Locke’s theory of just expropriation (crosspost from Crooked Timber)

For quite a few years now, I’ve been working on a response to Henry Hazlittā€™s Economics in One Lesson, a defence of free-market economics first published in 1946, but still in print and popular among libertarians. Hazlitt, as he says, is essentially just reworking Bastiat’s analysis of opportunity cost, represented by the broken window parable. What I’m trying to do is take the idea of opportunity cost seriously, and apply it across the board, including to issues of income distribution and property rights. It’s obvious (to me, at any rate) that any allocation of property rights to one or more people has an opportunity cost, namely the benefits that could be realised if the property rights were allocated to someone else. This is a live issue when property rights are being created explicitly right now, as they are with various kinds of intellectual property. But it is just as relevant when we come to consider the historical origins of property. I’ve spent a fair bit of time debating the question of whether property rights have a basis (say, in natural law) for existence independent of the states or governments that typically define and enforce them. I don’t want to talk about that issue right now, but it explains why I’m taking an interest in (I think) the most prominent proponent of natural law in relation to property, John Locke.

It’s a long time since I read Locke and, at the time, I was mostly concerned with Hume’s objection that

there is no property in durable objects, such as lands or houses, when carefully examined in passing from hand to hand, but must, in some period, have been founded on fraud and injustice.

That’s true of course. But rereading Locke[^1] I now conclude that he is not offering a theory of original acquisition, but rather one of expropriation, designed specifically to justify the “fraud and injustice” to which Hume refers.
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Goodbye to CPD

Like Mark Bahnisch, Eva Cox and a number of others, I’ve resigned as a Fellow of the Centre for Policy Development. It’s a sad day, since CPD has done a lot of great work, and I’ve enjoyed being involved in it. But the leadership of the Centre has taken a decision to move to the right in the hope of being more relevant to the policy process. The most recent outcome has been a paper on tax policy that broadly accepts the Treasury view of the issue, and pushes for a broadening of the GST base, which means taxation of fresh food. This isn’t a new or innovative idea. Rather, it has been part of rightwing orthodoxy for decades. CPDs endorsement allows its advocates to claim some “left” support. That claim obviously gained credibility from having Fellows like Mark, Eva and me. So, we had no alternative but to resign.

I should clarify that, apart from a nice title and a publishing outlet, I wasn’t getting any direct benefit from being part of CPD. So, I’m making a statement rather than a sacrifice.

Stop subsidising for-profit education

Among the many failures in the education ‘reform’ movement, the attempt to promote for-profit education has been the most complete. The Swedish experiment, for quite a few years seen as the exemplar of success, has turned out very badly.

In the US, the for-profit schools company Edison failed completely. Far worse for-profit universities like Phoenix, which have prospered by recruiting poor students, eligible for Federal Pell Grants, and enrolling them in degree programs they never finish. Phoenix collects the US government cash, while the students are lumbered with debts they can never repay and can’t even discharge in bankruptcy.

Several years ago, there was a major scandal in Victoria (which led the way in privatising vocational education) about similar practices.

This did not, of course, lead to any change for the better. Instead, governments across Australia followed the Victorian model. For-profit providers responded by emulating the University of Phoenix, with recruiters offering free laptops to anyone will to sign up for a course and the associated debts: the targeted groups were low-income earners who would not have to repay the income contingent loan except in the unlikely event that the course propelled them into the middle class.

This isn’t just a matter of fringe players: a report on A Current Affair[1] identified some of the biggest for-profit firms, such as Evocca, Careers Australia and Aspire. The Australian Skills Quality Authority is supposedly investigating. However, as with the authorities that are supposed to regulate greyhound racing, the obvious question is why, when these rorts have been common knowledge for years, a current affairs show can find the evidence ASQA has apparently missed.

It’s clear enough that privatisating VET-TAFE has been a failure, as would be expected based on international experience. But the answer isn’t to go back to the past. Rather, we need a national framework for post-school education, with funding both for TAFE and universities on an integrated basis.

There’s still the problem of how to wind down the for-profit system. I’d suggest that we could start by converting the better ones into contract providers of TAFE courses, and then gradually absorbing them into a unified system.

Those who don’t like that deal could compete like good capitalists in the open market, charging upfront fees and serving whatever market they could find, subject to ordinary consumer protection laws.

fn1. Presumably reflecting a change in the audience, A Current Affair has started targeting large-scale corporate wrongdoing rather than going solely after the easy target of dodgy tradespeople and low-grade con artists. Unfortunately, the story was spoiled by an apparently irrelevant attempt to drag in the Mormon affiliations of some of those involved in the basis, but you can’t have everything.

CO2 emissions levelling out?

Preliminary estimates from the International Energy Agency, released in March, suggest that energy-related emissions of CO2[1] were unchanged in 2014 compared to 2013. Countries experiencing notable drops in emissions included China, Britain, Germany and the EU as a whole, but not, of course, Australia[2]

This has happened before, but only in years of global recession, whereas the global growth rate in 2014 was around 3 per cent. Of course, there are plenty of special factors such as a good year for hydro in China. Still, after looking carefully at the numbers, I’ve come to the conclusion that this really does represent, if not the long-sought peak in emissions, at least the end of the link between rising living standards and CO2 emissions.

The most striking feature of 2014 in this context was the behavior of fossil fuel prices. Coal prices had already fallen a long way from their peak levels in the years around the GFC, and they kept on falling through the year, even as coal mines began to close and lots of projects were abandoned. Oil prices remained at historically high levels until the middle of the year but then joined the downward trend, which has continued into 2015. Natural gas is a more complex story, since there isn’t a global market, and I haven’t figured it out yet.

Still, it seems to me that the 2014 outcome is a consistent with a story in which most growth in demand for energy services will be met by a combination of renewables and energy efficiency, and in which coal continues to lose ground to gas. The lack of demand implies that fossil fuel prices are likely to stay permanently below the levels anticipated when most recent projects were initiated.

Behind all this, it seems as if the various piecemeal measures introduced with the aim of switching away from fossil fuels are working better than almost anyone expected, and with minimal economic cost. Hopefully, this will encourage world leaders to set more ambitious targets, consistent with stabilising the global climate at temperatures 2 degrees or less above pre-industrial levels.

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Sandpit

A new sandpit for long side discussions, idees fixes and so on. Unless directly responding to the OP, all discussions of nuclear power, MMT and conspiracy theories should be directed to sandpits (or, if none is open, message boards).

The Australian Sharia Lobby

There were a bunch of demonstrations and counter-demonstrations at the weekend, sparked by supposed concerns about the possibility of Islamic sharia law being imposed in Australia. While the anti-sharia demonstrators were clearly drawn from the extremist fringe, there has been plenty of commentary on this subject from commentators generally regarded as mainstream, and from elected politicians such as Cory Bernardi and Jacquie Lambie.

The prospect of any significant legislation being based on Islamic sharia law seems pretty remote. On the other hand, those who claim to be concerned about sharia law (the Arabic term simply means ‘religious law) might want to consider the much more relevant issue of ‘shar??at al-Mas??’ (the Arabic term for ‘religious law of Christianity’).

Despite the Australian Constitutional prohibition on establishing any religion, lots of Australian laws are derived from Christian taboos, and many more have been in the past. Equally importantly, there is a group called the Australian Christian Lobby which, as the name implies, lobbies for the imposition of shar?at al-Mas??. Its activities are reported as if it is a legitimate political grouping, and not, as concerns about sharia law would suggest, a theocratic danger to our personal freedom.

When you look at the kind of issues being pushed by the Australian Christian Lobby, notably on their signature issue of opposition to gay rights, there’s not much difference from what you might expect from proponents of sharia law.

As I’ve said before, it seems highly likely that Christians will soon be in the minority in Australia. So, my unsolicited advice to the ACL is that they should support tolerance and civil liberties for all, rather than attempting to use the temporary majority status of Christianity to impose their version of sharia law. There’s nothing wrong with political activity being motivated by general religious values, but a lot wrong with attempts to impose your own religious taboos on others.

Cognitive biases

Ross Gittins cites some interesting questions used by some of my QUT colleagues to assess cognitive biases before undertaking a study of investment behavior. Here you go: Try to answer before reading on or checking comments:

Give me high and low estimates for the average weight of an adult male sperm whale (the largest of the toothed whales) in tonnes. Choose numbers far enough apart to be 90 per cent certain that the true answer lies somewhere between.

Don’t like that one? Try this: give me high and low estimates of the distance to the moon in kilometres. Choose numbers far enough apart to be certain that the true answer lies somewhere between.

Now something more personal. When you buy a Lotto ticket do you feel more encouraged regarding your chances if you choose the number yourself rather than using a computer-generated number?

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