Back again with another Monday Message Board.
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
http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page and at my Economics in Two Lessons page
32 thoughts on “Monday Message Board”
I was saddened today by the announcement of the death of Jack Mundey. A communist, builders’ labourer, environmental activist, and very decent human being. He saved the Rocks area in Sydney from overdevelopment in the 1970s and was a pioneering urban environmental activist.
I met Jack Mundey once, but sadly don’t remember much about the occasion.
Very high-profile ongoing row between the German Constitutional Court (BVG), the European Central Bank (ECB), and the European Court of Justice over debt and stimulus.
The BVG has demanded the ECB justify its stimulus bond-buying programme, alleging a possible violation of the German Constitution (Art. 109(3)) (https://uk.reuters.com/article/uk-ecb-policy-germany/german-court-hands-ecb-three-month-ultimatum-to-justify-stimulus-scheme-idUKKBN22H0WA). The ECB, backed by the ECJ, has told the BVG to get lost; as a Community institution it is only accountable to the others of the same type (Parliament, ECJ). It’s not over yet, as the Bundesbank sits on the ECB board, and operationally the ECB needs its member national central banks. As a German public institution the Bundesbank is obviouly under the BVG’s jurisdiction.
The BVG has a general line on EU legislation: EU law trumps German domestic law, as per numerous ECJ rulings. But it does not trump the German constitution, until such time as the EU adopts a true federal constitution of it own, establishing a full hierarchy of laws. This looks sensible to me.
The problem is that Art. 109(3), adopted as late as 2009, is nuts. It’s textbook constitutional overreach, seeking to protect a policy option against democratic reversal by embedding it in constitutional concrete. This particular case is even worse, as the debt brake is economically illiterate. It takes no account of better-based fiscal maxims, such as capping structural borrowing at the volume of public investment, or capping the debt-to-GDP ratio at some target, allowing structural borrowing below the growth rate. The BVG is going to war to defend the worst provision in the Grundgesetz.
Politically, this looks to me like a last-ditch preemptive strike by the German orthodoxy of ordoliberalism, which has come up against two formidable adversaries: the climate crisis and the pandemic. Both call for radical Keynesian solutions, damn the torpedoes.
Watch this space – or, better, find more expert opinion.
I am a little conflicted about the EU. I approve of Federalism when it is what I would call true or adequate Federalism. This involves adequate vertical and horizontal fiscal transfers. The EU’s genuine horizontal transfers are inadequate in my book. Also, the EU is unfortunately a neoliberal project writ large, I consider.
In other respects, the EU is quite progressive. They probably have the best Climate Change (amelioration and mitigation) stance in the world. The EU is also taking a world leadership role in raising funding and organizing research program to find a vaccine if possible in the fight against COVID-19.
lol at Gay Alcorn’s Guardian piece (quoting JQ) about, well, you can read the thesis in the url:
Classic leftish over-optimism about the willingness of the other side to compromise on their ideology. I guarantee that in x months time we’ll be hearing about the need to tighten our belts, the economy is like a household budget, we owe it to future generations not to saddle them with crippling debt, no one ever taxed their way into prosperity, et cetera, et depressing cetera. (Where x = how soon they think they can get away with it)
The one bright spot is that with all these deserving, decent folks (h/t Stuart Robert) on the dole and unlikely to get off for a while, Newstart or equivalent might stay higher, since enough of those decent folks might vote Coalition.
Jack Mundey’s conservation efforts were admirable and are enduring but his union, the BLF, went on to legitimise criminal activities in the construction industry.
Well , of course the right wing will never compromise on their ideology. Exploitative power never conceded anything. Concessions and then real reforms have to be wrung out by effort and struggle. It was ever thus and will ever be thus. It’s time to make renewed efforts. This crisis provides a chance to permanently change our political economy. The right never let a crisis go to waste; often they crises they create themselves. The left must take a leaf out of that playbook. Never let a crisis go to waste. DO politicize it. Politicize it in favor of the poor, oppressed, marginalized and low paid workers.
The trend and… Catch Covid? The nitty gritty. Restaurants, choirs, offices. And Pubs – imo don’t open them. I used to do air conditioning control work in the dim dark past. If you have ever been in a 15 story buildings return air duct, you would never accept to work in the building. Covid or not.
A Comparative Immunologist and Professor of Biology (specializing in Immunology) at the University of Massachusetts Dartmouth says;
“What is the role of asymptomatic people in spreading the virus?
Symptomatic people are not the only way the virus is shed. We know that at least 44% of all infections–and the majority of community-acquired transmissions–occur from people without any symptoms (asymptomatic or pre-symptomatic people). You can be shedding the virus into the environment for up to 5 days before symptoms begin.
Infectious people come in all ages, and they all shed different amounts of virus. The figure below shows that no matter your age (x-axis), you can have a little bit of virus or a lot of virus (y-axis). (ref)”
Interestingly, the data shows that just 20% of infected people are responsible for 99% of viral load that could potentially be released into the environment (ref)
So now let’s get to the crux of it. Where are the personal dangers from reopening? …
“restaurant’s various airflow vents) was from right to left. Approximately 50% of the people at the infected person’s table became sick over the next 7 days. 75% of the people on the adjacent downwind table became infected. And even 2 of the 7 people on the upwind table were infected (believed to happen by turbulent airflow). No one at tables E or F became infected, they were out of the main airflow from the air conditioner on the right to the exhaust fan on the left of the room. (Ref)
…”serves to highlight that being in an enclosed space, sharing the same air for a prolonged period increases your chances of exposure and infection. Another 3 people on other floors of the building were infected, but the authors were not able to trace the infection to the primary cluster on the 11th floor. Interestingly, even though there were considerable interaction between workers on different floors of the building in elevators and the lobby, the outbreak was mostly limited to a single floor (ref). This highlights the importance of exposure and time in the spreading of SARS-CoV2. ”
“COVID-19 Superspreader Events in 28 Countries: Critical Patterns and Lessons
“In a fascinating paper published on March 26th, Turbulent Gas Clouds and Respiratory Pathogen Emissions: Potential Implications for Reducing Transmission of COVID-19,Bourouiba shows that analyzing a human sneeze is unusually difficult, even by the standards of fluid dynamics (whose mathematics I once modeled in my former capacity as an engineer and computer programmer). That’s because those mucosalivary droplets we emit are cocooned within a warm, moist enveloping gas cloud—Bourouiba calls it a “puff”—that protects the droplets from evaporation and allows even small globules to travel much farther than one might otherwise predict. The binary distinction between large and small droplets remains fundamental: Eventually, the big particles fall while the smaller ones don’t. But during those first fractions of a second when a sneeze (or cough, or shout) is expelled, Bourouiba shows, the enveloping gas sheath allows smaller particles to act, ballistically speaking, as if they were larger.”
akarog, It was Norm Gallagher, not Mundey, who was convicted of being a crook in the BLF.
There’s a bloke around the corner from my work who’s an absolute dead ringer for Norm Gallagher. Same everything – even the glasses. Every time I pass him I’m reminded of Norm.
Joel Fitzgibbon said we will continue to pay any amount to rescue sailors.We save sailors at any cost, why not these 140? $60m to $1.750,000,000.
Rubbery numbers… mine and theirs; $1.750,000,000÷140=@ $12.5m per life saved. As 10yrs/ 10m taxpayers = 175m/yr by 10m taxpayers = $175@taxpayer per year. $6 or $170 a year for 10yrs for the 140 lives. Your choice. Do your own numbers with the spreadsheet below.
Play god with the cited spreadsheet – open pubs saving / killing 40 to 200 lives @ $600m … “the government is paying 60 times more than it would usually pay to save a life.” “by keeping bars and restaurants closed the government is paying 250 times more than it would usually pay to gain a life year.”.
Lots of assumptions. (I hear you J-D whispering “Citation please”).
Article in today’s Conversation;
“Should we re-open pubs next week? The benefits seem to exceed the costs
“It suggests each life year saved as a result of keeping bars and restaurants closed costs around $12.5 million.
“Decisions on whether government should fund health interventions are commonly based on an assessment of whether the health gains justify the additional costs.
“As a ballpark figure, new measures are funded if they are shown to gain an additional life year at a cost of around $50,000.
This suggests that by keeping bars and restaurants closed the government is paying 250 times more than it would usually pay to gain a life year.
It is funding that doesn’t pass the usual test
A separate guideline used by Australian governments to assess regulations and infrastructure projects puts the value of a statistical life year at $200,389 in today’s dollars.
This suggests that by keeping bars and restaurants closed the government is paying 60 times more than it would usually pay to save a life.
It’s why we think governments should reopen them, next week.
Like all such analyses, ours depends on the assumptions used.
We have put a spreadsheet of our decision tree online to allow readers to experiment with different ones.”
“COVID open bars and restaurants decision tree
Would someone answer this please: what budget burden will the $600m be over x years? At 10yrs 60m a yr and 10m taxpayer = $6 per yr per taxpayer. For 160 lives with qaly / welby of say 10yrs. I’ll pay for it. I like grannies and grandpas and imuno comprimised people.
I liken it to ocean rescues. I have sailed to Vannuatu from Sydney being hit by the tail of a cyclone. Were we to be in need of rescue – 8 persons – would have taken a small frigate to reach us in the conditions. The cost to the taxpayer would be way above to $200,000 per yr per life. We have all paid taxes… 8p x 30yrs more tax.
“Do we abandon mariners?
Rescues to continue, regardless of cost
“The Defence Minister, Joel Fitzgibbon, said Australia had an international obligation to carry out search-and-rescue operations in its assigned area, which was one of the world’s largest. “We will continue to do so,” he said.
“A Defence Department spokesman said the cost of sending the frigate and its 100 crew on the mission had not been calculated. “I’ve seen several figures, but none of them have come from us,” he said. Some media reports put the cost at more than $1 million.
“A former round-the-world racer, David Adams, who is advising the Vendee Globe organisers, said it had proved impossible for these yachtsmen to obtain search and rescue insurance.
“He defended the race, which needed Australian Defence Force aid in 1996 and 1997 to rescue three competitors, Tony Bullimore, Thierry Dubois and Raphael Dinelli, at a combined cost of about $15 million.
“Dinelli was saved by the RAAF on December 27, 1996, when it dropped inflatable rafts and survival gear 10 minutes before his damaged yacht sank, 1250 nautical miles off Western Australia.”
Read about Bullimore & others… From Sailing World, April 1997
Capsizes and Rescues
(Riveting read imo)
“Politically, this looks to me like a last-ditch preemptive strike by the German orthodoxy of ordoliberalism, which has come up against two formidable adversaries: the climate crisis and the pandemic. Both call for radical Keynesian solutions, damn the torpedoes.”
Idiocy works even less well in an emergency than under normal conditions. Since becoming debt slaves has never served a good purpose with less dramatic problems to overcome, its going to be very poor policy when real problems present themselves. In terms of the climate crisis, its high prices to the consumer that ought to be our source of revenue and CO2 reduction. Not an indirect result of Keynesian over-spending on useless undertakings. Insofar as the virus is concerned, such money’s as are needed to end the crisis can be plundered from an embarrassment of riches in finance, public sector jobs, and multinational business.
Jack Mundey made it to 90, outlived his enemies, and left an enduring positive legacy.
You can’t ask for much more than that.
Bugger, I should have had “there’s no money tree” on my bingo card
Brendon Taylor: Citations wanted on the propositions that the real return on structural borrowing at 2% for massive investments in the energy transition will be negative, ditto for pandemic cyclical borrowing, and that Britain in 1815 (debt ca. 290% of GDP) was a failing debt slave.
The BLF could be characterised as both a defender of human rights and a promoter of extortion.
Koff koff Keynes. Viewers be warned – third panel visually upsetting.
I’m sure that in its time the BLF did both good things and bad things, because that’s only human.
But more specifically it’s not reasonable to blame Jack Mundey (and his allies and associates) for bad things done by the BLF under the leadership of Norm Gallagher (and his allies and associates). The Gallagher-led group was effectively responsible for driving the Mundey-led group out of the union (and reversing some of their policies, so it wasn’t just a struggle for personal power and privilege, there was a significant policy difference).
Jack Mundey’s men became known as Mundey’s marauders, or goon squads, and they held building sites to ransom.
They had a point, the working conditions were dangerous and unhygienic and they held builders responsible. More importantly, construction productivity was poor, managers were often as crude and unskilled as the workers.
Nowadays the OH&S Act and quality management standards covers all these issues.
You could start with the entire history of economic life James. Nowhere in this history of economic life has red ink proved to have the magical powers that Keynesian fanboys have attributed to it. You don’t have the evidence. While we can turn one useless banker executive, or public sector job, into at least 5 recently enhanced jobseeker allowances, then the money tree never runs out. Don’t ask me for a citation when the entirety of economic life has been a testimony to the failure of red ink finance. Its one basket case country after another with Keynesian magical thinking. And no the Labour party orgy of red ink finance in 2008 was also a failure. It created a deluge of unemployment and all over a schoolboy misunderstanding of what GDP measures.
One thing we CAN say though is that private debt, dollar for dollar is worse than public sector debt. They are both horrible but private sector debt is worse. We saw this with the Americans after World War 2. Price controls and shortages meant that people had built up their cash balances, paid off their debts and banked their money. This put everyone in a great position to start new businesses when all the boys came home. So thats about all the concessions I can make here.
Think about this crisis? 80% of the power of the crisis has been caused by being a high-debt private economy. Stop business for a few weeks and all the small businesses die. The lack of resilience that this high private debt creates is unprecedented in human history. We are supposed to be rich. We should be resilient. We are so feeble. We have to get serious about debt reduction. Both public and private. But private debt is more crippling, though both are no good.
But we cannot make the leap, that since private debt is even more poisonous that public debt, that public debt is ever a good thing.
“Britain in 1815 (debt ca. 290% of GDP) was a failing debt slave.”
Well obviously it was a failing debt slave in 1815. The success of Britain after that date came from its relentless surplus budgets which paid that catastrophic debt level down. That the British became so powerful in ensuing decades is a testimony to debt reduction. Not to debt accumulation. Now bear in mind that Bonaparte, when the British couldn’t be beaten, called the English a “nation of shopkeepers.” That is to say small businessmen. So the two lessons to be learnt here is that debt reduction works. And a nation of low-debt small businessmen is a resilient nation.
Now of course I would have wanted the debt reduction to be by way of reneging on fractional reservist debt. But the point is debt reduction leads to strength.
The Fantasy History game is fun to watch if not informative. Britain had a public debt to GDP ratio of over 100% for the whole century after 1750: a period that corresponds to its rise to global economic hegemon. IIRC the government ran a primary budget surplus after 1815, but the Sinking Fund to repay the debt never accounted to much. What lowered the ratio was economic growth.
If I as an individual borrow €1m from you, say 10x my income, we are creating a fraught relationship on both sides. If a society borrows €100bn from itself, the same does not hold. In 1815 England, Mr. Darcy’s rents and the taxes on them paid Mr. Bingley’s coupons on his Consols, quite stably. It helped that the debt was not held by foreigners (no risk of populist default) and was perpetual (no hostages to the bond market over rollovers).
The political issue came from the part of the budget not financed by income tax on the wealthy Darcys but by tariffs on imports, especially foodstuffs. Darcy benefited from higher wheat prices, but not Arkwright and other manufacturing capitalists, who had to pay higher wages. Hence the conflict over the Corn Laws, won by the new rich.
“And a nation of low-debt small businessmen is a resilient nation.”
I guess the British Navy and Britain being an island had nothing to do with it. Not to mention the colonial empire.
Don’t feed the Bird.
” neoliberalism, this dynamic contributes to a politics of ‘enduring austerity’ that limits governments’ fiscal discretion”…
Mobilising alternative futures: generational accounting and the fiscal politics of ageing in Australia
Economists typically argue population ageing generates fiscal pressures by restricting the tax base while increasing demands for social spending. Alongside other economic pressures associated with neoliberalism, this dynamic contributes to a politics of ‘enduring austerity’ that limits governments’ fiscal discretion. The politics of population ageing reflects modelling techniques, such as generational accounting (GA), which, anticipating future deficits, create demands for policy action today to address projected intergenerational inequalities. Taking Australia as a case study, this paper explores the politics of GA in public budgetary processes. While existing critiques reject GA by arguing it relies on ‘apocalyptic’ or unreliable demography, we focus on a different kind of contestation, which applies the techniques and even the categories of GA to frame different problems and promote different solutions. We identify three sites of partisan contest that refocus fiscal modelling: including the tax side of the budget equation; comparing the cost of public provision to public subsidies for private programmes; and including the costs of environmental damage. At each site, the future-orientated logic of GA is mobilised to contest the policy implications of austerity. This complicates analysis that financialisation and neoliberalism necessarily ‘de-politicise’ policy by removing state discretion. Instead, we identify an increasingly important, if technocratic, form of political contestation that offers the possibility to promote more egalitarian responses to population ageing.
Published online by Cambridge University Press: 13 March 2018 Volume 39, Issue 7July 2019 , pp. 1409-1435
James Wimberley at 11:25 pm. “Watch this space – or, better, find more expert opinion.”
The Crisis of a Lifetime
May 11, 2020
GREGOR PETER SCHMITZ interviews GEORGE SOROS
“The kind of bonds that I have proposed would sidestep this problem, because they would be issued by the EU as a whole, would automatically be proportional, and would remain so eternally. The member states would have to pay only the annual interest, which is so minimal – at, say, 0.5% – that the bonds could be easily subscribed by the member states, either unanimously or by a coalition of the willing.
European Commission President Ursula von der Leyen says that Europe needs about €1 trillion ($1.1 trillion) to fight this pandemic, and she should have added another €1 trillion for climate change. Consols could provide those amounts if the EU’s member states authorized them.
Unfortunately, Germany and the “Hanseatic League” states led by the Netherlands are adamantly opposed. They should think again.”
The company I soley contacted to in the ’90’s was bought by Worley Parsons. You here understand that when the tide goes out, I am mathmatically and economically naked. Unfortunately those at worley p are naked from the waste up. Big brains, exceptional grasp of specific domain knowledge, and totally incapable of an opinion (that you’d ever know) nor social awareness. Hired guns just like in a wild west movie. Some become sherriffs. Watch out. Some who need bullys rely on their work to bully. And the money is basically irrelevant – the puzzle and challlenge is it. I covered for their nakedness above the waist. Great people and work but morality and ethics in engineering and maths and specific models? No philosophers but plenty of war buffs and racing drivers.
Hoping Nev Power & Andrew Liveris is going to be good for australia is like hoping a spreadsheet will make you god like. Defund and remove them all but allow them, just like you and me, to make a submission.
I sincerely hope you JQ, scrutinise everything they do, touch or say.
“Coronavirus economic recovery committee looks set to push Australia towards gas-fired future
One of Mr Power’s early acts was to bring into the commission as a special adviser Andrew Liveris, former global chairman and CEO of The Dow Chemical Company.
Mr Liveris is deputy chairman of Worley, the world’s biggest engineering consultancy for the oil and gas industry, and also a director of the world’s biggest oil and gas company, Saudi Aramco, which is looking at gas development in Australia.
Mr Liveris — who advised both the Obama and Trump administrations on building up US manufacturing — is pushing the idea that a big lift in gas production is key to revitalising heavy industry.”
Fat report from Gratfan proposing a job- creating plan to export green steel made with Australia’s abundant renewable electricity, catalysis, and hydrogen DRI ironmaking: https://grattan.edu.au/wp-content/uploads/2020/05/2020-06-Start-with-steel.pdf
This is a better plan than exporting the hydrogen, possibly upgraded to ammonia. Shipping of steel or iron pellets should be far cheaper, so use the tricky hydrogen at the point of production.
Green steel involves two steps. One is replacing coke-fueled blast furnaces with hydrogen DRI reformers, the big change just starting. Two is turning the iron into steel in electric furnaces, which can be done anywhere electricity is cheap. The case for Australia getting into the second business is weaker than the first.
Grattan err on the side of caution by describing hydrogen DRI as pre-commercial. Technically true, but this is not very risky. One: DRI is used on a large scale in India using fossil gas, reformed into carbon monoxide and hydrogen. The latter already provides half the ore reduction, so going to 100% is an evolution not a revolution. Second, substantial pilot plants are being built separately in Europe by three extremely capable steel companies: SSAB, Voestalpine and Arcelor-Mittal. One could be quixotic, not three. This works.
JQ, I suggest a stress test for proving no / some counterintuitive risk perception transmission and actions for choices and experiences for ” the ARC funded Epistemically Feasible Choice project … choices will lead to transformative experiences that change our valuation of outcomes in ways we cannot anticipate.”
“Acute Stress Reduces the Social Amplification of Risk Perception
Our research reveals that stress changes the way we deal with risky information—results that shed light on how stressful events, such as a global crisis, can influence how information and misinformation about health risks spreads in social networks
Most participants initially reported not to be very concerned about Triclosan. After having read the articles, participants reported increased concern overall, but there was a substantial difference between stressed and non-stressed participants: Stressed participants were less influenced by the articles and increased their reported concern to a significantly smaller degree. Importantly, this effect was mediated by increases in the stress hormone cortisol: the stronger an individual’s increase in cortisol, the smaller this individual’s increase in concern. Consistently, stressed participants passed on less negative information than non-stressed participants to others. These findings suggest that acute stress causing an increase in cortisol renders people to be less responsive to negative risk information. In contrast to these effects of the endocrine stress reaction, participants’ subjective feelings of stress were associated with higher concern and more alarming risk communication.
Thus, our results uncovered a complex pattern of relations between endocrine and subjective stress, risk perception, and the sharing of information.