The Party of No

John Quiggin176 Comments

One of the most striking features of the health care reform was that it was passed over the unanimous opposition of the Republican Party. This has all sorts of implications, not yet fully understood by anyone (certainly not me). To start with, it’s now clear that talk of bipartisanship, distinctions between moderate and hardline Republicans and so on, has ceased to have any meaning. If their failure to stop the health bill works against them, we may see occasional Republican votes for popular legislation that is going to get through in any case. Obama’s Employment Bill got only 6 Rep votes in the House, but passed the Senate 68-29 (or maybe 70-28) in what the NYT correctly called a rare bipartisan vote. At least the reporter on this piece, Carl Hulse, has caught up with reality, unlike the general run of Beltway pundits who still think that Obama should be pursuing bipartisanship.

In many countries, a party-line vote like this (at least on one side) would be nothing surprising. In Australia, for example, crossing the floor even once earns automatic expulsion from the Labor party and guarantees political death on the other side. But the US has never had a really tight party system, largely because, until recently,the Democrats (and before them, the Whigs) were always split on racial issues.

One problem arising from this is that the US system is more vulnerable than most to the kinds of crises that arise when one party is determined to prevent the other from governing. Passing a budget requires a majority in both Houses of Congress, and the signature of the President. If the Republicans win a majority in either House in November, it’s hard to see this happening. A repetition of the 1995 shutdown seems highly likely, and, with the financial system still very fragile, the consequences could be disastrous. The 1995 shutdown didn’t turn out too well for Newt Gingrich, but it doesn’t seem to have pushed him in the direction of moderation, and the current crop of Republicans make Newt look like a RINO.

Read More »

Egg, faces

John Quiggin60 Comments

As Mark Bahnisch observes, lots of members of the commentariat have egg on their faces after tonight’s state elections, particularly in SA where, at least by the ABC estimates, Labor’s parliamentary majority has barely been dented, despite a big swing. If it weren’t for the pre-election spin, these results would be pretty good for the Libs. But, as it was, Rudd’s decision to stick with the standard “we’re the underdogs” line, looks a lot smarter than the actions of those Liberal apparatchiks who were confidently predicting the end of Labor dominance at the state level.

The Tasmanian Libs, having received marginally more votes than Labor, will presumably get a chance to form a government. But that’s something of a Greek gift. The Greens are sure to demand a high price (starting presumably, with a swift heave overboard for Gunns’ current management and what’s left of their plans for a pulp mill). And in the two-party preferred terms relevant for a Federal election, the result looks awful, with Labor and the Greens getting a combined vote of nearly 60 per cent.

Given the extent to which Abbott’s bogus “authenticity” campaign relies on momentum, this could be a big problem for him. Or maybe not. Despite the Libs pre-election spin, tonights votes had very little to do with Federal politics, and rightly so

A bit more on solar PV

John Quiggin34 Comments

I wanted to develop a few more points on solar PV. Like quite a few commenters, I think subsidies for rooftop solar PV installations are not a first-best policy option, and probably not even second-best. But the fact remains that a relatively modest subsidy is enough to make this a reasonably attractive choice (in comments to the previous post, Uncle Milton describes it as ‘marginal’, which is about right – at the margin, there’s just enough to make it an appealing option for suitably located households).

It doesn’t look so good as public policy. Assuming 6 KWh/day, the energy saving is around 2MWh/year, which, if it displaced brown coal would save about 2.5 tonnes/year. If the public subsidy is $5000, and the real annual interest rate faced by the government is 4 per cent, that’s about $100/tonne.

There are certainly better options than trying to achieve a large proportion of our emissions reduction goals through an approach like this. But lets suppose that the kind of political noise being made by Tony Abbott and others forces us into a high-cost winner-picking approach. Now suppose we decide to reduce emissions by 500 million tonnes a year (about 90 per cent of existing emissions), using approaches that are, on average as efficient as residential rooftop PV, that is, at an average cost of $100/tonne. The cost would be $50 billion a year or about 4 per cent of GDP, that is, about 2 years worth of annual growth in income per person.

In other words, even using highly inefficient approaches, the cost of climate stabilization would be marginal in comparison to the ordinary fluctuations in GDP associated with the business cycle, let alone the variations in personal income (IIRC, the coefficient of variation is more than 20 per cent).

This is a point that seems to be resisted vigorously both by advocates of ‘business as usual’, and by lots of people who think that the existing order of things is doomed by virtue of necessary increases in the cost of energy. The arithmetic above shows that this can’t be true[1], but I doubt that I will convince to many people of that.
Read More »

Going solar

John Quiggin63 Comments

The Rudd government’s ventures in subsidising energy-saving measures such as home insulation haven’t exactly covered it in glory. It’s not alone in this respect. The Howard government had similar problems, and Spain had a huge boom and bust in solar photovoltaics. The common feature in all of these cases was that the schemes got into difficulty because take-up was much more enthusiastic than was expected. This in turn reflects the fact that the economics of these measures, particularly solar PV, are improving fast.

I recently got solar PV installed on my roof, and the deal (available from Origin here), though not the cheapest on the market, was very attractive. A modest upfront payment, and monthly payments that are substantially offset by the cost savings, especially when the system is exporting back to the grid and attracting the feed-in tariff. And it is just so cool to open the meter box and watch the wheel turning backwards and the numbers going down.

Read More »

Deltoid vs The Thunderer

John Quiggin35 Comments

My recent scuffle with the Oz, is one of a long line in which a paper which was once (long ago, and only for a few years, but still) Australia’s best has had it out with bloggers, mostly coming off second-best. After being shredded in its fight with the psephbloggers in 2007, and having long since abandoned any claims to credibility, the Oz is not much of a scalp to hang on your belt these days.

A much more interesting match-up is between Tim Lambert’s Deltoid and the Times of London, as represented by their laughably mis-titled ‘Science’ reporter Jonathan Leake. With more than 200 years as the world’s best known newspaper of record, the Times ought to be a shoo-in. But Murdoch ownership erodes credibility at a startling rate, and Lambert has Leake dead to rights. I’m betting on a TKO for Deltoid.

Starting with Leakegate (Leake’s role in pushing the anti-science lies associated with ClimateAuditGate), Lambert has pointed out all manner of journalistic malfeasance on Leake’s part. The Times wisely stuck to dignified disregard for a while, but, like the Oz, they couldn’t keep it up. Leake had a fellow reporter call Lambert and claim to be doing a general story on science blogging. She didn’t manage to get much but ran a hatchet job anyway. Now, as Lambert is reporting, Leake is getting banned from all sorts of places for such malfeasance as breaking embargoes. You can read the whole story here.

Science the victim of dishonest attacks

John Quiggin230 Comments

That’s the title of my Fin column for Thursday 11 March 2010, which naturally picked out The Australian newspaper as a prime vehicle for these attacks. The Oz replied next day, with characteristic mendacity, pointing out that, on the same day they

ran an opinion piece by climatologist James Hansen, the NASA Goddard Institute for Space Studies chief who also happens to be known rather snappily as the “father of global warming”.

Only problem was, they weren’t running Hansen to defend science against their attacks, but because his policy views (he opposes an ETS and supports nuclear power) could be used in their continuing wedge campaign. The piece (can’t find it to link ran under the headline “”Only carbon tax and nuclear power can save us”

Anyway, here’s my piece
Read More »

A small win for economists

John Quiggin13 Comments

Late last year I was among more than 20 economists who published a statement rejecting the case for privatisation put forward by the Queensland government in its ‘The Myths vs the Facts’ booklet. Among the claims to which we objected was one which read

MYTH: The five commercial businesses the Government plans to sell generate a lot of income for the State

FACT: The total return from all five businesses in 2008-09 was approximately $320 million. This is less than 0.9% of the Government’s income. For every $100 of Government income that’s less than 90 cents. When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments.

The economists’ statement observed

This is an invalid, apples-and-oranges comparison. The $320 million figure consists solely of dividend payouts, excluding retained earnings, tax-equivalent payments[1] and the interest paid by the government business enterprises to service their debts.
The $1.8 billion represent the interests that would be saved, at a rate of about 6 per cent, if the state realised $15 billion from the asset sale and avoided $12 billion in new investment.  Most of this interest would be serviced out of the revenues of the GBEs, and can therefore not be compared with dividends derived from earnings after the payment of interest and tax.

The booklet is now on the web, and I’ve just noticed that the $1.8 billion claim has been dropped. If anyone would care to look through the archive, it would be interesting to see when this change was made.

Read More »