In the name of God, go! (repost)

John Quiggin40 Comments

I don’t have much more to say about the systemic corruption of the NSW Labor party than I already said in this post from July, except that I now think Federal intervention is essential. Suspending Eddie Obeid is not nearly enough. Those who allied themselves with him including Tripodi, Roozendaal, Bitar, Arbib and Keneally must all go too. And Labor needs a new Parliamentary leader – John Robertson is too compromised to present a clean face. It will be a long while before Labor is electable at a state level in NSW. But a determined cleanup would help reduce the damage to the national party

Back around 1970, the Labor Party was unelectable because its biggest branches, in NSW and Victoria, were controlled by factional machines of the right and left respectively, who were still refighting the battles of the 1950s Split. The eventual response was Federal intervention to restructure both branches. The intervention was more successful in Victoria than in NSW, but overall the results were good enough to produce a revitalised Labor party. The election of the Whitlam government was one result, as was the strength of the early Hawke ministries, almost any member of which would outperform the great majority of both frontbenches today.

I doubt that an intervention would produce a similar result in NSW today, but the situation is now so dire that it could scarcely make matters worse. It’s hard to imagine a political party with less justification for its continued existence than NSW Labor. It sold out its stated principles with repeated attempts to privatise the electricity industry, then made a botch of the job anyway. It has made itself look stupid with repeated changes of leaders (the only one who tried any resistance to the machine was Nathan Rees, and he was promptly squashed). Its members are enmeshed in every kind of corruption, financial, ethical and sexual, above and beyond the routine corruption of political processes that turned the word “rort” from Sussex Street slang into an Australian byword for sharp practice. Electorally, it’s a disaster area, having gone down to the worst defeat in its modern history, under the sock-puppet leadership of Kristina Keneally. Even though the NSW Libs are, as they always have been, appallingly bad, the O’Farrell government is riding high.

And now, these geniuses have decided that it’s smart politics to make war on the party that’s keeping Federal Labor in office, and with which they will need to deal for the indefinite future if they ever want to pass legislation through the Parliament. Looking at this appalling crew, I can only quote Oliver Cromwell “You have been sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go.”

Update My friends at the Oz take a keen interest in all my thoughts, so I wasn’t too surprised to see this post linked in their “Cut and Paste” section. However, the headline All the Climate Change Authority member would like now is to get rid of the NSW Right seemed both unwieldy and obtuse, in a fish-meets-bicycle kind of way. Why should my (widely shared and longstanding) views on the NSW Labor Right machine be of any more interest by virtue of my membership of the Climate Change Authority? And why should my enthusiasm about the election of the Rudd government (also linked by Cut and Paste) be relevant to either?

The answer, I would imagine, is this post by Sinclair Davidson at Catallaxy who (in a quite strange misreading) took the imprecation “In the name of God, go” to be directed, not at the Sussex Street machine repeatedly criticised in the post, but at the Federal Labor government. Terje Peterson tried to set him straight in comments (thanks, Terje), but I had to spell the point out before he added a correction on Sunday evening, which made the entire post rather pointless. By that time, I imagine, the cutter and paster had already set the story up and gone home, leaving the unfortunate sub-editor to do a salvage job with the headline (not the first time!).

“Southern White” as an ethnicity (crossposted from Crooked Timber)

John Quiggin64 Comments

A while ago, I posted about the supposed capture of the ‘white working class’ by Republicans, pointing out that the term was being used to refer to those with less than college education. On more traditional measures of class, such as income, the Democrats do much better, though still getting only about half the vote.

In response to this post a number of commenters pointed out that the data was not disaggregated by region, and that the South was anomalous. A couple of things I’ve seen recently support this. Here’s Charles Blow, reporting that 90 per cent of white voters in Mississippi supported Romney. Kevin Drum observes that Obama won about 46 percent of the white vote outside the South and 27 percent of the white vote in the South. Here’s a bit more from The Monkey Cage.

It strikes me that the best way to understand the distinctive characteristics of US voting patterns is to to treat “Southern White ” as an ethnicity, like Hispanic. With that classification each of the major parties becomes an coalition between a solid bloc vote from an ethnic minority and around half the votes of the “non-Southern white” ethnic majority, which is more likely to vote on class lines. The question then is which ethnic/class coalition is bigger. As in other countries, voting for the more rightwing party is correlated, though not perfectly with higher incomes and (conditional on income) lower education, and to shift according to broader ideological movements.
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A Xmas present from Campbell Newman

John Quiggin7 Comments

One of the jobs I had marked on my calendar for the holiday season was dismantling the second interim report of the Costello Audit Commission, due to be delivered on 30 November. While it’s obviously necessary to respond to these exercises in deception, I can think of plenty of better ways to spend the summer break. Fortunately, Campbell Newman turned out to be even less keen on defending the report than I was on attacking it. The government has announced the report won’t be released after all, so we won’t see anything more from Costello until February. Thanks, Can-Do!

Armistice Day

John Quiggin130 Comments

After more than a decade of war in Iraq and Afghanistan, there’s a chance Australia might finally be at peace next Armistice Day. Most combat operations in Afghanistan will cease early next year, and we can hope that the final pullout will take place not too long after that. In my lifetime, Australia has been involved in three long wars, none of which have produced the promised results. In two of them, Iraq and Vietnam, the pretext for war was clearly fraudulent. The overthrow of the Taliban regime, which had sheltered Osama bin Laden, was plausibly justified on grounds of self-defence, but the conduct of the war, and particularly the decision to invade Iraq, ensured that the effort would end in failure, as it has done. The best that can be said about the wars of the last decade is that they have been less costly, at least in Australian lives, than was Vietnam.

What is really striking, looking at the recent past, is how much has been achieved by peaceful means. In our own region, Indonesia has been transformed from a dictatorship (generally seen as representing a long-term military threat) to a stable democracy, which has largely overcome the challenges of terrorism, religious violence, natural disasters, and the attempts of the military to retain its central role in politics and business. With the aid of Australian peacekeepers, East Timor has made a start on a difficult road out of poverty. Elsewhere in the world from Eastern Europe to South America to the Arab world, seemingly durable dictatorships have collapsed or handed over power, mostly without the intervention of foreign governments.

Saying that war should be the last resort sounds like a platitude. But it is among the most important lessons we learn from history. Those who choose war rarely achieve the outcomes they expect and usually bring disaster on themselves as well as others. War in self-defence is sometimes necessary, and there are rare occasions when outside intervention can prevent an immediate human catastrophe. Fighting wars for justice, or democracy, or national honour, or to prevent future wars is a path to ruin.

The end of the tax revolt

John Quiggin36 Comments

The crushing losses suffered by Republican culture warriors in the US elections shouldn’t blind us to the fact that from the viewpoint of the 1 per cent, the culture war is just a useful distraction to ensure that those they are exploiting never combine against them. The big issue for them is taxation, and the opening round will be the struggle to keep the Bush tax cuts and the preferential treatment of capital gains. They’ve had an unbroken sequence of wins on these issues ever since California passed Proposition 13 in 1978. But things are finally turning around.

Over the fold, a piece on this topic that should be coming out in The Conversation next week

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Mulligan talks his book

John Quiggin24 Comments

Before engaging in another round with Casey Mulligan, I’d like to say that, while I find most of his arguments implausible, I don’t think he’s silly for making them. Given the position he’s trying to defend, these are the best arguments available. And that position is widely shared, not only by economists much more famous than Mulligan but by lots of governments and policymakers. Most mainstream opponents of Keynesianism are committed, one way or another, to the view that persistent high unemployment must be caused by problems in labour markets. But it’s much easier to talk in vague general terms about rigidities and structural imbalances than to present an operational explanation for the sustained high US unemployment of the last four years. Mulligan at least makes the attempt, which is more than most of the New Classical/Chicago/Real Business Cycle school have done, and necessary if there is to be any progress in the debate.

Replying to my criticism of his NY Times column, Mulligan suggests that I should have read his book. Perhaps so, but the column is presented as a critique of Krugman’s book, not a plug for Mulligan’s, and I responded in that light. His latest post mentions a couple of points where he draws on the book, but for the moment I’m going to continue to rely on data published elsewhere.

Mulligan responds to my points in reverse order, which makes sense, because his response to my central point is by far his weakest. The big difficulty for an explanation of post-2008 unemployment based on US welfare policies (unemployment insurance and food stamps) is that many other countries with radically different labor markets and policy responses experienced a big and sustained increase in unemployment at exactly the same time, following the global financial crisis of late 2008. In particular, lots of countries introduced austerity policies involving sharp cuts in the kinds of benefits Mulligan is criticising. Mulligan’s response to this evidence is handwaving. First he says that I haven’t calculated the implied changes in marginal tax rates, although its pretty obvious that most of them will be reductions. Then he resorts to US exceptionalism, saying

Finally, if marginal tax rates were found to be constant in Estonia (the only specific country that Professor Quiggin points to), does that mean that marginal tax rates do not matter in the U.S.? Please let me know so I can notify American economists that Estonia is our ideal laboratory, and notify policymakers that they can safety hike marginal tax rates to 100 percent without noticeable consequences.

That’s pretty startling for someone representing a school of thought which usually treats economic laws as having the same universal applicability as those of physics.

To try and make sense of an argument like Mulligan’s you’d have to start with the financial crisis as a global shock, then claim that, if only governments had sat on their hands, recovery would have been rapid. Instead, the argument would run, governments acted to alleviate the lot of the unemployed and thereby made things worse. That would be a coherent explanation for simultaneous and sustained increases in unemployment – the only difficulty is that it’s directly contrary to the facts.

It’s worth making the distinction here between changes and levels. Lots of European countries have high marginal tax rates and generous unemployment benefits, relative to the US. But, in many of the worst hit countries, benefits have been greatly reduced. By contrast in the US, benefits are very low but at least some have been increased. If, like Mulligan, you want to argue in terms of changes, then Europe should have seen reductions in unemployment (which was previously higher than the US). In reality, there is very little correlation between labor market policies and changes in unemployment. What has mattered has been exposure to the initial financial sector shock and/or subsequent austerity policies, exactly as Keynesian analysis would predict.

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