Tim Blair points to this exercise asserting that the EU is twenty years behind the USA. As Tim subtly points out, it’s absurd to suggest that the EU today (home of Nokia and Airbus, and birthplace of Linux and the World Wide Web) is comparable to the US when Atari boxes were the state of the art. Unfortunately, Tim’s irony is lost on his commenters, who assume the report deserves to be taken seriously.

To ram the point home to his slower readers, Tim might do well to point to the fact that, in terms of output per hour, several European countries are ahead of the US. Of course, when hours worked are taken into account, the US regains the lead, but on that criterion, Britain during the Industrial Revolution was ahead of any modern country.

The real point is that productivity differences between modern economies are so small that, by selecting the right criterion, any developed country can be made to look better, or worse, than any other. The report is explicitly described by its promoters as a “wake-up call” designed to scare Europeans into adopting the policies favored by its promoters. Having seen this kind of thing going on since the 80s, when Australians were terrified with the prospect of becoming the “poor white trash of Asia”, I find such reports more soporific than alarming.

The SMH has come with a list of Australia’s top 100 public intellectuals, of whom the top 10 are (with votes from a panel of 100[1])

Robert Manne – political scientist 39
Peter Singer – philosopher 33
Germaine – Greer feminist 29
Tim Flannery – scientist 25
Noel Pearson – Aboriginal advocate 24
Inga Clendinnen – historian 23
Geoffrey Blainey – historian 22
Helen Garner – writer 21
Donald Horne civil – society 19
Michael Kirby – judge 19

Andrew Norton has some discussion of the list, and the comments are also interesting. I just thought I’d repeat an observation I made in relation to Posner’s book on the subject. Of the top 10, only Singer and Greer (both expats) would have any significant recognition outside Australia.

This isn’t because our intellectuals can’t cut it on the world stage but because, in this respect, there is no world stage. As I observed at the time, Posner’s top 10 US public intellectuals are marginal figures as far as most Australians are concerned (unless they are famous for other reasons). The Prospect list for the UK (not easily available as far as I can tell, and I’ve misplaced my password) had more recognisable names (including our Germs at #2), but few who would fit naturally into a ‘public intellectual’ category. Each country, it seems wants to hear its own policy problems discussed in its own accent.

fn1. I was included in the panel, and also among the also-rans in the list of 100. I voted for three people who made it into the top 10 (Manne, Kirby and Garner) and Raymond Gaita who was ranked #11, as well as a couple of fellow-economists.

Although I read quite a bit, one thing I always have difficulty with is suggesting good readings on topics, or knowing who originally proposed some idea. I think this has something to do with the fact that I tend to flit from one topic to another, picking up ideas but rarely doing a proper review of the literature. In any case, I’ve been asked to suggest some readings and so I thought I’d pass this request on to any readers who can help me[1]. What I’d like is either an original/early source for various concepts or a more recent summary discussion, ideally one accessible to an intelligent general reader. Anyone with useful suggestions gets an acknowledgement in my forthcoming Oxford Handbook chapter which is, literally, priceless.

Here’s my list of terms

* Crowding out
* Twin deficits hypothesis
* Shadow price
* Golden rule (for budgeting in UK and elsewhere)
* Globalisation
* Crony capitalism

Thanks in advance for any help

fn1. There is a piece of blog jargon for what I’m doing here, but I refuse to even mention it. It’s bad enough that we’re lumbered with “blog”.

It’s too early to call an end to the great low-interest bond bubble. But interest rates on US 10-year Treasury notes have risen sharply in the leadup to a forthcoming Treasury auction. It’s hard to see how the US can restore balance on the trade account (as it must) without a significant increase in interest rates as well as a depreciation. And if US rates rise, there’s likely to be a flow on from Australia.

However, the Asian central banks that have been keeping both us and the Americans afloat still have plenty of buying power, and this could easily turn out to be another false alarm.

Over the fold, some notes I prepared in relation to issues raised by this case regarding the ‘use it or lose it’ approach to annual budget appropriations. Maybe of interest to hardcore budget policy wonks. Comments and corrections appreciated.
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In the weekend edition of the Fin (reproduced here), Justin Wolfers writes about a betting market on the Iraqi election turnout, run by the Irish betting exchange Tradesports. The bet turned on whether turnout would exceed 8 million and was roughly even money before voting began. The price of the contract rose sharply on early reports of turnouts over 70 per cent, then fell back again when to around even money when it became clear these reports had little basis. The final official turnout was about 8.4 million.

Attentive readers will recall that something very similar happened in the US election when early exit polls favored Kerry. Modifying an old aphorism to say that “two striking observations constitute a stylised fact”, I think we can now say pretty safely that political betting markets display the wisdom of crowds who read blogs.
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If you’re in WA, you’ve got a little more than 24 hours left in which to make up your mind (if my posts haven’t convinced you already). Nic White has comprehensive coverage of the issues. As always, Rob Corr is worth a read as well.

After a longer break than I’d planned, I’m back for the second and final instalment of my series on the efficient markets hypothesis and its implications for Social Security reform and other issues. The first instalment is here.

Last time, I pointed out that, under the strong assumptions needed for the efficient markets hypothesis to hold, the diversion of social security funds to personal accounts makes no difference at all, since everyone can already choose their optimal portfolio, borrowing if necessary to finance equity investments. A more realistic version with borrowing constraints or high borrowing costs implies that either private accounts or diversification of the holdings of the Social Security Fund can be beneficial, and also that a range of other government interventions will be beneficial. (See also Matt Yglesias

In this post I want to look at the case I think is actually relevant, namely, where the efficient markets hypothesis is violated in so many ways as to be a poor guide to economic policy of any kind.
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