Greg Hunt: Can’t add, can’t read

John Quiggin59 Comments

Last time I paid attention to Opposition climate spokesman Greg Hunt, he was talking to the Oz, making absurdly inflated claims about the impact of a carbon price[1] on household electricity bills. Now he’s at it again, with a statement to Imre Salusinszky at the Oz, claiming that I endorsed Jonathan Moylan’s (reported) actions in the Whitehaven hoax, and that I supported market manipulation more generally. From that, he draws the conclusion that I have breached my legal obligation under the Public Service Act to comply with the law in all matters relating to employment, and therefore that I an not a fit and proper person to be a member of the Climate Change Authority. Here are the money paras from Salusinszky’s email to me and Hunt’s statement to the Oz

Greg Hunt says your public support for Jonathan Moylan raises a potential conflict with your role on the Climate Change Commission (sic), because the public service code of conduct deems that “an APS employee, when acting in the course of APS employment, must comply with all applicable Australian laws.” Hunt’s point is that by supporting Moylan you are implicitly endorsing stock market manipulation.

Under the Public Service Act it is clearly inappropriate and irresponsible for Statutory office holders to be supporting market manipulation and the use of false and misleading information. This raises deep questions in terms of both the Act and the public service Code and values on a number of fronts. The simple answer is that no public official should ever be endorsing the use of false and misleading information to manipulate the share market

Obviously, this is a grotesque misrepresentation. My view of Moylan’s (reported) actions was summed up by the observation “I’m not a big fan of hoaxes”[2]. My posts on the subject were not concerned with the ethics of the hoax, but with the absurdity of the reactions to it.

But the claims that I acted unlawfully under the Public Service Act take Hunt’s silliness out of the normal political category, and well into the realm of defamation. Of course, Hunt is safe enough so far. I haven’t got the time, energy or financial resources to pursue him, other than through this blog. News Limited is a different matter. Given their deep pockets and demonstrable history of malice towards me, they’ll make a tempting target if they are silly enough to publish Hunt’s libels. I don’t usually read the Oz, but I will certainly do so with care tomorrow.

Update When he was advised of my response by Imre Salusinszky, Hunt backed off, though with bad grace (he stated to me in email that it was more than he thought I deserved) and in a way that makes his claim of a breach of the Public Service Act even more nonsensical (leaving aside the fact that, at least according to Bernard Keane, I’m not covered by the Act anyway). The resulting article, in which Hunt also attacks Clive Hamilton, is here.

While checking on that report, I found another Hunt piece, a passionate defence of free speech against the “un-Australian” threat of litigation. Published in the Oz, of course, and only five days ago.

Finally, I should say that I don’t have any complaints about Salusinszky’s actions in this matter. He advised me of the accusations and took my response back to Hunt. The report as published is an accurate representation of what I wrote.

fn1. A policy he supported for decades, until it became necessary to oppose it.
fn2. I never mentioned Moylan by name, and I have no knowledge as to whether he acted as reported and, if so, whether this constituted manipulation of the share market. As I said on Twitter, that’s his problem, not mine.

BHL on JMK

John Quiggin28 Comments

My essay in (the new and exciting) Aeon magazine looking at Keynes’ suggestion that we could achieve decent living standards for all with an average of 15 hours a week of market work has had mostly favorable responses. But Kevin Vallier at the Bleeding Hearts Libertarian blog has now written a lengthy response and he doesn’t like it. Unfortunately, that’s about all I can say, since he throws a lot of adjectives (sectarian, morally impoverished and so on) at me without actually spelling out an objection.

Vallier’s response is in three parts. The first is a lengthy and fairly accurate, though hostile, summary of my general political position. He doesn’t offer a substantive criticism, but snipes about semantics Vallier objects, for example, to my “derisive” use of the term “market liberalism’ to describe “the sum total of pro-market economic thought that has had some influence over the last fifty years”. In fact, as I said in Zombie Economics, I picked the term precisely to avoid the pejorative connotations of the more commonly used “neoliberalism”[1]. What does Vallier propose here? I can’t spell out “the sum total of pro-market economic thought that has had some influence over the last fifty years” every time I want to refer to the ideas I’m criticising. In essence, I think he is upset that, by giving any name to the dominant ideas of recent decades, I am pointing out that they represent an ideology, with a history, rather than a set of timeless truths.

The second part of Vallier’s response is a summary of the main argument of my essay, but so brief that a reader who didn’t follow the link would have a very limited idea of what I was saying. The third part criticises me for advocating “coercion” against people who want to work hard and make money. Vallier doesn’t say what he means by this. The obvious incorrect inference, drawn by quite a few of his readers, is that I’m advocating statutory limits on hours of paid work[2]. However, he doesn’t seem to mean that. Rather, he seems to object to high income earners being required to pay taxes to support people who don’t work.

But this raises a puzzle. The only policy proposal I discuss in any detail is that for a guaranteed minimum income. But Vallier supports this – in fact, it’s pretty much the central distinction between Bleeding Heart Libertarians and the regular Republican+legal drugs kind.[3] So, is he inferring (correctly) that I’d propose a higher minimum than the BHLs? Or something else? I really don’t know.

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More than a hacktivist

John Quiggin23 Comments

Many of you will have heard by now of the tragic death, by suicide, of Aaron Swartz, who was facing felony charges for an alleged attempt to distribute academic articles free of charge. It’s probably inevitable, as Henry Farrell says at Crooked Timber, that coverage of Aaron Swartz’ tragic death will focus narrowly on the story of Aaron as persecuted hacker. My main debt to him is almost entirely outside the tech sphere in which he made such big contributions. Early on in my blogging career, I came across the rightwing myth, that bans on DDT, inspired by Rachel Carson cost millions of lives. In fact, this was one of my first encounters with the rightwing parallel universe with which we are all familiar nowadays. At the time, most people hadn’t woken up to this, and the DDT myth was promulgated with great success. Tim Lambert and I spent years fighting the myth, ending up with this piece in Prospect. Along the way, we discovered the surprising fact that the myth was originally pushed by the tobacco industry, as a flank attack on public health bodies like WHO, which were trying to fight tobacco, and had (quite correctly) scaled back use of DDT, after early campaigns were defeated by the growth of resistance.

A crucial piece of the puzzle came from Aaron, who pointed out the central role of Roger Bate, an all-purpose anti-science activist based at the American Enterprise Institute (he’s largely moved on from DDT these days and is now fighting “counterfeit”, that is, unlicensed, versions of patented drugs). The DDT myth lives on in various corners of the blogosphere and still pops up from time to time in the mainstream media, but it’s now at least as easy to find refutations.

I honestly can’t imagine how someone could pack so much achievement into 26 years. Aaron’s loss is a tragedy for all of us, and the vindictive campaign against him by the Massachusetts prosecutors office (whose head, Carmen M. Ortiz, is regularly mentioned as being destined for higher office) was a crime.

Who are the criminals here?

John Quiggin20 Comments

I’m not a big fan of hoaxes, but the Whitehaven coal hoax (or rather, the reaction to it) has certainly provided plenty of teachable moments. Media stories are still calling it a $300 million hoax (while throwing stones at online reporting H/T Megan), and suggesting that Mums and Dads are big losers. Now we have some actual data, showing that clients of Morgan Stanley and Macquarie gained from the trades made during the hoax while those of Citigroup and UBS lost. [1]

Given the claim that hoaxes like this might destroy faith in the stock market, it’s worth looking at the track record of some of these banks. Looking just at the last few months, we have:

Morgan Stanley fined over Facebook IPO, 19/12/12
Citi fined $2 mln over Facebook IPO October 2012
Deutsche Bank, UBS Convicted by Milan Judge for Fraud Role
19/12/12

UBS in particular has a rap sheet so long that Bloomberg news recently published a call for it to be shut down

By comparison with these global titans, Macquarie Bank looks pretty good, despite being well-known as a sharp-elbowed practitioner of regulatory arbitrage
Regulator eyes millionaires factory

It’s now clear that this systematic criminality is part and parcel of modern financial markets, and that nothing can or will be done about it. After HSBC got a slap on the wrist for a long-term money laundering operation on behalf of drugdealers, dictators and terrorists, the US Department of Justice openly admitted that the big banks are not only too big to fail, but too important to be subject to the law. Modest fines are just a cost of doing business, exactly as they are for other businesses that routinely operate at the edge of, or outside the law.

Perhaps the clients of these firms are unaware of these facts. If so, this event might help to inform them. If not, they can scarcely complain about something as trivial as a hoax press release.

fn1. Apparently Morgan Stanley bought about $2.6 million of shares, which would imply a profit of around $500k, a significant sum, but several orders of magnitude below the $300 million quoted

$300 million

John Quiggin28 Comments

Continuing on silly claims about the Whitehaven hoax, the figure of $300 million is being bandied about as the cost to Australia’s Mums and Dads. I haven’t checked, but I assume that this is the change in market capitalization of Whitehaven from the opening to the point at which the hoax was exposed. That is, it’s the amount that would have been lost if all the shares in the company had been sold at the bottom, assuming this was feasible, which it isn’t. Of course, an equal amount would have been gained by the buyers.

But, ever vigilant on behalf of Australia’s Mums and Dads (I’d like extra bonus sympathy as a Grandad!), I thought I would check to see if any such outrages are continuing. It turns out that the All Ordinaries index has fallen 16 points, or about 0.4 per cent, since 10am. Assuming a market capitalization of 1.2 trillion, that’s nearly $5 billion ripped from our parental pockets in the course of a single morning. Almost certainly, some of this due to spurious rumors, some of which may have been deliberately spread.

Can’t something be done about this? Won’t somebody think of the children?

PS: I see in comments that Alison Parkes has made a similar point

Mums and Dads

John Quiggin68 Comments

I don’t have a strong view on the hoax announcement that ANZ had withdrawn its support for the Whitehaven coal project. However, I do have some thoughts on the widespread claim that “Mums and Dads” lost significant sums of money as a result of the short-lived fall in share prices that ensued.

First, the claim is undoubtedly true. By the time they have enough money to invest in, or speculate on, the share market, the great majority of Australians have children. Nathan Tinkler, for example, is a father of four. Gina Rinehart is, at least according to her kids, a spectacularly bad mother, but she’s a mother all the same. The unremarkable fact that most owners of shares have children does not entitle them to any particular sympathy.

More importantly, this was a zero sum event. For every Mum, Dad, or childless person who lost money by selling at the bottom, another gained by buying.

Finally, what kinds of Mums and Dads lost money on this event? Anyone who left their investment portfolio unchanged over the course of the day was unaffected. So, the losers fall into two groups
(a) Unsuccessful speculators, who might be better advised to spend more time with their kids and less time playing the market
(b) A few unlucky parents who shifted their long-term investments the right way (that is, out of coal) but at precisely the wrong time

As regards Mums and Dads in group (b), I offer the consolation that, while they didn’t get the timing precisely right, a decision to sell coal stocks will very probably turn out well in the long run. And, as far as investing is concerned, getting out of coal is certainly the best thing they could do for their children.

Krugman on 2013 vs 1958 macro

John Quiggin44 Comments

At the recent American Economic Association meeting in San Diego, Brad DeLong chaired a panel on ” Stimulus or Stymied?: The Macroeconomics of Recessions“, and has posted a transcript. Paul Krugman was there and picked up my claim that macroeconomics has, on balance, gone backwards since 1958. I’ve extracted his section here. Lots of useful stuff, but I’d stress this:

the whole basis on which we constructed monetary policy during the Great Moderation, which is that stabilizing inflation and stabilizing output are the same thing, is all wrong: you can have a sustained period of low but not negative inflation consistent with an economy operating far below its potential productive capacity. That is what I believe is happening now. If so, we are failing dismally in responding to this economic crisis. This is in contrast to what some central bankers are saying—that we have done well because inflation has stayed relatively stable.

To push this a bit further, I’d argue that there will be no real recovery as long as central banks continue to treat the inflation-targeting polices of the (spurious) Great Moderation as the pre-crisis normal to which we should strive to return

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Wouldn’t even know …

John Quiggin57 Comments

… if their a**e was on fire. That’s just about literally true of Australia’s climate delusionists. As the hottest temperatures on record set off the predictable (and predicted) bushfires, they keep on with the same old stuff. This Catallaxy thread has it all, if you can stomach it – bogus statistical claims from fools too ignorant to estimate a trend line and too lazy to learn how, silly IPCC and BOM conspiracy theories, absurd economic alarmism about the allegedly catastrophic effects of the carbon price, CO2 as plant food, and so on. Catallaxy’s main rival in the lunar right stakes, the Oz, chimes in with an editorial snarking about Al Gore. Meanwhile, Christopher Monckton has teamed up with pastor, creationist and bigot Danny Nalliah, who blames the bushfires on God’s wrath, to promote an Australian version of the UK Independence Party.

There is no possible evidence or argument that can shift these guys. The only consolation is that, while ignorance is strength in the short run, a political movement that relies on delusion will fail in the end. The US Republicans, and their supporting apparatus of thinktanks, media outlets and blogs have found that out, having lost both elections and credibility. The same is happening here, particularly with respect to alarmist claims about the devastating effects of pricing carbon.

Meanwhile, back in the real world, I’m starting a long-postponed project on bushfires and climate change with a former postdoc of mine who’s been working in the US for some years and is back for a long visit, having arrived just as the Tasmanian fires started it.