Author: John Quiggin

ID Cards

John Quiggin16 Comments

I haven’t followed debate about ID cards very closely, so readers may be able to point to discussion of an issue that I regard as central. There’s a big difference between a card that must be produced on demand by police and other authorities, on pain of arrest, and one that is simply required on particular occasions (for example, boarding an airplane).

The first kind of card would be a big intrusion on our day-to-day liberties, but it might well be useful in fighting terrorism, dealing with illegal immigration and so forth. It would be the kind of thing that they used to have in dictatorships, where the loss of your “papers” was potentially catastrophic, though presumably in the Australian context, it would merely entail a night in the cells until you managed to verify your identity.

The second kind of card would not, as far as I can see, make any practical difference to anyone. The occasions on which it would be used are those that already require photo ID like a drivers license or passport. Of course, you’re not compelled to have these documents, but the same would seem to be true with the card. As long as you don’t want to catch any planes, or undertake similar activities, you can throw the card away and forget about it.

So, does anyone know which of these is proposed, or why my uninformed reasoning on the subject might be invalid.

Planning for pandemics

John Quiggin10 Comments

The news of deaths from bird flu in Indonesia is pretty scary. Although, as I’ve mentioned recently Indonesia has made a lot of progress in many respects, the handling of this threat so far seems to show the worst of both worlds: all the ill ffects of authoritian habits combined with the timidity of weak politicians. There have been a lot of coverups, and an unwillingness to tackle the necessary but unpopular task of slaughtering affected flocks of birds. Things seem to be improving now, but there’s a long way to go.

It seems very likely that, sooner or later, bird flu will make the jump that permits human-human transmission, and quite likely that a major flu pandemic will result. The world, including Australia, is very poorly prepared for this. One thing we could do to prepare is to adopt a national program encouraging annual flu vaccinations for everyone, instead of just for limited categories of vulnerable people.

The main benefit of this is not that the shots would provide immunity against a new and deadlier flu variant (though there might be some limited benefit of this kind) but that we would have the infrastructure, production facilities and so on to undertake a mass vaccination against such a variant if it arose. As it is, it seems likely that many countries will be scrambling to get access to an inadequate world supply of vaccines, but if Australia and other developed countries ramped up normal levels of production, it would be much easier to generate extra supplies for our neighbours.

I haven’t looked into it, but my guess is that, even without considering the possibility of a pandemic, the benefit-cost ratio from such a measure would be pretty high. Flu is very costly in economic terms, and I suspect that, if pain and suffering were thrown into the balance, a program of universal free vaccination would come out looking pretty good.

Update There’s lots of good background in Foreign Affairs. A piece by Michael Osterholm reprinted in the AFR Review section recently, is very good and stimulated my thinking on this topic.

China unpegs

John Quiggin14 Comments

China has announced a small revaluation of the renminbi yuan against the dollar, and a move to a managed float, relative to a basket of currencies (apparently this will be like the Australian system of the 1970s, a ‘crawling peg’, with the rate announced on a daily basis). Brad Setser has analysis and links.

I would have thought a revaluation of at least 10 per cent would have been a better idea, giving speculators at least some reason to think the next move might be down, but decisions like this are highly political.

One foot on the platform

John Quiggin10 Comments

One of the questions that’s puzzled me for a long time is: who would be silly enough to buy US 10-year bonds? Given the massive trade deficit, it’s obvious that the US dollar will have to depreciate a great deal against all its trading partners to restore balance. Despite recent gains, it’s already a long way off its 2002 peak against the euro, and the problem was already apparent then.

The standard answer is that foreign central banks are buying US bonds to prop up the currency and keep their exports going. Reports from the US Treasury International Capital System give some support to this idea – foreign central bank holdings of US government securities have risen sharply. But when you look at the maturity structures reported in Tables 9a and 9b of the Report on Foreign Portfolio Holdings of U.S. Securities (PDF file) something interesting emerges. The median maturity for all holdings of long-term US securities is four years, but for official holdings its only three years. Nearly 75 per cent of all foreign holdings of US securities (and these amounted to $1.3 trillion as of June 2004) are for maturities of less than five years. For private holdings, the median is five years, and 25 per cent are for more than ten years.

This is very puzzling. It looks as if the foreign central banks are keeping their options open. At least if the dollar undergoes an orderly decline, they will be able to unload without too much loss. But private investors are in deep.

If this was equity investment it would be comprehensible – maybe these are people who really have faith in the capacity of the dynamic US economy to generate big profits. But large holdings of long term bonds seem almost impossible to rationalise

Over to you.

The Creative Commons as a default rule

John Quiggin6 Comments

Reader Ben Lancini points me to this piece by John Dvorak, attacking [or rather, confessing to not seeing the point of] the Creative Commons License. This has prompted me to write a post I promised ages ago, in response to Kim Weatherall and Nicholas Gruen. I won’t recapitulate the debate, but just state my own position.

I’ve chosen the non-commercial, attribution, share-alike version of the Creative Commons License. This says that anyone can reproduce my work from the blog, with attribution and for non-commercial purposes, as long as they share it under the same conditions[1].

I’ve chosen this, not because it’s necessarily the best option in all, or even most cases, but because it’s the best default rule. Anyone who wants to use material from the blog in this way can do so without asking me. And share-alike is a good feature for a default option, because it means that re-use is similarly free under the same conditions.

But if Hollywood wants to use bits of the blog in the forthcoming hit movie Crooked Timber of Humanity, they are not confined to the CC license. They’re free to fly me to LA, and make a stupendously generous offer for the commercial rights. Similarly, if someone wanted to use the posts without attribution for some good reason, they could always approach me and ask for permission.

More generally, if someone wants to do things differently they can propose a contract with me. The optimal default rule is one that protects most rights I might want to enforce, while allowing (without special permission) most uses I’d be unlikely to object to. Public domain fails on the first count, and standard copyright on the second. I think the Creative Commons License, in the particular form I’ve chosen gets the balance just about right.

The general idea of a default value is familiar to anyone who’s done any computer programming and I imagine that if things were put to Dvorak in this way he’d see the point.

The ideas I’ve associated with default rules are commonly, but not, I think, very helpfully, discussed in terms of the supposedly ‘viral’ nature of licenses, particularly in relation to software and the Gnu General Public License. The idea of a default rule clarifies what is going on here. You can only have one default. At one time this was public domain (since it was necessary to make a specific claim for copright). Now it’s copyright, and advocates of strong IP take this as normal and natural. But if you want to use GPL or CC material with a share-alike license you have to adopt this default. From the viewpoint of people who take copyright as natural, but see CC material expanding, this is like a virus.

fn1. Nothing I do with the license affects rights of fair use (not that these are very extensive in Australia, but this may change for the better).

Some real good news

John Quiggin10 Comments

If we’re looking for good news from the Islamic world, as most of us are, can I suggest that the best place to look just now is right next door in Indonesia[1]. The Indonesian government has just signed a peace agreement with the Free Aceh Movement (GAM). There’s plenty more to be done, and such agreements have failed before, but the chances this time look better than ever, as GAM has finally abandoned its demand for independence and the central government seems willing, for the first time, to concede real autonomy.

Regardless of whether this agreement holds, Indonesia’s successes since Suharto resigned have been simply amazing. At that time the economy was in a mess, there had been decades of brutal dictatorship, the army was involved mainly in domestic repression and deeply entangled in both politics and business, East Timor was still resisting occupation, Muslims and Christians were engaged in communal fighting, encouraged by sinister interests within the state and terrorist groups like JI and Laskar Jihad operated more or less openly. The odds of coming through this without some sort of crisis, or worse, seemed slim.

In the subsequent seven years, there have been four peaceful changes of government, each of them (in my view) an improvement. The army is out of parliament, and increasingly confined to its appropriate role in national defense, Timor is an independent, and friendly, neighbour, Laskar Jihad has disbanded, and JI has been largely broken up, with many of those involved in terror crimes now facing death or lengthy terms of imprisonment. Communal fighting in places like Ambon has stopped almost completely, and even long-running struggles like that in Aceh seem to be on the brink of peaceful resolution. The economy is still problematic, but it seems to be on the mend.

Things aren’t perfect of course, and in a democratic society that fact can’t be concealed behind a mask of official propaganda as it was in the Suharto years. But if everything in the world was going as well things have gone in Indonesia lately, we wouldn’t have too much to worry about.

fn1. Mark Bahnisch points to more good news here

Hassan al-Turabi’s open thread

John Quiggin17 Comments

In a fairly standard example of thread-jacking/topic drift, my challenge to nominate disinterested scientists sceptical of the anthropogenic global warming hypothesis veered rapidly off-track, turning quickly to the shortcomings of Hassan al-Turabi (a Sudanese politician, it appears). I’m posting this as a separate thread for the discussion beginning with this comment by Michael Burgess who observed, in response to Dave Ricardo,

While I don’t know what to think on the greenhouse issue, I do find it somewhat ironic that many of those who are usually so post-modern in their outlook (there is no objective truth etc and following Thomas Kuhn this applies as much in the physical sciences as it does in the social sciences etc) suddenly get very absolutist when it suits them.

I do think that before making such a claim, MB might reasonably have searched the site using the facility provided. He would have found many references to both left-wing and right-wing varieties of postmodernism, among which this is, I think the kindest (and it’s not very kind).

Anyway, as of now, I’m going to delete any further off-topic comments and side debates in the sceptics thread, and request that any discussion of Turabi and similar be directed here.