Month: September 2003

Thought for Thursday

John Quiggin3 Comments

My Fin column today, the two-year anniversary of the S11 atrocity, looks at Bush’s request for $87 billion more for Iraq (it also includes a pittance for Afghanistan). Like most commentators, I conclude that while the request marks a welcome return to reality after months of dodging the issue, the money is little more than a downpayment on the costs that will be incurred. In fact, after deducting military expenditure, what’s left will barely be enough to pay running costs for the Occupation government. A short excerpt …

The 2003 Budget released by the Coalition Provision Authority in July called for the expenditure of $ 6 billion in the second half of 2003 alone.
Then there is the Oil-for-Food program which is due to expire on 21 November. Under this program, Iraq was allowed to export oil to the value of about $10 billion per year, which was used initially to buy food, medicine and from 1998, a wide range of essential imports. … Maintaining the imports funded under the Oil-For-Food program and the current expenditure levels of the 2003 Budget will require about $20 billion in 2004, less perhaps $5 billion in net proceeds from oil exports. This would swallow all the money allocated in the Bush request, leaving nothing for large-scale reconstruction, let alone the now-forgotten Afghans.

If Bush had followed through the Afghanistan war with a serious peacekeeping and reconstruction effort, that country could be well on the way to a relatively prosperous democracy by now, going a long way to discredit its previous Taliban rulers and their Al Qaeda accomplices. Instead, the Taliban are on the rise again, and no doubt Al Qaeda is not far behind them.

Middle managers

John Quiggin3 Comments

My comments on Bad Company: The Cult of the CEO by Gideon Haigh have just been published in Quarterly Essay along with a response by Haigh. He argues that a focus on managerialism as an expression of the interests of the managerial class/caste as a whole is out of date because there’s now a cleavage interests between top managers and ‘middle managers’.

This got me thinking that although the phrase ‘middle managers’ is used a lot, I don’t know what it really means. In the large organisations I’ve worked in, people could be classified into three main groups. There are the people who actually do the work, the managers who tell people what to do and a group in-between, consisting of skilled and experienced workers who supervise others.

Sometimes the dividing lines are fairly sharp and sometimes not, but there’s usually a pretty clear line separating the managers proper from everybody else. In the public service, for example, the dividing line is generally provided by the boundary between the Senior Executive Service and what used to be called the Third Division.

What isn’t clear to me is whether the term ‘middle managers’ applies to the intermediate group I’ve described or (as Haigh implies) to managers other than CEOs and those in their immediate circle.

In debating things like managerialism, the two interpretations have radically different implications. I would certainly agree that the last decade has been a pretty miserable one for people in my worker-supervisor category. On the other hand, as David Gordon pointed out in Fat and Mean the idea that the corporate sector moved to slimmed-down management and flat organizations in the 1990s is a myth. Gordon was writing in 1996, but the dotcom boom was characterized by even more proliferation of management to the point where some firms had more vice-presidents than programmers.

Word for Wednesday Professionalism: Definition

John Quiggin4 Comments

Professionalism is both an individual characteristic and an ideological position. The primary definition is that of individual professionalism: the idea that membership of a profession carries with it a set of internalised values that will be reflected in the way in which work is carried out and the ethical standards that are adhered to. As an example, a concept of ‘medical professionalism’ would require that doctors prescribe the most appropriate treatment for their patients, rather than one which would yield them higher fees or would meet an externally imposed objective of cost control. Although the term ‘professionalism’ is associated with a fairly specific range of high-status occupations, much the same claim about other occupations is embodied in terms like ‘craftsmanship’ and ‘public service ethosâ.

As an ideological position, professionalism is the assertion that workers with a professional/craft/public service ethos should be given substantial autonomy to undertake their work in the way they judge to be appropriate. This assertion is most obviously opposed to managerialism (see also), which is based on the claims that all forms of productive activity are amenable to generic management techniques and that work is best organised by ‘letting managers manage’.

However, the most important and damaging critiques of professionalism arise from a neoliberal perspective.

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Kyoto and error

John Quiggin8 Comments

Given that I’ve been posting on both Kyoto and admissions of error I thought it would be interesting to check if any of the leading contrarians on climate change had revised their views in the light of recent evidence. On past form, I wasn’t expecting much.

The leading contrarians and their organizations (SEPP, Marshall Institute, Cato) cut their teeth in the debate over the ozone laye. Most of them are pretty quiet about this issue now. For example, despite extensive searching I couldn’t find a copy of Sallie Baliunas’ widely-cited article Ozone and Global Warming: Are the Problems Real? which is quoted as saying

there is currently no evidence to suggest that man-made chemicals, like CFCs, have significantly eroded the ozone over most of the world…. Rather than supporting federal regulation, scientific evidence leads to the conclusion that regulation is both economically devastating and scientifically irresponsible. Federal regulation…will cost the U.S. economy an estimated $2 trillion in the near term.”

Still, as far as I know, none of them has ever admitted being wrong, and some, like Fred Singer of SEPP are still keeping up the fight.

Anyway, I was particularly interested in Australian contrarian John Daly because, earlier this year, he took the unusual step of making a testable prediction. In this entry he predicted that, with the sunspot cycle turning down and El Nino ending, the climatic extremes of 1998-2002 would be a thing of the past.

Finally, last year in 2002, even before the solar cycle had started its usual decline towards the cooler Solar Minimum, we saw the development of another El Ni–o on top of an already stretched out solar maximum.Ê A Solar Maximum happening concurrently with an El Ni–o, with no cooling volcanic action for the last 10 years, is a potent combination climatically.Ê And the weather has been very active as a direct result of this combination.

But it will pass.Ê These things always do.Ê The solar cycle is now heading down towards its expected solar minimum around 2006, while the current El Ni–o is expected to wane in the next few months, possibly being replaced by its cooling counterpart, La Ni–a.Ê

The greenhouse industry has thrived off Nature’s climatic drama of the last 4 years, using a combination of public hysteria and bent statistics, but the pickings will be leaner in the months and years ahead – until we reach the next El Ni–o or the next solar maximum expected around 2012 (the same year the Kyoto Protocol expires) .

How has this prediction stood up so far? As Daly’s own site shows, the solar cycle has indeed turned down, and the El Nino has passed, (though without a return to La Nina). But, in case you haven’t been reading the news, the weather hasn’t got any cooler..

Of course, Daly will find a way to ignore all this. Rather than engage in fruitless debate, I’ll offer the following prediction. No matter how hot it is in 2006, we won’t see a retraction from Daly.

Ruddock vs Theophanous

John Quiggin3 Comments

If you want to see how Australian Federal politics have changed in a few short years, it’s worth contrasting the cases of Andrew Theophanous and Philip Ruddock. Theophanous,a former Labor MP, is serving a jail sentence for taking bribes in return for making false representations on visa applications. This was straightforward old-fashioned corruption – his clients paid cash and, if things went to plan, got a visa.* In one form or another, this happened ever since the First Fleet, though it used to be rare at the Federal level.

Now contrast the modern way of doing things under Ruddock. Nothing as sordid as a brown paper bag ever enters his office. He receives representations on immigration matters from prominent and well-respected community leaders, and responds by intervening to grant visas. Of course, under the general rules that apply nowadays, only friendly community leaders are likely to get a hearing and the best way of demonstrating friendliness is to deliver votes and donations to the Liberal Party. But, except for slipups like the Dante Tan case, there’s nothing so crude as the appearance of a quid pro quo in individual cases.

But how do the respected community leaders get the information on deserving migrants and the resources they need to maintain their leadership? No doubt they are approached by upstanding members of the community, who have demonstrated their upstandingness by supporting the community organisations that have such respected leaders. And, in one form or another, whether in cash or mutual and familial obligations, these upstanding members of the community expect some sort of return from the potential immigrants whose applications they support.

So, when everything is netted out, the applicants have less cash, but a better chance of getting a visa, while the Liberal Party ends up with more cash and the general pool of applicants loses some potential places **. But no-one has done anything illegal, or even sackable, and the crucial step – the Minister’s intervention – is on the public record, open and above board. Isn’t progress wonderful?

*I should note that Theophanous was partially successful on appeal and maintains his innocence on the remaining charges.

** In these circumstances, it is more necessary than ever to punish and demonise ‘queue-jumpers’ who have paid common criminals in the hope of securing a visa.

Are blogs chatrooms?

John Quiggin4 Comments

On the Monday Message Board, Gianna asks “Are blogs chatrooms”, and observes:

my view is that perhaps blogs with comment facilities could be seen as chatrooms, though it puts the blogger more in the role of moderator than writer, i guess. but blogs without comment facilities are a bit of a stretch.

A closely related question came up on Tim Lambert’s blog, in reference to the increasingly-ludicrous John Lott, who refers to USENet discussion groups (arguably, the predecessors of blogs) as “Internet chat rooms”.

Obviously a blog isn’t a chatroom, and the presence of a comments facility doesn’t make it so. Political blogs like this one are intended as competition for mass media such as newspapers opinion-oriented magazines like Quadrant or The New Republic and the Op-Ed pages of newspapers, and have had at least some success in this role. If adding a comments facility to an online newspaper Op-Ed page makes a chatroom, then the New York Times is a chatroom.

What then, makes a chatroom a chatroom? To answer this, it’s best to go back to the original, Internet Relay Chat, which provided the most basic version. The distinguishing feature of IRC was that it provided a screen which refreshed automatically when ever anyone who was logged in typed something (more precisely, when they hit the “Return” key). This gives rise to the “room” metaphor – everyone “in the room” (that is, logged in) can “hear” everything said there. The subsequent developments of chatrooms (lists of who’s in the room, avatars, “getting a room” and so on) all follow from this.

Although I’m confident in the correctness of the above analysis, I should say that my total time spent in chatrooms would not amount to more than about three hours over the last fifteen years. I find them unutterably boring. I can see that they would provide an excellent venue for anonymous assignations, but attempting any discussion is like trying to hold a seminar in a crowded discotheque.

UpdateKen Parish picks me up on the sloppy statement in the original that blogs compete with newspapers. As he says (and as I’ve said in the past) blogs have a symbiotic/parasitic relationship with the news media. I’ve edited the post accordingly.

Ian Castles – correction

John Quiggin

A few months ago, I linked to a Ken Miles post saying that Ian Castles, former Australian Statistician and prominent critic of the IPCC and Kyoto was a member of the Lavoisier Group. Ken’s post was based on Lavoisier’s Presidential Report, which stated

Two of our members, Bob Foster and Ian Castles, represented the Lavoisier Group at a workshop conducted by the Australian Academy for Technological Sciences and Engineering (AATSE)

.Ian Castles has written to me (and previously to Ken, who has already posted on this) to advise that this claim by the Lavoisier Group is incorrect, and will be corrected in due course. He is not, and has never been a member of the Lavoisier Group. Here’s a letter from Ian’s co-author David Henderson to USA Today on the same topic.

Dear Sir,

In your issue of April 2, your science correspondent, Dan Vergano, in referring to some recent work by Ian Castles and me, makes two statements which give the wrong impression. First, he describes us as being Ê’associated with the Lavoisier Group’ in Australia. It is true that we both know well the founder of the Group, and we agreed to his request to post our work on their website. But neither Castles nor I are members of the Group; no member of it is or has been involved on our work; and what we have written does not purport to be on the Group’s behalf or to represent its views. We are independent persons, holding no official position, and we speak and write for ourselves alone.

It is also not correct to say that what we have written has ‘appeared in The Economist’ : they published an article (18 February) on our work. They too asked permission to post our critique on their website, and in this case also we agreed.

David Henderson
Westminster Business School
London NW1, England.

For anyone who wants to read all the details, I’ve appended the entire exchange of emails, showing how the Lavoisier Group claim came about.

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Monday Message Board

John Quiggin15 Comments

Access to the site has been intermittent for the last couple of weeks and comments have been correspondingly scanty. But everything seems to be working now, and I’m hoping discussion will resume here. Meanwhile, it’s been a bit lonely. So please post your comments on any topic or even just a note to say you’ve been to visit the site (as always, civilised discussion and no coarse language, please).

Imperfect existence

John Quiggin3 Comments

Kieran Healy responds to my limited defence of existence theorems with the following challenge to economists

As John says, existence theorems are the negative form of impossibility theorems. The classic existence theorems in economics ÷ such as those for general equilibrium , also due to Kenneth Arrow, along with Gerard Debreu ÷ illustrate the point neatly. We begin with the result . Roughly speaking, Arrow and Debreu wanted to show that supply and demand could be in balance in all markets at once. We then move backward to the assumptions necessary to make possible such a result. These include (1) All individuals are perfectly rational, (2) All trades take place simultaneously and instantaneously, (3) There is perfect information about all markets for all products in all conditions both now and at any point in the future, (4) Money does not exist. With these (and other) assumptions in place, the existence of a general equilibrium can be proved. The proof is striking because the initial assumptions are so implausible, even absurd, but they must all be satisfied together in order for the desirable result to be possible. And so we give up our quest for what we now recognise is a chimera ÷ the idea that our world could ever contain economies capable of general equilibrium.

This attempt at a reductio ad absurdam doesn’t work properly, though, because Kieran is treating the sufficient conditions found by Arrow and Debreu as if they were necessary conditions. A lot of effort (too much, McCloskey would say) has gone into demonstrating that a general equilibrium can exist under weaker conditions than

I’ll grossly oversimplify and make the claim that an existence result for competitive general equilibrium like that of Arrow and Debreu will hold even if all of the conditions mentioned by Kieran are violated, provided only that technology sets are ultimately convex (that is, provided economies of scale run out in the end). Of course, even this condition is implausible and suggests that some activities where economies of scale are unbounded (for example, the dissemination of knowledge) must be excluded. But (if you accept my claim that convexity is the crucial necessary condition) at least the theorem is telling us where to look for problems.

The other main results proved by Arrow and Debreu are the First and Second Welfare theorems showing that
(1) a competitive general equilibrium is Pareto-optimal [you can’t make anyone better off without making someone else worse off]
(2) any Pareto-optimal outcome is the competitive equilibrium arising from some initial allocation of wealth and other endowments
For these theorems, the conditions found by Arrow and Debreu are, for all practical purposes, necessary and sufficient. The Big Argument in mainstream economics is whether the differences between the Arrow-Debreu conditions and the real world (often called, in a rather question-begging fashion, “imperfections”) are large enough to justify extensive intervention by governments that are, themselves, necessarily imperfect.

Headline News

John Quiggin4 Comments

Humans being what they are, admissions of error are rare events. My own concession a while back that I had been overly pessimistic about the military phase of the Iraq war was sufficiently unusual to earn a para in the Bulletin from Tim Blair.

So it’s headline news that, after a long debate, Catallaxy blogger Jack Strocchi has come to the conclusion that he overestimated the benefits of the war and underestimated the costs, saying “The US invasion and occupation of Iraq can now be considered a failure”. His lengthy, closely argued and densely hyperlinked post on the subject is vintage Strocchi and may well be the best he’s ever done.

One or two swallows don’t make a summer. But it would be nice if the kind of debate that prevails, at least in this corner of Ozplogistan (continuous interaction, with civilised norms of debate and easily searchable records of who said what), prompted a greater willingness to admit error.