Jefferson rejected even voluntary emancipation

The Washington Post has a long piece about a Virginia family whose current (substantial but not huge) wealth derives from their slaveholding forebears and who may now be greatly enriched by the discovery of uranium under their land. There’s an interesting discussion of the arguments for and against reparations

Buried in the middle of the article is something much more interesting, to me at any rate. One member of the family, Edward Coles, opposed slavery. He hid his views until he inherited ownership of 17 enslaved people, then took them to Illinois and freed them. None other than Thomas Jefferson wrote to Coles, seeking to dissuade him.

Jefferson wrote Edward a letter on Aug. 25, 1814, trying to talk him out of it.

[M]y opinion has ever been that, until more can be done for them, we should endeavor, with those whom fortune has thrown on our hands, to feed & clothe them well, protect them from ill usage, require such reasonable labor only as is performed voluntarily by freemen, and be led by no repugnancies to abdicate them, and our duties to them,” Jefferson wrote to Coles.

This is a pathetic evasion, amounting to a restatement of the standard enslaver claim that chattel slavery was a positive good compared to the alternative of earning a living in the capitalist economy (“wage slavery”). It undermines the idea that Jefferson maintained support for gradual and voluntary emancipation even after abandoning the idea of legal abolition. Adding weasel words about “until more can be done for them” doesn’t change that, given that Jefferson made no moves to do anything more, either politically or with respect to the hundreds he personally enslaved.

It seems that, having been genuinely opposed to slavery at the time of the Declaration of Independence, Jefferson came to realise that the profits of slavery, and particularly slave breeding, were too great to pass up. In this context, even his ban on the Atlantic trade slade looks bad. For a breeder like Jefferson, prohibiting import competition made perfect economic sense.

Another nuclear renaissance?

And did environmentalists kill the last one?

There has been a lot of talk lately about a revival of nuclear power, partly in response to the need to replace the energy previously supplied by Russia, and partly as a longer-term response to climate change. To the extent that this means avoiding premature closure of operational nuclear plants, while coal is still operating, this makes sense. But new nuclear power does not.

The misconception that nuclear makes economic sense remains widespread, but has been refuted many times. Less remarked on is the misconception is that the big obstacle to nuclear power is opposition from environmentalists.

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No new coal

Thanks to the efforts of Environmental Justice Australia (EJA) and the Environment Council of Central Queensland (EcoCeQ,), Environment Minister Tanya Plibersek reopened the environmental assessment process for 16 coal mines and two gas projects that had previously been approved. To take part, it was necessary to submit new information not available at the time of the original approvals.

I wrote the same comment for all of the coal projects*.

I wish to draw attention to the following information which was not available at the time this project was approved. This information implies that the climate damage caused by the project will be worse than seemed likely at the time, while any offsetting benefits will be smaller.

  1. International agreement on the necessity of phasing out, or phasing down, the use of coal by 2030 reached at COP26 in Glasgow. This agreement is inconsistent with an expansion in the global supply of coal. It follows that any new mine can operate only at the expense of existing mines, which will in any case be required to reduce their output. It is highly likely that the resulting job losses will be incurred in existing coal-reliant communities elsewhere in Australia
  2. The idea that coal-fired electricity generation could be rendered ‘clean’ through carbon capture and sequestration has now been abandoned. Most of the handful of projects that were put into operation have been closed down (Petra Nova) or scaled back (Boundary Dam). Other projects have been abandoned with large losses (Kemper). Hence any damage caused by additional use of coal cannot be prevented by CCS
  3. Rapid reductions in the cost of solar PV, wind and storage technology have rendered new coal fired power uneconomic everywhere, and have led to an accelerated closure of existing coal-fired power station. Although China continues construction of new coal-fired power stations, competition from clean energy means that many coal-fired plants will operate only seasonally, or as reserve capacity. This implies reduced demand for coal.
  4. At the time the project was evaluated, it seemed likely that coal would be replaced by gas, at least in the short term. This implied a smaller net benefit from eliminating coal than if the replacement is an immediate move to renewables+storage as now seems likely.

John Quiggin
Professor of Economics, University of Queensland

  • I meant to write something on gas, but ran out of time. Submissions closed yesterday.

Can Labor provide cost-of-living relief without feeding inflation and interest rates?

I was part of a panel who responded to this question for The Guardian

Here’s my response

The economic situation facing the majority of Australian households is dire. However, the common framing of the problem in terms of the “cost of living” distracts attention from the real problem, which is the decline in the real purchasing power of wages. Having remained stagnant for years, wages have now fallen far behind inflation. Moreover, the average rate of tax paid is rising because of bracket creep and because of the expiry of the Morrison government’s low- and middle-income tax offset, which was not extended in the October budget.

Under our current policy approach, economic welfare is declining

Neither of these outcomes is likely to improve significantly during the current term of government. The budget papers predict a further decline in real wages this year, and only a partial recovery over subsequent years. And while those on high incomes will benefit from the stage-three tax cuts, there is nothing for those on incomes below $45,000. Even the indexation increases in pensions and benefits lag behind inflation by six months.

In response to this crisis, Albanese has said, in effect, that his hands are tied. First, he denounces relief for low-income earners as “a cash-splash, a one-off giveaway to buy a headline. Cheap politics and hugely expensive economics”. But the same is true, in spades, of the massive stage-three tax cuts, which Labor promised to implement for fear of losing a few marginal high-income voters.

If the stage-three tax cuts had been cancelled or deferred in the October budget, Labor would have had room to improve the position of the worst-off voters, while maintaining a broadly stable ratio of debt to GDP. But Labor was too frightened of negative headlines to grasp this nettle.

Albanese’s other argument is that any expansionary fiscal policy would be cancelled out by the RBA, which would raise the interest rate. He observed that “fiscal policy needs to work with monetary policy, not contradict it”.

Pedestrians walk past the Reserve Bank of Australia
Reserve Bank predicts inflation to peak at 8% – the highest rate since 1990

There’s an element of truth here, but also a huge problem. As well as maintaining price stability, the RBA is supposed to act to achieve full employment and “the economic prosperity and welfare of the people of Australia”. But under our current policy approach, economic welfare is declining. Unemployment is expected to rise, and real disposable incomes to fall, even in a situation where GDP is growing steadily.

Under the policy of central bank independence, first introduced under the Howard government, there is nothing that can be done about this. The Reserve Bank pursues its inflation target without regard to the policies of the elected government. But this policy has not served Australia, or other countries that have followed this course, at all well. It was necessarily abandoned during both the GFC and the Covid lockdown. If fiscal policy must work with monetary policy, the reverse should also hold true.

It is clear enough that our current economic policy institutions are not fit for purpose. Sadly, that includes the policies of the Albanese government.

Vote for democracy (please!)

It seems highly likely that the Republican Party will win control of the US House of Representatives, and possibly also the Senate, next week. Unless the margin is so narrow that a handful of believers in democracy can tip the balance, that will mean the end of electoral democracy in the US for the foreseeable future. Most House Republicans voted to overturn the 2020 election. All (except a few who were on the way out) voted against the Electoral Count Act which is supposed to make cheating more difficult, but which will surely be ignored if necessary. That’s without considering the vast numbers of election deniers who will win (or already hold) crucial offices at state and local level, and the likelihood that the Supreme Court will enable them further. And once the Republicans hold all the levers of power, they will never let go of them.

There is still a slim chance that this disaster can be staved off but, even if it isn’t, it will be a shameful memory to have abstained, or voted for a third party with no chance, in this last real election. That’s true whether the decision is out of laziness, hopelessness or a pseudo-left (in reality, aristocratic) view that both sides are equally bad. If you fall into one of these categories, (or if you actually want a Trumpist dictatorship), please don’t comment on this post, or interact with me in any way from now on.

Everyone in the world will be affected by the end of American democracy, but the great majority of us have no vote. All we can do is appeal to those who do to make the right choice, as I am doing here.

Labor’s love lost:the tide is turning on private ownership of electricity grids

I’m not a fan of the convention that newspaper and magazine editors choose the headline for articles, but I liked this one in The Conversation. The heading is neat and the sub-heading gives you the tl;dr version.

The promise by the Andrews government to reintroduce public enterprise to Victoria’s electricity industry, through a revived State Electricity Commission, is something of a shock.

The process of electricity privatisation in Australia began with Labor in Victoria, when the government of Joan Kirner sold 51% of the Loy Yang B power station in 1992. Her Liberal successor, Jeff Kennett, then sold the remainder of Loy Lang B, as well as the rest of the state’s publicly owned generation, transmission and distribution assets.

Labor has been office for all but four years since Kennett’s defeat in 1999. Until now it has made no attempt to reverse his policies. Rather, it has undertaken some rather dubious privatisations of its own, notably the Andrews government’s 2018 sale of the Land Titles and Registry office.

Premier Daniel Andrews’ statement that “it was wrong, it was a mistake, to sell our energy companies” therefore marks a clear shift.

Labor leaders change tack

The change is part of a broader shift in Labor’s position throughout Australia.

Arguably this shift began in Queensland after the trouncing of Anna Bligh’s Labor government in 2012, winning just seven of 89 seats. The Bligh government had sold a range of public assets (though retaining distribution and transmission networks, and coal-fired power generators). The remnants of the Labor party concluded privatisation was electoral and economic poison.

Labor was returned to power in 2015 after the LNP government of Campbell Newman, having sought to push privatisation further, was ousted after one term. Under Annastacia Palaszczuk the Queensland government is now investing in new renewable generation through the publicly owned CleanCo – including 18 wind turbines as part of the MacIntyre Wind Precinct, the largest wind farm project in the southern hemisphere.

NSW Labor went through similar contortions over privatisation, with a series of premiers and treasurers trying and failing to find a way of selling the electricity industry.


caption. Shutterstock

The disastrous defeat of the Keneally Labor government in 2011 was driven by this failure, along with the string of scandals that seem to be the rule rather than the exception in NSW politics.

Now, with the prospect of Labor returning to power next March, Opposition leader Chris Minns has given a guarantee there will be no more privatisations.

At the national level, the biggest single commitment of the Albanese government is the $20 billion Rewiring the Nation initiative, to build the transmission network needed for clean energy. The first two projects to be financed – the Marinus Link between Tasmania and Victoria, and the Kerang link, between Victoria and NSW – are publicly owned.

Taxpayers worse off

What explains this shift?

First, public opinion is now opposed to privatisation.

There was significant public support for privatisation in the 1980s, but this went into decline after major privatisations began in the early 1990s. Contrary to the hopes of supporters, experience with privatisation only made voters more hostile. This has finally permeated through to political commentary. The failings of formerly public enterprises like Qantas are now regularly traced back to the process of privatisation.

More importantly, politicians now understand that the economics of selling income-generating assets don’t stack up.

The premise for privatisation was that it was better for taxpayers to sell state-owned assets and reduce public debt.

But, particularly when interest rates on public debt are below the rate of inflation, government-owned enterprises generate returns well above the cost of the capital invested in them.

Those states that kept ownership of their electricity networks, such as Queensland and Tasmania, have received a steady flow of dividends, and the value of their assets have appreciated. The proceeds of privatisation in other states have long dissipated.

According to the ideology of privatisation, the low cost of borrowing for public enterprises is an illusion, because the public is on the hook for the cost of a bailout in the event of any business failure. But such bailouts have been very rare in Australia, and taking their costs into account does not change the calculation significantly.

The risk premium demanded by investors in private equity has always been large, and is now growing, making the gap between the private and public cost of capital even larger. There has been a corresponding drop in private investment globally, and (outside mining) in Australia. The case for public investment has never been stronger. Labor politicians seem finally to have realised this.

A ‘no first use’ U.S. nuclear policy could save the world

My latest piece in Independent Australia

THE RISKS of nuclear war are greater than at any time since the Cuban Missile Crisis. Not only is Vladimir Putin threatening to use nuclear weapons to stave off defeat in Ukraine, but the North Korean Government has continued to develop and test both missiles and nuclear warheads.

U.S. President Joe Biden has responded to Putin’s threats with admirable calm so far, playing down the risk that Putin will use nuclear weapons and avoiding any threat of escalation.

Leaks from the U.S. Administration have indicated that the response to a tactical nuclear weapon would be massive but confined to conventional weapons. 

Yet the official doctrine of the U.S. would call for the use of nuclear weapons in exactly the situation faced by Putin today: a conventional war going badly.

With Russia and the U.S. currently on the warpath during the escalating conflict in Ukraine, the world is again at serious risk of nuclear disaster.

Unlike Russia and China, the U.S. military maintains the right to a “flexible response” in which nuclear weapons may be used against an adversary who hasn’t used nuclear weapons and doesn’t pose an existential threat to the U.S. itself [1]

If Putin is threatened with massive retaliation for breaking a supposed taboo on nuclear weapons, the U.S. should commit itself to “no first use” of nuclear weapons. But why hasn’t this happened already?

Throughout the Cold War, U.S. military planning was based on the assumption that the Soviet Union would have a massive advantage in conventional weaponry, most notably because of its tens of thousands of tanks and other armoured vehicles, not to mention millions of artillery shells.

In the scenario favoured by Pentagon planners, these forces would pour the Fulda Gap, on the border between East and West Germany, rapidly overwhelming North Atlantic Treaty Organization (NATO) forces. 

Only the use of “tactical” nuclear weapons would even the balance. The term “tactical” might sound moderately comforting, but some of these weapons would have many times the explosive power of the bombs that destroyed Hiroshima and Nagasaki. They would obliterate the advancing forces.

The end of the Cold War shifted the frontier hundreds of kilometres to the east, but the planners found another “gap” to worry about near Suwałki in Poland. And, as Putin rebuilt the crumbling armed forces he had inherited, it seemed that he still had at least 3,000 modern tanks, with another 10,000 in reserve.

But the failed invasion of Ukraine has shown Putin’s army to be a paper tiger. More than half of Russia’s front-line tanks have already been destroyed or captured by Ukraine. Indeed, Russia has been the biggest single supplier of tanks and armoured vehicles to the Ukrainian armed forces.

Meanwhile, the vast reserves turned out to be largely illusory. Thousands of tanks had been left to rust in the open air or pillaged for parts to be sold on the black market. By June, Russia was reduced to deploying ancient T-62 tanks, first produced in the 1960s and then updated in the 1980s. These have already been destroyed in large numbers.

After failing to conquer its near neighbour, there is no prospect that Russia could launch a successful conventional attack on NATO. There is, therefore, no need for tactical nuclear weapons. The same is true of a hypothetical invasion of Taiwan by China.

By adopting a “no first use” policy, the U.S. could greatly reduce the risk of an accidental nuclear war or an unintended process of escalation. Such a policy would certainly face resistance from the U.S. military, which never saw a weapons system it didn’t find essential — as it would from the Republican party.

The U.S. is one of a handful of countries that don’t ban the use of landmines. The Trump Administration revoked restrictions on the use of landmines and sought to develop new ones.

Still, there is hope. Richard Nixon, of all people, committed the U.S. to ban chemical weapons and stocks were finally destroyed under George W Bush.

And the Biden Administration has moved towards a ban on landmines. A “no first use” commitment once made, would be difficult to roll back, even for a future Trump Administration.

fn1. Putin has used annexation as a way of claiming that resisting Russia’s aggression represents an existential threat