Month: May 2020

UQ and China

John Quiggin23 Comments

A colleague wrote to me today asking about the case of Drew Pavlou, a student suspended by the University of Queensland for two years as a result of actions in the course of protests against the policies of the Chinese government in Hong Kong. Here’s my reply

I don’t know any more about it than what I read in the papers, but it certainly looks bad for UQ. To the extent that anything has come out about the reasons for suspending the student, they seem to be political stunts that are fairly typical of student activists. A sensible university management would ignore this kind of thing, not make a martyr of the student.
As you say, the more the Chinese regime deteriorates into a personal dictatorship, the more problematic it is to bend (or be seen to bend) to pressure in matters of this kind.

Can we beat influenza

John Quiggin26 Comments

Following my post on pandemic whataboutery, James Joyner had some interesting thoughts, noting that

Interestingly, Quiggin doesn’t circle back to the third example from his introduction: influenza. Will Americans, having been conditioned to lockdowns during this pandemic, be more likely to implement them again for lesser ones? Or will this be a Never Again moment?

I was thinking over a post on this topic when I read that New Zealand is planning to use the testing contact tracing system set up for the coronavirus to stamp out sexually transmitted infections. So, the idea is obviously in the air.

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MWW on MMT (from Twitter via Spooler)

John Quiggin25 Comments

Mitchell, Wray and Watts Macroeconomics p 323, give a the correct version of the #MMT position on budget aggregates .

Taxes create real resource space in which the government can fulfil its socio-economic mandate. Taxes reduce the non-government sector’s purchasing power and hence its ability to command real resources for the government to command with its spending.

Take a situation where the national government is spending around 30 per cent of GDP, while its tax revenue is somewhat less, say 27 per cent. The net injection of spending coming from the national government is thus about 3 per cent of GDP. If we eliminated taxes (and held all else constant) the net injection rises towards 30 per cent of GDP. That is a huge increase in aggregate demand and could cause inflation.

(I’d say would rather than could, but otherwise spot-on)

Ideally it is best if tax revenue moves countercyclically, increasing in an expansion and declining in a recession.

(This exactly matches Keynes’ position “the boom, not the slump is the time for austerity at the Treasury”)

3 per cent average deficit over the cycle is consistent with debt averaging 60 per cent, nominal growth g and nominal bond rate r averaging 5 per cent. In this case, primary deficit is zero on average.


But if r<g (desirable), can run a primary deficit as well as a total deficit.

A pre-pandemic energy policy

John Quiggin8 Comments

The government has released a report on energy policy it commissioned from former Origin Energy boss Grant King. I prepared a brief response for the Australian media science centre

The government’s thinking remains five to ten years behind the times.  Although the idea of new coal-fired power stations seems finally to have been abandoned, the report focuses heavily on technology options that seemed promising in the past but have now been abandoned everywhere in the developed world, such as nuclear power and carbon capture and sequestration. More important is the failure to recognise that gas-fired electricity generation is increasingly being supplanted by the combination of renewables and battery storage. The policy remains fixated on extractible resources such as coal and gas, ignoring our massive endowment of solar and wind resources.

The more fundamental problem is that the approach to climate policy that underlies all of this is the same as the denialist approach to the pandemic, exemplified by Trump – since dealing with impending disaster will be inconvenient, let’s just keep ignoring it. After all, it might never happen.

Sandpit

John Quiggin142 Comments

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. The last got clogged with random conspiracy theories.

To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.

Servants of three masters

John Quiggin14 Comments

Universities are the servants of three masters: the state governments that provide the statutory basis, the federal government which provides most of the funding for research and domestic students and the international market.
* The Australian public are not among those to whom the universities see themselves as owing a duty
* These multiple allegiances create great opportunities for the managers of the university to pursue their own interests, playing off the various masters against each other
* It all goes bad when the international market fails

All of this can be seen at work with the refusal of the University of Melbourne to enter into an agreement with the NTEU, saying that its statutory obligations (presumably to the state government) prohibit any element of joint management.

The need for action results from the collapse of the international market, and the refusal of the third master (the Morrison government) to accept its obligation to educate Australians. Instead, they offered a “rescue” package, consisting of a promise not to impose even further cuts this year, if domestic enrolments fell.

Whataboutery and the pandemic (crosspost from Crooked Timber)

John Quiggin46 Comments

Among the many consequences of the Covid-19 pandemic, and the measures taken to control it, there has been an epidemic of whataboutery. The starting point is the claim “we have locked down the entire economy to reduce the number of deaths from Covid-19, but we tolerate comparably large numbers of deaths from X”. Popular candidates for X include smoking, road crashes and influenza. In most, though not all, cases, the inference is that we should accept more deaths from the pandemic. Indeed, the majority of those using this argument are also opposed to any proposal to do more about the various examples of X they cite

I’m going to take the contrapositive, and argue that the inconsistency pointed out here should be resolved by taking stronger action to reduce avoidable deaths from a wide range of causes, with the primary examples being road deaths and smoking.

While whataboutery on these topics typically suggests that society has made a decision to tolerate deaths from these causes, the reality is that there have been increasingly stringent measures to reduce them, adopted over many years, and that in both cases, the ultimate objective (explicit in some jurisdictions, implicit in others) is to reduce deaths to zero. In the case of roads, this aim is expressed in Vision Zero, adopted initially in Sweden and subsequently in a variety of other places. The UK government aims to end smoking by 2030, and most governments have interim targets which imply ultimate elimination of smoking.

With or without explicit targets, the policy approach everywhere has been much the same. Restrictions aimed at reducing the risk in question have been introduced gradually over many years, with each new restriction providing a starting point for the next. In Australia’, for example, partial bans on tobacco advertising were introduced in the late 1980s. These were followed by complete ad bans, then by compulsory health warnings in small print, and finally by a requirement that cigarette packets should display gruesome photos of the consequences of smoking. At the same time, from an initial situation where smoking was universal, it has been progressively restricted in all public spaces, and where children may be exposed (as in private cars).

There is indeed an inconsistency here. If the restrictions in place now are justified in terms of a balance between health costs, damage to non-smokers and the restrictions on the rights of smokers, they would have been even more justifed 30 or 50 years ago, when the damage done by smoking was much greater. Coming back to Covid whataboutery, the inconsistency is not between accepting deaths from one source and not another, it’s between the urgent action necessitated by the pandemic and the slow pace adopted in other cases.

The slowness with which policies aimed at ending smoking, or road deaths, is easily explained. Governments have introduced them at a pace that avoids substantial political costs, and the risk of sustained non-compliance. In the case of smoking, for example, it is necessary to deal both with powerful and unscrupulous tobacco companies, using every available tool[1] to resist controls, and with a large addicted population, some (though not all) of whom have no desire to quit.

The success (so far) of lockdowns in controlling Covid, and their general acceptance outside the US, suggests that we should move more rapidly to eliminate public health risks, even where this involves coercive measures to stop people endangering others, and to prevent young people from endangering themselves. For example, partial bans on smoking in public places, or in the presence of children, should be made total. A more ambitious proposal of this kind would be to raise the smoking age, one year at a time, so that young people currently under the legal age would not be allowed to smoke until they were, say, 25 (hardly anyone begins smoking as a mature age adult, which is in itself an indication that it is not a choice open to a rational defence).

In the case of road deaths, the most obvious measures are lower speed limits in urban ares, and a greater willingness to take dangerous drivers off the road permanently. These measures will be adopted eventually – the only question is how many innocent lives will be lost before they are.

fn1. The tobacco companies not only lobbied directly, and funded a variety of front groups (astroturf smokers rights groups and free-market think tanks), but fought Australia’s packaging laws through international trade actions, ginned up by bribing governments or exploiting the Investor-State Dispute Settlement clauses of trade agreements. They were defeated, but almost certainly succeeded in deterring poorer countries, which could not afford such fights, from following Australia’s lead.

Universities and the pandemic

John Quiggin30 Comments

As I foreshadowed a while ago, the financial effects of the pandemic have been reflected in an agreement for university staff to take temporary pay cuts in order to save the jobs of casual workers. Lots of people are unhappy about this, but it’s hard to see an alternative, and the deal seems to be the best that can be reached, with the requirement that senior management take the biggest cuts and (I think) the cuts for academic staff being scaled to protect the lowest paid.

The primary cause of all this is the big reduction in overseas student numbers arising from travel restrictions and the pandemic. But the more immediate cause is the federal governments decision to exclude universities from the JobKeeper scheme, even though they would qualify under the loss of revenue .

This decision is due in large measure to the government’s culture war hostility to the university sector. It’s disappointing to see them pursue this kind of vendetta at a time when we ought to be looking for national unity. But given that this is the case, there is no serious alternative for universities but to share the pain as evenly as possible.

The fundamental problem is the quasi-NGO (quango) status of universities. Even though they are mostly funded by the federal government, universities are (mostly) organized as independent statutory bodies under state legislation. As a result, they engage in wasteful competition among themselves. Indeed, the ACCC watches for signs of anti-competitive behavior, a concept that would immediately be recognised as nonsensical in the case of schools and universities.

Education is a fundamental responsibility of government, and universities ought to be organized as a unified national system, with the responsibility of providing education to all students who can benefit from it. If that were the case, the government would have had to meet the gap in funding just as has happened in public transport and other services where revenue has fallen.

Coming back to the cuts, the NTEU-universities deal ought to be a model for the economy as a whole in important respects. Dealing with the pandemic is going to be hugely costly, and those at the top of the income distribution, in both private and public sectors, should bear most of that cost.