A snippet on foreign debt

Following financial deregulation and the floating of the dollar, both the current account deficit and net foreign obligations (debt and equity) grew rapidly, reaching about 5 per cent of GDP and 50 per cent of GDP respectively by 1990. Since then the current account deficit has fluctuated and net foreign obligations have risen slowly to around 54 per cent of GDP, the great majority of which is debt. By contrast, in 1980, two-thirds of foreign obligations were equity (Parliamentary Library Research Paper No. 3, 2002รถ03, Australia’s Foreign Debt).

It is straightforward to compute that if nominal GDP is growing at 6 per cent per year and if nominal foreign debt grows by an amount equal to the current account deficit, debt will remain stable at 50 per cent of GDP if the current account deficit is equal to 3 per cent (=0.50*0.06) of GDP. Since Australia’s current account deficit has generally been greater than this, it seems likely that debt will grow over time.

Coffee and literature (reposted)

The Harry Potter debate reminded my of Jonathan Franzen’s refusal to have his book The Corrections listed on Oprah’s Book Club. I thought I’d posted on this before and dug out this one from just before I left Canberra, which turned out to be mainly about coffee.

The house is all packed up except for the items we absolutely need for tonight and tomorrow – beds, a toaster and the Krups espresso machine. With a long trip ahead, a good cup of coffee will be even more vital than usual.

So I was fascinated to read this piece on a new image for “Mr. Coffee”, one of those 1970-vintage automatic coffee machines. In a nod to my favorite computer, they suggest calling it iCoffee, although there is no planned connection to the Internet.

This raises a couple of points. First, the problem is not the name but the mechanism. Given America’s status as the world’s leading consumer society, it’s startling that so few people there understand something as vital to civilisation as good coffee.

Second, as with anything about coffee in the US, the article can’t avoid mentioning Starbucks. The question I have is about the appropriate metaphor. Is Starbucks to coffee as Oprah Winfrey is to literature, a potential bridge from instant to the real thing. Or is Starbucks to coffee as Microsoft is to software, a ‘good enough’ monopolist that kills the competition and closes off the chance of anthing better?

Moves

Gianna has joined the move to MT, but has bypassed mentalspace in favour of rival blog empire ubersportingpundit (when Alston gets his reforms through the Senate will we have to merge?). Still no photo, though.

Meanwhile, a couple of blogs/plogs I’ve somehow missed are Mortigi Tempo and dolebludger.

I’ll fix my blogroll soon. Meanwhile this is a good time to remind everyone who hasn’t already done so to update their bookmarks and links to point to my new site.

Potshots at Potter

Jason Soon links to killjoy Jenny Bristow who says

For all the original artificial hype of Potter’s literary qualities, it is self-evident that their readability, not their quality, is what made them popular with children. Yet while Enid Blyton was actively resisted by school libraries in the past, on the grounds that it might distract from the better quality stuff, Rowling’s equivalent has all but formed the basis of English exams.

Even when I was a kid I thought the librarian jihad against Enid Blyton was pretty stupid. I read heaps of her trashy Famous Five books when I was in primary school (she wasn’t banned in our library). It didn’t do me any harm or distract me from better stuff – as I recall I read the Penguin translation of the Odyssey in the same years, for example. (Jason’s account of his own reading habits suggests a similar range, from absolute trash like Agatha Christie to the classics).

But at least the librarians of my youth had the excuse that a censorious attitude was part of the culture. In fact, such were the many grounds of censorship, I was never quite clear whether the ban on Noddy was because
(a) Blyton wrote trash;
(b) The portrayal of the golliwogs was considered racist; or
(c) The relationship between Noddy and Big Ears was considered ambiguous
I thought we’d grown out of that kind of thing these days. But apparently, according to Bristow, the demise of the Blyton ban shows that ‘Our expectations of children have plummeted’. I’ll bet she reads romance novels on the sly.

Enemy combatants

Via Brad de Long I recently saw this post from Jim Henley on the failure of Appeal Courts to impose significant constraints on the US government’s policy of secret detention of terrorist suspects. Henley says

For those of you reading these words I have one request:

COULD I GET A LITTLE ALARMISM HERE, PLEASE?????

What has the appeals court authorized?

Secret detentions.

Please say those words aloud. “Secret detentions.” Now use them in a sentence:

The US government engages in the practice of secret detentions.

The US government has broadly asserted its right to engage in the practice of secret detentions.

A federal appeals court has affirmed that the US government may engage in secret detentions.

The biggest single step in this regard is the creation of the category of “enemy combatants” applied both to people taken prisoner in Afghanistan and elsewhere (for example Pakistan), allegedly in the course of the war aagainst terror. More significantly the category has been applied to Jose Padilla, a US citizen arrested in the United States allegedly after returning from a meeting with Al Qaeda.

Until recently, I haven’t been too alarmed about all this. It seemed likely that as with most wartime excesses, the Administration would moderate its claimed powers, and, if not, that the courts would constrain them. In particular, I thought that the actions in the Padilla case would ultimately be declared illegal and that the Administration would be happy enough having had a couple of years to operate outside the normal limits.

But this optimistic view looks increasingly untenable.
Read More »

FTA vs Kyoto

I’m planning on putting the following argument in a piece on the proposed Free Trade Agreement with the United States. Can anyone confirm or refute my understanding of the implications of the FTA?

Under the Bush Administration the United States has, to an ever-increasing extent, rejected the whole idea of multilateralism on the basis that it fails to recognise the special position of the United States. In place of multilateral negotiations in which the United States is, at most, first among equals, the Administration has pursued bilateral agreements on a wide range of issues. The most notable case is that of the International Criminal Court, where the United States has pursued bilateral agreeements exempting Americans from prosecution.

Inevitably these agreements involve an element of ?pattern bargaining?. The United States proposes the same set of terms to each of its negotiating partners, generally on a ?take it or leave it? basis. While adjustments may be made in particular cases, the end result is inevitably that the terms of such agreements are those set by the more powerful party.

The most important multilateral agreement to be boycotted by the United States is the Kyoto protocol on climate change. It is noteworthy that the most prominent advocate of the FTA, Alan Oxley of AUSTA, is also a leading critic of Kyoto, and bases his arguments against Australian participation primarily on the argumentthat Australian industries will lose competitiveness against non-signatory countries such as the United States.

It is easy to foresee the possibility of the Kyoto agreement coming into conflict with an FTA. For example, an effective emission credit trading system will require some form of taxation of carbon dioxide emissions embodied in imports from nonsignatory countries. Applied by Australia to imports from the United States, this would, on the face of it, conflict with the requirements of the FTA.

Omphalos

A classic poser that first arose in debates over creation vs evolution is the notion of ‘apparent age’. The idea is that, if God created the earth, He would necessarily have done so in a way that gave it an apparent natural history. For example, even though Adam had never been born, he would, on this account have been given a navel. As (I think) Bertrand Russell observed, once we start on this, there’s no way we can stop. Perhaps the universe was created 10 minutes ago, containing us, our memories and an apparent history going back to the Big Bang.

Anyway, a couple of commentators on my first anniversary post noted that they imagined I’d been blogging for years. I had exactly the same perception when I started, with respect to people who’d only been going for a few months or even weeks. Obviously if there are any cues that distinguish newbies from old hands, they are too subtle to be picked by someone who is, by definition, a newbie themselves. More generally, the social conventions of the blogosphere are such that newcomers are absorbed very rapidly, cross-linked, added to blogrolls, and, before you know it, seem like part of the furniture.

Perhaps this will change. Blogging in the US seems much more dominated by ‘first movers’, though there’s still room at the top for high-quality entrants like Kieran Healy and Kevin Drum at Calpundit .

Academic relativism

Just when we thought Windschuttle had been blogged to death, the issue has been taken up on the other side of the Pacific. First, Erin O’Connor posted a long piece derived from an uncritically pro-Windschuttle source, taking at face value his claims to be a critic, rather than a practioner, of cultural relativism. Then Henry Farrell at Gallowglass responded with some of the many critical links including mine, and O’Connor posted an update (Thanks to Ehud Rostoker for the alert).

There’s a lot of other interesting stuff on O’Connor’s blog, Critical Mass. In the same post, there’s a link to Eugene Volokh, who links to and slams this (nearly six months old) press release from Gun Control Australia attacking the University of Adelaide for “supporting” pro-gun academic John Whitley. As Volokh points out

the group is essentially trying to pressure a university to shut up a faculty member who is making law reform proposals with which it disagrees.

(Obligatory Voltaire (mis)quote and allusion to JS Mill On Liberty here). I haven’t heard anything about this and Whitley is still at Adelaide and still involved in the debate. Still, statements of the kind made by Gun Control Australia have a chilling effect on debate and are always to be deplored.

Back at Critical Mass, O’Connor gives a personal account of how she came to be so down on academic relativism, after spending eight years becoming a “resident Body Critic” (every top English department must have one, she informs us). Great reading.

Finally, a little quibble. I know the spelling of my name is not obvious from its pronunciation, and I always take care to spell it out when I’m talking to someone. But how can people get it so consistently wrong when they’re taking it from a printed source? O’Connor has it right in one sentence and wrong in the very next one, and she’s not alone in this.

Monday Message Board

It’s time for the regular Monday Message Board when you have your chance to have your say on any topic whatsoever (as always, civilised discussion and no coarse language, please).

Although I begged off this job in my birthday message, I’ll probably end up doing a “state of the blogosphere” piece before too long, so any suggestions/opinions/predictions of imminent collapse will be of particular interest to me. But, as always, anything goes!

Update I wasn’t sure if there would be much interest in the new GG. But judging from the Message Board there’s heaps, including Rob Corr’s brush with fame.

What I'm reading

Drawn from life by Stella Bowen, kindly lent to me by reader and fellow-economist, Nick Gruen. Bowen was an Adelaide-born painter who, like most artistically inclined Australians before the election of the Whitlam government in 1972, left for Europe at the first opportunity and never returned. She took up with the American writer Ford Madox Ford and sacrificed her career to what she perceived to be his greater talent. I haven’t read any of Ford’s books, and I guess we can’t know what Bowen would have produced given a free run, so I’m not going to make a call on this for the moment.

Inevitably, I’m also reading Harry Potter and the Order of the Phoenix. My son Daniel devoured it on the afternoon of its release and now I have to read it as well if I’m to remain au courant with the younger members of the literary world. As always, JK Rowling does an excellent job, and its a pleasant read, with the trend to ever-longer volumes seemingly having levelled out after The Goblet of Fire.