Don’t look at the bank behind the curtain

John Quiggin19 Comments

The political impregnability of Rupert Murdoch and NewsCorp has always been one of those facts about the world that seemed regrettable but eternal. By contrast, the ability of the banks to emerge from their near-destruction of the world economy richer and more politically powerful than ever before certainly took me by surprise when it happened (partly motivating my change in title from “Dead Ideas” to “Zombie Economics”). John Emerson pointed out the other day that the head of risk management at Lehman Brothers, arguably the most egregious individual failure among the thousands of examples, was just appointed to a senior position at the World Bank.

But now it seems there is just a chance that the curtain might be swept away from even these wizards. The emerging theme in commentary is the corrupt culture of impunity represented by the press hacking scandal, MP expenses and the banks (here’s UK Labour leader Ed Miliband pulling them all together).

If Labor could tie the Conservative-Liberal austerity package to the protection of the systemically corrupt banking system, they would have the chance to put Nu Labour behind them (I noticed Blair has already credited Brown with killing the brand). Instead of putting all the burden on the public at large, they could force those who benefited from the bubble to pay for the cleanup. The two main groups are the creditors who lent irresponsibly, counting on a bailout and should now take a long-overdue haircut and high-income earners who benefited, either directly or indirectly, from the huge inflation in financial sector income.

I know it seems hopelessly naive to think the banks could ever be brought to heel. But they were, for decades after the Depression. And as impregnable as they look today, Newscorp looked just as impregnable three weeks ago, as did the CPSU and the apartheid regime in South Africa thirty years ago.

Of course this spring moment won’t last long. But perhaps there is enough momentum that it won’t be exhausted by Murdoch alone.
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Greenpeace, an enemy of science

John Quiggin139 Comments

Tim Lambert comments on Greenpeace sabotage of a CSIRO experiment on GM crops. Sadly, Greenpeace has become an openly anti-science organisation.

I agree with everything Tim says, but I’d add something more on the politics of this action. This kind of criminal vandalism, in the “right” cause, appeals to the juvenile instincts that nearly all of us retain to some extent, but it has repeatedly proved disastrous for the left, and the environmental movement. It’s worth comparing this kind of action to civil disobedience protests, where people put themselves on the line and openly invite arrest. If these guys had any desire to promote genuine debate they would turn themselves in and defend their actions in open court.

Given the embrace of anti-science and anti-rational views by the political right, it is important that the left and the environmental movement should dissociate themselves entirely from this kind of action. It will be a long time before Greenpeace can regain my support, if they ever do.

What can you say?

John Quiggin39 Comments

I don’t usually pick on Catallaxy. But I couldn’t resist pointing to this post where Rafe Champion describes Lord Monckton as a “sophisticated commentator”, and the rest of the crew pile in to defend him against the lone commenter pointing out the obvious fact that Monckton is a charlatan, conspiracy theorist, and all around crank. Not by any means the greatest of his follies, but this is someone who claims to be a member of the House of Lords after receiving zero votes(!) in the election for hereditary peers.

Being on the political left hasn’t always been comfortable, but these days I’m really glad I stuck it out. There must be some people remaining on the political right who know how far they have sunk when someone like Monckton can be a leading advocate for their views, but they are all either saying nothing (since speaking up would be politically suicidal), or hypocritically going along with the general applause.

Awards night

John Quiggin13 Comments

We academics love nothing better than to give each other awards. The Australian Conference of Economists is being held in Canberra this week, and the big social event was the conference dinner on Monday night, where blogger-economists were (as usual) well represented when the gongs were handed out. The “Best Young Economist” award (it says something about the pace of academic life that “Young” = “under 40”) previously won by econbloggers Joshua Gans and Paul Frijters, went this time to Andrew Leigh, who left ANU last year to become MP for Fraser in the ACT. Academia’s loss will be the nation’s gain if Andrew gets to exert some influence over public policy.

I also scored, being chosen for the Distinguished Fellow Award. Looking at the list of previous recipients, it’s a big honour to join them and I’m very grateful to my colleagues in the profession, especially since I’ve argued pretty vigorously with most of them at one time or another. The economics profession has its problems (as I argued in Zombie Economics, we haven’t been too good at learning the lessons of the Global Financial Crisis), but all things considered, it has been a force for good in Australian public policy debates.

How to create a world-class university

John Quiggin37 Comments

The Grattan Institute is advertising a lecture on “How to create a world-class university” by Andrew Hamilton, VC of Oxford and previously Provost at Yale. As the ad says, “Hamilton has been a leader in two universities that are world class by any measure”.

Still, if we take his experience as representative the obvious answer to the question is of how to create a world-class university is “found it in 1700, or preferably earlier”. Hamilton may have some significant achievements, but the creation of a world class university doesn’t appear to be among them.

That’s a snark, but it conceals a serious point. The fact is that (with a handful of marginal exceptions) the leading universities in most developed countries, including the US, UK and Australia, are those that were leading universities in 1900. There is very little evidence to suggest that anything done by a vice-chancellor or provost can achieve more than marginal improvements in the relative ranking of a new university. Conversely (and I won’t name the Australian examples I have in mind) even spectacularly bad management can’t do much to damage a university that has been around for 100 years or more.

That in turn means that common assumptions about the benefits of competition in the university sector are almost entirely wrong. In the absence of effective market mechanisms by which well-run firms prosper and grow while badly-run firms shrink and die, competition is essentially meaningless.

The expansion of competition between Australian universities has led to huge spending on marketing and advertising, and the growth of a large supporting bureaucracy, but it’s done nothing to improve standards.

Carbon tax – instant reax

John Quiggin48 Comments

The proposed carbon tax is a substantial improvement on the heavily compromised emissions trading scheme agreed between the Rudd government and the Opposition under Malcolm Turnbull. Although there is substantial compensation for emissions-intensive industry it is temporary and based on historic emissions level, so that the incentive to reduce emissions is not compromised. The design of the compensation package for households is also welcome.

The government has avoided the temptation to pretend that everyone will be better off, and has taken the reasonable position that high income households do not need to be compensated for the introduction of necessary reforms. This has permitted the very welcome measure of raising the income tax threshold and thereby taking more than a million low-income workers out of the income tax system.

While the primary focus of the package is, correctly, on the imposition of a price on carbon emissions, there are a range of supporting measures designed to encourage energy efficiency and innovation. On the whole, these seem more carefully designed than the measures introduced under previous governments.

The revolt against Murdochracy

John Quiggin69 Comments

Continuing on the theme of #newscorpfail, the ever-expanding scandal surrounding hacking, bribery, perjury and obstruction of justice by News Corporation in England has already brought about the closure of the venerable (at least in years) News of the World newspaper, but looks likely to go much further, with significant implications for the Murdoch press in Australia.

The scandal over hacking and other criminal behavior has now become an all-out revolt of UK politicians against Murdoch’s immense political power , which has had successive Prime Ministers dancing attendance on him, and rushing to confer lucrative favors on his News Corporation. Those, like Labour leader Ed Miliband, who are relative cleanskins, are making the running, while PM David Cameron, very close to the most corrupt elements of News, is scrambling to cover himself.

The hacking and bribery scandals appear (as far as we know) to be confined to the UK, but the greater scandal of Murdoch’s corruption of the political process and misuse of press power is even worse in Australia. The Australian and other Murdoch publications filled with lies and politically slanted reporting aimed at furthering both Murdoch’s political agenda and his commercial interests. Whereas there is still lively competition in the British Press, Murdoch has a print monopoly in major cities like Brisbane.

It seems likely that News International will be refused permission for its impending takeover of BSkyB on the grounds that it is not “fit and proper” for such a role. That would have important implications for Australia.

Regardless of how the current scandal plays out, we need to remember that while the productions of News Corporation be papers, what they print is certainly not news.