Month: September 2013

Launch delayed

John Quiggin21 Comments

After a disappointing campaign, Kevin Rudd’s “launch” speech was excellent, both as a defence of Labor’s record and in setting out an agenda for the next term, notably with a long-overdue focus on the TAFE sector. Unfortunately, this announcement wasn’t the only thing that was overdue. What possible sense is there in “launching” the campaign with a week to go, when most voters have already made up their minds or turned off? This isn’t one of the quirks for which Rudd has been criticised – Gillard did the same thing in 2010, and the Liberals were only a few days earlier. I have no idea how the supposed experts who run campaigns cna think this is a good way to do things – it’s obviously not a good way of presenting voters with a reasoned argument[1]

If Rudd had given this speech three weeks ago, and campaigned around it, Labor would be in with a good chance. As it is, their best hope is that the corresponding piece of trickiness on the other side will backfire. This is Abbott’s decision to release his allegedly independent costings on Thursday, with the advertising blackout in place, and only a couple of days to go. It’s hard to see any creditable explanation of this, and it ought to be reason enough not to elect him as PM. But that seems unlikely.

fn1. In fact, I have no idea why these “experts” are given any credence. As the debate between pundits and psephbloggers has shown, here and in the US, the alleged experts don’t even have the basic (first-year uni) statistics needed to interpret an opinion poll, which means that they can not have, and never have had, the slightest idea whether their strategies were working. It’s just that one side always wins, and victory has a thousand parents, at least until failure the next time around shows them up. The classic example is Karl Rove, acclaimed or dreaded as an electoral genius, who humiliated himself by refusing to believe the 2012 election results, even when they were beyond doubt. Then there’s Dick Morris, the famed inventor of “triangulation” who also predicted that Romney would win in a landslide.

Market monetarism: a first look

John Quiggin91 Comments

One of the more confusing of the macroeconomic debate is the emergence of a profusion of schools of thought with very similar names, but very different viewpoints. The one I’ve had most to deal with is Modern Monetary Theory. I had a go at this topic here and . My brief summary is that MMT pretty much coincides with traditional Keynesian views in the context of a liquidity trap, but that I reject the claim commonly made in popular presentations of MMT, that increased government spending doesn’t imply increased taxation.

Then there’s New Monetarism, associated with Stephen Williamson. He and I had a set-to a while back, which entertained many but didn’t produce a lot of enlightenment, and left me disinclined to put a lot of effort into understanding the differences between New and Old Monetarism. (For the record, I’m pretty much an Old Keynesian, but I have learnt a fair bit from New Keynesians like Akerlof and Shiller).

The third entrant is “Market Monetarism” associated mainly with Scott Sumner (though Wikipedia tells me the term was coined by Lars Christensen). I was aware in general terms that Sumner advocated a more expansionary monetary policy in response to the current crisis (I agree), that he prefers Nominal GDP level targeting to inflation targeting as the basis for monetary policy (I agree again though I’d prefer targeting levels rather than growth rates) and that he thinks this would be sufficient to fix the problem without any role for fiscal policy (I disagree). However, I wasn’t really aware that these ideas formed the basis of a school of thought, and I still haven’t investigated the underlying theory in any detail.

Sumner has commented on my recent posts on fiscal and monetary policy with a couple of his own, so I guess it’s time for me to look more closely at what he is saying. A first response is over the fold.

Read More »