This regular feature is back on line. The idea is that, over the weekend, you should post your thoughts in a more leisurely fashion than in ordinary comments or the Monday Message Board.
Please post your thoughts on any topic, at whatever length seems appropriate to you. Civilised discussion and no coarse language, please.
I’ve widened the page to 800 points, which looks better to me. If this breaks anybody’s browser could they advise me and I’ll put it back. Better still if someone could tell me how to get a layout that would be smart in these respects, they would get the priceless award of a free post on a topic of their own choosing[1]
fn1. I was thinking of a guest post, but actually, if someone could show me how to do this, I’d be willing to write a post on any topic they nominated (the more outlandish the topic, the more off-topic the likely result, of course). Also, how can I get my footnotes in smaller type? Is there a problem with WordPress and Textile?
Via the Fin, I learn that Australia now comes in 10-th place on the Economic Freedom Index ahead of the US at 12. This is, perhaps not surprising, as I’ve previously observed that big government is good for economic freedom, at least as measured by the EFI. I don’t think this is entirely a spurious feature of the Index. A strong state can achieve its ends with less interference in individual freedom (economic and personal) than a weak one. For example, a volunteer army, paid for by high taxes, is less intrusive on freedom than systematic conscription which in turn is less intrusive than a press gang, or the kind of backdoor draft now being imposed in the US.
But if we are going to have international league tables, I’d much prefer that we continue the competition of the past few weeks, to see who can give the most generous, and effective assistance to the poor people of the world. There’s some more on this topic over at 52nd state. As is so often the case, I have a big post on this topic planned, but haven’t had time to write it.
A decade or so ago, I wrote some modestly successful papers about the design of lotteries and the rationality or otherwise of buying lottery tickets. Having come to the conclusion that buying lottery tickets was (or at least could be) rational, it struck me that, apart from raffles and the odd birthday present, I’d never actually had a ticket in a proper lottery. So I went down to the newsagent on the assumption that I could hand over my money and get a chance at untold wealth. Instead I was confronted with a bizarrely complex lotto form (this was before scratchies, I think). I looked at it and decided it was too much trouble, and I would try to make my fortune the old-fashioned way[1].
Now I’m in a similar position. I’ve told the world the long-term US interest rate has to rise and, correspondingly, the price of US Treasury notes has to fall. Given that I don’t know when this will happen, I’m not willing to risk the unbounded losses of a short position. But I’d at least be willing to consider a modest flutter in put options, if the transactions costs weren’t too high and the settlement date were far enough in the future. However, although I’ve written plenty of papers about the properties of derivatives, the risks they pose to the world financial system and so on, I don’t know where or how to buy them, or what the costs are. The Sydney Futures Exchange seems to consider them too exotic. Any suggestions on easy ways to join George Soros and Warren Buffett will be greateful appreciated.
fn1. That is, as all Australian readers will know without being told, through real estate speculation.
I’ve still been getting reports that people have been having trouble reading the new WordPress blog. Fellow blogger “Yobbo” has kindly supplied me with his template, and I’ve followed his suggestion that I should differentiate by adding a beard. I’d very much appreciate reports on the change. At this stage, I want to focus mainly on blog-critical problems like unreadability due to overlaps between posts and sidebars, but I’ll also happily accept suggestions for colour schemes and so on. I’d like to hear from
* Readers who had problems with the old layout that have now been resolved
* Readers who have problems with the new layout that weren’t present in the old
* Readers who have continuing problems
Instant update The page looks too narrow for my liking, and I’ve already had one request to widen it. If it’s already filling your screen, and a wider format would cause problems, please advise me ASAP. If you agree that it’s too narrow, also please advise.
My piece in today’s Fin puts the argument that long-term US interest rates must rise in view of the many pressures (increasing inflation, massive trade and budget deficits) in that direction, and that intervention to hold them down will eventually fail. (I’ve put it over the fold)
Coincidentally, the US trade deficit for November came in at $60 billion, easily breaking the previous records, and despite lower prices and a sustained devaluation relative to the euro, $A and other currencies (though not the Chinese renminbi).
This was, as far as I can tell a surprise to the markets (unchanged at $55 billion) was the par prediction, and the US dollar promptly weakened. But the 10-year bond rate remained unchanged. This makes no sense at all, but I’ve given up expecting financial market outcomes to make sense. General Glut has a chart from Robert Scott of the Economic Policy Institute on another aspect of the puzzle as well as detailed commentary on the trade figures summed up by the observation This report is ugly 1000 ways till Sunday
I think a partial resolution of the puzzle in the Scott chart is that the last turnaround in the trade deficit was achieved through a combination of depreciation, budgetary tightening, higher interest rates and demand contraction (that is, a recession). The same was true, broadly speaking, in Australia. There is, in general, no painless way of fixing a trade deficit on this scale.
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There’s an interesting piece in today’s Fin (subscription required) from John Roskam of the IPA. Looking at the possibility of big tax cuts from the current government, he bags Howard’s conversion to tax-and-spend social democracy before and during the 2004 campaign. He goes on to say
There is no overwhelming demand from the public to lessen taxes and, indeed, this is the nub of the problem confronting Liberal MPs and anyone else committed to tax reform
On the other hand, there is an overwhelming demand for better public services, and Howard has promised to meet that demand. Supporters of tax reform should seek to convince the public rather than taking advantage of an essentially accidental parliamentary majority to push through policies for which they have no mandate.
The weekend Fin (subscription required) has a profile of the eminence grise of right-wing Melbourne poltiics, Ray Evans. It includes a comment from this blog on the various Astroturf organisations Evans set up when he was working for Hugh Morgan at Western Mining (not greatly to the benefit of WMC shareholders as far as I can see). Here’s the quote used by the Fin
Australia has a string of such [Astroturf] setups, all apparently created by Ray Evans of the Western Mining Corporation. The most egregious is the Lavoisier Group, an organisation for climate change contrarians (about as plausible as creationists calling themselves the Mendel society) . If you move along to the (anti-Aboriginal rights) Bennelong Society you’ll find an almost identical website with the same postal address, shared with the (anti-union) HR Nicholls Society . The (monarchist) Samuel Griffiths society is from the same production line, though not quite as brazenly so.
So what is it about names like these that screams “Astroturf�? Most named institutes are either named in honour of the founder, or are explicitly partisan institutions whose name indicates their affiliation, as with the Evatt Chifley (Labor) and Menzies (Liberal) foundations. It’s not clear that those named would always agree with what is published in their names, but there’s some reasonable basis for presuming that this might be the case.
In the discussion of the relative treatment of communists and nazis in Australia, I recalled reading that Menzies had visited Berlin not long before the war, and made complimentary statements about Hitler. Googling revealed only one supporting source, from the memoirs of communist Stan Moran, who also claims to have bestowed the nickname “Pig Iron Bob”. Moran says
In 1937 Menzies went to Germany to see Hitler but Hitler was too busy to see minor politicians, and all he saw was Himmler. When he returned he said “If you and I lived in Berlin we would say that Hitler had done a great job for the German people.�
This matches the quote I recalled, but raises the possibility that it is a spurious one foisted on Menzies by his opponents. Does anyone have any info on this?
Assuming the quote is valid, it rather undermines the claim that any flirtation with Nazism or fascism is fatal to ones reputation, while similar sympathy for communism is not.
I mentioned a while back that I was reading Iron Council by China Mieville as part of a mini-seminar being run at Crooked Timber. The discussion is going to open up on Tuesday (US time, I guess) and I’d encourage any interested readers here to participate. Anyone who wants to link should check back here or at CT then.
There will be review essays from Miriam Elizabeth Burstein, Matt Cheney, Henry Farrell, John Holbo, Belle Waring and me, with a response by China himself, and then comments from anyone who cares to make them. This is a bit (a long way, actually) out of my area of expertise, but I really wanted to be part of this venture, which I think has the potential to push the limits of the weblog form a bit further, and I have very much enjoyed Mieville’s work.
Update 12/1/4 The seminar is online. Go over and join the discussion
John Quiggin 