Category: Economics – General

Awards night

John Quiggin13 Comments

We academics love nothing better than to give each other awards. The Australian Conference of Economists is being held in Canberra this week, and the big social event was the conference dinner on Monday night, where blogger-economists were (as usual) well represented when the gongs were handed out. The “Best Young Economist” award (it says something about the pace of academic life that “Young” = “under 40”) previously won by econbloggers Joshua Gans and Paul Frijters, went this time to Andrew Leigh, who left ANU last year to become MP for Fraser in the ACT. Academia’s loss will be the nation’s gain if Andrew gets to exert some influence over public policy.

I also scored, being chosen for the Distinguished Fellow Award. Looking at the list of previous recipients, it’s a big honour to join them and I’m very grateful to my colleagues in the profession, especially since I’ve argued pretty vigorously with most of them at one time or another. The economics profession has its problems (as I argued in Zombie Economics, we haven’t been too good at learning the lessons of the Global Financial Crisis), but all things considered, it has been a force for good in Australian public policy debates.

Bad news from the Northern hemisphere

John Quiggin12 Comments

Another really bad employment report from the US Bureau of Labor Statistics. Employment has been essentially static for the last couple of months, and most of the ground gained in 2010 has been lost. Unsurprisingly, public sector job cuts are leading the way downwards, as the stimulus fades into memory and austerity proceeds at the state and local level. In this context, it’s hard to know what outcome of the current negotiations over the debt limit would be worse: unconditional surrender to Republican demands for yet more spending cuts, or a failure to pass any legislation, with consequences that remain unclear[1].It’s hard to see US unemployment falling substantially any time soon. The decline in the participation rate (it’s fallen by about 3 percentage points of the population, equal to about 5 per cent of the labor force) means that the standard measure seriously understates the severity of the problem. If employment growth were to resume, lots of people would re-enter the labor market, so that unemployment would not decline fast.

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Reasons to be cheerful, Part 3: Energy efficiency

John Quiggin53 Comments

There are plenty of reasons to be gloomy about the prospects of stabilising the global climate, but there are also some promising developments, so I’ve started a series on this topic. Part 1 on peak gasoline herePart 2 on solar PV here

This post is about energy efficiency, which is often neglected, but is likely to be the biggest single source of emissions reductions over the next few decades. I’m going to define efficiency fairly narrowly, to refer to technologies that deliver essentially the same services using less energy than those they replace: so, for example, I’m including more efficient airconditioners, but not “smart” systems that cut off when demand is high.

The shorter version is

1. With existing technologies or straightforward extensions, it’s possible to double energy efficiency (reduce energy use per unit of energy services by 50 per cent) at relatively low cost and with marginal changes in performance.
2. With rising carbon prices over time, it’s likely that further improvements can be made in many areas

3. Concerns about possible rebound effects (aka the Jevons paradox) are misplaced

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A quick post for a long break

John Quiggin25 Comments

When my wife sent me the link, this ABC story was headlined Treasury head says Australians must work harder. It’s now been changed to “Australians must increase productivity: Treasury head”, which sounds a bit more reasonable, but I think is still a somewhat problematic.

I’ll try to discuss this in detail later, but for now I just want to push a point I’ve been making for a long time, which came up in comments recently. If governments want a simple reform that would improve our economic performance (though maybe not the standard measures of that performance), one of the best things they could do is legislate for six weeks annual leave as a standard employment condition. We have parental leave for parents of new babies, but there’s an equally big problem for parents of school age children trying to deal with the mismatch between school holidays (six weeks over summer, as well as term breaks) and the measly four weeks they are allowed, unchanged since the Whitlam government. And the rest of us could do with more of a break as well.

An extra week’s leave is like a 2 per cent wage increase. If annual leave were increased in a couple of stages to six weeks a year, it would only be necessary to find productivity increases or other offsets of 2 per cent, and, as Martin Parkinson implies, that shouldn’t be too hard.

Marxism without revolution: Capital

John Quiggin52 Comments

I’ve been writing series of posts examining the question – what is left of Marxism, as a way to understand the world, and as a way to change it, once it is accepted that capitalism is not going to be overthrown by a working class revolution. The first was about class and the second about crisis. Now for the final instalment: capital.

By the way, the first post got translated into Spanish, here. It’s one of the things that I still find stunning about the Internet that things like this can happen.
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Last day of the financial year

John Quiggin4 Comments

I’ve been travelling and going to meetings, hence slow posting. Light posting for a while to come, but I thought I’d throw in a last minute reminder that there’s still a few hours left in which to support the Queensland Cancer Council and claim a tax deduction in the process.

Marxism without revolution: Crisis

John Quiggin39 Comments

I’m writing series of posts examining the question – what is left of Marxism, as a way to understand the world, and as a way to change it, once it is accepted that capitalism is not going to be overthrown by a working class revolution. Last time I talked about class. This post is about crisis. As before, the shorter JQ is “there are lots of valuable insights, but there’s a high risk of political paralysis.”

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Reasons to be cheerful, part 2

John Quiggin77 Comments

There are plenty of reasons to be gloomy about the prospects of stabilising the global climate, but there are also some promising developments, so I’ve started a series on this topic.

I’ve been meaning to write this post for a while, but Stephen Lacey at Grist (via David Spratt on Twitter) has done much of the job for me, and better than I could have. The crucial point is that the cost of solar photovoltaic electricity has fallen dramatically and is almost certain to fall further. In particular reaching the point where it is the cheapest large-scale alternative to carbon-fuelled electricity generation, and competitive (at reasonable carbon prices and in favorable locations) with new coal-fired power.

This makes for some fundamental changes in the debate over climate change and mitigation, even as it reaffirms the central point that advocates of mitigation have made all along, namely that, with an appropriate policy response, the costs of drastic reductions in carbon emissions will be modest in relation to national or global income.

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When will US debt be downgraded? By how much?

John Quiggin20 Comments

The once unthinkable prospect that US government debt might lose its AAA rating has suddenly become a real possibility. In fact, it now seems about as likely as not. The problem is not so much “can’t pay” but “won’t pay”. The US, like quite a few other countries, has some fairly serious fiscal imbalances, but they aren’t pressing in the short run, and there is plenty of capacity to raise additional revenue or cut spending so as to stabilise the ratio of debt to GDP at a sustainable level.

The problem is that even with a stable debt/GDP ratio the total value of outstanding debt keeps growing and the US Congress requires periodic votes to approve this. They are usually the occasion for some grandstanding, but this time the Republican majority of the House of Representatives is seriously threatening a refusal, unless the Democrats agree to massive (and still unspecified) spending cuts. The due date for raising the debt ceiling passed a while ago, but an actual default is being staved off by some sharp accounting tricks, which will apparently work until 2 August. The other day, to prove they are serious, the Repubs introduced a motion for an increase in the debt ceiling, with the express purpose of voting unanimously against it, which they did.

At this point, loud alarm bells have started ringing for the big ratings agencies, Standard&Poors and Moodys. They will have to decide, well before August, whether to downgrade US government debt and if so by how much.
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