crooked Timber)

March 11th, 2016 29 comments

Assuming that the US Presidential election is between Trump and Clinton (or, for that matter, Sanders) the voting bloc that’s most obviously up for grabs is that of working-class whites[^1]. Relative to expectations, working class whites have done worse under neoliberalism/market liberalism than almost any other group in the population. So, they ought to be more solid than ever against the right. But it’s easy for tribalists like Trump to blame migrants and minorities for the losses that working class whites have suffered.

What’s needed to turn this around, I think, is something, in Trump’s words “yuge”. My suggestion is repeal of the Taft-Hartley Act. Way back in 1948, Taft-Hartley prefigured anti-union laws that were passed throughout the English-speaking world[^2] from the 1970s and have spread even further since then. Its repeal would, at a minimum, be a huge symbolic step.
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Categories: World Events Tags:

Parallel universes

March 7th, 2016 186 comments

Of the 20 years or so that I’ve been observing climate change policy, global developments over the past year have been the most hopeful I can remember, particularly as regards electricity generation

* The Paris Conference was a big success, at least relative to expectations
* Coal-fired power stations are shutting down around the world
* China has reduced its coal use for two years in a row
* India has increased its coal tax, and greatly expanded use of renewables

Whether emissions reductions will be big enough and fast enough remains to be seen, but at least we are going in the right direction.

As far as climate science is concerned, the string of temperature records broken recently has killed any idea that we are in a ‘pause’ or ‘hiatus’. Even the favorite source of deniers, the satellite data from UAH, is now showing a new record. The only remaining issue is the second-order debate over whether there was a pause or perhaps slowdown at some point in the first decade of the 2000s.

At the same time, following the US election, I’ve been paying more attention than usual to rightwing blogs, most of which run climate denialist pieces fairly regularly. Given that nearly all the major US coal companies are now bankrupt, and that coal-fired electricity is declining rapidly, I’d have expected a lot of “wrecking ball” pieces on the supposed damage to the economy (in reality, the effects are small and mostly offset by the expansion of renewables) now that mitigation policies of various kinds are taking effect.

But I don’t see anything like that. Rather, most of the articles I’m reading are claims of victory in the debate over both science and policy. Here’s a fairly typical example, with the title “Is the Climate Crusade Stalling?

We really do live in parallel universes.

Categories: Environment Tags:

The three party system (crosspost from Crooked Timber)

March 3rd, 2016 40 comments

Warning: Amateur political analysis ahead. I posted this on Crooked Timber a few days ago. It isn’t as applicable to Australia. In part, I think, this is because Rudd (along with Henry and Swan) saved us from the GFC with Keynesian policies, but then failed to defend them, leaving the advocates of market liberal reform largely unchallenged.

Looking at the way politics has evolved over the past 25 years or so, in the English-speaking world and beyond, I have developed an analysis which is certainly not original, but which I haven’t seen set down in exactly the way I would like. Here’s the shorter version:

There are three major political forces in contemporary politics in developed countries: tribalism, neoliberalism and leftism (defined in more detail below). Until recently, the party system involved competition between different versions of neoliberalism. Since the Global Financial Crisis, neoliberals have remained in power almost everywhere, but can no longer command the electoral support needed to marginalise both tribalists and leftists at the same time. So, we are seeing the emergence of a three-party system, which is inherently unstable because of the Condorcet problem and for other reasons.

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Categories: Politics (general) Tags:

Monday Message Board

February 29th, 2016 33 comments

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:

Sandpit

February 29th, 2016 10 comments

A new sandpit for long side discussions, idees fixes and so on. Discussions about climate policy and related issues can be posted here, along with the usual things.

Categories: Regular Features Tags:

Refighting World War II

February 26th, 2016 64 comments

In keeping with his commitment to do exactly what Tony Abbott would have done, but with more style, Malcolm Turnbull has just announced that we are to spend a trillion dollars on fighter plans and submarines. Apparently, there are lots of problems with the hugely expensive F-35 Joint Strike Fighter, which Australia has on order. Rather than look at the details, it’s worth asking we are, yet again, arming ourselves to refight World War II.

World War II was fought on land, sea and air. Submarines and fighter planes played a crucial role. But since 1945, things have changed. The 70 years since 1945 have been marked by near-continuous land warfare in various parts of the world [1]. On the other hand, there has been essentially no naval warfare, in the sense of battles between ships or carrier based aircraft, with the exception of the absurd and unnecessary Falklands conflict. Air combat between fighter planes lasted a bit longer after 1945, playing a big role in the Korean War, but has been pretty much non-existent since the 1980s. All warplanes, these days, are effectively bombers, usually hitting targets that have previously been rendered defenceless by missile attack. Yet the problems of the F-35 stem, in large measure, from its capacity to engage in hypothetical dogfights.

Fighter planes and their pilots still attract most of the attention, and nearly all the glory, in air warfare. But the real work is increasingly done by drone operators, commuting from the suburbs to undertake their task of destruction in air conditioned offices: since they see exactly what they have done, the job is apparently much more stressful than that of a fighter pilot. So far, only the US is using military drones on a large scale, but it’s obvious that this is the way of future wars. The specific problems of the F-35 are irrelevant in this context: it will in any case be obsolete by the time it’s delivered.

As for submarines, Wikipedia gives a list of submarine actions since 1945. There have been six of them, three involving the sinking of surface ships, and three involving the firing of cruise missiles, something that can be done from craft as small as corvettes.

Submarines have been much more notable for sinking themselves. Wikipedia lists four US submarines sunk at sea since 1945, two with all hands. The Russians have done far worse, losing 18 subs, most notably the Kursk, lost with all hands in 2000.

Submarines aren’t obsolete in all their possible uses. If the world ends in a nuclear holocaust, the final missiles will probably be fired from nuclear-armed submarines. But the revival of old-style submarine warfare, using our subs to sink (say) Chinese naval vessels seems remote: the increasing power and range land based anti-ship missiles will soon make naval power obsolete. Even more remote (thankfully) is the use of submarines to attack merchant ships without warning, as was done in both World Wars.

Of course, no one can be certain that seemingly obsolete modes of warfare won’t be revived: For example, there was a cavalry charge during the Afghan war. But spending a trillion dollars on weapons systems that haven’t been used anywhere in the world for decades does not seem like a sensible use of public money.

Having posted this, I’m fully prepared to get a hammering from military buffs who will point out that I have got this or that detail of air and naval warfare wrong. But the idea that detailed knowledge of tech specs or the minor points of military history constitutes expertise is, in this context, quite wrong. In the absence of any significant air or naval warfare within living memory, supposed expertise is about as useful as Scott Morrison’s knowledge of unicorns. The only important thing to know is that, like nearly all military expenditure and nearly all wars, these proposed purchases haven’t been subject to a cost-benefit test and would fail it if they were.

fn1. There’s a case that land warfare has become less frequent, or at least less bloody over time. But it’s hard to tell.

Peak paper (updated)

February 22nd, 2016 55 comments

I’ve recently published a piece in Aeon, looking at the peak in global paper use, which occurred a couple of years ago, and arguing that this is an indication of a less resource-intensive future. Over the fold, a longer draft, with some links.
Read more…

Categories: Environment Tags:

Turnbull opposes affordable housing

February 21st, 2016 46 comments

Responding to Labor’s proposals on negative gearing and capital gains tax, Malcolm Turnbull has warned that property values will fall as a result. He is surely correct. To put the same point in different words, Turnbull agrees that Labor policy will make housing more affordable and thinks that this is a bad thing.

There are some obvious electoral advantages in Turnbull’s scare campaign. As I observed when this topic came up during Abbott’s Prime Ministership, most voters own houses and therefore benefit from making housing less affordable. For this reason, Australian public policy has long been to make housing as unaffordable as possible.

The difficulty for Turnbull arises from precisely this point. He has more or less promised to do something about the tax treatment of property. But, from our current starting point, almost any change must make existing owners worse off. So, when and if he does anything, he will be hoist on his own petard.

Labor’s response to Turnbull has been interesting and, I suspect, effective. The line has been to accuse him of a dishonest scare campaign, without explicitly denying that property values will decline with the removal of unjustified tax concessions.

While this is an example of a non-denial denial, it is I think, defensible. Turnbull is mounting a scare campaign, and doing so dishonestly, attacking policies he might otherwise embrace. This is a much fairer use of the term than when it was used to apply to Labor’s reiteration of its longstanding opposition to expansion of the GST at a time when the government was clearly floating the idea. Pointing out that it was never formal government policy is a silly evasion – it wasn’t as though Labor was inventing the idea.

Categories: Oz Politics Tags:

Another fearless prediction

February 20th, 2016 60 comments

As longterm readers know, my record on political and other predictions is mixed, not as bad as some have made out, but by no means uniformly accurate. Still, I’m going to venture my most fearless prediction in some time.

Bill Shorten will be Prime Minister after the next election.

Like most Australian voters, I have no great enthusiasm for Shorten. But, I’ve come to the view that Turnbull is, as the Fin remarked recently, “all hat and no cattle”, and the same can be said of most of his ministry. In particular, Scott Morrison is the most striking instance of the Peter Principle I’ve seen in some time. Brutally effective as Immigration Minister, he handled the Social Services portfolio quite deftly, but has floundered as Treasurer.

Turning from personality to policy, Labor certainly deserves a win. They have stuck to their guns on issues like carbon pricing, and advanced serious and credible policies on tax and public expenditure, something that hasn’t been attempted since John Hewson’s Fightback! disaster in 1993.

By contrast, the Turnbull government is an enigma. Will it go to the election with the policies Turnbull inherited from Abbott? Or will be asked to “let Malcolm be Malcolm”? Or will we see a continuation of the studied ambiguity of the last five months? No one seems to know.

For the moment, Turnbull’s popularity looks like the trump card. The experience of his last stint as leader suggests that this is a fairly weak reed.

The best hope for the government is that the post-Turnbull surge was not so much driven by support for Turnbull as by an underlying LNP majority, submerged by Abbott’s absurdities.

Categories: Oz Politics Tags:

Something doesn’t add up here

February 20th, 2016 28 comments

The papers are abuzz with speculation about an early election. This is one of the favorite games of the political punditariat, and it usually comes to nothing, but the story this time seems to make even less sense than usual. Part of the problem is that there are three different ways an early election could be held, and the proponents seem to be assuming a “unicorn” or “Pixie horse” (to use Scott Morrison’s evocative terminology) that combines the best of all three from the government’s position.

First, we could have an immediate dissolution of the House of Representatives. This would have a chance of achieving the biggest selling point of the early election idea, cashing in on Malcolm Turnbull’s popularity while it lasts. But such obviously cynical moves have failed in the past, as Campbell Newman could tell you. Also, it would (as I understand it) necessitate a separate half-Senate election in the second half of the year. The political class, with the exception of minority and micro-parties, really hates this idea.

Second, we could have a double dissolution, based on the Senate’s failure to pass anti-union laws, and held under the existing rules. Apparently, the election would have to be called the day after Budget Day (11 May), and couldn’t be held until July. So, it would only be a few months early, invalidating the whole idea. And, of course, it would guarantee a Senate with lots of micro and minor party members.

The third idea, is the second, plus a deal with the Greens to reform the Senate voting rules to allow preferential above the line voting. This would kill off the “preference whisperer” deals that have allowed the election of candidates with almost no votes. The reform makes sense, but why on earth would the Greens rush it through to make life easy for the government? All they have to do is hold off until the Budget session and they can get the reform with no possibility of a double dissolution.

Also, the idea that the reform will kill micro parties seems to be oversold. Automatic preference exchange might be gone, but there will still be “how to vote” cards. With a DD quota of about 7.5 per cent, a candidate with a 4 per cent primary vote, or even less, could easily get in on preferences.

However, no one seems to be making any of these points. Have I misunderstood the arcana of our system, or just got the strategy wrong? Over to you.

Update In comments, Lt Fred makes a convincing case that the Greens want and would benefit from a Double Dissolution. They did much better in 2010 than in 2013, so a DD would be good for them.

Categories: Oz Politics Tags:

Peak paper

February 18th, 2016 37 comments

I’ve recently published a piece in Aeon, looking at the peak in global paper use, which occurred a couple of years ago, and arguing that this is an indication of a less resource-intensive future. Over the fold, a longer draft – I’ll add hyperlinks back in if I get a free moment.
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Categories: Economics - General Tags:

No nuclear reactor for South Australia

February 15th, 2016 33 comments

That, for me at any rate, is the crucial element of the Tentative Findings of the South Australian Royal Commission into the Nuclear Fuel Cycle (here. The media releasee summarises

aking account of future demand and anticipated costs of nuclear power under the existing electricity market structure, it would not be commercially viable to generate electricity from a nuclear power plant in South Australia in the foreseeable future.

However, Australia’s electricity system will require low-carbon generation sources to meet future global emissions reduction targets. Nuclear power may be necessary, along with other low carbon generation technologies. It would be wise to plan now to ensure that nuclear power would be available should it be required.

The detailed findings are sensible (that is to say, largely in line with my submission and evidence. A crucial para:

If nuclear power were to be developed in South Australia, a proven design should be used that has been constructed elsewhere, preferably on multiple occasions, and should incorporate the most advanced active and passive safety features. This is likely to include consideration of small modular reactor (SMR) designs, but exclude for the foreseeable future fast reactors

Given that Barry Brook, a leading enthusiast for fast reactors was part of the Commission’s Expert Advisory Panel, this finding should make it clear that fast reactors are an option for the distant (beyond foreseeable) future.

The finding is striking because South Australia is, or ought to be a test case for those arguing that a carbon-free electricity system must rely on “baseload” nuclear. South Australia has high and increasing reliance on renewables, is close to phasing out coal, and has limited interconnection capacity. It’s exactly the modle that anti-renewable sites like Brave New Climate have “proved” time after time can’t possibly work without nuclear power. Yet, it seems, even a sympathetic inquiry finds nuclear power to be an option for the distant future, if that.

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Categories: Environment Tags:

Shorten wins the tax debate

February 13th, 2016 116 comments

Bill Shorten doesn’t have a lot of public support, a fact that reflects his background as a machine politician with a penchant for self-promotion. For a long time he has been accused of pursuing a “small target strategy”, hoping to win by default against Tony Abbott.

The latest developments in tax policy ought to prompt ] a reassessment. The nature of policy debates like this is that the government holds all the cards: control of the political agenda, expert Treasury advice, and the capacity to manage the media with judicious leaks.

Despite all of this, Shorten has left Malcolm Turnbull and Scott Morrison looking flat-footed. Their preferred option of raising the GST rate and expanding its base is dead in the water, but not yet formally disavowed. Opposing it was an easy choice for Shorten, but still one that required him to override some supporters within the ALP.

The general assumption was that the government would soon announce Plan B. But Shorten has now beaten them to the punch. His proposals to limit negative gearing and scale back the concessional treatment of capital gains are more substantial than anything they are likely to contemplate in relation to property taxation. And Labor has already signalled willingness to limit tax concessions for superannuation.

So, unless the government is willing to do something really radical, involving an explicit break with the Abbott era, anything announced in the Budget will look like “me too”.

Update Immediately after posting this, I found this piece by Laurie Oakes, arbiter of the Australian political zeitgeist, making an almost identical argument.

Categories: Oz Politics Tags:

Waist deep in the Big Muddy

February 10th, 2016 26 comments

The sudden collapse of four for-profit vocational education enterprises including Aspire college is the latest in a string of scandals, failures and license revocations in the sector.

Meanwhile, in the US, the Apollo Education Group, owner of the “University” of Phoenix, has been taken private for $1 billion, a fraction of its peak market value. UoP pioneered the model of providing a bogus education to publicly funded students, ripping off both the students and the public purse. As the US has cleaned up the worst abuses, UoP and others have seen their profits shrink, to the point of bankruptcy in some cases.

The provision of public funds to for-profit operators has been a predictable, and predicted disaster. Of all the disasters perpetrated under the banner of microeconomic reform, education reform has probably been the worst.

In these circumstances, it would make sense for the national government, which has borne much of the cost, to take over the vocational education sector, properly fund the public TAFE system, and close down the for-profit sector, as was recently done in Chile.

The idea of a national takeover is, indeed, on the cards. But far from closing down the for-profit sector, it appears the Turnbull government plans to push the reform agenda even further.

Waist deep in the Big Muddy, and the big fool said, Carry On.

Categories: Economic policy Tags:

The patrimonial society comes to Australia

February 7th, 2016 80 comments

Forbes just released its annual list of the ten richest Australians. Of the top eight, four inherited their wealth. The other four range in age from 75 to 85, suggesting that new heirs are likely to be joining the rich list before too long.

This pattern isn’t yet representative of the Australian wealth distribution as a whole, but it is becoming more so. Piketty’s patrimonial society is not far away.

There are a lot of things we can do to promote a more equal distribution of opportunity and outcomes, but a return to taxes on inheritance (preferably levied on the recipient rather than the estate) would be a good start.

Increasing GST: not worth the effort. How about inheritance taxes?

February 5th, 2016 104 comments

I posted this analysis in December, suggesting that, once the necessary compensation is paid for, an increase in GST wouldn’t be worth the effort. Apparently Treasury modelling (which I haven’t yet located) produces the same conclusion. Given that everything is supposedly on the table, maybe it’s time to look at some new options. An obvious example is inheritance taxes, which raised a fair bit of money before being scrapped in the late 20th century. As the inequality of wealth increases, the case for such taxes becomes every stronger.

Repost

The Grattan Institute has just released a report suggesting that the government should get more revenue from the GST, either by broadening the base to include food, health and education (yielding an extra $17 billion) or by raising the rate to 15 per cent (yielding an extra $27 billion). As you’d expect from Grattan, the analysis is sound and careful. As long as you accept the standard framing of the tax reform debate, in terms of the need to shift from direct to indirect taxation, it is reasonably convincing.

Grattan suggest using 30 per cent of the extra revenue to increase welfare payments and 30 per cent in cutting the bottom two tax rates, thereby compensating low income earners. The overview concludes:

Around 40 per cent of the additional revenue from a higher GST would be left over after welfare increases and tax cuts. At least some will need to go to state governments to help them address their looming hospital funding gap, as the price for their support of the change. This would leave a little – but not much – to reduce the Commonwealth’s budget deficit, or to pay for other tax cuts that promote economic growth.

(emphasis added).

Is that enough to sell the package? I can’t imagine the states going along with a deal like this for less than 20 per cent of the total extra revenue, which implies the Feds are left with 20 per cent, somewhere between $3.5 and $5.5 billion. From a political viewpoint, it’s hard to see this being worth the effort for the Turnbull government, especially with no guarantee of success.

As a comparison, the FBT concession for motor vehicles, reinstated by Tony Abbott costs the budget around $1.5 billion. Exemptions for non-profits, which have been comprehensively rorted, cost at least as much. Add in a few ‘rats and mice” concessions, and the Federal government would have as much as it could get, in net terms, from the Grattan package (Getting rid of the non-profit concession would probably require some compensating expenditure, but the same is true of the health and education concessions under the GST.)

That’s before we get to the elephants: superannuation concessions (also supported by the Grattan report), corporate tax avoidance, land tax and higher income taxes for (say) the top 5 per cent of income earners (reflecting elite opinion, the Grattan report suggests cutting these rates). All of these are hard, but not obviously harder than the GST.

So, why is GST reform at the top of the government’s list? The answer is simple enough. The advocates of reform haven’t had a new idea, on taxation or anything else, in 30 years. They didn’t get the GST out of Keating’s Tax Summit in 1984 and they didn’t get the version they wanted from Howard and Costello in 2000. So, the same old idea keeps on coming up.

Categories: Tax and public expenditure Tags:

Abbott without the attitude

February 5th, 2016 18 comments

Nearly five months after Malcolm Turnbull became PM, it’s finally possible to get a clear view on the big question of what the change means. Has the shift from Tony Abbott has led to a real change in policy approach, centred on growth and innovation? Or is it merely cosmetic, amounting to the end of the tribalist rhetoric and gesture politics that eventually cost Abbott his job.

Based on recent developments, the case for “merely cosmetic” seems overwhelming. Turnbull’s rhetoric about innovation is starkly at odds with the reality of:

* massive job cuts in CSIRO, focused on climate change. The fact that the new entrepreneurial CEO is flogging the dead horse of coal to diesel adds insult to injury; and

* the $5 billion Northern Australia infrastructure fund, a boondoggle based on mid-20th century rhetoric about “unlocking the North”. It was pushed by Abbott as a sop to the Institute of Public Affairs, who underwent a sudden conversion to the cause of publicly subsidised dam projects a little while ago. The political imperative has gone but the money still flows, it seems.

The picture is just as bad on other issues. Turnbull is going ahead with the $160 millikon plebiscite on equal marriage, even though its leading backers, who only pushed it as a delaying tactic, have announced they won’t be bound by the result. Turnbull should have taken these statements as releasing him from any commitments to the anti-equality right, and allowed a free (in both senses of the word) vote in Parliament instead.

On climate change, the rhetoric in Paris sounded OK, but there has been no action to speak of. Turnbull hasn’t even committed to maintaining the Renewable Energy Target, let alone increasing it as he will need to do in the absence of an effective carbon price.

I imagine the appearance of improvement will last long enough to secure an election win for Turnbull. But, unless he starts delivering some change, the reality will become evident before long.

Categories: Oz Politics Tags:

Adani: the dog that caught the car

February 3rd, 2016 41 comments

Adani has finally received environmental approval from the Queensland government for its proposed Carmichael mine in the Galilee Basin. At this point, in a standard news story about a multi-billion project, we’d be reading about the domestic and global banks that were competing to be the lead financiers for the project, and those who would have to content with the crumbs. Along with that, there would stories about the partners and subcontractors who would get the lucrative work of construction.

Instead, we have a long list of banks and other funding sources that have announced that they won’t finance the project, or have pulled out of announced and existing finance arrangements. The list includes the Commonwealth (formerly a big lender to Adani), NAB, the Queensland Treasury, the State Bank of India, and global banks including Standard Chartered (another former big lender), Citigroup, JP Morgan Chase, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland, HSBC, Barclays, BNP Paribas, Credit Agrilcole and Societe Generale. The US and Korean Export-Import banks have been touted as possible sources, but appear to have backed away. Even the Abbott-Turnbull $5 billion slush fund for Northern Australian boondoggles, seen when it was announced as a rescuer for Adani, now appears unlikely. At the recent Northern Australia Investment Forum, the fund was the centre of attention, but Adani apparently didn’t get a mention, unless it was implicit in Frydenberg’s claim that the government wouldn’t be investing in “white elephants”.

The situation with suppliers is just as bad. Adani sacked the engineering team from Worsley Parsons and the construction group from Posco (also a supposed equity partner) last year. A $2 billion announcement of work for Downer EDI seems to have vanished into thin air. And at Abbot Point, Adani, as owner, is engaged in a nasty brawl with Glencore, the current operator.

In summary, we appear likely to find out what happens when a dog catches the car it has been chasing. Adani and its backers have been denouncing green tape and “lawfare” as the only obstacles to the bonanza they have on offer. Now, the legal and administrative obstacles are gone, so they have only to line up the money, rehire the contractors and announce the starting date. My guess is that this will never happen.

Categories: Environment Tags:

A question about group selection

January 29th, 2016 73 comments

I’m doing some work on evolutionary models of game theory and need to understand the debate about group selection. It seems pretty clear that the great majority of evolutionary biologists reject the idea of group selection, but I haven’t found an adequate (to me) explanation of why they do so. A crucial problem for me is that the literature seems, without exception as far as I can see, to conflate group selection with co-operation and altruism. But the problem of group selection arises in non-cooperative settings, provided they are not zero-sum.

To illustrate the problem I’m struggling with, suppose that two previously isolated species meet as a result of some change. In one species (peacocks), competition between males for mates takes the form of elaborate, and energetically costly, displays. In the other species (penguins) males compete by providing food to their mates. In all other respects (diet, predators and so on) the two are similar. It seems obvious to me that the penguins, with their more efficient social arrangements, are going to outbreed the peacocks and eventually drive them to extinction.

It seems to me there are only two possibilities here
(a) My reasoning is wrong, and we can’t judge which species, if either, will dominate; or
(b) Even though it involves one group being selected over another, this isn’t what is meant by group selection

I’d really appreciate some help on this. I’m happy to have thoughts from anyone, but I’d most like to hear from actual experts with contact details.

Categories: Economics - General, Science Tags:

Education is an investment, not a filter

January 28th, 2016 44 comments

There’s been a fair bit of fuss about reports that it’s now much easier to get into a university course than it used to be. This is the unsurprising result of decades of public policy aimed in this direction (with some brief reversals, most notably when David Kemp was minister). This piece by Leith van Onselen is fairly representative

Thanks to the former Labor Government’s uncapping of university places in 2012, allowing universities to recruit as many students as they can fit, actual tertiary entrance scores have plummeted, meaning every man and his dog can now get a degree, devaluing their worth in the process.

Implicit in this statement is the “screening” theory of education, that the point of getting a university degree (or finishing high school for that matter) is to show that you are smarter than the people who didn’t. The idea that doing a degree might equip you with useful specific knowledge, or with general skills in reasoning, writing and so on, doesn’t get mentioned.

Assuming, as is fair in this context, that the “worth” of a degree is being conceived in monetary terms, the claim that degrees have been “devalued” depends on the future earnings of the students now being admitted. We can’t know this (neither can van Onselen). However, the long-term evidence is clear: in Australia, as everywhere else in the world, the wage premium for graduates has remained large enough to make going to university a very good decision, even as the proportion of young people undertaking university education has risen from a tiny minority in the mid-20th century to around 40 per cent today.

One interpretation of this is that, over the past century or more, the entire world has been engaged in more and more elaborate screening for no good reason. A more plausible explanation is that technological change has eliminated the kinds of jobs that used to employ kids with a Year 10 education (the median level of achievement when I was young), and replaced them with jobs that need the skills (specific and general) of a university graduate.

There’s every reason to think that these trends will continue in the future, so we are going to need more education not less. In my view, just about everyone should undertake post-secondary education either at university or TAFE.

In this context, I shoud note that van Onselen is spot-on about the disaster area that is for-profit education, particularly in the vocational sector. As I’ve said before, the for-profit providers should either be shut down or turned into contract providers for the TAFE system.

Categories: Economic policy Tags:

Known unknowns (crosspost from Crooked Timber)

January 27th, 2016 22 comments

In September 2002, according to Politico magazine, Donald Rumsfeld received a report (mostly declassified in 2011) stating that the intelligence on Saddam Hussein’s putative weapons programs was essentially worthless. For example, the report says:

Our knowledge of the Iraqi (nuclear) weapons program is based largely—perhaps 90%—on analysis of imprecise intelligence

The report was seen by Paul Wolfowitz, then Deputy Defense Secretary and now an adviser to Jeb Bush, but wasn’t shared with President George Bush, or with other members of the Administration, such as Colin Powell. And despite his musings about known and unknown unknowns (unsurprisingly the subject of some sardonic comment in the Politico piece, Rumsfeld showed no doubt in his public pronouncements about the supposed weapons.

This report ought to be (but won’t be) enough to discredit Rumsfeld and Wolfowitz once and for all. Given that they knew that the claimed legal basis for the war relied on spurious intelligence, both are guilty of the crime of a war of aggression. More to the point, in terms of US political debate, a Defense Secretary who sends thousands of US troops to their deaths in pursuit of a goal he knows to be illusory ought to be condemned out of hand.

On the other hand, does the report help to exonerate those who advocated war based on the spurious intelligence being pushed by Rumsfeld? Not to any significant degree. The fact that Rumsfeld was a four-flusher was obvious in December 2002, when Saddam denied having any weapons. As I observed at the time

In the standard warblogger scenario, the declaration was the trigger. Once it came out, the US would produce the evidence to show Iraq was lying and the war would be under way … Instead, Iraq is denying everything but the US is in no hurry to prove that Saddam is lying … The only interpretation that makes sense is that, despite all the dossiers that were waved about a few months ago – including satellite images of ‘suspect’ sites – the Administration doesn’t really have anything

Anyone who wasn’t already committed to war could have followed the same reasoning, and many did.

Categories: World Events Tags:

Monday Message Board

January 25th, 2016 33 comments

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:

Hard cash and climate change: repost from 2005

January 20th, 2016 142 comments

While thinking about decarbonizing transport, I dug out this old post from 2005. It’s interesting to see how the debate has evolved (or not) since then.

The big change has been that the prospects for technological alternatives like alternative energy sources and electric vehicles have improved dramatically. As regards transport, I don’t see much reason to change the analysis I presented in 2005. Unfortunately, while some progress has been made along the kinds of lines I suggested, it’s been very limited compared to the radical changes in electricity generation. So, we are only at the beginning of the process of decarbonizing transport.

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Categories: Economics - General, Environment Tags:

Sandpit

January 19th, 2016 61 comments

A new sandpit for long side discussions, idees fixes and so on. Discussions about climate policy and related issues can be posted here, along with the usual things.

Categories: Regular Features Tags:

Increasing fuel efficiency: standards vs prices

January 19th, 2016 24 comments

As I mentioned in a previous post, I’ll be talking to the Victorian Transport Economic Forum on decarbonizing transport on Wednesday, 10 February 2016 from 5pm at the Public Transport Victoria Corporate Centre, 750 Collins Street, Docklands. I thought I’d start with the policy issue implying the smallest change in existing transport patterns, increasing the fuel efficiency of petrol-engined vehicles. The primary choice here is between relying on a carbon price and imposing fuel efficiency standards. For those who want the shorter version, I think we need both but standards are probably going to be more important.

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Categories: Economics - General, Environment Tags:

Decarbonizing transport

January 18th, 2016 78 comments

I’ll be talking on this topic to the Victorian Transport Economic Forum on Wednesday, 10 February 2016 from 5pm at the Public Transport Victoria Corporate Centre, 750 Collins Street, Docklands. I’m still formulating my thoughts, so I’ll be happy to read those of anyone who’d like to comment. Here are a few observations to get started

* The process of decarbonizing electricity supply is well under way and, I think, just about unstoppable. To some extent at least, this process provides a template for an approach to transport. In particular, there’s a close analogy between cars and coal. Both have negative local effects (air pollution, congestion, negative amenity and so on) that haven’t been properly taken into account, in addition to generating CO2 emissions. Focusing on the local effects may be a more effective way of reducing CO2 emissions than attacking the problem directly

* By contrast, although we have the technology to greatly reduce the use of carbon-based fuels in transport, we haven’t made nearly enough progress, and it’s not clear what is the best way to go. Should the focus be on improving existing modes of transport (for example, with electric cars), or in switching modes (public transport instead of private) or in reducing the need for travel (with urban design, telepresence and so on).

* Relatedly, is it better to rely on prices, direct controls such as vehicle fuel efficiency standards, or on some other approach?

Categories: Environment Tags: