Bligh’s bad arguments for privatisation

John Quiggin33 Comments

The Bligh’s government’s original case for the asset sales announced in the June budget was that the state’s finances had deteriorated drastically since the previous assessment at the time of the March election, as part of the generally declining outlook for the world economy. That argument has collapsed as the Australian and global economies have strengthened with the result that the Queensland state budget managed a surplus for 2008-09, as opposed to the projected $500 million deficit.

It would be possible to argue for some (though not all) of the proposed privatisations on the grounds of economic efficiency, but of course arguments of this kind are no more (and, given the epic failure of financial markets seen over the past two years) arguably less valid than they were before the crisis, at which time Labor rejected them.

That leaves the argument that the asset sales will improve the state’s finances. Such arguments depend on showing that the value derived from selling the assets exceeds the value realised by keeping them in public ownership. In this opinion piece, Bligh attempts to make such a case, but the arguments involve hopelessly invalid apples-and-oranges comparisons. When a policy is defended by such obviously shoddy arguments, the only reasonable inference is that the correct assessment comes out the wrong way.

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The prehistory of “liberal fascism”

John Quiggin16 Comments

A week or two ago I was doing a bit of work on the Wikipedia article on political correctness, and I came up with what may well be the first introduction of the term (initialised as “p.c.”) to the general public, as represented by the readership of the New York Times, in an article by Richard Bernstein.

At least since the 1970s, the description “politically correct” or, in Australia, “ideologically sound”, had been used within the left to mock those who were excessively concerned with doctrinal and linguistic orthodoxy. The story of how “political correctness” turned from an inside joke to a Marxist-inspired assault on All We Hold Dear is reasonably well known. Bernstein traces its emergence as a pejorative to a conference by the Western Humanities Conference held, appropriately enough, in Berkeley.

For me, at least, the real surprise in this article came right at the end, with a quote from Roger Kimball, now of Pajamas Media, who said “It’s a manifestation of what some are calling liberal fascism”. Apparently, Jonah Goldberg owes him royalties.

Update I haven’t made proper use of the excellent NYTimes search facility until now. This search shows a string of sardonic references to political correctness in the Arts section (and one reference to its use by the Chinese CP) appearing in the years before Bernstein’s piece. After that, there’s an explosion). And “liberal fascism” made its first outing (post-1980 at any rate) in a 1988 story about the Dartmouth Review, spoken by then editor Harmeet Dhillon.

What is it with governments and car races?

John Quiggin57 Comments

Just about every Australian city has had a disastrous experience with a publicly-subsidised motor race. In most cases, the governments concerned have been advocates of market liberalism, who somehow find it possible to make an exception for motorsport.

Adelaide spent a fortune to buy the Grand Prix, only to see Jeff Kennett spend even more to entice it to Melbourne (at the same time as he was closing schools and sacking hospital staff). Economically unsound from the outset, the Grand Prix has experienced steadily declining attendance and interest, and is unlikely to last beyond 2015.

Kate Carnell in Canberra wasted a fortune on the V8 Supercars before admitting defeat. Before that, there was the Greiner government’s Eastern Creek fiasco. Now, we have another fiasco on the Gold Coast.

I’ll pass over the easy pointscoring about a government, claiming to be reduced to such straits that it has to sell off the family silver, blowing over $10 million on a sporting event. Even supposing we had to spend this money on sport, surely we could do better than this low-grade exercise. I have a few suggestions over the fold, and would welcome more.

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A snippet on representative agents

John Quiggin13 Comments

In response to some comments, I’ve written a little bit about the representative agent assumption in Dynamic Stochastic General Equilibrium Models. I argue that, given the underlying DSGE assumptions, you won’t get very much extra by including heterogeneous agents.

But, I intend to say in the “Where next” section, it seems likely that heterogeneous and boundedly rational individuals, interacting in imperfect and incomplete markets will generate ’emergent’ macro outcomes that are not obvious from the micro foundations. Of course, this is going to be a prospectus for a theory, not the theory itself.

In the meantime, comments on my snippet would be much appreciated.

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Solar sums

John Quiggin18 Comments

Are you interested in switching to solar hot water and/or power? My UQ colleague Tim Coelli (mainly in the vineyard and holiday business these days, but still an adjunct professor) has done the sums, and says they come out looking pretty good for the package as a whole. Of course that depends on location, costs, available subsidies and so on. Tim has produced a spreadsheet so you can work it out for yourself.