Tristan Ewins has set up a website for the group, Movement for a Democratic Mixed Economy. I’ve contributed an article. Go, read and comment (there, not here).
Monday Message Board
It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
An interesting reversal
Janet Albrechtsen, who previously endorsed Lord Monckton’s conspiracy theory that the draft Copenhagen agreement were designed to bring in a world government has backed away, admitting that his rants about Hitler Youth and similar make it unsurprising that neither Kevin Rudd nor Tony Abbbott would see him during his Australian tour (I delayed in responding to my invitation, and it was pulled).
Albrechtsen has previously shown more willingness to admit error than the average pundit, and this piece counts in her favour. Still, it’s disappointing to see her continuing to suggest that the utterly unqualified and ludicrously wrong Viscount is “powerful” when he talks about the science. She quotes him confronting an activist, and asking
whether she is aware that there has been no statistically significant change in temperatures for 15 years. No, she is not. Whether she is aware that there has in fact been global cooling in the past nine years? No, she is not. Whether she is aware that there has been virtually no change to the amount of sea ice? No, she does not.
Perhaps the activist does not know these things because none of them are true, at least not in the sense that is implied. For example, as predicted by climate models, the dramatic reduction in Arctic sea ice has not not been mirrored in the Antarctic, so with a little ‘virtual’ fudge Monckton’s claim is, kind of, true. The point about statistical significance may be restated as saying that the variability of temperature about the upward trend is sufficiently great that 15 observations is not quite enough to reject the null hypothesis of no change with 95 per cent confidence (when I did stats, the standard number for a decent-sized sample was 30 observatons, but the trend in temperatures is strong enough that we don’t need so many). And the claim about global cooling is typical cherry picking, now out of date. 2009 was warmer than either 2000 or 2001, but Monckton was presumably using the relatively cool 2008 as his endpoint, or maybe the exceptionally warm El Nino year in 1998 as his starting point.
Albrechtsen is no more qualified than Monckton on these points. But she ought to ask herself whether it makes sense to rely on the statistical judgement of a former political advisor (to climate arch-conspirator Margaret Thatcher no less) whose political judgement is so obviously flaky.
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Weekend reflections
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.
Obama and the Banks
Given the Republicans’ success in painting the Democrats as the party of Wall Street, it was inevitable that the Obama Administration would announce some measures aimed at bringing the banking sector under more effective control. But the smart money would have been on a symbolic gesture, such as an ineffectual limit on bankers pay.
The announcement today that banks are to be banned from undertaking proprietary trading operations may have proved the smart money wrong. Certainly the sharp drop on Wall Street suggests that the announcement delivers more than expected for the public, and correspondingly less for the shareholders of big financial institutions.
If it is delivered as described, it would force the reversal of the 2008 move by Goldman Sachs and Morgan Stanley to become bank holding companies, with direct access to support from the Federal Reserve and Federal Deposit Insurance Corporation. More generally, it would be a significant move in the direction of narrow banking, preventing publicly guaranteed banks from engaging in the kind of high risk trading that produced the current financial crisis. As Chris Joye points out, narrow banking has surprisingly broad support among economists.
But will it be carried through? The first problem is the dysfunctional US political process, which prevents just about anything from happening. Obama might be able to wedge the Republicans on this issue, but they will probably find an excuse for voting en bloc against any measure he proposes. Under the current Senate supermajority rules that would be enough to stop any reform.
So, it will probably be necessary to scrap the filibuster and pass legislation with a simple majority. And that’s assuming that Obama can command the support of the numerous Democrats who are beholden to Wall Street, just as the Republicans (hypocritically, given their own position) allege.
Leaving aside the political obstacles to getting legislation passed, there’s the problem of making it effective. Even if banks aren’t allowed to own speculative investment enterprises, they can make big money lending to such operations. Then when things go bad, the failure of one or more big speculators can imperil the system as a whole. That’s what happened in 1998 with LTCM.
What matters here is the political dynamic. If the aim is to get back to business as usual as fast as possible, any reform will be short-lived and ineffectual. On the other hand, if there is a permanent shift in public and political sentiment against an economy dominated by the finance sector, things will work out very differently. Instead of eroding control, the discovery of loopholes will lead to tighter and more systematic regulation ending in a full-scale separation of banking and speculative finance.
One sign for optimism is the progress being made on the related issue of tax havens. Until very recently, moves to control the activities of tax havens were almost entirely ineffectual, at most prompting wealthy tax dodgers (and the banks who hid the money for them) to shift accounts from one jurisdiction to another. But as governments have run short of money and tolerance, the picture has changed. A combination of economic/diplomatic pressure on tax havens and a willingness to make use of whistleblowers within banks has rendered international tax evasion far less viable.
Perhaps this time Wall Street really will be cut down to size. If Obama’s Administration is to recover from its current malaise, he needs to win on this one.
I wrote this for Crikey. It should be appearing there soon, I expect
Nuclear power and Australia
There’s been a bit of discussion about nuclear power lately, but it tends very much to the abstract. I thought I would look into the question of when, if ever, nuclear power might be a reasonable option for Australia to consider, and how we should go about it.
An obvious starting point is the Switkowski report commissioned by the Howard government, which I’ve uploaded here. There are three main points which allow me to provide an answer to the question, at least for the next decade or so.
(i) In the absence of a substantial carbon price nuclear power is not competitive with coal
(ii) First-of-a-kind (FOAK) nuclear plants are likely to be very expensive (above $80/MWh), not competitive with wind or gas (even with CCS)
The estimate is that ‘settled down’ long run costs could be $40-$65/ MWh, which is competitive with wind and cheaper (for the moment) than other renewables.
Let’s take “settled down” to refer to a design with at least 5 examples completed and operating in developed countries, at least some of them built on greenfield sites (that is, not next to existing nuclear power plants which already have a lot of the necessary infrastructure). It seems clear that these minimal conditions can’t be met before 2025 at the earliest. The US, which has been attempting for a decade to restart its nuclear industries is still at the pilot stage, exploring a number of technologies, and offering to subsidise the construction of three plant designs for each major option. Most of the proposals are on existing sites, only six have reached the point of a plant actually being ordered, and none is anywhere near starting construction. Given a sharp acceleration in progress, the emergence of a highly successful design and a lot of new orders towards the end of this decade, the 2025 date might just be reached.
That suggests that Australia should forget about nuclear power entirely for at least the next five years. If things are going well for nuclear, and not so well for renewables, that would be the time to start setting up regulatory structures, looking for sites and so on.
Column and bookplug
My column from Thursday’s Fin, with a not so subtle plug for my book.
Bookblogging: The end
Over the fold, the conclusion of my book, with Release Candidate title “Zombie Economics: How Dead Ideas Still Walk Among Us”. I plan a proper post on the whole bookblogging experience, but until then, I’ll thank everyone who’s commented, or just read this exercise with interest and make one (maybe) last request for help. Can anyone recommend a book on Thatcher’s economic reforms that would be a good suggestion for further reading? I’m currently suggesting Anderew Glyn’s Capitalism Unleashed, but I’d like to add something from a centrist or Thatcherite perspective, as long as it’s readable and not too objectionable for words.
Beatup of the century
If you thought the East Anglia email hack was overblown, how about today’s Oz. Frontpage lead[1] is a story that’s been rattling round the blogs for at least a couple of months, without attracting any real interest. The story is that the 2007 IPCC report quotes a poorly sourced estimate that most Himalayan glaciers could be gone by 2035. This is a bit worse than the evidence suggests. Himalayan glaciers have lost about 20 per cent of their area in about 40 years, and have also become more fragmented. That’s bad, but not quite as bad as the IPCC report, based on a speculative forecast suggests.
So, there is a mistake on one page of a 3000 page report. That’s unfortunate but scarcely surprising. But, if you want real silliness about glaciers, you have to go to the other side of the road and look at this (widely repeated) howler from David Bellamy, derived originally from Fred Singer. The Oz ran Bellamy’s (totally false) claim of persecution for his devotion to the delusionist cause (he was washed up long before he changed sides), but did not AFAIK cover this embarrassing episode,
Every new talking point that emerges from the delusionist camp gives further emphasis to the fact that these are people who have sacrificed both their own intellectual integrity and the future of the planet in the pursuit of a tribal vendetta.
Update Commenter James notes that, with much less apparent fanfare, the Oz published a report derived from Associated Press that concluded that there was nothing in the hacked East Anglia emails that undermined the mainstream consensus on global warming.
fn1. At least in the edition I saw. It’s almost invisible on the website now.
Monday Message Board
It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
John Quiggin 