What I did on my holiday …

John Quiggin8 Comments

… from blogging.

I’ve been off-air for quite a while. First, I was travelling in Europe, mainly based in Paris, doing some joint work with colleagues there and attending conferences on decision theory. I made some good progress on my main project, on the role of unforeseen contingencies in financial crises, which hope will lead to some interesting posts in the future.

I got back a couple of weeks ago, with a week to spare before I went to the Cairns Adventure Festival, where I entered in the 70.3 (Half Ironman) event. I was the last person to finish within the stated cutoff time of 8 hours, though a few crossed the line after that. Still, I finished, which pleased me a lot given that two weeks in Paris would be suboptimal for training even if it hadn’t been wet and cold enough that I caught a nasty cold there.

That was a week ago, and I’ve been catching up on unfinished business, and planning a return to regular blogging. The state of Australian politics is so depressing that I plan to avoid the topic altogether[1], which will give me a chance to talk about some of the broader issues we face.

fn1. Let’s see if I can hold myself to this, or whether I get so annoyed I need to vent

Why gold is different from Bitcoins

John Quiggin35 Comments

I have a new piece out in the National Interest, explaining why gold, unlike Bitcoins, will remain valuable for many years to come. In essence, gold has an intrinsic value derived from its industrial and decorative uses, and this value is enhanced by the demand for gold as a store of value, and by the belief (mistaken in my opinion, and certainly not an option I would favor) that gold-backed currencies may be restored.

By contrast, in my view, this piece by Robert Murphy misses the crucial distinction. Monetary demand can enhance intrinsic value, but it can’t make an intrinsically worthless asset valuable. He also fails to state the crucial point about fiat money. The “fiat” comes from the fact that a state can demand taxes can declare (“fiat”) that its money is acceptable in payment of those obligations. Hence, as long as the state can enforce its demands, its money has real value.

How Gillard could have won for Labor (repost)

John Quiggin118 Comments

I see from my Twitter feed that the viewpoint I expressed a year or so ago is becoming more widespread. Of course, it’s too late now for anything but damage mitigation.

Repost follows:

How Gillard could win for Labor

By resigning gracefully. If I were advising Gillard on how best to secure her place in history, I’d suggest waiting until the 1st of July and then making a speech along the following lines

The carbon price, legislated by my government is now in place. It will soon become obvious that the scare campaign run by Mr Abbott and the Opposition has no basis in reality and that our plan will achieve cost-effective reductions in carbon emissions, while making most Australian households better off. I am proud of my government’s achievements in this and other areas. Nevertheless, I recognise with sadness that I am not the best person to take this message to the Australian public. I have therefore decided to resign the office of Prime Minister and advise my Labor colleagues to support the return of Mr Kevin Rudd to this position. Mr Rudd and I have had substantial disagreements over matters of managerial style, but we are agreed on the need for a Labor government with Labor values, and on the need for action in key areas including the carbon price, the mineral resource rent tax and the successful management of the Australian economy. I will give the new PM my enthusiastic support, and work for the re-election of a Labor government.

Would this work? I’m not really sure. But given Abbott’s failure to achieve any popular support at a time when Labor has plumbed unheard of depths of popular support, it would have to be worth a shot. At a minimum, it would help avoid the Queensland-style wipeout that is currently on the cards. And if it worked, history would certainly look kindly upon a PM willing to give up the job for the sake of her party and, more importantly, in the best interests of the country.

Queensland Budget Response

John Quiggin2 Comments

I ran this up yesterday, but have only just had time and Internet access to post it

Despite the usual attempts to shift blame to the previous Labor government, Queensland Treasurer Tim Nicholls’ budget speech shows that the real problem is inadequate tax revenue. The boost provided by the housing and mining booms has passed, but the demand for public services continues to grow. Attempts to solve the problem by cutting staff, supposedly without reducing services, are doomed to failure, as is already becoming apparent.

Because it is the lowest taxing state in Australia, Queensland’s difficulties are even worse than those of other states. The Budget contains some belated recognition of this, with the deferral of the irresponsible proposal to raise the payroll tax threshold, already the highest in Australia, even further. Scrapping this proposal altogether would do more to ensure the fiscal sustainability of the state budget than the unsustainable cuts imposed last year.

Ultimately, however, the solution to this problem must be found at the national level. While the Budget’s complaints about the meanness of the Federal government strike a familiar chord, in the present context they are fully justified

Monday Message Board

John Quiggin36 Comments

I’m back in Australia, catching up on a few things, and getting ready to resume normal blogging in a week or so. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

Last three on the island (Crosspost from Crooked Timber)

John Quiggin28 Comments

There’s been a spate of recent articles looking at a group of US political writers referred to as “conservative reformers”.

The term ‘reformers’ is misleading since it tends to imply a shift in the direction of liberalism, which is not what the members of this group are hoping to do. More importantly, it implies the existence of a body of orthodox conservative thought against which the reformers are reacting. In reality, US conservatism has returned to the state identified by Trilling ‘ a series of irritable mental gestures. The ‘reformer’ label covers all those self-identified conservatives who would like to present some sort of intellectually coherent policy platform. These days, that’s a surprisingly small set – the typical list includes Douthat, Salam, Ponnuru, Barro, Brooks, Levin, and Dreher.

There used to be many more people in this group. But one by one, they’ve either abandoned ship and moved to the left (Lind, Sullivan, Frum, Bartlett, Ornstein) or descended into outright hackery, an absolute requirement for employment at any of the main rightwing thinktanks (and it’s hard to recall, but there was a time when people like Glenn Reynolds and the Volokhs seemed like serious intellectuals).

Looking at the remaining group, it’s pretty clear that Barro and Dreher are well on the road to apostasy, while Brooks and Levin are now reliable hacks, if they weren’t always. So, that leaves three reformers (Douthat, Salam and Ponnuru) still on the island.

The reactions of the remaining three reveal the pressure they are under. Salam more or less openly shills for the party line from time to time, as in his (now-deleted) attack on the DREAM Act. It seems pretty clear that he will stick with the team, come what may.

Ponnuru responded with the plaintive observation that, to accept the positions being urged on him from the left, he would have to concede that the majority of US conservatives were crazy. But, if craziness is assessed on the basis of stated views, this is evidently true, as Ponnuru surely knows.

Pluralities of US conservatives believe, or at least claim to believe, that:

The President of the US is a socialist Muslim, born in Kenya
The earth is less than 10 000 years old
Mainstream science is a communist plot
Armed revolution will likely be necessary in the near future

Ponnuru hopes that he can engage in serious policy discussion with conservatives while treating such delusional statements as mere shibboleths – harmless assertions of tribal identity

Most interesting is this piece by Ross Douthat, setting out what he sees as the reform conservative policy program. As he observes, it’s not designed to appeal to (US) liberals, and its full of arguments that have been demolished repeatedly by the left.

OTOH, as Douthat admits, there’s no sign that the Republican party has any interest in a program of this kind. More importantly there’s nothing there that would seriously upset a moderate conservative like Obama, or either of the Clintons. It’s well to the left of the revealed preferences of someone like Rahm Emanuel.

Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

Paris in the Spring (crossposted from Crooked Timber)

John Quiggin27 Comments

Sunday was Mother’s Day in Paris, and also the occasion of a big demonstration against equal marriage, titled “Manif Pour Tous”, presumably with the unspoken reservation “sauf homos”. I ran into a bit of the crowd, coming back from this event [^1], and they were certainly loud and boisterous. The idea that this was a rightwing version of a “Paris Spring” occurred to me, and also to this commentator in Le Monde.

I’ve seen it suggested that resistance to equal marriage is stronger in France, because there’s no legal recognition for church marriages – everyone has to go through the same civil ceremony. I’d be interested in other thoughts on that.

Overall, the real appeal of the right still seems to me to lie in anti-immigrant rhetoric and, within Europe, on attempts to blame the people of one country or another for a crisis of the entire global system of financial capitalism. The backlash against equal marriage seems to me to be the last gasp of the cultural right, rather than the basis for a sustained upsurge. But then, what I know about social developments in France would fit comfortably on a restaurant menu, so I’d be interested in what others have to say on this..

[^1]: I’m actually in town for this conference, where I’ll be talking about bounded rationality and financial crises. Essentially a preliminary attempt to describe the “Black Swan” problem in terms of formal decision theory, with the hope that this will lead to a more developed theory of financial bubbles and busts.

Monday Message Board

John Quiggin82 Comments

I’m travelling, so posting will be light to non-existent for a while yet. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

The arithmetic of space travel (crossposted from Crooked Timber)

John Quiggin110 Comments

There’s been a lot of excitement about the discovery of two Earth-like[^1] planets, a mere 1200 light years away. Pretty soon, I guess, we’ll be thinking about sending colonists. So, I thought it might be worthwhile to a little bit of arithmetic on the exercise.

I’m going to assume (generously, I think) that the minimum size for a successful colony is 10 000. The only experience we have is the Apollo program, which transported 12 astronauts to the Moon (a distance of 1 light second) at a cost of $100 billion or so (current values). So, assuming linear scaling (again, very generously, given the need to accelerate to near lightspeed), that’s a cost of around $100 trillion per light-second for 10 000 people. 1200 light-years is around 30 billion light-seconds, so the total cost comes out roughly equal to the value of current world GDP accumulated over the life of the universe.

Even supposing that technological advances made travel possible over such distances possible, why would we bother. By hypothesis, that would require the ability to live in interstellar space for thousands of years. A civilisation with that ability would have no need of planets.

[joke alert on] On behalf of my fellow Australians, I’m going to make a counter-offer. For a mere $10 trillion, we can find you an area of land larger than a typical European country, almost certainly more habitable than the new planets, and much closer. We’ll do all the work of supplying water and air, build 10 000 mansions for the inhabitants and guarantee a lifetime supply of food. I’m hoping for a spotters fee of 0.01 per cent.[joke alert off]

On a related point, what should we be wishing for here? The fact that no-one has sent a detectable signal in our direction suggests that intelligent life forms similar to humans are very rare. If habitable planets are very rare, then this is unsurprising – interstellar distances preclude both travel and any kind of two-way communication. If on the other hand, the emergence of intelligent life is common, then the evidence suggests that its disappearance, through processes like nuclear war, must also be common.

[^1] Where Earth-like means somewhere between Venus-like and Mars-like.