Emergencies and luxuries

John Quiggin85 Comments

The floodwaters have receded[1] and the miserable task of cleaning up is beginning in Bundaberg, Laidley and other communities. Here in Brisbane we were lucky enough to avoid another flood. The remnants of Cyclone Oswald hit us in the form of a summer storm, bigger than usual, but a pretty regular event here. It wasn’t surprising that hundreds of thousands of people (including me) lost electrical power, or that repairs couldn’t start until the wind had subsided. Even so, the restoration of power was very slow – in many places slower than in 2011. It’s become evident that, like all areas of the Queensland public sector, the electricity distributors (Energex in the Brisbane region and Ergon elsewhere) have been subject to staff cuts that have hampered their ability to respond. The union was issuing warnings about this last year, and they have been proved right. In one startling case, workers were delayed from responding to the emergency in Bundaberg, so they could be briefed on their redundancy options.

Ergon and Energex are government-owned corporations, which are normally supposed to make their own commercial decisions. In this case, however, the shareholding ministers, Energy Minister Mark McArdle and Treasurer Tim Nicholls, have actively intervened to push for job cuts. The obvious explanation is that they are trying to boost profitability (at least in the short term) to prepare the enterprises for privatisation. The regulatory system is supposed to require Energex and Ergon to meet reliability standards, but it seems likely that it is vulnerable to gaming, possibly by excluding extreme (but not uncommon or unpredictable) events like this storm from the criteria (I plan to look into this).

The cuts in the electricity sector have been matched or exceeded across the entire public sector, including the services on which we all rely in an emergency. Meanwhile, Campbell and Nicholls are building themselves a brand new office tower, demolishing the aging but serviceable building in which they currently work. They are paying off their supporters with cuts in payroll tax, grants to racing clubs and so on. But if you want a symbol of this government, you can’t go past Jeff Seeney, who tried to get a government plane, currently used for organ transplants and similar emergencies, allocated for his personal use.

Everyone's a winner

John Quiggin28 Comments

I was way behind the rest of the Interworld in catching up with the Eden Hazard ballboy kicking, but coming late has its advantages. As is presumably well known to followers of this particular competition, but not to others, the “ballboy” is a minor match official whose job it is to return the ball when it goes out of play. Traditionally, this was done by actual boys, aged in their early teens, who volunteered to help out in this way – giving out this coveted job being a minor perk for the senior officials of the club. Naturally, they were supporters of the home team, but this was unimportant.

But, now, it seems, the typical “ballboy” is a young man, under instructions to make life easy for the home side and difficult for the visitors. This is a new twist on the standard practice of grimy visitors’ dressing rooms with unreliable hot water and so on. All of this helps to create a home ground advantage.

This raises some interesting points about the business of sport.
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BReakout?

John Quiggin9 Comments

A crosspost from Crooked Timber, speculating (from a non-expert perspective) on the possible consequences of a referendum vote in favor of a British exit (BReakout?) from the EU. I’ll start by thinking about two polar cases.

One is the Norway/Switzerland model. Initially, the only thing that changes is that Britain gives up its political membership of the EU and institutions like the European Parliament, Council and so on. Otherwise things go on as before – Britain pays into the EU Budget, is bound by current EU regulations and subsequent changes, keeps its optouts on things like Schengen, at least initially, and maintains its current access to EU markets, free movement and so on. This seems to work well enough for Norway and Switzerland, but doesn’t seem likely to satisfy UKIP or Tory Eurosceptics. And, of course, it depends heavily on the goodwill of the EU. Britain could seek to negotiate further exemptions from EU rules, but, the EU could scale back the existing British optouts over time.

At the other extreme, Britain could unilaterally abrogate all the existing arrangements and start over from the position of, say, Russia – a major EU trading partner without any special rights or obligations other than those agreed on a case by case basis. Prima facie, that would include applicability of the standard third-country tariffs in each direction, non-tariff restrictions applicable to goods not compliant with EU (or, in the opposite direction, UK) regulations, standard visa requirements for travel, residence and work, controls on capital flows and so on. It seems clear that this would be damaging for the EU, and disastrous for the UK. Still, it also seems clear that this is what the Eurosceptics have in mind, though typically with a liberal dose of wishful thinking about how easy it will be to negotiate FTAs, visa-free travel etc.

Is there an intermediate path? I can’t immediately see one. Presumably, there is a notion that Britain would stay in while the terms of exit were negotiated. But that could last many years, and would effectively amount to the Norway/Switzerland situation in the interim.

Any other thoughts on this?

Calories or Kilojoules?

John Quiggin66 Comments

Like many of us, I’m engaged in a constant struggle to maintain a healthy weight and fitness level, and being an economist, I naturally like to think about this in quantitative terms (I’m not alone in this).

The basic equation is simple[1]: Energy used – energy consumed = fat burnt. But to make sense of this equation, we need units, and that raises the immediate questions:

Calories or kilojoules? and
How much do I have to burn to lose 1kg of fat?

The short answers are: Calories and 9000 Cal[2]

More over the fold

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Swartz and Keen

John Quiggin52 Comments

Over at Crooked Timber, I and others have been blogging about the death of the wonderful Aaron Swartz, driven to suicide by abusive prosecutors Carmen M. Ortiz and Stephen Heymann (there are petitions calling for their dismissal, which US readers are encouraged to sign, and another to pardon Swartz. Opinions differ on the last of these, but I think it should be supported).

Now we have a similar, though hopefully less tragic, case of the same mentality being applied in Australia. Last year, the University of Western Sydney tried to shut down its economics program. I was among the many who protested and the university backed down partially, agreeing to retain a major. But lots of people, including well-known macroeconomist Steve Keen decided to take the redundancy package and leave. Keen’s course was to be scrapped, and he commented to students that, in the absence of any way of retaking the course, he wouldn’t be able to fail them. Whether this was a joke, or a serious statement, it certainly pointed out the incompetence with which the shutdown was being managed. The University, possibly still smarting from its defeat, took disciplinary action against Keen and has now taken the extraordinary step of referring him to the Independent Commission Against Corruption. I’m sure that ICAC will laugh at this, but it’s the kind of threat that has to be taken seriously. I imagine Keen will face significant legal expenses as a result.

So far, I’ve referred to the University, but obviously these decisions were made by actual people, and those at the centre appear to be:

Kerri-Lee Krause, pro vice-chancellor (education) (quoted in the Oz story)
and
Clive Smallman, Dean of Business

The vice-chancellor of UWS, Janice Reid hasn’t made any public statement as yet, AFAIK. If she has any care for the reputation of UWS, and her own, she needs to abandon this vindictive attempt at prosecution, and pull these bullying bureaucrats into line.

More at Catallaxy – on this occasion, I agree entirely.

Note – if you follow the Catallaxy link, do yourself a favor and skip the comments thread. Australia’s centre-right intelligentsia living up/down to its usual standard.

Trifecta

John Quiggin101 Comments

If there were still magazine stands, I’d be all over them today. Three pieces of mine have (coincidentally) come out on in the last day or so, in fairly disparate publications

* In Aeon (a new British “digital magazine of ideas and culture, publishing an original essay every weekday”), I have a followup to my first essay there, which argued the case for a Keynesian utopia, with a drastic reduction in market working hours. In my follow-up, I look at the environmental sustainability of the idea. The tagline for the essay “For the first time in history we could end poverty while protecting the global environment. But do we have the will? ”

* Continuing on the utopian theme, Jacobin magazine has published The Light on the Hill, a reply to Seth Ackerman’s piece on market socialism

* And, at The National Interest, a piece with the self-explanatory title, Will Banks Finally Be Brought to Heel?

While I’m plugging my own work, I thought some readers might be interested in this paper on financial liberalisation and asset bubbles, written in the leadup to the global financial crisis. There’s not much I would change now, and it’s still a pretty good summary of how I think about the financial bubble that created the crisis. The linked working paper version is from 2004, and it eventually appeared in the Journal of Economic Issues, the main journal of the institutionalists who carry on the tradition started by Veblen and Commons in early C20. Not surprisingly, given this obscure outlet, it hasn’t had a lot of attention.