Integrity and the lack of it

Mark Harrison is quick to impugn the integrity of signatories of the pro-Kyoto petition, and particularly mine (see (4) below). In particular, he asserts that the statement, “policy options are available that would slow climate change without harming employment or living standards in Australia” is “completely false”

I have a few questions for Mark:
(1) Since you’ve linked to my blog, you’ve presumably read my observation that one such measure would be the removal of subsidies to the aluminium industry. If you disagree with this observation, why don’t you print your argument? If you agree, will you apologise to those you’ve accused of lying?

I’ll observe that there are a number of others including:
(a) a more rational approach to land clearing
(b) appropriate pricing of urban road use
(c) changing the structure of electricity markets to reduce incentives for heavy use of baseload power

(2) If the statement is false, why was an almost identical statement signed by over 2000 US economists including eight Nobel prize winners and William Nordhaus, the main expert cited in your counterpetition?

(3) The anti-Kyoto counterpetition puts a lot of stress on alternative proposals for international agreements to reduce CO2 emissions, such as that put forward by Warwick McKibbin. Do you actually support any of these proposals, and if so which?

(4)As you’re aware, I’m a senior colleague of Alex Robson’s, and the only sponsor of the pro-Kyoto petition who’s in his department. Do you have the guts to spell out the imputation in your statement

“It seems that Australian academia hasn’t changed – integrity is in short supply and disagreeing with the left is not the easiest way to get ahead. Be prepared for a higher teaching load next year Alex!”

or do you prefer to stick to slimy innuendo?

Petition and counterpetition

In an earlier post, I noted that Alex Robson and John Humphreys, lead sponsors of the Kyoto counter-petition hadn’t mentioned their association with the Australian Libertarian Society.
On the comments pages of this blog Jason Soon made the reasonable argument that it was the content of the petition, not its provenance that mattered. I demurred, noting that although I agree with One Nation about Telstra, I wouldn’t like to sign a petition they’d organised.

Alex Robson has now settled the dispute. In an opinion piece in yesterday’s Canberra Times he referred, in the opening para, to the original petition as being sponsored by “the Australia Institute (a Canberra left-wing think tank)”. So he obviously thinks that it’s important to know who’s behind a petition.

[ The statement isn’t exactly correct – of the four sponsors of the petition, only Clive is formally affiliated with the Institute, I’ve done work for them and Glenn Withers and Peter Dixon have no association. But the organisational support of the Institute was openly acknowledged].

The counterpetition now seems to have become a joint project of the Australian hardline right. Both the Institute of Public Affairs and Gerry Jackson’s New Australian, normally bitter enemies, are promoting it. Despite what’s said in the counterpetition, these groups are opposed to any governmental action or international agreement to reduce carbon emissions, not just the specifics of Kyoto.

Alleged and real economists

Scott Wickstein weighs in the economics of Kyoto, and on who is and isn’t an economist, demonstrating once again that he isn’t one. Scott’s argument is that signing Kyoto would kill the gas export deal to China, costing the economy the $25 billion in sale proceeds. Assuming the claim that the deal would be killed is right (it’s drawing a long bow to put it mildly), let’s look at the economics. The economic value of the deal is not the $25 billion sale price but the difference between this price and the value of the gas in its next-best use. It could, for example, be used in gas-fired power stations, displacing coal and therefore reducing our net emissions of carbon. Given that gas is a commodity, it’s rare for the price to vary more than 10 per cent or so from one potential buyer to the next. So the net benefit of the deal might be $2.5 billion over the life of the contract – it certainly isn’t $25 billion. Of course, given the high political profile of this deal, there’s every prospect that we haven’t in fact got the best possible price, and that we are worse, not better off.
Scott also objects to my ‘gratuitous swipe’ at the self-styled ‘Anti-Idiotarian Rottweiler’, whose entire blog, starting with the title, consists of gratuitous abuse. This is another instance of a point I’m increasingly noticing – the right can dish it out, but they can’t take it.

Manne on Iraq

Robert Manne asks Will this war work?.

Perhaps the most relevant para is:

“Few principles are more fundamental to the conduct of international relations than the idea of non-interference in the internal affairs of sovereign states. Such a principle precluded international military action against even fouler tyrannies than Saddam’s – like Stalin’s or Pol Pot’s. If such a principle were ever to be revoked, it would certainly require general agreement between countries and strict provision for collective action through the United Nations. The international order would be thrown into chaos if individual countries came to believe that they possessed the right to take unilateral military action against what they judged to be an unacceptably tyrannical regime.”

I think the doctrine of non-interference has had its day. But Manne is right to point to the chaos that will arise if individual countries decide to appoint themselves as judge, jury and executioner in the affairs of others.

It's not April 1, is it?

Is this “defence” of telecom shill Jack Grubman from Forbes.com an inspired parody of bubble-era thinking, or a perfect example of the real thing. I’ve quoted it in part, with the best bits italicised. You decide!

Jack’s praise was not based on nothing. It was based on research! But many people misunderstand the nature of research. Jack didn’t ask whether the company was likely to be profitable. He asked whether the share price was likely to rise. And to know that, he had to know the thinking of the very same institutional investors who so admired him.

Nowadays, everyone is all over Jack because he had friends in the industry, especially Bernard Ebbers, who invited Jack to WorldCom board meetings. A few years ago having friends was a good thing. They called it being connected.

Now they’re calling the same thing a conflict of interest. But as Jack himself once said, “What used to be a conflict is now a synergy. …Objective? The other word for it is uninformed.”

Jack caused synergies for his employer, too. He didn’t just stand to the side and predict where stocks would go. He helped make it happen by encouraging telecom companies to sign up to have Salomon sell their IPOs. Some estimates say Salomon earned $1 billion in investment banking fees from the industry.

If Salomon paid Jack $20 million a year, it wasn’t because he predicted well. Nor was it because he had the good looks or the winning personality of other bankers. It was because the bank believed he helped generate those fees. His ability to generate fees was a direct result of investors’ belief in him. Somewhere along the way–around the same time that the telecom industry lost perhaps $2 trillion in market value–people stopped believing.

So let’s not blame Jack for causing the fall of telecom. If they still believed in Jack the way they once did, the fall never would have happened.

Libertarians against Kyoto

I hadn’t heard of John Humphreys, who is organising the Kyoto counterpetition with Alex Robson, but, in the era of Google, no-one is truly obscure. It turns out he’s the President and founder of the the Australian Libertarian Society, and Alex is part of the Honorary Executive.
Not, as Seinfeld would say, that there’s anything wrong with that. Still, it’s my view that, if you’re asking people to sign a petition you’ve written, it’s best to be upfront about your organizational affiliations.

More on Kyoto

Tim Blair refers to me and other signatories of the Kyoto petition as “alleged economists”. This is an interesting epithet to be applied to, among others 30 professors of economics. If Tim wants to say we are bad or mediocre economists, let him say so, but terms like “alleged” are silly, just like the use of “pseudo-intellectual” as a derogatory term for “intellectual”. The implication is, of course, that somewhere out there are “real’ economists and intellectuals, whose rigorous analysis invariably agrees with the uninformed prejudices of people like Tim. Or should I say- the uninformed prejudices of “people” like “Tim”?

For those interested in following up this issue, I’ve linked to a counterpetition being organised by my colleague Alex Robson, a letter from Alan Moran of the IPA supporting the counterpetition, and an article on approaches that would permit us to meet our Kyoto commitments at low cost and in some cases with a net benefit. Moran and Robson take great exception to the suggestion that there are policies that would both reduce emissions and improve the economy. As I’ve already pointed out, reducing subsidies to the aluminium industry is a case in point. Since Moran is a professional advocate for fossil-fuel intensive industry, he’s unlikely to be impressed by this argument, but other economists thinking of signing the counterpetition might want to ponder it.

Working for the man

Thanks to Tex, I found this interesting piece entitled Rich people work, too. As far as I can tell it was published on the very day that Salomon telecom shill Jack Grubman retired with a payout of $US32 million (on top of millions already received in salary). I suppose putting out ludicrously inaccurate forecasts does constitute “work” in some sense, but I could have done better (in fact, did) in my spare time.