Costello – the numbers but not the bottle ?

John Quiggin10 Comments

Looking at today’s news, it’s pretty clear that the Prime Ministership is Peter Costello’s for the asking. We have two senior ministers, Downer and Turnbull giving non-denial denials to claims that they want Howard out. That means there have to be enough numbers for a serious challenge. That in turn means that Howard’s position is untenable, if such a challenge is made. Howard might win a party-room vote, but he would be doomed at the election even if he did. By contrast, Costello would have a chance. The remorseless logic of game theory now implies that anyone who cares about keeping their seat should support the challenger, and try to force Howard to bow out gracefully.

But Howard has made it clear he won’t do this in the absence of an overt challenge from Costello. He judges, on the basis of past experience that Costello won’t have the bottle*, and that facing the challenge down gives him a chance to present himself as a strong leader in the contest with Rudd.

* I had various thoughts about the origin of this term for nerve/guts. A quick search of the Internet found support for all my ideas and quite a few I hadn’t thought of. It looks as if it will remain a mystery.

$50 on the footpath?

John Quiggin2 Comments

Quite a few people have pointed out that, while the betting markets have now caught up with the opinion polls in making Labor hot favorites to win the election, seat by seat markets while shortening suggest a very tight outcome. The question that doesn’t seem to have been asked (not aloud at any rate) is whether there is (or was) an arbitrage opportunity here. That is, if you backed the Liberals to win the election, while backing Labor in all the marginal seats needed to win, could you make a “Dutch book” against the bookies and guarantee a net gain no matter what happened (within reason – you would still lose if Labor got in by winning lots of supposedly ultra-safe seats while losing in the marginals).

Looking at the movements in seat prices, I suspect this was a real possibility not long ago, and that alert punters have exploited it, closing the gap. But this is definitely a case for Andrew Leigh.

Update As you might expect, I’m not the first to have asked this question. Here’s John Barrdear asking and Simon Jackman answering (a bit obscurely – I think he’s assuming a uniform swing, but I’m not sure). I’m still keen to discover Andrew’s thoughts on all this.

Immediate further update No need to worry. They’ve stopped taking bets

Thoughts on Beattie’s resignation

John Quiggin17 Comments

A few thoughts, not well organised, which I may update

* Labor has now changed leaders in five states, twice as a result of illness and three times because of a voluntary decision to retire, with no sign of any damage as a result. Such a string of smooth transitions is almost unprecedented in Australian political history where the rule is that all careers end in failure (defeat by the electorate or by a party rival, or resignation in disgrace)

* Following from the previous point, if the Federal Libs get the drubbing predicted by the opinion polls and Rudd doesn’t run rapidly into disaster, Labor will be established as the natural party of government. It’s hard to see how the Liberals, for whom success is the main raison d’etre could survive this for long

* I imagine Beattie’s departure will take the sting out of the council amalgamations issue in Queensland, which will be a gift to Kevin Rudd in a couple of marginal seats such as Herbert.

* Obviously, this has contributed to the pressure on Howard to follow Beattie’s example. I can’t see him caving in to this, nor can I see a last-minute switch to Costello doing the government any good. On the other hand, the way things are going, this is Costello’s last chance to be PM, if only for six weeks or so.

The Sydney Declaration – mostly harmless

John Quiggin20 Comments

Unsurprisingly, the APEC leaders meeting in Sydney have signed a statement on climate change, grandly described as the
Sydneydeclaration
Sydney Declaration and described by Dennis Shanahan and Cameron Stewart in the Oz as a ‘sweeping triumph’.

It’s unsurprising because once the host nation has proposed a topic, it’s pretty much unthinkable for a meeting like APEC to break up without some sort of agreement, because such agreements commonly have grandiose titles and because the Oz … well, you get the idea.

Most of the attention so far has been focused on the set of initiatives referred to as the “APEC Action Agenda”, which includes various voluntary steps on energy efficiency, reafforestation and so forth. As my co-author Frank Jotzo notes, “In practical terms, that will mean almost nothing”. A fair indication of the significance of this agenda is its treatment by the New York Times, which gives a one-line link to the AP wire service report in which Jotzo is cited. The Washington Post has a story on the Bush-Howard statement a couple of days ago, but nothing so far on the great Declaration.

The really important point, though, is the section on Future International Action which begins “We reaffirm our commitment to the United Nations Framework Convention on Climate Change (UNFCCC).” (Kyoto is a protocol to this convention). There’s more, spelling out the post-Kyoto bargaining process embodied in UNFCCC In other words, the idea that APEC would produce an alternative to Kyoto, or a post-Kyoto agreeement outside the UNFCCC is dead.
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Fat and thin

John Quiggin37 Comments

The latest Scientific American is all about food and includes the striking fact that there are now more people who are overweight or obese (1.3 billion) than people who are chronically malnourished (800 million). This makes it obvious that the world could feed all its people if we had the right social organisation. It’s closely related to the fact that there are now more rich people (by any historical standard, most people in developed countries are rich) than very poor people (income of less than $1US a day). The overlap here isn’t perfect – most of the malnourished are very poor, but obesity is mostly a problem of relatively poor people in rich countries, and it’s now common in poor and middle-income countries as well.

The main point though is that we have the resources to end poverty. Doubling the income of the very poor would cost about $300 billion a year, which is pretty close to the 0.7 per cent of total rich country income that was promised as a target for foreign aid years ago. We’ve got nowhere near that, and much of what is given doesn’t go to the very poor. Admittedly, there will always be leakage, but if the rich countries were prepared to allocate as little as 2 per cent of their income to a well-planned and well-funded effort, we could surely pull most people out of extreme poverty. The task would be made even easier if the benefits growth in China and India, both of which still have many very poor people) were spread a bit more evenly.