Month: October 2003

The Fin leans left and gets it right

John Quiggin19 Comments

Although I’ve written for the Fin for nearly ten years, it’s always been in the role of a dissenting voice on the Op-Ed page. Even when, as at present, the regular opinion commentators are fairly evenly balanced between left and right, the editorial column has stuck closely to economic rationalist/neoliberal orthodoxy.

Today’s editorial on unemployment (subscription required) though is positively Quigginesque*, making the points that 6 per cent unemployment is too much and the Job Network is a mess (for my views on the same topic, go here. There’s even a warning against excessive reliance on market ideology, to balance the inevitable call for further liberalisation of labour markets.

Obviously it’s great to see the Fin taking a hard look at an issue like unemployment and coming up with an answer I can agree with in large measure. I also take a less worthy pleasure in thinking how much this will annoy my friends at the Institute of Public Affairs. They’ve always been bitter at the Fin for having me as a columnist, and they’ll be spitting chips if they think that my heresies could start to infect the editorial column.

While we’re on the opinion pages, check out this neat application of prospect theory by Ross Gittins.

*This delightful term was coined, I think, by Henry Ergas

Another dubious quote

John Quiggin5 Comments

I’m always suspicious when I see a quote attributed to some historical figure that seems too neatly in tune with the preoccupations of today. Take this widely-cited quote, attributed to Marcus Tullius Cicero in 63 BC

The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt

What’s wrong with this? For a start, the concept of bankruptcy didn’t emerge until the Renaissance and neither did double-entry accounting, without which the concept of ‘balancing the budget’ makes no sense. The Roman Republic did not have anything that really corresponds to “officialdom” – there was no standing bureaucracy and most public offices were held for short terms by aristocratic figures like Cicero himself. And foreign aid was not something the Romans went in for. On the other hand, if you wanted a statement that perfectly encapsulated the views of a large group of Americans in the late 20th century, when this quote seems to have surfaced, you couldn’t do much better than this.

At a minimum, there’s some free translation being used here. But my guess is that the quote is entirely bogus. Does anyone have any info?

Instant update Yet again, Alan from Southerly Buster comes to my rescue. He writes: Everyone reliable seems to agree the Cicero quote is bogus. So is the Petronius quote.

MRD

John Quiggin1 Comment

Over at Troppo Armadillo, Wayne Wood, discussing Beazley’s contribution to a defence conference, says

Well he would say that wouldn’t he ? (wasn’t that first said by someone else that had something to do with Profumo ?)

This immortal line was indeed first uttered by Mandy Rice-Davies, who is now, I discover, a grandmother living in the United States.

I’ve often thought that a great deal of space could be saved if utterly predictable false statements by politicians and others were replaced by the simple notation MRD. For example, when a political leader is asked whether they are concerned about his or her followers plotting a spill, any response other than “Yes, and I plan to get them before they get me!” could just be reported as “MRD”.

How much is water worth ?

John Quiggin9 Comments

In a comments thread, a few weeks ago, regular commentator Observa asked

read somewhere (maybe on the Sydney water supply price hikes for heavy users)that it takes about 7,400L of water to grow a dollars worth of rice compared to a tenth of that volume for fruit and veges and hence we should import our rice. Are those sorts of consumption figures true?

Here’s a a table from an article I published in the Australian Journal of Agricultural and Resource Economics a couple of years ago.

Table 1: Water required for $1 000 gross profit
Commodity Water use, in Ml
Fruit 2.0
Vegetables 4.6
Dairy products 5.0
Cotton 7.6
Rice 18.5
Pasture 27.8
Source: adapted from Hall, Poulter and Curtotti (1994)

Observa’s relativities are right and the number in the table implies 18000 litres for a dollar of profit in rice. Assuming gross profit is around half the value of total output, the number quoted also looks pretty accurate.

Before drawing policy implications, it’s worth noting that irrigating pasture is even more water-inefficient. The quoted number implies that an increase of $40/Ml in the price of water would wipe out all the gross profit from this activity.

So the first big agricultural adjustment is likely to be a shift away from the use of irrigation for pastures. One feature of the table that surprised me is that irrigation for dairy products (which presumably means pastures for dairy cows) is actually quite profitable.

Good news?

John Quiggin7 Comments

The NYT presents this story with an oddly positive spin. The guts of it is a World Bank study estimating that Iraq can only ‘absorb’ $6 billion in reconstruction spending in 2004. To put it another way, given a total cost estimate of $55 billion (which has not been challenged), only about one-tenth of the job will be done by the time the US and presumably (if things are going at all well) Iraqi elections are held next year.

This is ‘good news’, because it seems likely that the total amount available from non-US donors might be a couple of billion, which, as a proportion of $6 billion, can be spun as a successful outcome.

But the unnamed American officials quoted at the end of the story are right to be ‘ unhappy over any suggestion that Iraq cannot “absorb” more than $6 billion in the first year’. As one correctly observes, “You can’t get the country back on its feet until the power is back on.” So, if the World Bank is right, and all the evidence so far suggests that it is, Iraq is not going to be back on its feet for quite a few years to come.

There’s no easy resolution here. The correct policy would have to been to let the UN inspections proceed, relax economic sanctions when no weapons were found and try to deal with the problems of the Middle East as a whole before focusing on Iraq. As it is, the world, and particularly the Coalition of the Willing will have to make the best of a bad job. It’s still not clear exactly what this will mean, but the process of lowering expectations has already begun.

Update Even with lowered expectations, I find this story in The Economist hard to believe. Apparently, thousands of workers from Bangladesh and India have been imported for all the jobs on American bases in Iraq because “Iraqis are a security risk”. Can this be true?

Constitutional change vs convention

John Quiggin3 Comments

One point that hasn’t been noted in the current debate over reform* of the Senate is that there is no need at all for the major parties to secure a constitutional change. If they think that upper houses are too obstructive, they need only agree not to oppose each others’ legislation, whenever this has an appropriate mandate. The minority parties could do nothing to stop the operation of such a convention.

Howard could show his good faith by instructing the Liberals in the Western Australian Upper House to pass legislation for a one-vote, one-value electoral system, something for which the Gallop government has a clear mandate and which is, in any case, a basic requirement of democracy.

Then again, pigs could fly, given wings and an appropriate power-to-weight ratio.

*As always, I use this term to mean “change in form”, not “change for the better”.

Thought for Thursday

John Quiggin25 Comments

My column in today’s Fin (subscription) is on Lomborg and foreign aid. Having tried out the full frontal assault in the blog and found my readers generally unconvinced, I decided to take Lomborg and his backers at face value, at least to begin with.

Lomborg argues that, rather than incur the costs of Kyoto, which he estimates at around $US 200 billion per year, the money should be spent on aid to poor countries such as improvements in health and drinking water. This is more than 1 per cent of the GDP of the developed countries as a group, compared to current aid levels ranging from 0.1 per cent of GDP for the United States to 1 per cent for Denmark, Lomborgâs home country.

If Australia adopted Lomborgâs proposal, foreign aid would need to be quadrupled at least. The cost to the budget would be somewhere between $5 billion and $10 billion per year.

Itâs not surprising that the conservative commentariat has endorsed Lomborgâs opposition to Kyoto – they were against long before anyone had ever heard of Lomborg. Whatâs striking is that, without exception, they have either explicitly endorsed or tacitly accepted the second part of Lomborgâs argument, calling for a massive increase in foreign aid.

The position of the Institute of Public Affairs is particularly interesting …

Regardless of whether Lomborgâs argument is put forward in good faith, or merely as a debating point, it is worth taking seriously. There is no investment the rich countries of the world could make that would yield higher returns, even in terms of our self-interest in a less chaotic world, than $100 billion per year allocated to improved health and sanitation in the worldâs poorest countries.
Fortunately, we do not need to choose between Kyoto and aid. As Lomborg and others, both critics and supporters of Kyoto, have pointed out, implementing Kyoto through global emissions trading would amount to a massive foreign aid program as well as being an important first step towards resolving the problem of climate change.

Intelligence test

John Quiggin8 Comments

For anyone who cared to look at the issue logically, it was obvious that the question of Saddam’s putative weapons of mass destruction would be decided on day one of the war. As I said, the day before the war started,

the “best” time for Saddam to use them is before the US attack commences, which means almost immediately … If, in the face of an invasion aimed at killing him or seizing him for a war crimes trial, Saddam still refrains from using WMDs, only two conclusions are possible:
(a) there were no weapons; or
(b) they were not, even in the most drastic circumstances, a threat to the US

This is clear enough, but still, some reasonable people might have taken a little longer to be convinced, and, as we’ve seen, there’s still the possibility of a leftover test-tube in a fridge somewhere. But after six months, anyone who continues to think that illegal weapons in working order are going to be discovered is revealing more about their own psychology than about the real world. What then, is to be said about the report that Polish troops had discovered four French Roland missiles, manufactured in 2003 and delivered to Iraq at a time when massive US forces were already surrounding the country, and when the capture of such missiles would have utterly discredited the French government?

This story was so unlikely that any rational person would have dismissed it out of hand, especially in the presence of a clear alternative explanation, that the missiles had been delivered before the imposition of sanctions in 1990* , and the Poles just got the dates wrong (as they subsequently admitted). In its combination of wish fulfilment and total implausibility, it was on a par with the various rumours that Jews/Muslims/highly placed Americans had been tipped off before September 11 and stayed away from the World Trade Center.

So, who fell for it? As far as I can tell, a large proportion of warbloggerdom bought the story and hardly any debunked it.

At the top of the list, there’s, Instapundit, LGF, samizdata and Kevin Donahue

Google reveals so many suckers for this story that it’s impossible to list them all, but I estimate the number must be into the hundreds, even excluding those who reproduced the story without comment. A few linked to the subsequent retraction, but mostly in a way that failed to admit that the original report had been completely falsified. For example, Instapundit is still suggesting that the Polish retraction is part of a coverup.

Hat-tip to Roger Ailes whose link to Instapundit I followed.

*That is, in the days when Saddam was “a mass murderer, but our mass murderer”.