Author: John Quiggin

Freedom of speech (if you’re a boss or a bigot)

John Quiggin87 Comments

Hard on the heels of the fiasco over the “Bolt clause” in the government’s proposed changes to the Racial Discrimination Act[1] comes the news that the government is prohibiting public servants in the Department of Prime Minister and Cabinet from criticising it in any medium, even anonymously, and urging colleagues to dob in violators. Except for the handful of people who took the government’s talk about free speech seriously, there’s no surprise here. But I’d like to respond to this from the “Freedom Commissioner”, Tim Wilson of the IPA, who says

“Ultimately public servants voluntarily and knowingly choose to accept these limits on their conduct when they accept employment”.

On the contrary, it seems clear from the report that, at a minimum, the interpretation of existing rules (allowing free comment in general, but not on matters related to your own work) is being tightened. For example, the kinds of comments made by Greg Jericho under the pseudonym Grog’s Gamut, which were considered acceptable in the past, now appear to be proscribed.

More generally,it’s important to remember that Wilson, like all propertarians, is no friend of free speech. Propertarians may oppose governmentally imposed restrictions on the speech of people who have no dealings with the government, but the standard position is that any employer, or landlord should be free to sack or evict, anyone they don’t like for any reason, including their political views. Of course (echoing Anatole France) the position is one of majestic equality. If you don’t like the views of your boss, or landlord, you’re entirely free to quit your job, or move out (but not of course to sleep under a bridge).

As for the government, the principle applying to public servants apply equally to pensioners, road users, beneficiaries of national defence and so on (that is, everyone). You knew what you signed up for when you decided to stay here, rather than doing the decent libertarian thing and seasteading or moving to Mars. So, if the government chooses to impose conditions on your political activity, you’ve got no right to complain.

Update It’s been pointed out in comments that the directive, from the Department of Prime Minister and Cabinet applies only to staff in that department and not, as I originally read it, to the Commonwealth Public Service as a whole. It appears to be a tightening of existing restrictions, but not, as I suggested above, a wholesale removal of freedom of political opinion. I’ve edited the post accordingly.

Even though the original post was overstated, the general trend is clear, as Jeff Sparrow points out here. The government is seeking to remove any restrictions on the speech of its powerful friends, while tightening restrictions on its enemies, in keeping with its general tribalist approach to politics.

fn1. So-called because the aim was to create room for racially offensive lies by people the government likes (such as Bolt) while ruling out lies the government dislikes, such as the Holocaust revisionism of Fredrick Toben. It turns out that drawing a legally watertight distinction between Bolt and Toben is more difficult than the government expected.

Why nuclear power worked once in France and might work again in China

John Quiggin181 Comments

That’s the question I looked at a while back in this piece in the National Interest, which I was too busy to post about at the time. TNI’s headline, which I didn’t pick, is the more definitive ‘China Can Make Nuclear Power Work‘. The key point is that, when France embarked on a crash program to implement nuclear energy in the early 1970s, all the right ingredients were in place: a centralised state in which a skilled technocratic elite could push projects through without much regard to public opinion, the ability to fix on a single standardised design, low real interest rates and preferential access to capital, and the ability to fix pricing structures that eliminated much of the risk in the enterprise.

Over time, these factors were eroded, with the result that as the program progressed, the cost per megawatt of French nuclear plants tripled in real terms. As the Flamanville fiasco has shown, whatever the secret of French success 40 years ago, it has been well and truly lost now. And the picture is equally bleak for nuclear power in other developed countries. New nuclear power is far more expensive than renewables, even after making every possible allowance for the costs of intermittency, the various subsidies available, and so on. That’s why, despite the vast range of different policy settings and market structures in developed countries, the construction of new nuclear plants has been abandoned almost everywhere.

But China today looks, in many respects, like France in the 1970s, a technocratic state-capitalist society with the capacity to decide on, and implement, large scale projects with little regard to anyone who might object. If nuclear power can be made to work anywhere, it’s probably in China.

Obviously, pro-nuclear commenters like Hermit and Will Boisvert are welcome to have their say on this one.

Inequality is caused by ideology, not technology

John Quiggin63 Comments

I’ve just had an article published at New Left Project, under the title Don’t Blame the Internet for Rising Inequality. Much of it will be familiar, but I want to stress a particular, and I think novel, critique of the idea that skill-intensive technology is responsible for rising inequality

while technology explains the decline of the middle and working classes relative to the professional and managerial class, even this latter group has barely maintained its share of national income since the 1980s. The real gains over this period have gone to a subset of the top 1 per cent, dominated by CEOs, other senior managers and finance industry operators. This group has nearly quadrupled its real income over the past 30 years, far outpacing the professional and managerial class as a whole.

This is a major problem for the Race Against the Machine hypothesis. Much of the growth in income share of the top 1 per cent occurred before 2000, when the stereotypical CEO was a technological illiterate who had his (sic) secretary print out his emails. Even today, the technology available to the typical senior manager—a PC with access to the Internet, and a corporate intranet with very limited capabilities—is no different to that of the average knowledge worker, and inferior to that of workers in tech-intensive specialities.

Nor does the ownership of capital explain much here. Even for tech-intensive jobs, the capital and telecomm requirements for an individual worker cost no more than $10,000 for a top-of-the-line computer setup (amortized over 3-5 years), and perhaps $1000 a year for a broadband internet connection. This is well within the capacity of self-employed professional workers to pay for themselves, and in fact many professionals have better equipment at home than at work. Advances in information and communications technology thus can’t explain the vast majority of the growth in inequality over the past three decades.

On the same day as this came out, Paul Krugman was demolishing another version of the argument, the zombie idea that current high unemployment in the US is due to a “skills gap” which apparently emerged on the day Lehman Brothers collapsed.

What happiness conceals

John Quiggin48 Comments

For quite some time, I’ve been saying that research effort into the economics of happiness would be better devoted to researching unhappiness. I’ve now presented this argument in the excellent online magazine Aeon, with the takeaway

So, perhaps we need a new research programme, to examine how unhappiness really works. Does hunger, or unemployment, or the loss of a family member to preventable illness make you a stronger and better person? Is striving after more and better possessions more fulfilling than satisfaction with what you have? It’s obvious from the way I’ve posed these questions what I believe the answer to be. But genuine research into the economics of unhappiness might yield some surprising answers to such questions as these, and reveal new questions that we have never before considered.

West facing solar panels

John Quiggin37 Comments

There was a bit of a fuss on the US web late last year about whether solar panels should face south (that is, towards the path of the sun) or west (towards the setting sun). One point that emerged is that, while the electricity generated by west facing panels during the afternoon peak is more valuable, that isn’t reflected in the prices paid by consumers.

But thinking about the situation for new installations in Queensland, and particularly North Queensland, the case for facing west looks strong. The first thing to observe is that, in the tropics, the sun is in the south in summer and the north in winter, so there’s not a lot of benefit in choosing one or the other.

Second, Ergon now has a “time of use” tariff, to be used in conjunction with a “PeakSmart” airconditioner, which has a peak rate of 34c/kwh between 4 and 8 pm on weekdays. That’s almost as good as the 44c feed-in tariff that used to be on offer, and massively better than the 8c rate available to new installations. Even the shoulder rate of 24c is way above the feed-in tariff So, if you are installing panels, you really want to maximize your own consumption and minimise the amount fed back to the grid.

My first cut at a calculation suggests that, with this tariff, solar PV looks pretty good. Assume a cost of $2/watt installed, which is common for large systems, and suppose that, with the western orientation you get 1000 hours a year, equally divided between shoulder and peak. That is, each installed watt of capacity saves you 1 kwH/year, at around 30 c/kwh, for a 15 per cent rate of return. Even if you add back the 70c/watt or so saved by virtue of renewable energy credits, the return is still above 10 per cent.

Feel free to point out arithmetic or parameter errors here.

Climate denial and the decline of the IPA

John Quiggin43 Comments

The Institute of Public Affairs has long been a major source of anti-science climate denial, following naturally from its earlier role as the leading denier of the health risks of passive smoking. While intellectually disreputable, this aspect of the IPA’s output seemed not to pose a problem for its broader role as an advocate of market-oriented economic policies. Indeed, given the frequency with which free-market economics and anti-science nonsense on all sorts of issues go together, the two seemed like a comfortable fit.

Over time, however, major corporations have become more wary of being linked to climate denialism, with the result that the IPA has become increasingly dependent on wealthy private donors like Gina Rinehart and Rupert Murdoch, whose definition of “free market” appears to be “lots of free stuff for Gina and Rupert”. In particular, Rinehart and her front group Australians for Northern Development are pushing the federal government to offer a tax holiday for Northern Australia, where most of her business interests are located. The IPA has delivered in full for Gina, including

* Joint work with ANDEV pushing the case for massive tax expenditures
* Prominently announcing that Ms Rinehart, arguably Australia’s greatest corporate welfare queen, had received a “2012 Visionary CEO Award”[1].

To get a feel for the kind of nonsense the IPA is now espousing, listen to this interview with the head of ANDEV on RN Bush Telegraph. It’s a display of rent-seeking that would have been considered brazen back in the days of ‘protection all round’. Particularly absurd, and offensive, is the suggestion that an income tax holiday designed to attract lots of (non-indigenous) workers to Northern Australia will somehow benefit the indigenous community.[2]

Of course, as long as Tony Abbott is in office, the fact that the IPA has lost all intellectual credibility won’t be a problem. But in the long run, the embrace of climate denial is exacting a high price for the IPA, as for US counterparts like Heartland.

fn1. I can’t find anything about this award on Google, except for an apparently unrelated gong given by a US outfit call qad.com. It appears to be an instance of the Montgomery Burns Award for Outstanding Achievement in the Field of Excellence, except that IIRC, Burns gave the award to Homer, not himself.
fn2. Compare Rinehart to Andrew Forrest, who at least makes efforts to employ indigenous people, and criticises Rinehart for not doing the same.

She who pays the piper

John Quiggin60 Comments

I’ll be on Radio National Bush Telegraph this Friday, talking about the proposals for massive tax expenditures on a “Northern Economic Zone” being pushed by Gina Rinehart, her lobby group Australians for Northern Development (ANDEV) and the Institute of Public Affairs, now heavily reliant on funding from wealthy individuals of whom Rinehart, directly and via ANDEV is the most prominent.

Back in 2000, the IPA was describing the Alice Springs to Darwin rail link, a heavily subsidised Public Private Partnership, as “the modern equivalent of the stupendously wasteful Ord River irrigation scheme“. This was one of the rare occasions on which I agreed with the IPA.

And it has historically been critical of deductions, rebates and other tax expenditures, correctly describing them as a disguised form of public spending
. Again I agree. It’s very rare to find a tax subsidy that achieves a public policy goal more cost-effectively than direct spending.

Having been exposed to Ms Rinehart’s persuasive mode of argument, the IPA has changed its tune, and plays a melody sweeter to her ears. It’s now fully on board with dams, tax subsidies to promote Northern development, and even special visa conditions on migrants, a policy that ought to be repugnant to libertarians of all kinds.

I’ll be interested to see how the IPA reconciles its former free-market line with its current position as advocate for yet more subsidies for someone who is arguably the world’s greatest welfare queen.