As far as I can see, the Right seems to be winning the scandal wars just at the moment. I didn’t follow the Plame-Wilson scandal the first time around, so I can’t really tell how damaging or otherwise the latest claims from US and British intelligence may be to Wilson’s credibility. Similarly, although it seems clear that Sandy Berger has made a fool of himself , I have no idea what this means for anything that might possibly matter. Finally, it appears that last Thanksgiving in Iraq, Bush posed not with a fake turkey, but with a display turkey, never intended for carving but to adorn the buffet line. I’m glad that’s been cleared up.

All this confirms me in the view that the kind of “smoking gun” or “what did X know and when did s/he know it” scandal that has dominated politics since Watergate is a waste of everybody’s time. The real scandals are those that are, for the most part, on the public record.
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I managed to prove Milton Friedman[1] right in fine style today. First I gave a talk on the FTA to about 700 high school students, which was supposed to sell them on the idea of studying economics at UQ. In return (and in addition to a small gift from the Queensland Economics Teachers Association) I got an invitation to lunch which I declined so I could lunch with the seminar speaker in my other department, Political Science and International Relations (it was Joe Camilleri, talking on Islam and the West). Arriving early, I ordered straight away to beat the rush, only to discover that, had I waited I would have had my lunch paid for out of some fund or another.

So, if there are any free lunches about, I wasn’t getting them today. Instead, I paid three times (giving the talk, turning up at the seminar and handing over the cash) and only got fed once. Fortunately, I love giving talks and (given a good speaker) like attending seminars.

fn1. Although Friedman and Robert Heinlein usually share the credit for this acronym, Tyler Cowen points out that it should actually go to Alvin Hansen, America’s most prominent early advocate of Keynesianism, and someone whom the average person with a TANSTAAFL bumper sticker might be surprised to find they agreed.

There’s a cottage industry within economics involving the production of historical arguments giving rational[1] explanations of seemingly irrational historical episodes, of which the most famous is probably the Dutch tulip boom/mania. This Slate article refers to the most recent example, a complex argument regarding changes in contract rules which seems plausible, but directly contradicts other explanations I’ve seen.

Once opened, questions like this are rarely closed. Still, articles of this kind seem a lot less interesting in 2004 than they did in, say, 1994. In 1994, the efficient markets hypothesis (the belief that asset markets invariably produce the best possible estimate of asset value based on all available information) was an open question, and the standard account of the Dutch tulip mania was evidence against it. In 2004, the falsity of the efficient markets hypothesis is clear to anyone open to being convinced by empirical evidence.
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A couple of readers have written to me suggesting it would be a good time to post about poverty and income inequality. First, I’ve been alerted to this story by Miranda Devine saying that the tragic house fire in Sydney a couple of days happened because the family couldn’t afford blankets. It’s often been asserted that poverty is an out-of-date concept, but there is still plenty of absolute deprivation in modern societies. There’s some evidence onhunger in the US here. Although I don’t have the data handy, the proportion of the population living below the US poverty line (based on a PPP conversion) is actually slightly higher in Australia than in the US – much higher in both countries than in most developed countries. Of course the biggest problems are those of indigenous Australians (from Devine’s report, this includes the family in the Sydney tragedy) but there’s nothing to be complacent about more generally. And there’s no justification for looking only within Australia. We can ignore poverty in the world as a whole if we choose, but that doesn’t mean the world will choose to ignore us.
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For those of you who like end-of-financial year bargains, here’s one that’s hard to beat. The Australian government has a scheme under which it matches donations to certain aid projects on a $3 for $1 basis[1].So if you give $500, the matching funds can bring the grant up to $2000 which is enough to buy books for an entire school in a poor country. In addition, the donations themselves are tax deductible, so if you’re one of those groaning under our top marginal tax rate, the effective cost is only $250.

I got the info on this from PLAN, but a lot of other organisations have access to the same scheme. In addition to PLAN, I’ve always found Oxfam/CAA to be pretty impressive, but there is a wide range of worthwhile options.

I found this info on the Ausaid website. In particular, if all the funds allocated to this program aren’t spent by June 30, they’ll go back to consolidated revenue. So if, like me, you think that aid to the world’s poor ought to have a higher priority in the budget, you can get a lot of effective leverage from this program. I assume the program will continue next year, and I don’t know what would happen if an increase in donations used up the budget allocation early in the year, but it couldn’t hurt to try. Maybe the government would be shamed into allocating more money.

fn1. There’s an “up to” in there, which always rings alarm bells when you’re looking at bargains, but it does appear that the full 3:1 amount is available in most cases.

Via Eugene Volokh, I came to this Boston Globe piece by Jeff Jacoby, who complains that the term “partial birth abortion”, when used in news stories, is normally surrounded by scare quotes, with the explanation that this term is used by opponents of abortion, but disputed by supporters. Jacoby complains about liberal bias here and says, among other thing “when reporting on the same-sex marriage controversy, they should observe that “what critics call ‘homophobia’ — a term promoted by gay and lesbian activists — is not recognized by medical authorities”

As far as I can recall, I’ve never seen the word “homophobia” used in a news story in a major newspaper, other than in quotes, usually direct, but occasionally indirect (“activist X is concerned about homophobia”) Certainly I’ve never seen it used as if it referred to a recognised medical condition analogous to, say, claustrophobia. I looked in Google News and the recent uses I could find were all either in direct or indirect quotes, opinion pieces (including reprints of Jacoby!) or in publications such as Gay Times and Alternet, which don’t claim to be unbiased. Can anyone point to examples that would support Jacoby?
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In today’s Fin (subscription required), Sinclair Davidson, author of a recent Centre for Independent Studies monograph on income tax, restates the hypothesis[1] , most famously associated with Arthur Laffer, that governments could reduce revenue by raising tax rates. He claims that his own calculations have revealed that revenue would be maximized with a marginal tax rate of 35 per cent.

Does the CIS endorse this claim? I don’t recall seeing it in the monograph. But the article refers to Davidson as the author of the CIS monograph, and this piece is associated with a broader campaign by the CIS on this issue, which has included a number of policy monographs and opinion pieces, including a recent attack on me by Peter Saunders. In the absence of some specific disclaimer, I think it’s reasonable to take this piece as part of the CIS campaign[2].

I commented previously that the Davidson monograph represented an alarming lapse in quality control on the part of the CIS, but I’m now coming to think that the problem may be more systemic.

fn1. It is common to refer to the Laffer curve, but the idea behind the curve is obvious, and had been observed by many writers before Laffer. Laffer’s justified claim to fame is the assertion that the US in the early 1980s was on the declining section of the curve. This was one of the arguments supporting the Reagan tax cut. Of course, revenue fell after the Reagan tax cut and Reagan partially reversed it.

fn2. Of course the CIS doesn’t have an official set of policy positions. But it seems reasonable to speak of a CIS viewpoint and to regard Davidson as being representative of that viewpoint as regards tax policy.

There’s been an interesting discussion going on around Ozplogistan about increasing public support for high levels of taxation and public expenditure, and the reasons for this increase. But reading a new CIS report by Sinclair Davidson, I’ve discovered, to my surprise, that it’s all my fault!
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