The R word, fifteen years on

Back in 2004, I wrote that

There is only one real instance of political correctness in Australia today and that is that you are never, ever allowed to call anyone a racist. It’s OK to say that Adolf Hitler was a racist, and that apartheid was racist, but the idea that any actual Australian could be a racist is utterly taboo.

Of course, the same was true in the US. But after two and a half years of an openly racist Trump Presidency in the US, the taboo seems finally to be open to challenge. Opinion writers and individual Democratic politicians have been calling out Trump’s racism for some time, but news reports have stuck with lame euphemisms like “racially charged”, or saying that “critics have called it racist”

In the wake of the House resolution condemning Trump latest racist tweets, the ground may have shifted, at least a little. Quite a few news organizations have used the R-word, in their own voice, to describe Trump’s “go back to where you came from” tweets, and others have tiptoed towards the line.

Most notably. CNN political reports are now referring to Trump’s “racist jabs” in matter-of-fact terms, noting that Trump sees them as politically advantageous and discussing the implications for the 2020 campaign. (Hat tip: Daniel Quiggin). 

There’s still quite a few steps to go before the taboo is ended. Even moving from “Trump’s racist tweets” to “Trump’s racism” will take a fair bit of courage. And so far only CNN has used the word routinely. The NY Times hasn’t even got past “widely seen as racist.” . (For that matter, it’s still calling Trump’s lies “falsehoods” to avoid feeding ” the mistaken notion that we’re taking political sides.”

This isn’t just a matter of rhetoric. It’s difficult to do any kind of political analysis clearly if one of the main political tendencies can’t be named. Trump’s re-election hopes depend to a large extent on motivating racist Republicans to vote and on peeling off the remaining racists from the Democratic Party. Try to make this obvious point without using the R word and you end up with obfuscation or worse, such as the use of”working class” as code for racism.  

Irregular email update

Here’s my email update. Sign up if you’d like to get it delivered to your mailbox

Hi all,

It’s been quite a while since my last email news, which I sent out before the May election.  Following Labor’s loss, I resolved to avoid commentary on political strategy or day-to-day politics, and to spend more time thinking about global and long term issues, such as climate change and the global choice between socialist and Trumpist futures.
I’ve mostly stuck to that resolve discussed the topic. I did a radio debate with conservative US commentator Joshua Muravchik, on the topic Is socialism still relevant in 2019?  and wrote articles about the need to face up to climate change sooner or later and Libra, the new Facebook cryptocurrency

The Brisbane launch for Economics in Two Lessons was at Avid Reader on 25 June and the Sydney launch at Gleebooks on 27 June.

On my blog,  I discussed A new two-party system? and whether globalisaton can be reversed looking at trade and migration.

Inevitably, though, I’ve felt the need to say something about current Australian policy issues including

The Murray-Darling Basin scandal: (economists have seen it coming for decades),  Adani (I remain sceptical that the project will go ahead without public money)  and of course Israel Folau (where I focus mainly on protecting workers’ rights)

Coming events

Melbourne launch for Economics in Two Lessons at Readings, Hawthorn Wednesday 17 July and also at University House, Melbourne Uni, 4-6 pm Friday 19 July

What Should Our Economy Look Like in 2030? Brisbane Seminar 6 August

How to follow what I’m doing (if you want to!)

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Signup for this list is here. I also have a mailing list focused on Adani and related issues, to which you can sign up here

Comments, bouquets and constructive criticism always welcome at

Best wishes

The big yellow grader, one last time

Adani is getting on with the job of building its Carmichael coal mine as opponents prepare for a renewed campaign of protests.

That’s the lead in this SMH story about the Carmichael mine. But the picture released is the same yellow grader that’s been there for months.

This is a puzzle. On the one hand, Adani’s pronouncements exude confidence that the mine will be shipping coal within a couple of years. That was reinforced in a recent interview with Gautam Adani himself.

On the other hand, the company is showing no signs of urgency about getting to work. They’ve advertised only four jobs on their portal this month, after cutting lots of staff last year. And there’s been no announcement regarding contractors, consulting engineers and so forth, even though all their previous partners have either been sacked or walked away.

Given the subsidies Adani has recieved in India, the project might just be financially viable. But if so, why isn’t the corporation rushing to get it done while the political stars are aligned.

Adani again

In pointing out that Adani’s Carmichael mine wasn’t viable without government help, I focused on the possibility of a concessional loan from Australia’s Export Finance Insurance Corporation. As commenters have pointed out, Adani (a prominent crony of Indian PM Modi) looks like being able to charge above-market prices for electricity in India. I’m not clear whether this helps much to make the Carmichael project viable. Over the fold, an exchange I had with Charles Worringham.

In other news, it seems likely that Adani will move fairly slowly even after the environmental clearances come through. They’ve announced on their Facebook page that they are filling “more than 50” positions for pre-project work, and there are a dozen or so HQ jobs listed on their jobs portal. That’s a long way short of their announcements in January that they were ready to start digging the moment they got the go-ahead.

Read More »

Economics in Two Lessons: 21st century cars

My central claim, in writing Economics in Two Lessons, is that most economic policy issues can be understood in terms of opportunity costs and their relationship to prices. I was talking about 21st century (electric and self-driving) cars, and several of the issues that came up illustrated this point very neatly. Among the objections to 21st century cars are the following

  • Since 21st century cars don’t use petrol, governments will lose the revenue needed to fund the road network
  • Self-driving cars will cruise around cities to avoid paying for parking, thereby increasing congestion
  • Because of the limits of AI, self-driving cars will inevitably kill people

The answer to the first two questions is the same. These problems arise because prices don’t reflect opportunity costs. Opportunity costs arise from cars using the road network, reducing access to others, and from the initial construction of the network, consuming land and resources that could be used for other purposes.

Under current conditions, petrol consumption provides a rough proxy for general road use, while parking charges provide a rough proxy for road use in urban areas, shopping precincts and so on. That relationship breaks down with 21st century cars.

But, this is a self-resolving problem. The reason we used petrol taxes and parking charges was because charging for road use was too hard. With 21st century cars, it’s trivially easy. We can set prices exactly equal to opportunity costs, taking account of time-varying congestion and any other factors we want to.

The dangers of 21st century cars can also be understood in terms of opportunity costs. The question isn’t whether they are perfectly safe, but whether they are safer than the next best alternative – the current mix of human drivers, including the large proportion of incompetents, drunk and drugged drivers.

A side issue that has just occurred to me: is it possible to steal a self-driving car with no manual override? It seems a bit like stealing a train.

Trade wars: Easy to win?

The trade war between the US (or rather the Trump Administration) and China (or rather Xi Jinping) is heating up again. The standard view seems to be that, because of the massive imbalance in merchandise trade between the two countries, Trump has the advantage. China could retaliate by dumping US bonds, but this is seen as a weapon too dangerous to use.

I don’t think this exhausts the options. As we’ve seen in Australia, the Chinese government can do all sorts of things to retaliate against nationals of a country that has offended them. That might, however, be an option confined to bit players like Australia.

If I were advising Xi on retaliation against Trump, I’d suggest looking at services where the balance is strongly in favor of the US. An obvious starting point would be tourism. A travel advisory, suggesting that the US is a dangerous place for Chinese tourists to visit, and implying that such visitors might face adverse consequences on their return would be an obvious choice. It would cause instant economic pain, be easily reversible and could be justified by pointing to the example of the US embargo on Cuba.

A more hopeful, and probably more likely, outcome is that China will play for time until 2020, when Trump will come under pressure in US farm states, or until 2021 when (more likely than not) he will be gone altogether.

Trade wars aren’t, as Trump suggests, easy to win. But they are nowhere near as destructive as real wars. We should be more concerned about the hawks in the foreign policy establishment, spoiling for a fight over the South China Sea, than about tariffs on TVs and soybeans.