Monday Message Board (on Tuesday)

Another Monday Message Board, running a bit late. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page

Brexit: The endgame (update)

Prediction is a mugs game, but, watching the Brexit trainwreck, I can’t resist. Over the fold, my predictions from mid-December. So far, everything has gone as I predicted, but I didn’t anticipate how badly May would be defeated, or how strongly Parliament would reassert itself.

I now think that the “No Deal” option will be off the table sooner rather than later. Either May will capitulate to Corbyn’s demand or Parliament will force the issue somehow.

That makes revocation of Article 50 the default option, so that a strategy of running down the clock makes no sense for Brexiteers of any kind. Still, I think May will keep stalling because that’s what she does.

Now, I suspect the approach of 29 March will work a bit differently. Rather than unilateral revocation, May and the Conservatives will want an extension, which requires the consent of the EU27. To get that, they’ll need to offer a prospect of finality. Since a general election is unlikely to appeal, a second vote is the last option standing.

The question is: what will be voted on? It’s clear that Remain (that is, unconditional revocation of Article 50) will have to be one of the options. On the other side, there’s May’s failed deal with the EU (possibly tweaked further in the interim) and No Deal. Given that the Brits don’t understand preferential voting, my guess is that one of these will be ruled out. From a procedural perspective, I think the fairest choice would be the clearest. On the one side, reverse the result of the last referendum. On the other side carry it through regardless of what the EU thinks.

To be clear, “No Deal” doesn’t really mean that. A literal no deal would see Britain reduced to food rationing in a matter of weeks, air travel cancelled immediately and so on. In reality, “No Deal” means a series of emergency deals, cobbled together in circumstances where the EU faces significant but manageable economic costs, while the UK faces catastrophe. My guess is this would imply, for example, that EU airlines would ensure that air travel continued, but that British airlines would get short shrift. Perhaps the British side could call in Donald Trump, master deal-maker, to help drive a better bargain.

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What do we do with a problem like #Adani

Inside Story has run an updated and expanded version of my last post on Adani’s pretense that it is ready to start its mining project at a moment’s notice. The main new point is a suggestion for how a federal Labor government could close off the Galilee Basin without a general moratorium on new coal mines.

If federal Labor wins government in May (as seems highly likely), it will need to face up to the issue later this year. First of all, it will need to develop a coherent policy on phasing out coal exports — ideally involving a ban on new coalmines, though this is almost certainly too much for Labor to contemplate. That proposal also faces the counterargument, put forward by both mining companies and unions, that reduced Australian exports would be replaced by lower-quality coal from other countries.

The argument has some force, but there’s a way of taking it into account. Australia’s benchmark export is Newcastle coal, with an energy content of 6000 kilocalories per kilogram and a correspondingly low ash content. The premium for this higher-quality coal has risen greatly, though it has declined somewhat in recent years. Galilee Basin coal’s heat content, by contrast, is estimated at less than 5000 kcal/kg, and its ash content is 26 per cent, worse than coal from many competing countries. A policy that stops short of a blanket ban but requires new mines to supply coal of, say, 5500 kcal/kg or more would put an end to any idea of developing Galilee, while allowing for some smaller, higher-quality projects to proceed.

Further suggestions would be appreciated.

Socialist utopia 2050 …

what could life in Australia be like after the failure of capitalism?

That’s the title of my latest piece in The Guardian . It’s had quite a good run, but of course, plenty of pushback, mainly along the following lines

  • General objections to any kind of utopian thinking, even the very modest version in my article
  • Political impossibility
  • What about Stalin/Venezuela ?

What I haven’t seen, interestingly, is any suggestion that continuing expansion of financialised capitalism (aka neoliberalism) would produce a better outcome. Feel free to discuss this and other issues

NAIF Naivete

I was recently asked to comment on the Northern Australia Infrastructure Fund, which has largely dropped from sight since its apparent primary purpose, channelling public money to the Adani mine project, was vetoed by the Queensland government. Here’s my response

The NAIF is a failed political solution to a non-problem, harking back to the developmentalist ideology of the mid-20th century.. It reflects an outdated view of Northern Australia as a largely homogenous, underdeveloped region, in need of special government action to get growth going. In operation it has proved to be little more than a slush fund, dribbling out modest amounts of assistance to a grab-bag of projects with no coherence.

Whatever the individual merits of these projects, including regional universities and airports, fish farms and power plants they don’t differ in any important way from similar projects that don’t happen to be located north of the Tropic of Capricorn.

The NAIF should be wound up, and the funds allocated to a coherent program of infrastructure investment based on national needs rather than arbitrarily geographical distinctions.

A Green New Deal?

The idea of a “Green New Deal” seems to be everywhere, quite suddenly, although Wikipedia suggests it has been around for quite a while and that the phrase was coined by the ubiquitous Tom Friedman. There’s quite a good summary of the various versions by David Roberts at Vox (for those who don’t know him, an excellent source on climate issues in general).

The fuzziness of the term is, in a sense, unsurprising. It seems obvious that any progressive policy for the US must fit this description in broad terms. That is, it must be a modernized version of the New Deal and it must imply a shift to an environmentally sustainable economy. So, I’m going to put up my own version, without claiming that it is the One True GND.

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