Nuclear, again

John Quiggin116 Comments

I’m sure quite a few regular commenters are keen for me to lift my ban on discussions of nuclear power (imposed to prevent the threadjacking effects of this topic). So, I thought I would open it up to all comers with a couple of observations of my own:

(1) Nuclear power isn’t going away any time soon. Nuclear plants generate a lot of power and most of them seem likely to outlive their originally planned operational lifetime. So, there doesn’t seem to be much point in being “anti-nuclear” in the sense of hoping for a world without nuclear energy – that horse bolted decades ago.

(2) Except in China (and maybe India) nuclear power isn’t getting bigger any time soon. Following the failure of Obama’s energy bill and the GFC, the US “nuclear renaissance” is dead in the water, and the same is true in Europe. While residual anti-nuclear sentiment plays a role here, the big problem is economics.

(3) The only plausible path to an Australian nuclear power industry involves the use of modern plant designs and regulatory systems with a proven track record in the US and/or Europe and Japan. Given point (2), that path won’t open up any time soon. So, for the foreseeable future, nuclear isn’t an option for Australia, and there is little or nothing we can, or should, do about it. When there, are, say 50 new plants in the developed world with 5-10 years of operating history behind them, it would make sense for us to take another look. On the most optimistic possible projections, that might happen sometime after 2030.

That’s it from me. I won’t moderate the thread except to delete personal attacks and similar violations of the comment policy.

Crying poor

John Quiggin41 Comments

The Queensland government has cited an alleged financial crisis as one of its spurious justifications for the sale of public assets, but apparently it can find a spare billion or so to spray on yet another sporting event which will almost certainly return little or nothing in revenue. I had my say on the Commonwealth Games bid here and here. The ABC story includes Treasurer Andrew Fraser’s admission that the proceeds of the asset sales, which were supposedly going to finance schools and hospitals, are the source of this luxury expenditure.

I’m happy to say that on this occasion I was accurately quoted in the Oz. The reporter Roseane Barrett did her job properly, and there was no editorial interference, presumably because the story was critical of a Labor government.

Weekend reflections

John Quiggin19 Comments

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. In keeping with my attempts to open up the comments to new contributors , I’d like to redirect discussion, as opposed to substantive new contributions, to the sandpit. As always, civilised discussion and no coarse language please.

Hayek’s Zombie Idea — Crooked Timber

John Quiggin29 Comments

I’m paying close attention to Amazon rankings just now[1], and it’s striking that both the #1 and #2 spots in “Economics-Theory” are held by FA Hayek’s Road to Serfdom. Whatever your view of Hayek’s work in general, this is truly bizarre, and indicative of the kind of disconnection from reality going on on the political right. On the natural interpretation, shared by everyone in mainstream economics from Samuelson to Stigler, this book, which argued that the policies advocated by the British Labour Party in 1944 would lead to a totalitarian dictatorship, was a piece of misprediction comparable to Glassman and Hassett’s Dow 36000. So what is going on in the minds of the buyers? Are they crazy? Do they actually think that Hayek was proven right after all? Is there a defensible interpretation of Hayek that makes sense?

The answers are “Yes”, “Yes” and “No”. The current sales of Hayek’s book are being driven by Glenn Beck, who claims that Britain is indeed a socialist dictatorship of the kind predicted by Hayek (or was, until the recent election), and that Obama is propelling the US along the Road to Serfdom by making medical care marginally more affordable.

Until the right went completely crazy, the most common claim in support of Hayek was that his predictions had somehow been vindicated by Thatcher’s reaction against the welfare state. Leaving aside the fact that Thatcher’s remodelling of the British economy in the image of the City of London looks a lot less appealing today than it did only a few years ago, this totally misses the point of Hayek’s book. If he had wanted to argue that social democratic policies would reduce the rate of economic growth, and to throw in a bit of hyperbole, he could have called it “The Road to Destitution” or something similar. Hayek wanted to make the much stronger claim that the attempt to implement Labor’s policies would necessarily lead to a loss of personal and political freedom.

The most plausible attempt to extract a defensible claim from The Road to Serfdom is to suggest that it applied to policies of comprehensive and centralised economic planning, which might, on an extreme reading, have been imputed to the Labour Party of 1944. Fortunately, on this account, Labour saw the folly of such ideas and did not attempt to implement them. Even on this charitable account, a book warning against hypothetical policies that might have been, but weren’t, adopted in the early postwar period, and aren’t advocated by anybody nowadays, would be of fairly marginal historical interest. But, as Ed McPhail and Andrew Farrant have shown (I’ve linked to a summary since the article seems to be paywalled) this view can’t really be defended.

Depressingly, most of the rest of the “economic theory Top 20” list, including Wealth of Nations, Free to Choose and the writings of Peter Schiff, suggest that the buyers are the same people buying (if perhaps not reading) Hayek. If people actually read Smith, particularly the Moral Sentiments they might gain something, but these purchases look more like an affirmation of tribal identity than an attempt to learn something.

fn1. Zombie Economics briefly made it into the Economics-theory Top 20, but is now slipping out again.

via crookedtimber.org

Posted via email from John’s posterous

Another meltdown at the Oz

John Quiggin35 Comments

As I’ve mentioned a few times, the Oz is extremely sensitive to blogospheric criticism. In response, its typical MO has been an unsigned editorial, or a piece by a ‘staff writer’, in which unnamed and unlinked (but easily identifiable) bloggers are castigated for their sins. Typically, the piece ends with a flourish of bravado, in which the brave, though anonymous, editorialist, backed only by the multi-billion dollar resources of News Corporation, pledges to carry on in defiance of the powerful, but unnamed, bloggers arrayed against it.

The script has been reversed, however, in the case of Grog’s Gamut, a pseudonymous political blog which made some useful contributions during the election campaign. Apparently acting under the misconception that public servants aren’t allowed to engage in political activity, Oz journalist James Massola took on himself to out the blogger concerned. He works in the film section of what was the Department of Environment, Heritage, Water and the Arts, which suggests that the potential for political activity to compromise his public service role is, shall we say, limited.

There are still some decent journalists working for the Oz, but the paper itself is a sad joke. On the other hand, as Steve Hind observes, the downmarket spiral of the Age and SMH (at least in their online versions) means that there is not much competition.

Conference like its 1999

John Quiggin19 Comments

A long time ago, I read an article whose author had read through all the leading economics journals from the 1930s. The striking finding was that only a tiny proportion of the articles published in those years concerned the Depression and what to do about it. This struck me as a disastrous state of affairs, and has been one factor in pushing me to comment on the important issues of the day, rather than to a narrow specialisation.

But, having attended the Australian Conference of Economists for the last couple of days, I have to say that a future historian of economic thought will be able to rewrite much the same article about the current crisis. Only a handful of papers presented at the conference have dealt with the crisis, even indirectly, and most of those have concluded that we only need marginal adjustments to our current way of doing things.

The opening plenary session, for example, was on inflation targeting and the main message was that, all things considered, inflation targeting worked pretty well in the Global Financial Crisis. Some tweaks might be needed in the future, but then again they might not. This was the same conclusion as at the Reserve Bank 60th Anniversary meeting earlier this year, and I find it pretty hard to believe.

About the best I can say is that, against this background, my Zombie Economics book stands out.