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.

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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