Some good news from Iraq

John Quiggin47 Comments

There’s not a lot these days (here’s a roundup from Winds of Change), but it’s definitely good news that Saddam Hussein is to stand trial on genocide charges, relating to his campaign against the Kurds in the late 1980s.

The crimes for which Saddam is currently being tried, relating to torture and executions of about 100 people from the village of Dujail following an attempted assassination during the Iran-Iraq war, are terrible, but if the same criteria were applied generally, a large number of world leaders would be in the dock along with Saddam (Fallujah, Grozny, Tienanmen Square and the list goes on).

By contrast, the “Anfal” campaign against the Kurds was a genocidal atrocity. If the death penalty is ever justified, it’s justified in this case and whatever the legal technicalities, there’s no doubt of Saddam’s guilt.

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Hindsight?

John Quiggin80 Comments

Andrew Leigh has moved to a new, more mnemonic location. He has a post which concludes that, although the Iraq war has turned out badly, it seemed like a good idea at the time. So, on the information available at the time, he suggests, he was right to support it. Much the same point has been made in discussion here. Tim Dunlop criticises this, pointing out that lots of people (in fact, the majority of people in most countries) looked at the same evidence and came to the (ex post) correct conclusion that war was a bad idea.

I want to pick up a different point. It’s still possible to argue (not convincingly in my view, but not absurdly) that who supported the war made a reasonable judgement on the available evidence, including the evidence supporting the existence of WMDs, provided by Bush and Blair. Only if you discounted this evidence, as bogus or at least slanted and exaggerated, could you draw the right conclusion. As we now know, the evidence was bogus and the whole UN process was a sham since Bush and Blair had decided to go to war anyway. But, someone who assumed that they were presenting the best available evidence, and accepted their repeated claims that war was a last resort, might reasonably have support the war.

However, Andrew wants to go further, saying “given the information then available, I still think Blair, Bush and Howard made the right call.” I can’t see how this claim can be defended. Clearly, Bush and Blair had the information that only later became available to the rest of us showing the spurious nature of the ostensible case for war.
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More doubts on PPPs

John Quiggin27 Comments

As reader Jonno points out in comments to the previous post on this, the problems with Public Private Partnerships are beginning to become apparent even in the UK where, under the name of the Private Finance Initiative, the idea has been pushed strongly by both Conservative and Labour governments.

This report in the Guardian indicates that the UK Treasury is pulling back from an aspect of the PPP model I’ve long criticised, the bundling of “soft services” like cleaning and catering into contracts for the construction and maintenance of hospitals and schools. The British government is still pushing ahead, under intense pressure from the business interests who benefit from these schemes, but the Treasury Report while unsurprisingly positive in tone, stresses the subsidiary role of the PFI, which is expected to account for between 10 and 15 per cent of total investment in public services.

Ideas Festival

John Quiggin4 Comments

I’m giving two talks at the Ideas Festival this weekend, both paired with blogger and economist Andrew Leigh. At 11:45 today it’s

Who will serve?
Who will be the worker of the future, where will they come from and how old will they be

at the Cremorne Centre, QPAC, Southbank

and at 1:30 tomorrow Gross national happiness in the Recital Hall.

It’s been great so far. I missed Cory Doctorow’s talk, but I got the chance to meet him and discuss DRM and related issues. More on this soon, I hope.

Weekend reflections

John Quiggin44 Comments

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

NZ Treasury on PPPs

John Quiggin14 Comments

The NZ Treasury has a paper looking at the advantages and disadvantages of Public-Private Partnerships (PPPs)*. The conclusions are almost exactly what I would have written myself.

This paper argues that:

* there are other ways of obtaining private sector finance without having to enter into a PPP
* most of the advantages of private sector construction and management can also be obtained from conventional procurement methods (under which the project is financed by the government, and construction and operation are contracted out separately), and
* the advantages of PPPs must be weighed against the contractual complexities and rigidities they entail. These are avoided by the periodic competitive re-tendering that is possible under conventional procurement.
The paper concludes that PPPs are worthwhile only if all three of the following conditions are met:

1. The public agency is able to specify outcomes in service level terms, thereby leaving scope for the PPP consortium to innovate and optimize.
2. The public agency is able to specify outcomes in a way that performance can be measured objectively and rewards and sanctions applied.
3. The public agency’s desired outcomes are likely to be durable, given the length of the contract.

The only thing missing is a discussion of the cost of capital. I’ve discussed this issue with NZ Treasury in other contexts, but I’m not sure where they would come out in relation to PPPs

* Acronyms are tricky things. In the post below, PPP means Purchasing Power Parity. And once upon a time, it meant Point-to-Point Protocol, which was used by modems.

Diewert on Quiggin, Castles and Henderson

John Quiggin24 Comments

A while back, I had an interesting debate with Ian Castles about the significance or otherwise of the choice between market and purchashing-power parity (PPP) exchange rates in the IPCC projections of global warming. You can read a number of contributions from Castles and David Henderson at the Lavoisier Institute website and their main article is published in Energy & Environment”, vol. 14, nos. 2 & 3: 159-85. They argue that the use of market exchange rates understates the income of poor countries and therefore overstates the growth in income and energy use that will occur as they catch up with rich ones.

My criticism is directed at the second part of this claim. I say that if the demand for energy is modelled using market exchange rates, the choice of income aggregate doesn’t matter much. If the income estimate is biased downwards, so will be the estimate of the rate at which energy use grows with income. I make this point in my submission to the Stern Review in the UK.

These debates are inevitably complicated, but someone with the right skills can make them a lot clearer. I can think of no one better than Erwin Diewert, who has been the leading researcher* in the theory of index numbers for the last thirty years (and a big name in other fields). So I asked Erwin for comments and was both surprised and pleased to receive not just comments but a whole paper, not quite by return mail, but after only a few days.

I think it’s fair to summarise by saying that Diewert agrees with my main point, but also agrees with Castles and Henderson that the IPCC should change its modelling approach.

I agree with everything in the comment, but there a couple of points of emphasis I would place differently, as noted in my response . In particular, I stress the importance of consistency. Using PPP numbers for income, then plugging in income elasticities derived from studies using market exchange rates, is a recipe for disaster.

* I should also mention Sidney Afriat who is famous for being both brilliant and esoteric. Afriat has made fundamental contributions to the field.