Month: October 2003

Arnie !

John Quiggin7 Comments

There are all sorts of problems with the process that has made Arnold Schwarzenegger governor of California. The numbers needed for a recall seem too small, the mechanics of US elections are chaotic, and the first-past-the-post (plurality) system induces lots of strategic voting.

But the idea of recall is a good one, directly opposed to the notion that governments are entitled to a set term of office, the longer the better, that dominates Australian discussion of issues such as four-year terms. The more democratic checks on government, the better.

As regards the outcome, I can’t say I endorse it, but it’s easy to make the case that, considering the feasible outcomes from the viewpoint of the average Californian, Schwarzenegger looked like the best of a bad bunch. Whatever merits Davis might have had (and they were far from obvious) and whatever the role of adverse circumstances (clearly dominant) his administration had failed, and, in a democratic system, the usual response to failure is to let someone else have a go.

Blair and Brown

John Quiggin5 Comments

Following the recent British Labour Party conference, Chris Sheil suggests that Tony Blair will be gone by Christmas. In these narrow personal terms, I’mnot sure. Most commentary suggests that his position was somewhat strengthened. More importantly, Blairism is gone already. Back in 2001, I argued that, in substantive terms, the Third Way was already dead. After the recent conference this fact is right out in the open. Its most noteworthy feature was not the debate over Iraq, but the fact that Gordon Brown felt free to give a speech in which he mentioned Labour and its traditions 57 times and failed to use the phrase New Labour even once.

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Barbarism

John Quiggin12 Comments

I’m opposed to the death penalty, on the grounds that it does more harm than good in the circumstances of a modern society, but I don’t feel any particular repugnance at the execution of someone who has had a fair trial and is obviously guilty of murder. This, however, seems like something out of the Middle Ages.

Update Some more gruesome details have just emerged about the chemical execution process.

If not Crean, who?

John Quiggin11 Comments

Chris Sheil puts forward a somewhat tentative case for the return of Kim Beazley to the Labor leadership, prompting me to clarify my own views on the subject.

In my view, it’s a mistake to expect an Opposition leader to be a votewinner. There are exceptions, such as Hawke in 1983, but most of the time the best an Opposition can hope for is that the leader should not drag the party down. An illustration is the fact that the incumbent Prime Minister, no matter how unpopular, almost invariably beats the Opposition leader on the question “Who would make the better PM”.

In current circumstances, there’s also not much point in trying to distinguish between alternative leaders on the basis of their beliefs about policy. To the extent that apparent differences have emerged from time to time, they are more about political positioning than anything else. So, for example, Beazley is now attacking Crean and Latham from the left, arguing against tax cuts, but the positions could easily be reversed. Similarly factional allegiances, while they are important in lining up numbers, now have little or nothing to do with policy. The Socialist Left faction, for example, might as well be called the Impressionist Blue faction as far as the significance of the name is concerned.

My view therefore, is that Labor needs someone competent, without substantial negatives, rather than a savior.

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Spies and scandals

John Quiggin11 Comments

I haven’t got around to blogging about the parallel Plame/Kelly/Wilkie scandals, but I didn’t have a well-thought out reason for not doing so either. Nathan Newman supplies the gap (see also here). To restate Nathan’s key points more generically

  • The main purpose of secrecy laws is to protect governments against their own citizens, so breaking these laws isn’t such a big deal
  • Scandals are a distraction from the real issues

I wrote an essay on the spy myth a couple of years ago, concluding as follows

The spy myth clearly served the interests of intelligence agencies, which prospered during the 20th century more than any set of spies before them. The real beneficiaries, however, were the counterintelligence agencies or, to dispense with euphemisms, the secret police, of both Western and Communist countries. The powers granted to them for their struggle against armies of spies were used primarily against domestic dissidents. Terms such as ‘agent of influence’ were used to stigmatise anyone whose activities, however open and above-board, could be represented as helpful to the other side.

The supposed role of the secret police, to keep secrets from opposing governments, was, as we have seen, futile. Secret police, and the associated panoply of security laws, Official Secrets Acts and so forth, were much more successful in protecting their governments’ secrets from potentially embarrassing public scrutiny in their own countries.

As spies and the associated fears have faded in their public mind, their place has been taken by terrorists. In many ways, this is a reversion to the 19th century, when the bomb-throwing anarchist was a focus of popular fears and the subject of novels by such writers as Chesterton and Conrad.

As the attacks of September 11 showed us, the threat posed by terrorists is real. Nevertheless, even if terrorists were to mount attacks ten times as deadly in the future, they would still present the citizens of the Western World with less danger than we accept from our fellow-citizens every time we step into our cars.

If the century of the spy has taught us anything, it is that we need to assess the dangers posed by terrorists coolly and calmly rather than giving way to panic.

Monday Message Board

John Quiggin26 Comments

I’m back in beautiful Brisbane and, I hope, back to normal blogging. It’s time for your comments on any topic (civilised discussion and no coarse language, please).

As a starter question, I’ll ask – should I join the general trend, and give this blog a name? If so, any suggestions? (I know I’m leaving myself wide open here, but that’s what blogging’s all about!)

What I'm reading, and more

John Quiggin

Disgrace by JM Coetzee. It’s been sitting on my shelf for a year or so, and the Nobel Prize (along with the interesting, if not strictly relevant, fact that Coetzee is now living in Adelaide) finally prompted me to read it. It’s a bleak look at post-apartheid South Africa and at the human condition in general. The hero is a middle-aged academic, formerly a classicist and now reduced to teaching communications who leaves his job in disgrace after an affair with a student, and goes to live with his daughter on a remote farmlet. Coetzee got into a lot of trouble in South Africa over the central scene, in which the pair are attacked by a group of black marauders, and for the generally pessimistic outlook of the book as a whole. His latest book, Elizabeth Costello has an Australian writer as its main character, and covers some of the same themes as Disgrace, including animal rights and how to talk about evil. I was impressed by the excerpt I read in Prospect but haven’t yet seen the book.

Last night, I went to a concert by Margret RoadKnight, looking back on forty years on the folk scene. She showed off both her vast range of traditional and contemporary music and a voice that hasn’t lost any of its quality in the thirty years I’ve been listening to her. Accompaniment was provided by Bruce McNicol, late of the Captain Matchbox Whoopee Band. The concert was held at the very snazzy Judith Wright Cultural Centre and the audience was much more cultural centre than folk club. With the exception of the goateed youngsters taking the tickets mine was just about the only beard there.

Puzzles and solutions

John Quiggin5 Comments

Brad de Long reports on a dinner discussion with Paul Krugman and Janet Yellen, hinking About Puzzling Anomalies in the Flow of Macroeconomic Data . He says

We currently have two large, puzzling anomalies in the macroeconomic dataflow. First, productivity growth is ludicrously, ridiculously, unbelievably rapid. Second, the high current level of the U.S. trade deficit fits very uneasily with the relatively high value of the dollar and the lack of large interest rate differentials in favor of the U.S. relative to other countries

and says

Things that readers think are smart should be attributed to Paul Krugman or to Janet Yellen. Things that people think are dumb should be attributed to me.

. At the risk of showing myself up as dumb (at least relative to these very smart guys), I don’t see a problem in either case.

Beginning with productivity, it’s only labour productivity that’s grown rapidly and seemingly anomalously. Capital productivity has declined markedly, as has multifactor productivity (a weighted average of capital and labour productivity) In part this reflects the economics of embodied technical change – as computing power has become cheaper it has been applied more intensively. But there’s also a big hangover effect from the bubble and bust, when crazy signals from capital markets led lots of firms to undertake unprofitable investments. Once some semblance of reality returns, the natural response is to cut back and it’s much easier to sack the least productive workers than to reduce capital stock. So labour productivity rises fast, but output growth is weak. I’ve done the numbers here (see also here and here), and they fit the data neatly.

On the absence of a large interest rate differential and the relatively high value of the dollar despite the large deficit, this is only a problem if you assume capital markets operate rationally. All the recent evidence is against this assumption, but in any case the markets aren’t as crazy as all that. Most non-US participants are now selling US-denominated assets ,which are only being kept afloat by the efforts of Asian central banks. Strong versions of the efficient markets hypothesis would suggest that such activities must be futile, and that speculators, anticipating the inevitable decline of the dollar would drive the central banks to the wall, but I don’t have any problem ignoring strong versions of the efficient markets hypothesis.

Telstra & Alston

John Quiggin3 Comments

I’m just back from appearing before yet another Senate inquiry into the sale of Telstra. I’ve been doing this for so many years, I’ve outlasted all the original members of the Committee, and most of the government’s policy position (in 1996, for example, they were arguing strenuously that partial privatisation was a good idea). I’ll post my submission soon, but this Evatt piece gives you a summary of my position.

I’ve also outlasted Communications Minister Richard Alston, described in this political obituary by Tex as “One of the worst ministers of his generation”. What was even more striking than Alston’s incompetence was the arrogance that went with it. I think Alston would be aptly memorialised by a scale measuring the ratio of arrogance to the amount one has to be arrogant about. Richard himself would set the upper bound of 10.

Assuming a log scale, I’d give Costello a 6 on the Alston scale, Keating a 5 and Whitlam a 4. They’re about equally arrogant, but Keating has 10 times as much to be arrogant about than Costello, and similarly for Whitlam v Keating (common sense is another matter).

Conference news

John Quiggin3 Comments

A quick report on the Economists’ conference.

The first plenary was by Paul Ormerod on “What can economic agents learn?”. The central idea is that we need more realistic models in which people’s capacity to learn and make inferences is bounded. I’m fully in agreement with this and am actively working on a way of modelling such ideas. Ormerod didn’t give much detail about his own approach to the problem.

Deirdre McCloskey presented her ideas on statistical significance, which have already been discussed on this blog. In question time, Adrian Pagan gave a characteristically vigorous defence of the standard approach, making some good points I thought (disclosure: McCloskey’s paper includes a ranking of all the papers published in the American Economic Review according to the adequacy of their treatment of significance in published regressions. My paper with Steve Dowrick ranks a bit below average on this scale. I don’t really think it should have been included, since the main focus of the paper is on nonparametric measures of relative international income. We only threw in a regression to show the difference between our measure and the standard PPP measure).

Richard Freeman gave a talk on “Not your Father’s Union”, talking up the prospect of a resurgence of unionism based on Internet organisation. Coincidentally or otherwise, the same day I got an email from the AFL-CIO (US equivalent of the ACTU), which I’ve appended as an instance of this phenomenon. It was part of a campaign to resist Administration attacks on overtime pay, which was successful in its immediate objective of getting a favorable vote in the House of Representatives.

The higher education session was, as Derrida Derider mentioned, disgustingly civilised, with no fisticuffs between me and fellow-blogger Andrew Norton. I plan to post a full paper before long. There was at least a good crowd, filling the small room. By contrast, my paper on water reform was presented to an audience of about twenty in a theatre with a capacity of 500. Again, I’ll try to post a paper. My idea is to spend money now buying irrigators’ rights to license renewal in ten years’ time.

(AFL-CIO email follows)

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