Probity and economic liberalism

Coming out of the utegate/emailgate fiasco, I’ve seen a lot of variants on the claim that interventionist policies, like OzCar, are conducive to corruption, while economic liberalism reduces the scope for wrongdoing. I’ll just offer a few observations (readers with access to Google can fill in the details).

* If the standard of behavior implicit in criticism of Wayne Swan were applied to the Howard government, hardly any minister in that government could have remained in office. That particularly includes Howard and Turnbull.

* The Howard government breached standards of public probity on a scale never before seen with an Australian government, and approached only by the later years of Hawke-Keating and the worst of state governments. Not only did numerous ministers engage in activity that personally enriched them, and would have been regarded as corrupt in any preceding government, but the government consistently undermined the integrity of the public service, engaged in cronyism to an unprecedented extent and (Howard in particular) lied consistently and shamelessly. With relatively few exceptions, economic liberals didn’t complain about this.

* The Thatcher-Major, Reagan and Bush II governments were among the most sleazy and corrupt in the modern history of the UK and US (Clinton, Bush I and Blair were marginally better).*

In summary, the idea that economic liberalism goes with high standards of public probity doesn’t pass the laugh test.

* Defenders of economic liberalism may wish to disclaim one or more of these. But I’m not going to respond, except with derision, to anyone who tries to dodge the issue by any of the standard excuses familiar from apologists for the failure of Communism: never really tried, the fault of the individuals not the theory, etc.Meet the Browns film

Kruistocht in spijkerbroek psp

Refuted economic doctrines #9: Real Business Cycle Theory

Yet another in my series of articles on economic theories, empirical hypotheses and policy programs that have been refuted, or undermined, by the Global Financial Crisis. This one, on Real Business Cycle Theory, is a bit econowonkish, but I’m putting it up here because
(a) I hope some econowonks among the readers might find errors and correct me
(b) Judging by some other recent commentary, RBC still has some interest.

* As indeed, they have. My suggestion of a link between calibration and the GMM has been roundly refuted both here and at Crooked Timber. I can only say, it seemed like a good idea at the time. Thanks for the very useful comments on this point, and on RBC more generally.

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Don't free Mickey

I doubt that this is exactly what Ross Douthat had in mind, but I have been thinking for a while about one version of extending the duration of a limited-scope copyright. I’d support a proposal that gave Disney unlimited duration ownership of Mickey Mouse and similar characters, both for economic and political reasons. The political reason is straightforward: if Disney got its own side deal, they would have no reason to keep up the push for indefinite extensions of copyright for books and other things I actually care about.

The economic reason is that Mickey Mouse is not a character in a black and white cartoon produced in the 1920s (and cribbed off someone else, IIRC), and his copyright protection does not (except incidentally) act to restrict people who want to reproduce or adapt Steamboat Willie today.

Mickey is, in the terminology of the industry, a franchise. Disney puts millions into producing and promoting Mickey every year, and reaps even more millions as a result. I think it’s plausible to claim that each individual franchise of this kind is a natural monopoly, and that we would be less well served with multiple Mickey suppliers, as opposed to competing franchises like Bugs Bunny (there’s an analogy here with the debate over sporting teams and leagues which I’m too lazy/busy to work out in full). So, I’d be happy to allow Disney, Warner Bros, DC, Marvel and so on to have permanent rights over their characters, as long as they kept on using them.

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Costello's moment ?

With Turnbull seemingly doomed, the great sport of Costello-watching gets one last (or maybe not) run onto the field. Will the Libs turn in desperation to the Eternal Bridesmaid, and persuade him to return to the fray? There is a favorable recent precedent with the WA Libs, who persuaded Colin Barnett to reverse a decision to quit, and went on to gain office under his leadership.I’ve never rated Costello, but then, I didn’t (and don’t) think much of Barnett, either.

The big problem for the Libs, I think, is that the Grech scandal goes a long way deeper than Turnbull. Eric Abetz and Joe Hockey are obviously implicated, for example, and the chain of links seems likely to go to Costello as well. And while, as numerous commenters have pointed out, leaks from public servants to Opposition politicians are not that unusual, each such leak constitutes a criminal offence. It’s the kind of thing that “everybody does” from time to time, but it’s only OK if you don’t get caught. Add forgery to the mix, and you’ve got a disaster.

People power and its limits

The authorities in Iran seem to have succeeded in suppressing popular protests for the moment. More generally, it seems clear that “people power” has its limits, summarised by the aphorism that a successful revolution consists of kicking in an open door. That is, if a state is divided, unsure of itself and illegitimate even in its own eyes, a manifestation of mass opposition will be enough to bring it down. But a coherent ruling group, confident of its own rightness and willing to use force against its opponents, can retain power even in the face of a strongly mobilised majority of the public. It remains to be seen which of these analyses applies in Iran.

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Escalation

The Great Ute Scandal has been bubbling along for weeks but I ignored it, partly because scandals are rarely interesting and partly because I couldn’t get to the starting point of working out what wrongdoing was supposed to have taken place (compare for example the Manildra business, which involved large sums of public money and provoked no serious concern). But in the last day or two the stakes have been raised dramatically, based on the alleged email from the PM’s office urging a prompt response to the concerns of a car dealer who contributed a car to Rudd’s campaign.

Whatever the significance of the putative email may have been, Rudd’s outright denial that any such email was sent means that it will be a major crisis for him if the email turns up, and possibly a terminal one if it turns out that the email was suppressed. On the other hand, if it can be proved that the email published by the Telegraph and referred to by Turnbull was in fact a fake, the consequences will be dire for Turnbull at least (I don’t suppose the Tele could lose much credibility). As my recent spam crisis demonstrates, I’m no tech expert, but I would have thought that the headers on an email would make it pretty easy to check whether it had been sent and that erasing all trace of an email would be just about impossible. And it would be grossly irresponsible to publish an alleged email if you received it with the identifying info removed.

Update

The news that the email was a fake confirms that the outcome will be bad for Turnbull, and could be catastrophic. The worst case, but a plausible one on the evidence to hand, is that the email was the product of a fraud cooked up between Liberal staffers and one or more corrupt Treasury officials. Even the best case, that the email was fabricated for some personal reason, and passed to the Liberals along with other leaks about the car scheme, doesn’t look good. I guess, given the twists and turns so far, it’s also necessary to consider the Machiavellian possible of a (highly successful) agent provocateur, luring Turnbull into a trap, as happened (IIRC) with Ralph Willis in 1996.

Further update

It now appears that the worst-case scenario is pretty close to the truth. Grech has apparently been working as a source of leaks to the Liberal party for a long period*. Apart from the obvious disastrous implications for the Liberals, this point also casts doubt on what remains of the case against Swan. If Grech was working for the Libs all along, he could easily have generated a large volume of emails, reports and so on, without any particular pressure from the government

* The term “mole” is commonly used in such cases, but the original idea of a mole was one of an agent in place who did nothing but burrow nto the target organisation, waiting for the time to act.

Miracles of modern journalism

The sacking of Dan Froomkin by the Washington Post reminds me a remark attributed (IIRC) to Auberon Waugh on being told that Randolph Churchill had undergone the surgical removal of a tumour that turned out not to be malignant.

It is a marvel of medical science that they could first locate the one part of Randolph that was not malignant, and, having found it, immediately remove it

More from the ever-growing Wapo fan club.

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