The markets for finals tickets provide pretty good evidence on which football code is going to win out in Australia.
Ticket scalping is rife for the AFL Grand Final, despite a Victorian government crackdown. Meanwhile, in the NRL finals, 10 000 tickets have been given away free.
This report, saying that a return of 1500 Gigalitres to the Murray is needed to achieve moderate improvements in ecological conditions is pretty much what was expected. As I argued here, such a reduction in water use is feasible, but expensive and politically tricky. Given the way the process has been set up 1500 GL is likely to be an upper bound for the return of water to the Murray, at least for the next 10 years, the period for which NSW licenses will be allocated.
I can’t say I’m eager to say anything positive about Kim Beazley after the fiasco of 2001, but I have to agree with what he has to say here and with the unstated message that it’s time to dump Simon Crean as Labor leader. Beazley attacks the last round of tax cuts, endorsed by Crean, and Crean’s promise not to increase the Medicare levy. (I haven’t been able to confirm the existence of this promise, but it’s implied in various press reports)
Having said that, I don’t retract my endorsement of the Caucus decision to reject Beazley’s leadership challenge. Beazley had the chance to put his thoughts into practice in 2001 and he squibbed it. Not only did he not propose an increase in the Medicare levy, he even vetoed any change to the absurd tax subsidy to private health insurance.
After beating off Beazley’s challenge, Crean needed to get off the fence as far as tax and public spending is concerned but he’s failed to do so. As a result, he remains a purely negative figure as far as the Australian public is concerned. In effect, he’s reproduced Beazley’s small target strategy.
So I’ll modify the ABC (Anybody But Crean) view, and say that Labor should go for ABCEB (Anybody But Crean, Except Beazley).
My column in today’s Fin (Subscription required) is about the (putative) bubble in housing prices. After noting that virtually all economists think there is a bubble I observe
There is a paradox here. In a country with a longstanding suspicion of market forces, economists have normally been among the few defenders of the market. Even relative sceptics put more weight than the average Australian on seeking rational economic explanations of market outcomes. Yet in the case of the housing boom, ordinary Australians have shown a faith in the market that would put the most devout Chicago economist to shame….
A bad end to the current boom would mark the failure of the separation between monetary policy and prudential regulation introduced following the report of the Wallis Committee. The whole program of financial deregulation would be called into question.
The implications would be even more striking if the current putative bubble turned out to reflect a sustainable increase in underlying values. If the doubling of house prices over a few years is not a bubble, then it is clearly impossible for economists to recognise one when it is in progress. It would be hard to imagine a more triumphant vindication of the efficient markets hypothesis than this.
If anyone has a plausible story as to how the rise in asset prices is sustainable, I’m eager to hear it. Sustainable in this context means that the value of the flow of services from housing should equal the rental cost implied by current prices and reasonable real interest rates.
Leafing idly through Russell’s History of Western Philosophy, I came across this interesting quote (p 683 in the Unwin paperback edition)
Kant gives as an illustration of the categorical imperative that it is wrong to borrow money, because if we all try to do so there would be no money left to borrow
Russell seems to see nothing wrong with this, but it is obvious that the same argument applies to trade of any kind. If I engage in trade, I must be a net buyer of something, say bread. But if everyone tried to be a net buyer of bread, there would be none left. Hence the categorical imperative requires everyone to be self-sufficient.
I assume this constitutes a reductio ad absurdam for Kant’s argument against borrowing. But is it possible to reject the argument against borrowing while accepting the categorical imperative from which it is derived? Any Kantians among the readers of this blog are invited to set me straight on this point.
Update In the comments thread, James Farrell points out that, contrary to the quote from Russell, Kant was talking about borrowing money without the intention of repaying it.
This piece in the NYT reports that Warren Buffett is making a countercyclical move into manufactured housing. Until recently, at least, this form of housing (pejoratively referred to as ‘trailers’) has been very significant in the US – around 20 per cent of all new houses, and up to 50 per cent in rural areas.
This raises a number of questions. First, why there is no comparable development in Australia, where manufactured units are typically used only as holiday accommodation? Is it a matter of building regulations, and if so should we be changing these regulations to bring down housing costs? Or, as the NYT story implies, does this kind of housing degenerate rapidly towards slum status. The rapid decline in the manufactured housing market during the boom of the late 90s seems to support the view that this is a last-resort option.
There’s also a bigger question which I’ve been puzzling over for some time. Real incomes for the bottom 40 per cent or so of US households haven’t risen since the 1970s. At the same time, ownership of items like TVs and washing machines has expanded significantly. That’s not surprising, since the relative price of these items has dropped. But that implies that other relative prices have risen, and housing is an obvious candidate. Has housing quality declined for low-income Americans? If consumption of all items has increased, while income has been constant, the implication is obviously that savings have declined, presumably because of the availability of new forms of credit, and the story also hints at this.
I’d be very interested in any comments and grateful if anyone has useful references on the points I’ve raised.
I’m on the road for a couple of weeks, first on a short visit to the Snowy Mountains, and then going to the Economists’ conference in Canberra. So postings may be infrequent and erratic (that is, more erratic than usual). I hope readers will fill the gap with their views on any topic (as always, civilised discussion and no coarse language please).
Another great night last night, with the stirring tune of La Marseillaise announcing a great win for the Lions. I’m sure all right-thinking people, even Swans supporters, will join me in hoping for victory over Collingwood next week.
In the comments thread for my post on Lomborg, I’ve been presented yet again with the widely-reproduced quotation in which Stephen Schneider is supposed to have advocated scientific dishonesty in the interests of environmentalism. In fact, the history of this quote proves exactly the opposite of the point intended by those who use it.
The original quote, was in an interview by Discover Magazine in 1989, where Schneider discussed the problems of dealing with the media. (I’ve looked in vain for the full interview, so I’ll make my usual appeal for help on this).
The relevant paragraph is
On the one hand, as scientists we are ethically bound to the scientific method, in effect promising to tell the truth, the whole truth, and nothing but – which means that we must include all the doubts, the caveats, the ifs, ands, and buts. On the other hand, we are not just scientists but human beings as well. And like most people we’d like to see the world a better place, which in this context translates into our working to reduce the risk of potentially disastrous climatic change. To do that we need to get some broadbased support, to capture the public’s imagination. That, of course, entails getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have. This ‘double ethical bind’ we frequently find ourselves in cannot be solved by any formula. Each of us has to decide what the right balance is between being effective and being honest. I hope that means being both.
The first public use of this quote against Simon was by the late Julian Simon (of whom Lomborg is a big fan). Here’s the version he printed, in the APS News, March 1996
Scientist should consider stretching the truth to get some broad base support, to capture the public’s imagination. That, of course, entails getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention about any doubts we might have… Each of us has to decide what the right balance is between being effective and being honest. (emphasis added)
The section in bold is a complete fabrication and the remainder of the quote has been distorted by omission of key sentences, notably the final one. Schneider demanded and received the right to print a correction.
One might think that having been caught out in this fashion, Simon and his friends would either avoid using this quote or be careful to get it right. Not a bit of it. Both Simon and his numerous followers have continued to use distorted versions of this quote. (I should note that Lomborg used a short version but was careful enough to give the full quote in a footnote). Here for example is John Daly
To capture the public imagination, we have to offer up some scary scenarios, make simplified dramatic statements and little mention of any doubts one might have. Each of us has to decide the right balance between being effective, and being honest.
Note that critical sentences have been omitted or run together with no indication of what has been done.
What’s really interesting about this episode is that Schneider’s opponents are committing exactly the offence of which they accuse him. They are convinced he is a dangerous scaremonger who needs to be exposed in the interest of “making the world a better place”. Unfortunately, their best piece of evidence has a lot of “ifs, ands and buts”. So rather than “tell the truth, the whole truth and nothing but”, they extract the “simplified dramatic statements” and serve them up to “capture the public imagination”. Indeed, “each of us has to decide what the right balance is between being effective and being honest”, and for not of all us does it mean being both.
UpdateAs regards my own reaction to Schneider’s views, I’ll restate what I said the first time I discussed this. “Iâm not a huge fan of Schneider – I find him overly prone to alarmism, and even in the corrected version I think this comes through. But that doesnât justify reproducing quotations from obviously hostile sources without the simple precaution of a Google check.”
Not long after the fall of Baghdad, I wrote a piece for the Fin pointing out that the
The total budget of the USAID, the main US agency for development and humanitarian assistance is $8.7 billion for the coming year. That is, the money already spent on the Iraq war could have doubled USAID’s budget for the next five years.
It seems certain, however, that the war will herald a sustained increase in military expenditure of at least $US100 billion per year. A more reasonable comparison, therefore, is the ambitious proposal of the Commission on Macroeconomics and Health, led by Harvard Economist Jeffrey Sachs. The Commission aimed to achieve, for all a poor countries, a two-thirds reduction of 1990 child mortality levels, a three-fourths reduction of 1990 maternal mortality ratios and an end to the rising prevalence of major diseases, especially HIV/AIDS.
As the Commission pointed out, in addition to the humanitarian benefits of saving as many as 8 million lives per year, reductions in mortality are directly correlated with a reduced frequency of military coups and state collapse. These provide the breeding ground for terrorism and dictatorship and ultimately lead, in many cases, lead to US military intervention. The estimated cost for the Commission’s seemingly-utopian program over the next decade is estimated at between $US 50 billion and $US 100 billion per year.
Now, via Tim Dunlop, there’s a piece fromÊSachs himself saying
The cruelest twist, though, is that the all of the talk about US and UK compassion is accompanied by indifference where compassion is truly needed. Nine months ago, Bush spoke movingly about the tragedy of millions of people with AIDS turned away from African hospitals, because they were too poor to afford the drugs. During those nine months another two million or so Africans died, and the United States accomplished absolutely nothing to change the situation. The president’s much vaunted $15 billion five-year program for AIDS is on paper only.
This year Bush asked for only $200 million for the Global Fund to Fight AIDS, TB, and Malaria, a sum equal to 1.5 days of spending on the US occupying forces in Iraq. The US annual contributions to fight malaria are less than the costs of one day’s occupation, and as a result, 3 million Africans will die needlessly from that preventable and treatable disease.
But who is talking about $87 billion for the 30 million Africans dying from the effects of HIV/AIDS, or the children dying of malaria, or the 15 million AIDS orphans, or the dispossessed of Liberia and Sierra Leone, or the impoverished children of America without medical insurance?
As Atrios notes in the comments thread, Sachs has certainly shown a side of his character no one would have suspected when he was prescribing shock therapy for Russia.
