Author: John Quiggin

Carbon taxes and fuel prices

John Quiggin61 Comments

This is an appeal to my many numerate and well-informed readers to check my calculations. I’ve been asked to do a quick estimate of the implications of including motor transport (particularly petrol) in a carbon tax/emissions trading scheme. Since it’s easier to model, I’ve decided to look at carbon taxes at rates of $20. $50 and $100 per ton of CO2.

Since a litre of petrol produces 2.3 kg of CO2 when burned, the taxes correspond to 4.6, 11.5 and 23.0 cents/litre, and I’m going to assume that the addition of margins yields final increases of 5, 12.5 and 25 cents/litre.

Given annual consumption of around 30 billion litres (this is petrol + diesel, but I’m going to treat it all as petrol), the revenue generated is $1.5, $3.75 and $7.5 billion, ignoring demand responses (of course, we want demand responses, but I’ll leave this for alter I think).

Coming to a very rough assessment of compensation, if the proceeds were divided equally amoung households in the bottom half of the income distribution (about 5 million of them), the payment would be around $300, $750 and $1500 respectively.

If anyone can see any big holes in my calculations, I’d be very grateful to have them pointed out. More generally, any constructive comments appreciated.

The Great and Unremembered War

John Quiggin29 Comments

This piece by Edward Lengel n in the Washington Post has a lot to say about something I’ve long regarded as critically important in explaining the strength of the war party in the US: the absence of any real recollection of the Great War of 1914-18, the opening round of the bloody conflict that dominated the history of the 20th century, spawning Communism and Nazism, Hitler’s War and the Cold War, and even, in large measure the continuing war in the Middle East. Of course, the US came late to the war, and its losses (50 000 combat deaths) were comparable to those of Australia, with 10 per cent of the population. But there is more to it than that.

Lengel (a military historian writing on Memorial Day) makes the striking observation

Americans haven’t forgotten about the doughboys. We just didn’t want to hear about them in the first place.

and continues

“The boys would talk if the questioners would listen,” said one embittered ex-doughboy. “But the questioners do not. They at once interrupt with, ‘It’s all too dreadful,’ or, ‘Doesn’t it seem like a terrible dream?’ or, ‘How can you think of it?’ or, ‘I can’t imagine such things.’ It shuts the boys up.” … The Civil War and World War II seem to lend themselves to good storytelling, as long as one avoids the ugly, depressing bits. They appear to have clear beginnings and endings, with dramatic heroes and villains. They move. World War I, by contrast, with its images of trench warfare and mustard gas, is not so easy to manipulate in a marketable manner. Popular historians consequently avoid it.

It would be charitable to interpret the reluctance of Americans to talk about the horrors of the Great War as evidence of inherent pacifism and perhaps this element was present. As Andy McLennan points out in comments, the main reaction to WWI was an increase in isolationist sentiment: the problem was Europe, not war itself. After isolationism was discredited (which did much to strengthen the War Party) from a distance it looks like WWI was simply forgotten,and the end state is functionally equivalent.

In any case, in the long run, the absence of this most bloodily futile of wars from historical memory has been a huge boon to the war party. With a historical memory of war dominated by the “Good War” against Hitler and the Axis, it’s unsurprising that Americans have been much more willing than the citizens of other democratic societies to accept war as part of the natural order of things.
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Regular inflation in Australia: Guest post from Bruce Bradbury

John Quiggin23 Comments

There’s been a fair bit of discussion of inflation in the comments threads. Bruce Bradbury of the Social Policy Research Centre has sent in a guest post (in a PDF over the fold), making the point that the cost of regular purchase, notably food, has gone up by more than the Consumer Price Index. This implies that irregular purchases (consumer durables like TV sets and cars) must have gone up by less than the CPI and in fact the inflation rate for these items over the past three years has been only 0.5 per cent. Bruce’s conclusion

This gap perhaps explains some of the divergence between the expressed concerns of consumers and the complacency of economists. Though consumers know that their next TV will be much better than their last one for much the same price, they are still struggling to meet their weekly supermarket and petrol station bills.

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Groan

John Quiggin75 Comments

It’s taken six months, and there have been some near-misses along the way, but for me, the weekend announcement that the government will be reviewing the collection of GST on the full (excise-inclusive) price of petrol is the Rudd government’s inevitable first big policy failure. I don’t know where to start on this. First, the objection that it’s “a tax on a tax” is just silly. The effective burden of the GST falls, inevitably on inputs of primary factors (labour and natural resources including land). Since both are taxed, the entire GST is “a tax on a tax”. Politically, the government abandons the high ground it occupied on the issue, while not providing serious competition for the Libs on the low ground. It also undercuts Rudd’s correct statement only a few days ago that the government had done all it could on petrol prices. And environmentally, it’s a sign of impending disaster.

About the only consolation is that, like Nelson’s five cent excise cut, it will never happen. The idea is bound to be shot down in the review for the reasons I’ve mentioned. But there are plenty of other opportunities to cave in, and it looks as if this government is going to take them. The only remaining faint hope is that Rudd will pull those who’ve floated this stupid idea into line, at the cost of throwing away the advantages they held over a divided and confused opposition.

Peak car

John Quiggin47 Comments

Today’s Fin (paywalled unfortunately) includes the neat neologism “Peak Car” from transport consultant John Cox, making the point that car travel in developed countries is unlikely to increase further. I’ve tended to disagree with Cox in the past: for example, with this 2006 piece, which stated that public transport is in terminal decline. This was just at the beginning of the recent resurgence in public transport use, particularly noticeable in Brisbane. Still he’s right about the peak, or more precisely plateau in car travel, matching what’s happening to oils supplies. I’d take it further and say that the inevitable (given no growth in supplies and increased demand from China and India) decline has probably already begun.

Calculated Risk points to this report from the US Dept of Transportation, showing the first yearly decline in several decades, and includes a graph which shows that the recent decline follows several years of flattening
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On the bleeding edge of videoconferencing

John Quiggin8 Comments

Yesterday, I appeared on video a National Symposium to be held by the Australian Agricultural and Resource Economics Society in Adelaide (details here and program (PDF) here).

Unlike previous videoconferences I’ve done for smaller seminars (audience up to 30 who can fit into a dedicated venue) presenting to a big event like this posed lots of difficulties, though most were satisfactorily resolved at the end. After initially giving assurances that they could handle a videoconference, the venue advised that they didn’t have an ISDN line, or any adequate alternative, and that installing a line would cost thousands of dollars. We looked at various computer-based options, but eventually decided that we would be unlikely to get sufficient reliability and video quality that way, so I stepped back from the frontier and made a DVD of my presentation which I mailed to Adelaide. Even that fairly low-tech approach created some problems, as playback of computer-burned DVDs turns out not to be 100 per cent reliable. There was a scramble to find a setup that would play the DVD, but it all went well in the end.

The plan was to take questions by audioconference, and this was incorporated in a panel discussion where questions were addressed to several speakers. The organisation on this point was a bit ad hoc, and the sound quality was very poor. Fortunately, perhaps, the format only allowed for one or two questions per speaker.

A benefit of going this way is that it’s reasonably easy to make a podcast. Unfortunately, my slide design, which works fine on standard projection equipment, and seems to have gone OK in the DVD, is very hard to read in a small movie format. Even with this poky format, 30 minutes of video turns out to be too big to upload. I’ll have to split it into parts. I’ve attached the presentation for the moment, but even that is 8.3MB..

Overall, my experience here is an indication of some of the kinds of adjustments that need to be made if videopresence is going to replace air travel on a large scale. None of them are huge in themselves, but they reflect the marginal status of this option When the problems are overcome, the advantages, such as the permanent availability and reusability of the video and podcast will be substantial, but at the moment, it’s still on the bleeding edge.

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Spin and silence

John Quiggin30 Comments

Glenn Greenwald reports that the story of secret Pentagon efforts to set up a group of supposedly independent military experts, who then ran the Administration line on network TV, detailed in the New York Times a month ago, has made the standard transition from “we don’t illegally manipulate the news” to “of course we did that, why are you still making a fuss about this old story“.

No news, or even meta-news there. What’s really striking is that, as far as I can tell, none of the TV networks implicated in the story have reported it on-air in any way, and most have made no response at all (with the exception of CNN, none responded substantively to questions from the NY Times, and I haven’t seen anything since). And with the story now in the old news category, they have clearly succeeding in keeping it from their viewers, with the exception of assiduous readers of the NYTimes or blogs. Apparently, if it isn’t on TV, it didn’t happen. And of course, if it is on TV, it probably didn’t happen either, at least not the way we get to see it.