Sir Sir Sir Sir Sir Ninian

John Quiggin18 Comments

Following up on the silly idea being floated in the Murdoch press that John Howard might be made a Knight of the Garter (surely Alexander Downer would be a more appropriate choice!), I discovered the interesting fact that Ninian Stephen is a knight five times over (KG, AK, GCMG, GCVO, KBE)[1].

Fine judge and Governor-General as Ninian Stephen was, I find this a bit excessive, and something of a reductio ad absurdam on the whole business of knighthoods.

fn1 For those who don’t recall, AK was Malcolm Fraser’s shortlived notion of adding knighthoods to the Order of Australia, and the rest are British honours – he got the KBE in 1970, three more on becoming GG and the Garter in 1994. My guess is that, if he hadn’t had already had the handle “Sir Ninian”, the other awards would have been more controversial, and might not have happened.

fn2 I should note that academics like myself are not exactly innocent here, and some even string together multiple titles, particularly in Europe.

Quick links

John Quiggin9 Comments

I’ve been too busy to post on a lot of things so I thought I’d just post some quick links with minimal comment. Some very important, and some not.

* One measure of the death toll in the wars launched by Saddam and then by Bush is the number of Iraqi widows, estimated at between one and two million. Widows are largely excluded from paid work and many are in a desperate position.

* A while ago I pointed out that the paperless office is finally on the way to reality. Today’s NY Times takes the story a bit further.

* What have the unions ever done for us

* Finally, some real progress in the struggle against malaria.

AARES

John Quiggin74 Comments

I’ve been at the annual conference of the Australian Agricultural and Resource Economics Society for the last few days. I’ve been coming to these for nearly 30 years, and it’s always good to catch up with old friends and colleagues. For many, it’s the first time they’ve seen me without a beard, and quite a few failed to recognise me until I accosted them.

The big change in 30 years has been the rise of environmental and resource concerns at the expense of old-style agricultural economics. Most of my early papers dealt with now vanished policies like the wool price stabilisation scheme, and the analysis of production systems needed to inform such policies. Now the conference has continuous sessions on both water and climate change, and only a handful of papers on production economics.

Ross Garnaut spoke on Tuesday and his talk was pretty sobering. Short version – as regards the likely consequences of business as usual, Stern was an optimist. Unless the world acts decisively, and well before 2020, we’ll have emissions higher than the highest of the IPCC scenarios Stern looked at. What’s worse new information on feedbacks suggests that the models relating emissions to temperature change are also likely to be on the conservative side, as the capacity of sinks to absorb emissions declines.

The positive side of this, I guess, is that the problems arise from China (and to a lesser extent India) growing fast, and that means China has more resources to address the problem, if we can only get the politics right.

One aspect of the latter is the near-certainty that we won’t be able to get away much longer with the notion of historical rights for high-emission countries like the US and Australia. By 2050, under any plausible agreement, we’ll have uniform emission entitlements per person, for everyone in the world, at a level well below our current emissions.

Howard’s economic record

John Quiggin74 Comments

If there was one thing John Howard and Peter Costello could reasonably have expected as part of the historical judgement on their terms as PM and Treasurer, it was a positive assessment of their record as economic managers. But a game isn’t over until the final whistle, and the last few months have produced some unpleasant data. Howard and Costello have left higher inflation and (if you impute the whole of the current tightening phase to their policies) higher interest rates than they inherited from the Keating government. Given that the ratio of household indebtedness to income has grown massively, the effective burden of interest rates is far higher now than in 1996.

A judgement based on inflation and interest rates is unfair in some senses. The big achievement of the last 15 years has been to avoid a recession. While most of the credit for this outcome must go to the Reserve Bank (particularly for getting policy right in the Asian crisis of 1997) and some is down to luck, the government should at least be credited for not doing anything to muck things badly enough to derail the Bank’s economic management (I’m assuming here that the housing bubble, to which the government’s policies contributed greatly, will deflate gradually rather than popping us into a recession. That would be a really nasty legacy for Howard and Costello to leave).

Unemployment has also fallen quite a lot, though until quite recently, the improvement in headline figures masked a deterioration in broader measures of employment and unemployment, particularly for men.

The problem for Howard and Costello is that they chose the criteria on which they wanted to be assessed. They never cared much about unemployment, abandoned the whole idea of an unemployment target early on, and their occasional policy interventions were either focus-group driven exercises like “work for the deal” or ideological costcutting like the Jobs Network.

By contrast, they ran hard on “keeping interest rates at record lows” and now have to live with their failure.

A sorry business

John Quiggin129 Comments

Brendan Nelson’s career as Leader of the Opposition looks to be over before he has even faced the Rudd government in Parliament, thanks to his equivocation over the issue of an apology to the Stolen Generation. If Nelson was fair dinkum about supporting an apology, given the appropriate words, he could have made a positive virtue of it, saying something like “This apology needs to come from the Parliament, not just the government. I’m willing to work with Mr Rudd in preparing a statement that will have unanimous support”.

As it is, he will end up being forced through every possible position from outright opposition to conditional support to the final stage when he’ll be forced to deal with the hardline rejectionists in his own ranks.
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Misquoted or badly edited?

John Quiggin18 Comments

As anyone who’s dealt with the mainstream media knows, any time you’re directly involved in a story, you’re likely to see that it’s been misreported.

I was interviewed recently about the economic problems facing the new government and said, several times, that we would be better off if both parties had not committed themselves to large tax cuts on the basis of optimistic projections but that, having made the commitment, the Rudd government should honour it. This is how it came out in the news.com story

Some economists believe the promised $31 billion tax cuts should be abandoned.

“The country would be much better if we hadn’t had these tax-cut promises from both sides in the election campaign,” University of Queensland professor John Quiggin said.

“It was irresponsible to promise such large tax cuts where the fiscal situation needed more flexibility than that allowed.”

But Mr Swan insisted the tax cuts would be delivered.

You could argue that the report is accurate. Some economists do believe the tax cuts should be abandoned and I did make the remarks quoted. Perhaps the reporter submitted a story in which these two facts weren’t run together as they have been here, and it was cut in a way that produced this misleading impression. Or maybe the original report was wrong.

Either way, it confirms negative impressions about the mainstream media. Of course, bloggers make plenty of mistakes too, but it would be nice to think the professionals could do better.

Update I got a phone call this morning from news.com.au and I’m happy to say the story has been rewritten with my views reported correctly. Blogging gets results!

The Great Australian Dream

John Quiggin42 Comments

I’ve been meaning for ages to write a post about house prices, but haven’t come up with an analysis that satisfies me. Still, here goes.

On most standard measures. Australian house prices have been far above their long-run equilibrium value for at least five years, and the gap seems to be widening. But the length of the strength of the boom has convinced most people that high prices are here to stay, at least until they are replaced by even higher prices.

If this belief were suddenly reversed, and the prices returned to say, 2000 levels (even adjusted for changes in prices and incomes since then) there would be an awful lot of financial distress, with hundreds of thousands of households having negative equity.

This is already happening in the US and to some extent the UK. Compared to the US we have nothing like the volume of bogus subprime loans. On the other hand, price increases have been even greater, so there’s more room to fall.

If there is a really dire economic scenario facing the Rudd government over the next few years, this is it. By contrast, a slowdown in the export boom and a gradual deflation of the housing bubble would be a much better outcome.