ACMA fails again

John Quiggin144 Comments

Following the tragic suicide of a British nurse, the victim of a cruel and unfunny practical joke by an Australian radio station 2DAYFM, what action can we expect from the Australian Communications and Media Authority which is supposed to regulate such matters? Following the most recent of many such breaches of license conditions, in May last year, ACMA warned 2DAY-FM that it could lose its license if such behavior continued. But ACMA has never cancelled a license, and clearly never will. So, we can expect another warning, or perhaps some meaningless, and unenforceable, license conditions.

ACMAs total failure contrasts with the success of the Facebook backlash against Alan Jones, which has cost him and his employers millions in lost advertising revenue, and greatly reduced his power and influence.

At this point, it’s clear that licensing has failed. Rather than continuing with this farce, we should auction the spectrum currently allocated to commercial radio, and let the winners do what they want with it, subject to the ordinary law of the land (which prohibits recording deceptive calls, though this law is never enforced against radio stations). As a community, we should continue to punish the corporations that sponsor the likes of Jones, Kyle Sandilands, and their latest imitators.

Just when you think they couldn’t get any worse …

John Quiggin67 Comments

The Queensland LNP comes up with this. Fortunately, I doubt that this silliness will have any effect, except to increase the likelihood of a one-term Newman government, already close to even money in my view.

Having lived in Queensland for most of the last 20 years, the only LNP government I can remember is that of Rob Borbidge, who seemed like a paragon of good sense compared to this lot. It really is as if the entire LNP has been in cold storage since the Joh era and revived for the occasion. But, given Labor’s appalling betrayals of its own voters, they were certain to win, and better that they should be so obviously silly as to make the next election a chance for real change.

A surplus of stupidity

John Quiggin62 Comments

When commentators as disparate as me, Warwick McKibbin, Bernie Fraser, ACOSS the Australian Industry Group and the Business Council of Australia are all in agreement, it might be time for the government, and the opposition to start paying attention. At this point, I doubt that there is a single credible economist who thinks that the government’s promise to return the budget to surplus this financial year is a good idea. Yet the Treasurer remains absolutely committed, and the Opposition is ready to denounce him if we miss the target by even a single dollar.

To restate the case, it’s clear that growth is slowing, and, as usual in these circumstances, monetary policy is becoming less effective. In cases like this, fiscal policy ought to be moderately stimulatory, or at least left neutral, so that the automatic stabilizers (declining revenue and increasing welfare payments) are left to cushion the impact of a slowdown. Instead, thanks to this absurd pledge, the government is committed to matching every reduction in economic activity (and therefore in the budget balance) with its own cuts or tax surcharges.

Obviously, the reasoning here is political not economic. The government suffered badly from the gratuitous “no carbon tax” promise[1] made before the 2010 election. To dump the equally gratuitous “early return to surplus” promise would involve a whole world of pain. And of course Tony Abbott cares nothing at all about good policy, unless it’s defined as policy that will make him PM. So, we have the politicians united on one side of the debate, and everyone who has any idea of economic reality on the other.

fn1. Feel free to parse this in comments, but the fact remains that the Rudd government was elected with a strong commitment to carbon pricing, which Labor then dumped in a loss of nerve before the 2010 and was forced back to (something like) its original position by the election outcome. In this context, the question of whether a specific promise was made and broken is of secondary intersest.

Sandpit

John Quiggin62 Comments

Comments seem to be veering off-topic, so I’m opening a new sandpit for long side discussions, idees fixes and so on. In particular, this includes MMT-related discussions. I’m planning a post which will address some of the arguments raised by MMTers and others as to when, if at all, the government’s budget constraint is binding.

Doing the time warp

John Quiggin34 Comments

Following up on my post about Rachel Nolan’s arguments for privatisation, I ran across this interview with former ALP education minister and attorney general Cameron Dick, generally regarded as a rising star while Labor was in office. Before Nolan, Dick was the only minister willing to go on record with thoughts about Labor’s defeat and he had this to say

he felt the party should have concentrated more on the economy during the election campaign, emphasising the decisions it had made.

‘‘I do think Labor fell into the error, or seriously miscalculated and under-estimated the desire for Queenslanders to hold onto the AAA credit rating,’’ he said.

‘‘And I think the concern Queenslanders had generally about government debt and deficit.

‘‘And I think we were unable to effectively tell our story about investing in infrastructure to keep jobs.

‘‘I mean, that was the strategy we took as part of the global financial crisis.’’

Say what? All of these points would be a great explanation if Labor had lost the 2009 election, after sacrificing the AAA rating to maintain infrastructure and jobs as a strategy in response to the global financial crisis. But, in reality Labor won that election easily. The plunge in the polls came when they announced a drive to restore the AAA rating by selling public assets, mostly infrastructure, and by pushing the panic button with respect to government debt and deficits. All the polls showed that no one except the pollies (and powerful bureaucrats like Doug McTaggart and Leo Hielscher) gave two hoots about the discredited ratings agencies. They hated the asset sales, and dumped the government as a result.

To strengthen my conclusion from last post, while the Newman government has been a disaster, the Labor MPs who supported the sales to the bitter end (all but a handful) brought their fate on themselves, and deserved it. Labor will certainly win lots of seats next time around, and perhaps even win government. I hope they can do a better job selecting candidates whose views reflect those of Labor voters.

Rachel Nolan on the case for privatisation

John Quiggin60 Comments

During the long debate over the Bligh government’s sale of public assets, I was frustrated by the government’s refusal to mount a serious case in favour of the sales. The official argument, that the money gained from the sale of income-earning assets could be used to finance the building of schools and hospitals was such obvious nonsense that even strong advocates of privatisation like Henry Ergas were willing to sign a letter I organized pointing this out and calling for a proper debate. Now finally, former Transport Minister Rachel Nolan has given us some idea of what the government was really thinking.

Nolan has a piece in Quarterly Essay (paywalled, but there is a summary from Laura Tingle here), in which she laments that Australians “have little philosophical grasp of the (rightful) diminution of governmental power which deregulation has brought” . She retails some anecdotes of being besieged by “rent-seekers” wanting her to direct Queensland Rail in various ways[1], and complains about constituents wanting her to fix various things outside her control.
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The Murray Darling Basin: the end of an era

John Quiggin18 Comments

I first started working on the problems of the Murray-Darling river system 30 years ago, just as the great expansion of irrigated agriculture was reaching its limits. I’ve done a lot of different things since then, but kept on coming back to this issue. For a brief moment after the election of the Rudd government and the implementation of the Water for the Future plan, it seemed like Australia finally had the policy right. The government would buy back enough of the water rights it had given away in the past, and use them to restore something close enough to natural flow patterns to protect the most vulnerable natural environments. The money spent on the purchases would ease the pain of the adjustments that have been going on for decades anyway, as a result of “closer settlement” policies that encouraged the creation of farms too small to support a family properly.

All of that fell in a heap with the disastrous mismanagement of the Draft Basin Plan, which led to its rejection first by irrigators instead of the government. At this point, the process reverted to the time-honored patterns of political horse-trading and I announced a year or so ago that I was moving on. Now the Basin Plan is finally law. The best that can be said is that it is not the disaster it might have been. Billions of dollars have been allocated to infrastructure boondoggles, and the allocation of water to the environment is less than what is needed. But the 2750 GL environmental allocation is much more than seemed remotely plausible a decade or so ago, and there seems to be some effort to stop the most wasteful infrastructure project.

Meanwhile, on the academic front, I’ve had one last gift from my decades of work on this topic, with a publication in Nature Climate Change, something I’ve long aspired to. Admittedly, I’m listed last among nearly 20 authors of an article that’s only a few pages long. I wrote a fair bit in the drafting process, but only a couple of sentences ended up in the final paper. Still, that’s the way things are done in the natural sciences, so I’m not going to complain. For those who can’t get access, the shorter version is that, while Australia hasn’t done a great job with the management of our water resources, we are still doing better than anyone else.

As I’ve mentioned before, I’ll be starting a new Australian Research Council Laureate project next year, on bounded rationality and financial crises. I’ll also continue working on climate change, and may touch on the issue as it relates to the Basin. But, apart from that, I think it’s time to declare an end to my work on the Murray. I think the work I put into this problem, along with many other natural and social scientists, led to a better outcome than we might have seen otherwise. And, sometime before too long, I really will take the family on the houseboat trip I’ve been planning since the beginning.

The Great Oil Fallacy

John Quiggin117 Comments

That’s the headline for a piece I published in The National Interest last week. Opening paras

Among the unchallenged verities of U.S. politics, the most universally accepted is that of the crucial strategic and economic significance of oil, and particularly Middle Eastern oil. On the right, the need for oil is seen as justifying an expanded and assertive military posture, as well as the removal of restrictions on domestic drilling. On the left, U.S. foreign-policy is seen through the prism of “War for Oil,” while the specter of Peak Oil threatens to bring the whole system down in ruins.
The prosaic reality is that oil is a commodity much like any other. As with every major commodity, oil markets have some special features that affect supply, demand and prices. But oil is no more special or critical than coal, gas or metals—let alone food.

This piece expands on my earlier argument that the US has no national interest at stake in the Middle East, just a set of mutually inconsistent sectional interests and policy agendas. I don’t talk about climate change explicitly, but we’ll never have a sensible debate about climate change until oil is demystified.

In which I agree with Megan McArdle (crosspost from Crooked Timber)

John Quiggin20 Comments

For quite a while, I’ve been arguing that the simultaneous occurrence of sustained depression in most developed countries provides fairly conclusive evidence that both new classical macroeconomics and standard versions of real business cycle theory cannot explain actual macroeconomic outcomes. That argument is directed both against US-based economists like Casey Mulligan and Narayana Kocherlakota, who are trying to explain the US experience in terms of problems specific to the US labor market[1] and to European advocates of austerity who blame the crisis in peripheral European countries on (mostly falsely) alleged government profligacy in those countries.

An immediate implication, drawn out here by Paul Krugman, is that the success or otherwise of the limited stimulus undertaken by the Obama Administration should be assessed by comparison to the performance of other countries, most of which undertook less stimulus, returned to austerity faster, and have experienced correspondingly weaker growth (as some Oz tweeps are pointing out, he might have mentioned Australia, which undertook a big stimulus and avoided recession altogether).

But, as Megan McArdle snarks here, there’s an implication more appealing to Republicans. If Obama can’t be blamed for a global recession, neither can Bush. Although McArdle’s argument isn’t watertight (the US is big enough that US actions have a big effect on the world as a whole), the conclusion is broadly correct. There’s plenty of blame to go around for the Global Financial Crisis and the subsequent depression, and the Bush Administration deserves only a small share. Bush’s main contribution was to introduce unfunded tax cuts at a time when the budget should have been in surplus, thereby reducing the fiscal space available for stimulus when the crisis came. But, given the weakness of the stimulus and the ferocity of the political response, it’s not clear that was a binding constraint in any case.

The primary culprit is market liberal economics, which may be considered both as a set of ideas with its own internal logic and as an expression of the class interests of those who benefit from the finance-dominated form of capitalism that produced the crisis and has prevented any recovery. My book Zombie Economics is a critique of market liberalism considered as an economic theory, showing how market liberalism produced the crisis. Colin Crouch’s Strange Non-Death of NeoLiberalism gives more of the class interpretation, explainign why these discredited ideas remain dominant.