Month: August 2005

A nice round figure

John Quiggin33 Comments

According the Bureau of Economic Analysis, US household saving was 0.0 per cent of income in June. I was going to boast that we in Australia were doing better, having had negative savings for several years now, but a check over at General Glut’s Globblog informs me that the ABS figure deducts depreciation of privately owned housing (correctly in my view,though others disagree) while the US does not. Both measures omit capital gains, and the validity or otherwise of doing so is central to any assessment of the sustainability of the present economic trajectory.

Regardless of this, the collapse of household saving in the English-speaking countries suggests to me that, with deregulated capital markets, the low real interest rates that have prevailed recently, particularly in the US, are not consistent with any significantly positive savings rate. It follows that such low interest rates can be sustained only so long as someone else is saving: either households without easy access to credit or foreign governments. Business may save some of the time, but low interest rates make borrowing for speculative investment quite attractive I can’t see this lasting too long, and therefore conclude that real interest rates have to rise.

Morris Who?

John Quiggin38 Comments

New South Wales has a new premier, someone sufficiently obscure (to me, at any rate) that his name didn’t even occur to me when I thought about possible successors to Bob Carr last week, and suggested that the NSW machine would do well to look outside their own ranks. Instead, they’ve picked someone who’s been a minister for two years, and whose main claim to fame is that he’s a protege of Graham Richardson. Having done so, they managed to fix up an uncontested appointment, apparently under the impression that voters are worried by any suggestion that their rulers might not only believe in democracy but practice it from time to time. I’ve seen many instances of this kind of deal, but can’t recall any that led to electoral success. And, given that Iemma’s first action was to sack his deputy, I doubt that this will turn out to be an exception.

What thought process can have led the Sussex Street machine to think this was a good idea? Given the absence of any obvious candidate, wouldn’t it have been a good idea to leave this one to the Caucus to sort out. Even pure self-interest might have suggested keeping their nose out. In the quite likely event that Labor loses the next election, the machine will certainly cop a large share of the blame, whereas, should they win, the credit will go to Iemma personally.

I think this is yet another instance of the hammer-nail problem. What the machine does is stitch up deals, so any problem looks like the occasion for a stitch-up.

The real de facto ban

John Quiggin5 Comments

The widely circulated claim that the antimalarial use of DDT has been banned, costing millions of lives, seems finally to have been refuted (score one for the self-correcting blogosphere!). For those who haven’t followed this one, here’s one of my contributions, with links.

The last line of treat for this argument is the claim that there is a “de facto” ban on antimalarial use of DDT (agricultural use is banned, and a good thing too, since this builds up resistance). Tim Lambert nails this one, assisted in a lengthy comments thread by Ian Gould, a regular commenter on this site also.

There is a sense, though, in which all antimalarial strategies are subject to a de facto ban: there simply isn’t enough money to implement them. The Roll Back Malaria partnership has a comprehensive program to halve the burden of malaria by 2010, which could be implemented for a fraction of the cost of the Iraq War (or, to be evenhanded with the examples, the EU Common Agricultural Policy), but it’s almost certainly not going to happen.