Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

15 thoughts on “Weekend reflections

  1. Not having an actuary in our house it is only just in the last few days that we did the hard number crunching to see how FTB interacts with the general income tax system. This lets us see who has the most painful EMTRs and should work a shorter week. Compared to how the numbers stacked up before the last budget they do seem to have improved quite a bit. In terms of transpaency it is still a mess and EMTRs bounce up and down across the full spectrum of income combinations and possibilities (and thresholds are a moving target also). However at least EMTRs over 70% now seem to be concentrated to a much more narrow set of income bands (at least if you have as many kids as I do). We still feel inclined to underperfom this year but not as much as usual.

    We should be thankful for small mercies. So thankyou Mr Howard for your small amount of mercy. Now can you trash this whole &#*%$# stupid tax welfare churn crap completely before I feel obliged to engage in full blown sedition.

  2. Well, John howard has changed my mind with his highly convincing trashing of the “withdrawal” argument re: Iraq.

    Withdrawal would be terribly damaging to the US’s “prestige”.

    Yeah, I did gag on my weet-bix.

  3. Dear Prof Quiggin,
    Did you attend Paul Ehrlich’s public seminar on Monday night? I was fortunate enough to meet Professor Ehrlich and during the conversation with him and another ecologist a rather intriguing comment was made. It was claimed that economists are getting more enthusiastic about engaging ecologists in plans to combat climate change in economically sound ways, but that relations between environmental economists are a problem. What is your experience?
    Yours sincerely,

  4. It is a constant source of amazement to me that people form their opinions from daily broadcasts from the media, obviously for some people the media determines the problems and ipso facto the solutions.

    I must be a bit of a sceptic, maybe even a denialist, I’ve taken to identifying my own problems and working out my own solutions.

    Disappointing really, no one paid me to think like this but I am accused of same (disappointing in the sense that if there is all this ill gotten cash floating around how come nothing comes my way?)

  5. Gotta love Michael Moore’s pledge to the Disheartened Conservatives.

    1. We will always respect you for your conservative beliefs. We will never, ever, call you “unpatriotic” simply because you disagree with us. In fact, we encourage you to dissent and disagree with us.

    … and it goes on. Every point is spot on, including his “keep your rosaries off my ovaries” statement.

  6. Emma, I certainly think economists are keen to engage ecologists in the way you suggest. Our proneness to disagreement has been exaggerated, but it can be a problem at times. In the particular case of climate change discussion in Australia, the relatively minor disagreement between advocates of emissions trading and of the price-based McKibbin-Wilcoxen scheme have been blown up into an issue of greater significance than is merited, and this has been a problem.

  7. 2Tanners, having read the transcript, I would still choke on my weeties if I had some. I remember soundbites such as [we’ll be in Iraq] ‘definitely for months, not years’, ‘no, we won’t increase our troop commitment’, ‘global warming is a myth’, ‘children overboard’.

    As to fighting a war over US prestige, there could be an argument on this as to geostrategic utility of having a prestigious US force. I think that even if the pulled out of the rubble of Iraq right now, there wouldn’t be too many nation states that would want to upset the Eagle, whether or not US prestige suffered.

    Interesting too, how the ALP seems to have swung behind the view for which they were lambasting Latham (pull out by Xmas), without even a sideways acknowledgement. Forgetfullness is history.

    My opinion is still that Bush Howard and Blair are warcriminals for their war of aggression (shame) and that their prestige is going to take a very long time to recover even if they pull out right now.

  8. I notice in today’s Grodian archive (from 1899) an account of the young Winston Churchill, then a journalist, bravely taking part in a skirmish with Boers when the train in which he was travelling was attacked. He took an active part in the response and was last seen heading off with a rifle in the company of some soldiers. My vague recollection is that he actually spent some time as a POW and later escaped – I may be wrong here. (The link to the story is below – I’m sorry I don’t know how to do this as a hyperlink).

    Anyway, I was wondering how these actions would be viewed in today’s climate (especially if it were say an al Jazeera journo in a skirmish in Iraq).

    A second point, and I guess it’s news to no-one is that Churchill was known by name (a celebrity!)in 1899, some 40odd years before he first became PM. He was of course, of noble birth.


  9. So, Milton Friedman is dead and mangled revisions of his work are being parleyed around. Additionally Phelps has recently won the Bank of Sweden prize.
    Both men have had a large part of their work based on the inclusion of expectations of inflation into macroeconomics.

    I wonder what role expectations of technical advance should play in our study of human economic behavior.

    It is particularly important now since a central part of the discussion on global warming revolves around technology.

    “Clean coal technology will prevent carbon reaching the atmosphere”

    “Technical advance will make nuclear/solar/wind/geothermal/tidal power most cost effective”

    “Cars will become more efficient with ethanol”

    “We will soon have cold fusion”.

    It is only recently in the span of human history that we have had any good grasp as a society at large, that technical change happens, and that it happens within our lifetimes. Those expectations can now effect our behavior in the present. People, and then governments, may not reduce their emissions in the expectation that technology will provide an answer.

    Phelps wasn’t particularly concerned about whether such expectations were necessarily rational or accurate, and perhaps we should be taking into account how these expectations are changing consumer behavior and government policy, or conversely allowing them to resist change.

    In many ways these expectations seem purposely irrational, a defense mechanism against guilt in the present, but these expectations can have all sorts of ramifications. Expecting a breakthrough to be inevitable may cause a lack of investment in research (since someone else will get it before you anyway), pessimistic outlooks may cause more investment or sharper changes in activity. It seems to be something that must be looked at, if it hasn’t already.

  10. A lovely twist on global warming or just seemed like a good idea at the time. A town in the NSW coal belt – names aren’t important – recently hosted a convention of tidy-towners. Chief sponsor thought it a great idea to supply some big lumps of the black stuff in a floor display. Convention over, guests gone, what to do with one hundred weight of combustible lumps? You guessed it, into the recycling bin for land waste dump collection. Noble intent? Convenience? Or just a case of letting someone further down the line decide?

  11. On a point of information, Winston Leonard Spencer-Churchill wasn’t of noble birth, though his father Lord Randolph Churchill was; that title was only a courtesy title as a younger son of a Duke, which is why Lord Randolph Churchill was able to sit in the House of Commons. And if you start talking about noble ancestry, you get back to the earlier Winston Churchill who had himself been an MP, the father of John Churchill who eventually rose to become Duke of Marlborough despite not being of noble birth.

  12. Why would there be a lot of disagreement between emissions trading advocates and advocates of the McKibben-Wiulcoxen proposal? It seems to me that the McKibben-Wilcoxen proposal is essentially emissions trading with a circuit breaker. Their system basically works like an emissions trading system so long as the cost of the permits does not exceed some threshold price and then works like an embodied emissions tax thereafter. Presumably the objectioon relates to the cases where the circuit breaker is needed, in which case the initial aggregate embodied emissions quota will be violated. Given that this quota is in some sense arbitrary in any event, this seems to be a fairly weak objection. The main initial policy objective, in my view, should be to introduce some form of price signal for embodied emissions. This will allow people to get comfortable with the idea. The price can be adjusted as necessary afterwards. In fact, I think an embodied emissions tax would probably be the simplest and most effective way to introduce such a price signal. A US environmental economist (I think it might have been John List, but I’m not sure about that) once indicated to me that he thought starting with a really low carbon tax would be a good way to proceed, since it would overcome the “it is too costly” type of objections and allow people to become familiar with a system in which there is a price attached to embodied emissions. That strikes me as particularly good advice!!!

  13. I’m a musician and not an economist, so pardon me if I am not clear about what I write.
    Today’s Independent carries a quote from Richard Dyer, aviation campaigner for Friends of the Earth. He said the airline industry was “getting out of control”. He added: “The Government should take immediate action by increasing air passenger duty in the pre-Budget report – which has fallen in real terms under Labour – in order to make flying more expensive and, in the longer term, by controlling plans for airport expansion as part of a complete rethink on aviation policy.”
    Would a passenger duty be a congestion tax, and like many taxes, fall disproportionally harder upon those who can only afford the cheaper seats? This, I presume, would have to be separate from any emissions tax.
    Would this be enough discouragement to passengers such that aviation investors are themselves dicouraged and aviation expansion disappear of its own accord? Or are governments going to have to bite the bullet and govern in the public interest at last?

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