Only a tiny minority of American academics are Republicans, a fact that is a continuing source of angst for much of the political right, as well as quite a few centrists. It’s generally assumed that this fact requires some explanation specific to the way in which universities work. The implicit assumption is that the group of those qualified and willing to take up academic jobs is roughly representative of the US population, and therefore contains roughly equal numbers of Democrats and Republicans. To state that submission is to see immediately what’s wrong with it. As a group, academics are obviously not typical of the US population. They have much more education and significantly higher incomes, though not as high as those of highly educated Americans in general. We know that these two characteristics work in opposite directions politically. Other things equal, more income is positively associated with Republican voting while more education is associated with lower support. So, a proper test of the idea that there is something special about academic voting patterns would begin with a multiple regression incorporating income and education as explanatory variables, then see if a dummy variable for academic employment was (statistically and quantitatively) different from zero.

But this is a blog post, so I’m not going to bother with all that hard work. Rather, I’ll point to this New York times article about the voting patterns of doctors. It includes a bivariate regression of voting patterns on income, with specialisations marked as observations It includes a bivariate regression of voting patterns on income for a sample of 30 000 doctors. This graph shows the resulting regression and plots the mean values for different specializations

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That’s the title of the FH Gruen lecture I’ll be presenting at ANU on Tuesday 4 October.

I’ll be talking first about the end of the era of reform that began in the early 1980s, and then about the information economy and a policy agenda for the 21st century.
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A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

Over at Club Troppo, Nicholas Gruen has a thoughtful piece on the role of competition and choice in human services. He’s responding to the less-than-thoughtful boosterism of the Productivity Commission and the Harper Review on this topic. It’s well worth reading. Before doing so, though it’s important to take a look at the mounting evidence that for-profit provision of human services is almost invariably disastrous.

I’ll write a longer piece on this soon, I hope. But here are three recent examples from the United States, which has led the way in for-profit human services, and is now beginning to pull back

Shonky for-profit educator ITT closes down without notice, right at the beginning of a new semester.

Following a damning report, the US Department of Justice announces it will no longer use private prisons.

Charter schools (some openly for-profit, many others run as businesses) have been failing at a starting rate.

Over the fold, some concluding comments from a chapter I’ve written about the rise and decline of neoliberalism. I’m drawing on the “three-party system” analysis I’ve put forward before, in which neoliberalism (in both ‘hard’ and ‘soft’ forms) is increasingly breaking down under pressure from tribalists on the right, and from an amorphous, but still resurgent left.

This is just a snippet, which I hope will evolve into a more extensive discussion of the policies and political strategies the left should adopt in response to the breakdown of the neoliberal order.

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Writing in the AFR, economics correspondent Jacob Greber begins his discussion of the Xenophon proposal with the assessment “What a stupid idea”. Given that he is dismissing proposals with wide support in the economics profession (including economists as different as me and Warwick McKibbin in the Australian context) one would expect that he had a knockdown argument to present. In fact, he offers a valid, but minor nitpick and a string of confusions and errors.

The nitpick relates to the distinction between nominal GDP growth, as reported by ABS, and the way the term is commonly used in the context of monetary policy discussion, to refer to the sum of the inflation rate and the real rate of GDP growth. Inflation is typically measured by the CPI. However, the statistical nominal GDP is associated with a different inflation measure, the GDP deflator, which is heavily influenced by export prices. So, a policy that targeted the statistical measure would imply trying to reduce growth when export prices boomed, and increase growth when they fell. In most times and places, the difference is too trivial to matter, but in the context of the recent minerals boom in Australia, it was substantial. So, I’d suggest we really want to use the phrase “nominal growth targeting” with nominal growth spelt out as the sum of CPI inflation and real GDP growth.

After that valid point, we have a mess of confusions and contradictions. First, Greber objects to Xenophon’s proposal on the basis that it would push up housing prices. If this is to be taken seriously, it means that the RBA should be targeting asset prices as well as CPI inflation. While there’s a good case to be made here (I discussed the issues in a paper with Stephen Bell quite a while back) it contradicts the central claim that everything is fine with inflation rate targeting.

Making the contradictions even worse, Greber notes that inflation has been well below the target range for some time. That is, under an inflation targeting system, the Reserve Bank should be cutting rates. But Greber appears to oppose this, while conceding that “To be fair, there is a legitimate debate to be had about how far and for how long inflation should range outside the current band”. In this context, the question of a shift to nominal growth targeting is a red herring. Real growth (about 2 per cent) is only marginally below the likely long term trend (2.5 per cent), so a monetary policy that targeted both growth and inflation would, if anything, be a little less expansionary than a strict inflation target

The obvious problem being ducked here is that, if the RBA sticks to inflation targeting, it may well have to cut interest rates all the way to zero, as most other central banks have already done. So, the temptation is to accept a long period when we are below the target rate. But that, in effect, is switching from a 2-3 per cent target to a 0-3 target, something for which no real justification has been given.

Like Bernard Keane and Glenn Dyer to whom I responded previously, Greber makes much of Australia’s special circumstances, treating nominal GDP targeting as (to quote Keane and Dyer) as “a foreign solution”. This piece of economic exceptionalism is surprising coming from a haven of orthodoxy like the AFR, and even more surprising in the context of monetary policy. Inflation targeting, central bank contracts and 25-basis point interest rate adjustments aren’t Australian inventions. We adopted this approach at the same time as the rest of the world and for the same reasons. We’ve had much better outcomes as Greber notes, but there’s nothing to suggest that inflation targeting is the main reason.

On the contrary, inflation targeting has evidently failed nearly everywhere in the developed world, in at least three ways
* it has not kept inflation within the target range
* interest rates have been driven to zero or below, so that “emergency measures” like reliance on open market operations now appear to be permanent fixtures
* it has not delivered on the promise that targeting inflation would also deliver stable GDP growth

The first of these problems is already evident in Australia, and the second appears imminent. We should think twice before saying that, since nothing has gone badly wrong so far, we should stick with our existing policy framework.

Greg Jericho in The Guardian has some similar thoughts.

I’ve been invited to give a talk on the topic of challenges posed by an ageing population. This issue has been around ever since I can remember and, in a literal sense, it’s one I am pretty concerned about. Throughout my life I have, like the rest of the population, been aging at a rate of one year per year, and this poses plenty of challenges. On the other hand, as someone said recently, getting older may have its unpleasant aspects but it’s a lot better than the alternative.

Of course, when pundits talk about an ageing population, they do not mean that we are individually getting older but that we are not dying as soon as we used to. The result of this (and subject to demographic fluctuations) is that the average age of the population is increasing.

While I was a little snarky in my opening para, this is, in fact the correct way to think about things. We are, mostly, living longer and this creates a bunch of individual and social opportunities, choices and challenges. The two big ones are:

* How should the extra years of life be allocated between additional education, additional years of work (including household work most notably childraising) and additional years of retirement?

* What are the implications for our personal health and for the health care system.

I’ve looked at the first of these questions on quite a few occasions and concluded that the problems, if any, relate to the way the labour market works (or rather fails to work) for older worker

On the second, the operating assumption in much of the discussion seems to be that people will live longer, but that their health, at any given age, will be much the same as that of previous cohorts. This is obviously nonsensical. The reason the previous cohorts died earlier (on average) is that their health was worse. If people live longer, this will mostly mean more years of healthy life.

One possible exception I’ve been concerned about is dementia caused by Alzheimer’s and related diseases. Perhaps that’s inevitable deterioration rather than a product of ill health. But the news here is good. Age-specific rates of Alzheimers have been declining for the past 25 years as general health improves.

One remaining issue is that people with severe dementia are surviving longer than they used to, as a result of improved care, and this is socially costly. However, this is a once-off shift that has already happened, so the extra cost has been incurred already. Increases in lifespans associated with improvements in general health, including reductions in the age-specific frequency of dementia should not have any additional cost.

This is, in fact, an illustration of a more general point. The increase in health care expenditure we observe is the result of the development of new, and costly treatments. Unsurprisingly people want these treatments and are willing to pay for them, either privately or through the public health system. To regard this as a problem is like complaining about the availability of flat-screen TVs on the basis that buying them will increase our entertainment costs.

I have a new article in The Conversation, riffing off ACCC chairman Rod Sims’ recent denunciation of privatisation policy in Australia. The Conversation’s ran with the headline “People have lost faith in privatisation and it’s easy to see why“. To be slightly more precise, when privatisation started in the 1980s, most people had an open mind on the issue – there was plenty of dissatisfaction with public enterprises like Telecom Australia. As they experienced privatisation, they became more hostile and, eventually, implacably so, even as the political class remained convinced of the merits of the idea. The successive defeats of the Bligh (Labor) and Newman (LNP) governments in Queensland illustrate the point. The rare cases when privatising governments have been elected or re-elected usually arise only when the Opposition is utterly unelectable (Baird in NSW for example).

Part of Sims speech and my article referred to the continuing disaster of for-profit vocational education. Right on cue, the day the piece came out, the Victorian government terminated the contracts of another 18 shonky providers (though they are still registered with the national regulator ASQA), with the students being directed to the public TAFE system.

Billions of dollars are being wasted and thousands of lives ruined by this continuing policy disaster. Yet, it seems, no one in authority is willing to admit that the whole idea of publicly funded for-profit education is a disaster, guaranteed to generate scams and rorts on an industrial scale. The whole system needs to be shut down and replaced by a fully public TAFE system. The minority of for-profit providers who are doing a decent job could be hired as subcontractors to teach TAFE courses.

It appears that, having crashed last night with only about 10 per cent of households having submitted data, the Census website is now off the air indefinitely. It’s hard for me to see how this exercise can be salvaged. Almost certainly, lots of people who tried and failed to fill in their forms last night will be unwilling to do so again, especially in the absence of any coherent explanation for the failure. It’s looking increasingly as if the only option will be to give up and try again in five years time. Coincidentally or not, a ten-yearly census was exactly what the leadership of ABS was suggesting a couple of years ago.

This fiasco seems to have “reform” written all over it, from the new entrepreneurial leadership of ABS to the contracting out of vital functions to the benign/malign neglect displayed by the Abbott-Turnbull government. Peter Martin is very good on this, as is Chris Graham at New Matilda.