My election commentary in Inside Story is about
The dog that didn’t bark … the (assumed) majority of “decent Republicans” to whom Clinton sought to appeal. Although most observers (including me) assumed that many of them would turn against Trump, hardly any did so
Peace now, more than ever.
So said Adam Smith a couple of centuries ago, and he will, I hope, be proved right, in the US, and elsewhere in the world. Trump and the Republican majority in Congress and (imminently) in the Supreme Court will, in all probability, repeal Obamacare, restore and expand the Bush tax cuts for the rich, stop action on climate change, overturn Roe v Wade, expand deportation and more.
At CT and just about everywhere else, there’s been lots of discussion about who is voting for Trump and why. This began during the Republican primaries, when it made sense to ask “what kind of Republican would prefer Trump to Bush, Cruz etc?”.
This kind of discussion continued through the general election, even though the answer is now staring us in the face. Trump is getting overwhelming support from self-described Republicans and Republican-leaning independents, and almost none from Democrats and Democrat-leaning independents. The same was true for Romney four years ago, and for McCain and Bush before him.
This is well known, but few people seem to have drawn the obvious conclusion*. With marginal changes (I’ll discuss these below), the people who are voting for Trump now voted for Romney four years ago, and for Bush before that.
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In thinking about how the global economy can be decarbonized, I’ve focused on the electricity sector, and particularly the elimination of coal-fired electricity generation. In the transport sector, I’ve pushed for fuel efficiency standards, but have generally assumed that internal combustion cars are going to be around for a long time to come. That’s consistent with Australian experience where annual sales of electric vehicles are counted in the hundreds, and with the US, where cheap petrol has held electrics to a market share of a couple of percentage points.
So, I was quite surprised to find out that lots of European countries, including Germany, Norway and the Netherlands, are talking about ending sales of petrol driven vehicles in the near future (2025 or 2030), with diesel possibly being banned even earlier.
Obviously, achieving these goals will require some pretty strong policy encouragement, including subsidies and planned provision of infrastructure, and targets are easier to announce than to hit. Still, it looks as if eliminating internal combustion engine cars is not a distant dream but a feasible policy goal.
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While doing a bit of work on electricity policy, I dug out this piece from 2001, which was published as ‘Market-Oriented Reform in the Australian Electricity Industry’ in The Economic and Labour Relations Review, June 2001; vol. 12, 1: pp. 126-150. The conclusion, written at a time when supporters of electricity reform were trumpeting it as a huge success, stands up pretty well 15 years later, I think.
Some problems, however, are likely to become more rather than less acute. The Australian National Electricity Market commenced operation in a period of oversupply so that problems of market power and excessive prices have not emerged until recently. It remains unclear whether an electricity auction market can produce adequate incentives for investment while generating appropriate prices for consumers.
Similar problems are emerging in relation to the regulated monopoly component of the industry, the transmission and distribution sector. Regulators must set prices that do not reward inefficiency or allow monopoly profits, but nevertheless provide appropriate incentives for new investment. This is a delicate balance.
In the longer term, the problem of the environmental impact of an industry relying predominantly on carbon-based fuels remains to be addressed. A market solution would involve the creation of emissions credits that could be traded along with electricity in national markets. Although limited steps have been taken in this direction, much remains to be done.
There are reports that the ABC’s Catalyst science program is to be dumped, and replaced by a series of specially commissioned 1-hour documentaries. The move has reportedly been prompted by the disastrous broadcasts of Maryann Demasi, on the supposed dangers of statins and wifi. I have mixed feelings about this. Catalyst has serious problems, going beyond Demasi, but the alternative sounds like it will require a lot of money to do well. I fear that “specially commissioned” will turn out to mean “recycled from Discovery Channel” and that we will end up with lots of variants on “Shark week”
More generally, it’s depressing to reflect on the near-total failure of television as a communications medium for science. The demands of the medium (flashy visuals, and continuous sound) overwhelm what ought to be its potential. Discovery Channel is a joke that makes Catalyst at its worst look good. Even the great David Attenborough is now presented inaudibly, drowned out by the monotone background noise of Sigur Ros. Overall, radio is better, and text better still.
A while back, I made the case that the political crisis evident in most developed countries could be explained in terms of a “three-party system” in which the political forces were divided between tribalism, neoliberalism and a somewhat inchoate left. This replaced a neoliberal consensus in which power alternated between hard/right neoliberals (in the US context, the Republican party), relying on the political support of tribalists, and soft neoliberals (in the US context, centrist Democrats) relying on the left to support them as a lesser evil. The first stage of this breakdown has been the capitulation of hard neoliberals to the tribalist right. The most obvious instance is Donald Trump, but the same thing is happening in Australia with Pauline Hanson, in England with UKIP/Brexit and in many European countries as well.
That this is happening is now obvious. What should the left do about it? It’s obviously insufficient to make the point that Trump, or Hanson, or Farage is a racist (or uses racism for political benefit) and expect that to settle the question. That doesn’t mean that we should maintain the long-standing taboo on using the word “racist” to describe such people. Rather, we should start developing a proper analysis of political racism and strategies to oppose racism and tribalism.
The problem we face today is new in important respects. The civil rights and anti-apartheid movements were was a struggle against overtly racist racist state structures. The success of those movements did not end racism, but drove it underground, allowing neoliberals to exploit racist and tribalist political support while pursuing the interests of wealth and capital, at the expense of the (disproportionately non-white) poor.
That coalition has now been replaced by one in which the tribalists and racists are dominant. For the moment at least, ahrdneoliberals continue to support the parties they formerly controlled, with the result that the balance of political forces between the right and the opposing coalition of soft neoliberals and the left has not changed significantly. However, unlike the Civil Rights era, where racists had a clear agenda of defending the status quo, the new politics of the right is driven more by a general expression of resentment (or, if you want to be fancy, ressentiment) than by coherent policy objectives.
I have some ideas about what kinds of strategies and arguments are needed here, but I thought I’d post this first, and wait to see what others have to say.
I’ve just done an interview with Channel 10, about cost blowouts on the infrastructure projects supposedly funded by Mike Baird’s asset sales program. I made the point that such blowouts are more likely when projects are funded from special pots of money rather that avoid normal processes of budget assessment.
More tiresomely, I repeated a point that I have been making for 20 years, and that (as far as I know) every economist in Australia agrees with. Selling income generating assets does not provide any additional capacity to invest in non-income earning assets such as (untolled) roads, schools and hospitals Exactly this point was made by the Secretary of the NSW Treasury in relation to PPPs back in the 1990s (I’ll dig out a link).
Despite this nonsense idea being refuted over and over again, it continues to be believed by politicians of both parties and to get a free ride from our economically illiterate press, most notably (since it ought to do better) the Financial Review.
I’ve given up hoping that this will change. Fortunately, privatisation is so politically toxic that justice is usually served in the end.
A few weeks ago, I gave the FH Gruen lecture, on the topic After reform: the economic policy agenda in the 21st century. Thanks to sound editor Simon Kravis, I now have a version of the podcast with improved audio quality, but unfortunately the part of my tribute to Fred that was drowned out by a hailstorm is permanently lost.
So, I thought I would try to write something like what I said, with a few (I hope) improvements. Here it is:
It’s great honour to be invited to give the FH Gruen Lecture.
Fred was very much a role model for me, and while I will never be able to emulate his effortless personal style, I have done my best to follow his lead in my approach to economics. He saw economic theory as a tool, and only part of what economics should be: what really matters is the application of theory to improve policy.
In a small country like Australia, it’s necessary for economists to take part in public discussion and public debate. The older generation of academic economists, exemplified by Fred, did this, and I’ve tried to maintain this approach.
Like me, Fred began his career as an agricultural economist, and I’ve always thought this was some of the best training for an economist. But Fred’s contributions weren’t limited to agriculture. He ranged across a wide range of policy issues. He always brought to bear both a keen economic insight and a commitment to the use of economic policy to improve the lives of ordinary Australians.
He greatly encouraged me, and many of my generation of economists who worked with him in the Economics Department of the Research School of Social Sciences at ANU.
I am very proud to be able to give a lecture in his honour.
John Quiggin 