Without a trace of knowing postmodernist irony (or is that Gen X?), the publishers of The Backbench lobbed an email into my inbox advertising their new website, offering “Gen Y opinions on current affairs” .
I was prepared for the worst, but the website is well-presented (with the exception of an article on blogs that unaccountably lacks hyperlinks) and the pieces I sampled seemed thoughtful, well-argued, and entirely free of generation-game cliches. Go and have a look for yourselves.
After a fairly high-pressure trip to Sydney and Canberra, I’m back in beautiful Brisbane, having arrived just in time for karate training with my son. Thanks to the latter I’m too tired to write much, but I should be back on deck soon.
Confirming my view that the generation game is, for journalists, the last refuge of the incompetent, Richard Neville lets off a spray on behalf of the Boomers against Gen X. A typical para
Around the time US snipers were taking aim from the rooftop of Falluja’s last functioning hospital, and images of their infant victims started to appear on websites, an old-fashioned student demo erupted in Sydney.
At last, I thought, the era of the zombie workaholic is over. It’s back to reality, instead of back to reality TV.
But no, these respectable ruffians in branded chinos were holed up in a vice-chancellor’s office to protest against the rising costs of education. No posters of dead Iraqi babies. The students have a point about the fees, but why can’t they get upset about other people’s problems?
I hate to break it to Richard who was, perhaps, a bit out of it at the time, but a large proportion of student protests in the 60s and 70s were about internal university issues, and a lot more were about the issue of the draft, directly relevant to those protesting against it. Quite a few of those attending probably wore Levis jeans and, some, as cool kids at high school, had probably made life a misery for those unfortunate enough to have parents who thought that King Gee was good enough. Finally, contrary to what Neville implies[1], there were loads of young people at the marches I attended in protest against the Iraq war.
Of course, this piece produced the appropriate response from outraged GenXers on the letters page, which only encourages hacks like Neville to reach for this piece of boilerplate next time they have nothing worthwhile to write. I’ve been bombarded with generational cliches since I was old enough to turn on a TV set. I look forward to a time when the idea that you can classify a person by the date on their birth certificate is accepted only in the astrology columns.
Update 06/05More on this from Ken Parish and I should also acknowledge Geoff Honnor who beat me to the punch on this one. Paul Watson recognises the silliness of Neville’s attempts to define Gen X on the basis of a sample apparently provided by his daughter’s affluent boyfriends, but doesn’t yet concede that it’s the whole idea of defining generations that’s absurd.
fn1. The story makes it pretty clear that Neville himself hasn’t been to an antiwar march for quite some time, and is relying on what he sees on TV.
As indicated in my previous post on the FTA, the revised CIE study on the effects of the proposed Free Trade Agreement between the US and Australia has most of the benefits coming from investment liberalization. The estimated impacts on merchandise trade are now so small that a modest adjustment to the elasticities would turn the estimated gains to losses. As the report says (p98) “A high Armington elasticity implies that imports (from any source) are highly substitutable for local production, thus raising the prospect of trade diversion and income losses.”
Nearly all the gains proposed for the FTA therefore arise either from hypothetical dynamic productivity gains (the services gains are also mainly from this source) or from the supposed reduction in the risk premium for equity arising from capital market liberalisation. I’ve had my say on the dynamic gains hypothesis before, so I’ll focus on the equity premium.
First, as these results indicate, the equity premium is a really big deal. In the modelling present here, a reduction of 5 basis points (0.05 percentage points) in the equity premium induces a permanent increase in GNP of around 0.5 percentage points. The analysis assumes linearity as far as the gap between Australian and US equity returns is concerned, so we can take it further and say that reducing our equity premium to be equal to that in the US would raise GNP by around 12 per cent. Pushing the linear extrapolation further (further than it will go, but a reasonable first approximation), eliminating the equity premium altogether would raise GNP by around 60 per cent. I’ve done calculations in the past with very similar results, so I have no problem with any of this.
The difficulty is in the assumption that capital market liberalisation will reduce the equity premium and will have no offsetting adverse effects. The proposed changes are tiny by comparison with the floating of the dollar and the associated removal of exchange controls over the 1970s and 1980s, not to mention the associated domestic liberalisation. Yet there is no convincing evidence that these changes had any net effect on the risk premium for equity. Australian regulators who have to use a risk premium in estimating the cost of capital have looked at this issue repeatedly, and none has yet been willing to base decisions on the assumption that the risk premium for equity has declined recently, relative to the 20th century as a whole.
Then there’s the question of offsetting effects. The most important changes relax restrictions on takeovers. The analysis here is based on the assumption that such restrictions are necessarily harmful. Yet there’s ample evidence at every level to contradict this[1]. The takeover boom in Australia in the 1980s, led by the entrepreneurs was cheered at the time by economic commentators using precisely the reasoning of the CIE. It’s clear in retrospect, though, that the entrepreneurs, and the “white knights” who opposed them, dissipated vast quantities of capital in the 1980s. In fact, the mid-1990s increase in multifactor productivity was due, in part, to the unwinding of the bad investment decisions made in the 80s.
Finally, there’s a question about process here. Comparing this report with the estimates made by the CIE in 2001 before the FTA was negotiated, it’s apparent that the trade gains have declined significantly, as would be expected given the unfavorable nature of the agreement. The response has been to add in hypothetical benefits so great that the aggregate estimated benefit is actually higher than before. Meanwhile, obviously negative aspects of the agreement, such as the extension of copyright and the changes to the PBS have been put in the “too-hard” basket. The fact that the observable choices have consistently favored the FTA supports the view that, in more technical areas like the choice of elasticities, there has probably been a similar tendency to make favorable rather than unfavorable assumptions. Thus, the dubious analysis of capital market liberalisation casts doubt on the analysis as a whole.
fn1. It’s true, as Harry Clarke pointed out a while ago, that the strongest finding is that takeovers are bad for shareholders in the acquiring firm. This implies that we ought to be willing to sell our own assets while discouraging overseas acquisitions by Australian companies. While I can see the logic in this, I’m not willing to push this argument to its logical conclusion.
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It is hard to overestimate the damage that has been done, not only to the US occupation of Iraq but to the cause of democracy and civilisation as a whole by the exposure of torture and sexual humilation of Iraqi prisoners in Abu Ghraib prison, formerly used for the same purposes, though of course on a much more brutal and extensive scale by Saddam Hussein[1]. If these pictures had been staged by the Al Qaeda propaganda department they could scarcely have been better selected to inflame Arab and Muslim opinion against the West, combining as they do the standard images of torture with scenes specially designed to show the determination of the West to humiliate Muslim men in every way possible.
It goes without saying that those directly involved, or who knew what was going on and failed to act, should be prosecuted and punished to the full extent of the law. In addition, those in the chain of command whose lapses contributed to the commission of these crimes should be dismissed out of hand. It seems clear that this latter class must include nearly involved in organising the policy of detention without trial, and particularly those involved in the interrogation of prisoners – scenes like these could not occur if the general practices of the prison were not already violent and degrading. But these steps, necessary as they are, will do little more than to prevent the further aggravation of the damage that would be done if these crimes were seen to be condoned in any way.
Only a response on a dramatic scale has any hope of significantly reducing the damage. My suggestion[2] is that the Administration should immediately evacuate and demolish this awful place, and should announce that, before June 30, all those detained by the CPA will either be released or charged with a criminal offence, and, further, that anyone detained after that date will be brought before an Iraqi court. It might be useful to propose a memorial for those who died there and in similar places, though the design and construction should be left to an Iraqi governent.
Of course, this will mean releasing many people who are either insurgents themselves or have given aid and comfort to the insurgents. And, of course, the Iraqi court system is far from satisfactory. But the policy of detention has created far more insurgents than it has captured, as have the raids and searches associated with it. And if Iraqi judges are good enough to produce an arrest warrant for Muqtada al-Sadr, they’re good enough to deal with ordinary Iraqis caught up in military raids,
fn1. I say “of course”, but even the most charitably disposed commentators in the Arab/Muslim world are unlikely to concede so much. The most favorable view that Arabs and other Muslims are likely to hear is that the Americans are no different from Saddam, neither better nor worse.
fn2. Not mine alone, I’m happy to say. As pointed out in the comments thread at CT, Scorpio at Eccentricity made the same suggestion, a couple of days before me. Let’s hope this idea has also occurred to someone with the will and capacity to implement it.
I’ve got quite a few events coming up, including a couple of possible TV appearances. The first will be on the SBS Insight program (a revival of the old Monday Conference format for those who remember it), which is on the topic of tax and public spending. It’s on Tuesday at 7:30 (here are some details).
I’m also doing an interview with Inside Business on Public-Private Partnerships, but I’m not sure if or when this will go to air. Finally, the Senate Committee of Inquiry into the FTA is running a roundtable on Wednesday, which I’ll be attending along with quite a few other participants in the debate.
It’s already 1 May in Australia, so I get to make what will no doubt be (among) the first of many posts on the significance of the day.
First, and still the most important in the long historical view is the holiday (a public holiday here in Queensland) celebrating the achievements of the labour movement.
Second, there’s the admission of ten new members to the EU. As far as the historical significance of this event goes, I’m waiting to see whether Turkey is admitted to accession negotiations later in the year.
Thirdly, and of most immediate interest, the anniversary of Bush declaration of victory looks as good a time as any to date what seems increasingly certain to be a defeat [at least for the policies that have been pursued for the last year] . Of course, this judgement may turn out to be as premature as was Bush’s statement a year ago, but the decline in the US position has been almost as rapid as the collapse of Saddam’s regime, and the events of the last few days have seen the process accelerating.
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John Quiggin 