While I was out

I’ve been off the air with database problems for a day or so, and missed some important developments. First, there was the bad news of the first Australian military casualties in Iraq, an unfortunate but inevitable development, given that insurgents are now operating freely throughout Baghdad, and even within the Green Zone. The Zarqawi group has claimed responsibility. This followed the earlier horrific massacre of Iraqi recruits, again claimed by Zarqawi.

Second, and closely related, the Zarqawi scandal has developed a further, with the Administration finally admitting on the record that the decision not to go after leading terrorist Zarqawi in the lead-up to the Iraq war was politically motivated. Money quote

Lawrence Di Rita, the Pentagon’s chief spokesman, said in an interview that the reasons for not striking included “the president’s decision to engage the international community on Iraq.” (from the WSJ, via Tim Dunlop

With a week to go, it’s probably too late for this disclosure to have any impact on the US election. But if anyone ever refers to George Bush as fighting a war against terrorism, just point them to the Zarqawi story. The failure to go after bin Laden in an effective fashion can be put down to this Administration’s routine incompetence. The failure to go after Zarqawi was simply criminal.

Finally, there was this piece by Barry Cohen, accusing the ALP of anti-semitism. In Cohen’s language criticism of Israel is anti-Semitism and criticism of Ariel Sharon is criticism of Israel. I’m sure examples of anti-Jewish prejudice can be found in the Labor party, but Cohen doesn’t produce any. There are more extensive responses here and here.

An afterthought on Bush vs Gore (crossposted on Crooked Timber)

I was thinking about the prospects for the US election and also about the probability of casting a decisive vote and it struck me that a situation like that of Florida in 2000 would have had a quite different outcome in Australia. In a situation where there were enough disputed votes to shift the outcome (and no satisfactory way of determining the status of those votes), the Court of Disputed Returns would probably order a fresh election. It seems to me that this is a better way of resolving problematic elections than attempts to determine a winner through court proceedings[1], though I’d be interested in arguments against this view.

In view of the long delay between election and inauguration, this solution would seem to be particularly appealing for the US. However, it seems clear from this page that the American constitutional tradition does not allow for such a possibility, preferring such devices as drawing the winner from a hat, if nothing better can be found. I wonder if there is a reason for this, or if it is just one of those things that doesn’t come up often enough for people to think about fixing it?

fn1. Obviously, once the situation arises, one side or the other will see an advantage in going through the courts, or allowing state officials to decide,and will oppose a fresh election. But ex ante, it seems as if agreeing to a fresh election in such cases would benefit both sides.

Larry Summers on the US trade deficit

Guy at Full Context went to hear Larry Summers talk about the US current account deficit. As he notes, Summers analysis was very similar to the one I presented here. Guy has some useful comments, and notes the following, attributed by Summers to Rudi Dornbusch

Things always happen later than you expect, but when they do happen they happen faster than you expect.

This may not be true of all things, but it is a pretty good description of the way unsustainable economic imbalances are resolved.


Given that Labor obviously has to do something more than wait for the housing bubble to burst, one simple (but not easy!) organisational step would be to abolish factions. That is, membership of any organised factional grouping ought to be treated like membership of a rival political party, as grounds for automatic expulsion. Of course, it would be impossible to prevent informal or secret factions from operating, as they do in all parties. But, to my knowledge, the only major political party anywhere in the world with a faction system comparable to Labor’s is the notoriously corrupt Liberal Democratic Party in Japan, and even here PM Koizumi is largely independent of the factions.

There was a time (from the 1950s split to sometime in the 1980s) when the factional groupings corresponded to ideological divisions. But that has long since ceased to be true. It’s probably true that the average member of the Left faction is a little more likely to favor a ‘progressive’ line on social issues than the average member of the Right and Centre, but that’s about the strength of it. Each of the major factions is subdivided into smaller groups, often little more than extended families, with their retainers and servants.

Nowadays, the factions exist because they exist. No-one is willing to bell the cat. However, this is the kind of thing Latham could take on, and perhaps even win. It would certainly be more in his line than Simon Crean’s lame achievement of changing the union voting ratio from 60 to 50 per cent[1].

fn1. While I’m dreaming, I’d like an end to the formal link between the unions and the ALP. And a pony.

Kyoto ratified!

The lower house of the Russian Duma has voted to ratify the Kyoto Protocol. Although some formal steps remain, this was the last real hurdle to be cleared before the Protocol could come into force.

The only signficant holdouts now are the US and Australia. The Bush Administration has, as expected, said it will do nothing, and Howard will presumably follow. The ratification will pose some significant problems for Kerry, who has tried to sit on the fence so far – his position appears to be that he would seek to renegotiate the treaty to make the terms more favorable to the US. Realistically, this is probably a sensible outcome for the world, but I don’t know in practice how a treaty that’s already in force can be renegotiated unless all parties agree, which seems unlikely.

Unfair to the readers

I’ve never been a great fan of Steven Landsburg’s ‘Everyday Economics’ columns in Slate[1]. While he occasionally has something interesting to say, a lot of his columns are what Orwell called ‘silly-clever’, such as this piece defending looting. Economists are often prone to this kind of thing, and it doesn’t do the profession any good in my view, but it’s usually not worth refuting.

Landsburg’s latest piece is in a different category. It’s a repetition of dishonest rightwing talking points about taxation that have been refuted over and over, but apparently need to be refuted yet again. As is his wont, Landsburg seeks to defend a paradoxical claim, namely, that “Bush’s Tax Cuts Are Unfair …To the rich.” He makes a total hash of it.
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Read the whole thing, Part II

Following up on the theme of manufacturing decline, here’s a piece by Ronald McKinnon of Stanford, linking the decline of US manufacturing to the low rate of national savings. I’m not entirely convinced by the argument, which seems to rest heavily on the manipulation of identities that gave rise to the twin deficits hypothesis, but I’ll think about it a bit more.

It is certainly striking that all the English-speaking countries seem to have a broadly similar pattern of large current account deficits, low household saving, and rapid decline in the manufacturing sector (more I think than can be accounted for by long-run structural change). This would be an obvious basis for contagion in the event of a financial crisis affecting the US.