American commentators are finally waking up to the fact that a strong currency does not necessarily imply a strong economy. I made this point 18 months ago, here and I think the analysis still stands up pretty well, even if US consumers are still spending.

One interesting point in the article is the idea that even though US investments are unattractive, investments in other countries are even less so. I disagree. If you accept that the $US has to depreciate at some time, then holding bonds denominated in $US, and paying interest rates lower than those obtainable in other currencies, is a dumb idea. Unless you think either that European governments are likely to default on their debt or that euroland is poised for inflation, eurobonds are a better bet, and similarly for Australian government bonds denominated in $A. But I’ve given up even the residual belief in the efficient markets hypothesis that would lead me to try and work out a coherent explanation of perverse asset prices.

Scott says “I’ve finally got a basic MT blog off the ground- It’s certainly not what I hoped it would be from the visual side of things, and I’m sure I will cop absolute HELL for it from some of the people I’ve written about for it being so lame; be that as it may, it’s up and off the ground. There will be certain tweaking of the code- and any feedback that’s not too complex for me to implement is more then welcome!
Thank you for supporting scottwickstein.blogspot.com. I hope my new site is even more thought provoking and successful.
The associated sites Ubersportingpundit and Oneblog in September will be up in due course. I hope to have Uber up within a week; OBIS might have to wait till next season.”

This looks like an open invitation (or maybe a troll) to visit Scott’s new site and bag out the design, so head on over

My column in Thursday’s Fin argued that the future of the world is going to be determined in Europe and not in the fight between America and Iraq. Key points:
“like the embryonic United States of the early 19th century, Europe has both a doctrine of ‘manifest destiny’ and a well-established procedure for expansion. Since the original European Coal and Steel community was established in 1951, with the aim of preventing a recurrence of War between France and Germany, the core of the European vision has been one of a world governed by laws rather than naked force. ”
“European social democracy, and not American free-market capitalism, has ended up as the winner of the Cold War. By 2004, the European Union will have borders with Russia and will incorporate most of Eastern Europe. Under the EU Social Charter, all entrants are committed to a social-democratic system.”
“In the light of recent history, the Euro-Mediterranean Partnership and the Euro-Mediterranean Free Trade Area must be seen as the precursor to a Greater Europe encompassing the entire classical world. ”
“The success or failure of Europe in integrating Muslim countries, beginning with Turkey, will do more to determine future relations between Islam and the West than any military expedition. ”

Things didn’t look too good earlier in the year, as a string of social democrat governments lost office, mostly to coalitions of the ‘official’ conservative parties and far-right parties opposed to both immigration and European expansion. But now the right-far right coalitions are collapsing and expansion is going ahead at full pace.

A lot of pundits thought that the (expensive and silly) Common Agricultural Policy would prove a fundamental obstacle. But the French have very sensibly agreed to share the subsidies with new entrants, leaving the total cost fixed until 2006, with a commitment to reform thereafter. The NYT headlined this: A Fight Over Farms Ends, Opening Way to Wider Europe. This kind of messy compromise may not be inspiring, but it’s characteristic of the democratic political systems that have repeatedly outlasted and defeated more impressive-looking regimes with imperial aspirations.

Arnold Kling presents a range of commentary on economic and technological issue that is always provocative and usually sensible. In
this post, however, he falls for a fallacious argument based on a confusion between price and income effects. He says:

” In my view, it is difficult to dispute that the rich are getting richer. However, it is equally difficult to dispute that the poor are getting richer. For example, W. Michael Cox and Richard Alm in Myths of Rich and Poor have pointed out that in spite of the rise in inequality a poor household in the 1990’s was more likely than an average household in the 1970’s to have a washing machine, clothes dryer, dishwasher, refrigerator, stove, color television, personal computer, or telephone. ”

The common feature of all the items listed in this quote is that their price has fallen dramatically relative to to the general price level. This means that even if incomes were exactly the same as in 1970 we would expect to see a big increase in consumption of these items.

Conversely, the income data, which show no significant increase in income for workers with high-school education since 1970, imply that consumption by the poor of some goods and services must have decreased. The obvious candidates ar e those goods that have increased in relative price, such as housing. Although it’s difficult to assess, the proliferation of prefabricated homes (aka mobile homes, aka trailers) supports the view that the poor are worse off in this respect.

A little while ago, I put forward a modest proposal to promote peace in the Middle East. Now new blogger Gummo Trotsky at Tug Boat Potemkin has put forward what I can only describe as an immodest (but very funny) proposal on gun control.
In keeping with recent discussion of attribution I’ll remind readers that the original Modest Proposal by Jonathan Swift was a rather gruesome way to increase Irish exports.
On another topic, I’ve congratulated Gummo on a great choice of pseudonym – I also like “Derrida Derider” who appeared in my comment thread a while back, and I should also mention Mumble. Pseudonyms raise a natural curiosity. Some pseudonymous bloggers have revealed their secret identities to me and I’m pretty sure about some others, such as Stanley Gudgeon, but all secrets are safe with me. But I think Bargarz, whose comments are often serious and sensible, should consider revealing his true identity. I find it rather incongruous to say “I must agree with Bargarz’ analysis of the Iraqi question …” or similar.
Finally, apologies for not updating my blogroll. The number of bloggers is growing daily, and some sort of classification scheme seems to be necessary. I’ll try and link to all ‘Ozploggers’ of any interest, and I may set up a new category for humorous political & social commentary.

Brad DeLong, in hisSemi-Daily Journal writes:

While the rate of advance of computer and communications technologies have vastly outstripped anything I imagined when I was a child … where are the robots?

I disagree with Brad’s premise that advances in computer and communications technologies have outstripped imagination.

We haven’t even got workable voice control, let alone a computer comparable to HAL in 2001. As regards communications, video telephony (a staple of imagined futures since Dick Tracy) is still off in the distance somewhere. I can’t believe Brad’s youthful imagination didn’t run to something more impressive than SMS text messaging.

And while the Internet is great, personal computers in other respects haven’t made more than incremental advances since the 1980s (or, in the case of Windows, since 1995).

Paul Krugman did a piece a while back looking at the technical predictions of people like the Hudson Institute. He found that, like economists with recessions, they forecasted all the main innovations we actually got and a bunch that we didn’t.

I can’t resist baiting from Ken Parish, even when he shifts the blame by heading his piece Bettina baits Quiggin. He’s referring to an article describing the debate between the two Peter Saunders whom I’ve mentioned previously. I’ve responded to the main arguments of the “New” or “CIS” Saunders here. I’ll just note the end of Arndt’s piece where she observes ” the huge gulf between the two men on the extent of poverty in Australia – Saunders the Old claims disadvantage is increasing, while the New cites evidence to show it remains constant ” (note, BTW, the use of “claims” vs “cites evidence to show”, a typical pundit trick)
In other words, after a decade when we have been told incessantly that Australia’s economic performance is ‘miraculous’, ‘world-beating’ and so on, the best that the advocates of free-market reform can claim is that poverty has remained constant.
Update Yet another comment thread that dwarfs (is this still a PC verb?) the original post in length, thoughtfulness and erudition. Be sure to read it. I plan a lengthy post covering the issues raised here, but I’ll have my work cut out.

Arthur Rorris of the the South Coast Labour Council has a very good analysis of the Cunningham by-election result, including an effective critique of the idea that Labor should be going after ‘aspirational’ voters. Having followed the entire debate on this, I conclude that “aspirational” refers to someone whose parents voted Labor, but whose economic situation and political views make them natural Liberal supporters, a description which applies to most of the leading members of the NSW Right.

The idea that former Labor heartland in the Western suburbs is full of these aspirationals is one of those factoids that takes a bit of work to refute. I have a go here, pointing out that lots of the Western suburbs are very like Pauline Hanson country in statistical terms.

The debate over gun control rages on, but as far as I can see, no-one on the pro-gun side of the debate has taken up my invitation to present a principled libertarian position. Instead, as Jack Strocchi points out in the comments thread for a previous post, the pro-gun side is trying to make a consequentialist and utilitarian argument that widespread gun ownership will save lives. It’s dishonest to make this argument if, in fact, you would oppose gun control regardless of the net impact on murder rates and so on. So, I’m putting forward a proposition which I’m inviting pro-gun writers like Alex Robson to join me in endorsing:
Proposition: Since any other costs and benefits of gun policy are trivial in relation to the saving of lives, I support whatever gun policy is most likely, on the available evidence, to minimise the loss of life from homicide and related causes
As far as I’m concerned, anyone who is not prepared to endorse this proposition (or some marginal variant) should be assumed to be dishonest when they present factual claims about the effects of different gun policies on murder rates and so on.

Anyone who is genuinely interested in the facts should read the analysis posted by Ken Parish. My prediction, though, is that having lost both the statistical argument and the political debate, the gun libertarians will resort to Steynwalling.

Update The proposed response of the Howard government has been excellent – a ban on all handguns except for police, security guards and elite pistol shooters and a gun buyback. Importantly this means a total ban on most types of handguns, which are not used in shooting competitions. And after initially ducking the issue as is their wont, the Labor state premiers have sniffed the political wind and realised that their only chance is to be even tougher. Bracks is pushing for a change which would require sporting shooters to keep their guns locked up at gun clubs, and Carr is pushing to include a bigger push against illegal gun imports (a factor in the localised rash of gun crimes in Sydney’s inner west). My guess is that the combination of requirements for psychological testing and the impossibility of actually having a gun to stroke at home will deter most of the marginal types from taking the sporting shooter route to gun ownership, and that membership of gun clubs will decline precipitously as a result.

Further update I should note that a couple of libertarians have responded to my invitation. ct8o (can you believe that I’ve seen this sig about 50 times and not realised that it’s a fancy way of writing “Cato”) put up some points to which Ken Parish has responded both in the comments thread and on his own blog. John Humphreys has a comment under “Guns and Libertarians” a couple of posts down, to which I’ve responded.
As I’ve been getting a lot of new visitors lately, some of whom may be new to blogging, I’ll repeat my advice to click on the comment line. In my not-so-humble opinion, this blog has one of the best comment threads to be found anywhere. In quite a few cases, the comments add more value to the debate than the original post. And please, don’t be shy about adding your own comments. You can always use a pseudonym, or just “Anon”.

Lots of American warbloggers and pro-gun types (there’s almost 100 per cent overlap between these groups in the blogworld) have been arguing that the Washington shootings are probably being carried out by a terrorist – either an Al Qaeda operative or a ‘volunteer’ like Hessan Hadayat, who shot two people dead at the El Al ticket counter at LAX before being killed himself by a security officer. Tim Dunlop’s coverage has lots of links on this. We can be certain that, whoever is doing this, Al Qaeda hasn’t failed to notice his success in creating terror.
The reasoning of the US writers seems to be that the implications for the gun control debate would be more favorable if this killer turned out to be a terrorist. At least as far as Australia is concerned, I think the opposite is true. We are, sadly, becoming used to periodic multiple gun murders committed by professional criminals and by ‘ordinary law-abiding gun owners’ who’ve cracked under the various pressures of life. We must now face the new threat that some local supporter of bin Laden (or some other terrorist) will decide to martyr himself and, more importantly, other Australians.
For the American warbloggers, the answer seems to be that ‘ordinary’ Americans should be armed at all times, and that ethnic and religious profiling should be used to identify and disarm those who are not ‘ordinary’. Leaving aside the awful implications of such a policy, these guys seem to have conveniently forgotten Oklahoma City, not to mention many other acts of terror committed by a groups and individuals whose ethnic and religious profiles are very similar to their own.
The likelihood that terrorists will adopt a strategy of random shootings adds to the urgency of removing as many guns as possible from circulation. This might be of limited value against ‘professional’ terrorists, but it would reduce the risk of ‘volunteers’. If we diverted the resources currently allocated to chasing drug users into a crackdown on illegal guns, a lot of progress could be made. Guns are, after all, metal objects, and much harder to conceal than drugs.
Update The main suspect arrested in the sniper case, John Muhammad, appears to fit the profile of a ‘volunteer’ . Basically, as Jack Strocchi points out in the comments thread (does he ever sleep) a black Islamic version of Timothy McVeigh.