Paul Krugman shortens the odds on a double-dip recession in the US. While I agree with Krugman on a lot of things, I tend to give more credence to the Schumpeterian idea that in an economy bloated with excess, recession is unavoidable. The obvious imbalance in the US economy is the huge current account deficit, now near 5 per cent of GDP. It’s hard to see how this can be maintained for long, and also hard to see how it can be reduced without a recession. Of course, this is relevant to other chronic deficit countries like Australia.

The NYT gives the full Text of Bush’s Iraq Proposal . The key clause
“The president is authorized to use all means that he determines to be appropriate, including force, in order to enforce the United Nations Security Council resolutions referenced above, defend the national security interests of the United States against the threat posed by Iraq, and restore international peace and security in the region.”
It would be interesting to see some of our experts in textual analysis analyze what limits, if any, this places on Bush’s power to make war anywhere in the Middle East for any reason.

According to theWashington Post the US government has decided that inspections to detect germ warfare programs aren’t a good idea.

Glenn says:

Well, you’re talking about equipment for *making* bombs, and Wright’s talking about the bombs themselves.

My reply:

I’m not saying that the 1991 experience *proves* that inspections will work and that anything found will be destroyed. But it’s silly to discuss hypotheticals without reference to relevant historical experience, and in a way that implicitly assumes that the relevant historical events didn’t happen.

In any case, no-one I’ve seen is claiming that Saddam has anything more than equipment at this stage. The whole case for immediate invasion is that we need to stop him before he gets a bomb.

I’ve always wondered why the warbloggers among us are so convinced that inspections can’t possibly work, given their successes in the past. In some cases, it’s clear that they just want a pretext for invasion, but in others they simply appear to have forgotten.

For example, Glenn Reynolds links to Oz warblogger Paul Wright who asks what happens if the weapons inspectors, by some miracle, actually find something? Reynolds continues “His rather chilling answer suggests that either (1) the powers-that-be have no real expectation that this will come to pass; or (2) they haven’t thought about this hard enough. I’m guessing it’s (1).”James Lileks goes over much the same hypothetical ground

These would be fascinating hypotheses to kick around, if it weren’t for the fact that it’s already happened

• Dj Nadi Girls Power 015

. As Michael O’Hanlon of Slate notes, inspections are the only reason Saddam doesn’t already have the bomb:

“As is well known, Iraq was disturbingly close – perhaps only months away – from building a nuclear weapon at the time of Desert Storm. After Israel bombed its Osirak nuclear reactor a decade earlier, Iraq had embarked on a program to develop less visible technologies for enriching uranium from domestic and possibly foreign sources?its “basement bomb” project. In numerous ways, this effort resembled the difficult and tedious approach taken in the 1940s during the Manhattan Project in the United States, particularly the effort to build uranium-235 devices such as the one dropped on Hiroshima. U.N. inspectors found and destroyed most of the equipment believed to have been involved in Iraq’s effort before the Gulf War of 1991.”

To restate the obvious, inspections will only work with free and unfettered access, and it’s up to the Security Council to ensure this.

Yet another commenting failure. I’m pretty much resigned to moving on from Haloscan. Please send any suggestions by email. For those who don’t feel like typing an address, visit my website (behind a firewall and apparently safe from spiders) and click on the link there.

I haven’t checked Scott Wickstein’s blog for a week or so, since he announced a hiatus, due to pressures of “work, family and having a life”. But he’s obviously found it easier to “delegate some responsibilities” than to kick the blogging habit. When I checked back, I found a very well-thought out response to my post on Pinochet and Brezhnev.

Yesterday Steven den Beste was quibbling about the meaning of “unconditional”. Today, he’s proposing an all-out war against the entire Arab culture, noting “I am forthrightly proposing what some might call cultural genocide”.

Leaving aside the scary implications of all this (as his critic Hesiod
notes, try reading the post with “Jew” substituted for “Arab” at every occurrence, and some corresponding changes of cultural stereotype), this kind of wild mood swing is a caricature of the Bush administration’s stance on Iraq.

The result is that we know Bush wants war, but is it to:
(i) stop terrorism,
(ii) remove an evil dictator,
(iii) get rid of WMDs,
(iv) enforce UN resolutions,
(v) forcibly convert the Arabs
(vi) democratise the Middle East
(vii) secure a free flow of oil
(viii) stimulate the US economy
or
(ix)settle an old family feud?

All but (ix) have been seriously put forward by advocates of war within or close to the Bush Administration, and plenty of people outside the Administration suspect (ix) is the truth. If all these objectives could be pursued at once, there would be no problem, but there’s clearly a lot of conflict between them.

Warwick McKibbin has kindly supplied me with the present value calculations to permit an assessment of his model results. The idea of a present value is to reduce a series of future gains and losses to a single present day value, the amount that would have to be invested (or borrowed) at a given rate of interest to yield an equivalent flow. The rate of interest in Warwick ‘s model is 5 per cent. There are four main scenarios in the model.
The first is the Business As Usual case in which no countries ratify Kyoto or do anything about global warming. This provides a baseline, but is of no real interest since most countries have already ratified.
n the other scenarios, it is assumed that everyone except the US ratifies. The second is one in which Australia ratifies, but where no account is taken of measures the government has already taken to reduce emissions at low economic cost. The third is one in which Australia ratifies, and account is taken of existing measures. The fourth is one in which Australia does not ratify.

The crucial issue is the difference between ratifying and not ratifying

Warwick supplied me with estimates expressed in terms of US dollars of present value, but it’s more useful to convert these to percentage losses. Warwick estimates that (not taking existing measures into account), ratification will reduce the present value of income for the period 2000-2050 by 0.34 per cent, from $US14401 billion to $US14352 billion. If existing measures are taken into account, the loss from ratification falls to 0.16 per cent. I think the estimate with measures is more appropriate since the policies are already in place, but Warwick has argued that the ‘without measures’ estimate is more robust.

All of the net loss is incurred after 2020. For the period 2000-2020, the present value of income is almost identical in all three scenarios (ratification without measures comes out slightly ahead, but the difference is negligible).

To get a feel for the magnitudes, it’s useful to observe that 0.16 per cent of GDP is equal to two weeks’ economic growth. In other words, suppose that we all took two weeks off to watch the Olympics. During those two weeks the economy kept producing the same level of output but there was no growth in productivity. Suppose that after the two weeks were finished the economy returned to the previous rate of growth, but that the growth missed in those two weeks was not regained. This would be roughly the impact that Warwick is modelling. Actually, since there’s no net impact before 2020, a closer parallel would be that nothing happened until 2020 and that we missed four weeks growth then.

In current monetary terms, 0.34 per cent of GDP is around $2 billion per year, 0.16 per cent is around $1 billion per year. By contrast the Great Barrier Reef, which will almost certainly be severely damaged if global warming is not controlled, is estimated to contribute around $2 billion a year in economic benefits alone. Of course, Kyoto alone will not solve global warming, but equally the Reef represents only a fraction of the ecosystems that will be damaged or destroyed if warming is allowed to proceed, without even considering coastline shifts, increased cyclone intensity, and the huge impact on poorer countries.

Seeking to shore up support for his position on Iraq (whatever that turns out to be), Tony Blair has called for redistribution of wealth. As the Guardian notes, ‘ it was one of the first times the prime minister has used the word “redistribute” unprompted – it was previously a taboo expression in New Labour.’
As far as I can see, there is now nothing left of the Third Way other than an attachment to Public-Private Partnerships (for my take on PPPs, look here or here). Blair has now accepted the need for higher taxes to fund both improved services and redistribution of wealth. In other words, he’s now an old-style social democrat, just a very wishy-washy one.