Water, water everywhere

John Quiggin50 Comments

There’s been a lot happening in water policy lately, and for once, most of the news is good. Most importantly, it’s been raining, a lot. The total volume of the recent rains has been estimated at around 6000 Gigalitres. Even after diversions, evaporation, absorption by the soil, refilling of water tables and so on, there will be somewhere between 600 and 1000 GL to flow down the Murray and stave off the disaster threatening the Lower Lakes, as well as many upstream ecosystems.

Meanwhile, the Rudd government’s decision to bite the bullet and start buying water from irrigators willing to sell has been thoroughly vindicated. The money has been a huge benefit to farmers keen to move out of agriculture, or from irrigated agriculture to dryland, and has done a lot to soften the impact of the drought. Most recently, a couple of irrigation districts have voted to sell en masse with a resulting saving in the cost of irrigation channels and other infrastructure. In a situation where too much water had been allocated to irrigation, and where (despite the current rain) there is likely to be less in the future, this is a necessary part of the adjustment process.
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The rising generation

John Quiggin77 Comments

We just returned from Sydney where we saw our first grandchild, James, now two weeks old. (I’ll skip all the doting grandparent stuff, but other grandfathers and grandmothers can fill it in for themselves). It’s striking to think that he could easily be around in 2100 and, given plausible advances in medical technology, well beyond that.

When we (that is, middle-aged and older people) talk about the effects (good and bad) of our actions on “future generations”, it’s worth remembering that young people now alive will experience those effects long after we are gone.

Abbott’s Bingle

John Quiggin77 Comments

Having just watched the media tear down their former darling, Lara Bingle (I tried to avoid it, but omnipresence defeated me), it seems likely we’ll now see the same with Tony Abbott.

The most common comparison has been between Abbott and Mark Latham, but we’ve seen plenty of examples of the celebrity style of reporting applied to rising politicians – Bronwyn Bishop and John Elliott were prime examples.

Celebrity politics has a well-established story arc – the fresh face, not scared to say what they think, with off-the-wall new ideas is built up until everyone is on the bandwagon. At that point, the only new angle points down, to the feet of clay. The alpha wolf in the journalistic pack is the one who can pick this moment to turn. Then the rest follow and before you know it, yesterdays fresh face is today’s wet-behind-the ears, authentic becomes aggressive, create ideas become a sign of flakiness. (sorry for all the mixed metaphors – it’s impossible to write this stuff any other way).

My guess is that Tony Abbott’s performance at the Press Club marks the turning point in the celebrity narrative. His bungle on maternity leave and the attacks from Keating and Costello set him up for the make or break performance in the movie. The fading star (Piaf, or maybe Rocky) has to go on stage and win over a hostile crowd. Instead, he ended up with rotten tomatoes.

To break away from meta-narrative for a moment, the debate reminded us that Abbott was an undistinguished health minister whose policy agenda, to the extent that there was a consistent one, went nowhere. His only contributions of any note were attempts to turn his personal prejudices into law. Now, he has no policy, and it’s a safe bet that anything he comes up with won’t stand up to even momentary scrutiny, as with his alternative to the ETS.

Chutzpah

John Quiggin14 Comments

According to the Courier Mail

Anna Bligh has turned down an invitation to debate the opposition leader on her privatisation plans, arguing there would be no point outside an election year.

For chutzpah, this beats the classic illustration (the kid who murdered his parents then appealed for clemency on the grounds that he was an orphan). In case Premier Bligh has forgotten, 2009 was an election year, and she had ample opportunities to debate the proposal before the election.

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.

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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.
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