Class of ’05

John Quiggin126 Comments

The New Republic has a gloomy but, I think, accurate piece by Spencer Ackerman, focusing on

the disturbing prospect that future attacks against the West will be carried out by those who have gained a wealth of experience fighting U.S. forces in Iraq’s western, Sunni-dominated Anbar province–the premier location for on-the-job terrorist training on the planet. The CIA calls this the “class of ’05 problem.” Such future attacks may very well make yesterday’s carnage seem amateurish in scale.

At this point, I think there’s very little chance that we [in Australia and elsewhere] will escape the attentions of the Class of ’05 indefinitely, whatever policy decisions are taken now with respect to Iraq.

I think the best option is to announce, and adhere to, a timetable for withdrawal of US? Coalition troops from Iraq, and hope that the Iraqis can reach some sort of solution among themselves. But the inevitable short-term consequence of that is that Anbar and other places will be a fairly safe haven for foreign jihadists, until they become more of a liability than an asset for the Sunni nationalists who still appear to dominate the insurgency. The hope is that they won’t get many new recruits, in the absence of US forces to fight.

The alternative is for the US to “stay the course”, and fight the jihadists in Iraq. So far, any successes on this front have been more than offset by the boost to Al Qaeda recruiting provided by the US occupation, and by the stimulus to the domestic insurgency created in part by the mere fact of foreign occupation, and in part by civilian casualties, arbitrary arrests and detention and so on. There’s no reason to think that holding on longer will make things any better – even if the insurgency winds down eventually, the Class of 05 will just disperse aroudn the world.

Either way, there’s every reason to expect more and worse terror attacks. We will endure them, as we must, and we will pursue and bring to justice those responsible. But we have created a rod for own backs in Anbar, as the Russians did in Afghanistan.

Weekend reflections

John Quiggin65 Comments

This regular feature is back again. The idea is that, over the weekend, you should post your thoughts in a more leisurely fashion than in ordinary comments or the Monday Message Board.

If anyone has any thoughtful comments about how we should respond to terror attacks like the one we’ve just seen in London, I’d be glad to read them. Unfortunately, the thread below went into partisan pointscoring at the second comment, and was derailed thereafter, despite a few attempts to focus on what we have in common. I’ve been too busy to respond today, but from this point on I’ll delete or disemvowel anyone who, in my judgement, is more concerned with scoring points against domestic opponents than about dealing with Al Qaeda.

That said, part of the fight involves carrying on with normal life, so feel free to comment on other topics.

Please post your thoughts on any topic, at whatever length seems appropriate to you. Civilised discussion and no coarse language, please.

Crowds and market caps (crossposted at CT)

John Quiggin3 Comments

I happened to reread a passage from James Surowiecki’s “The Wisdom of Crowds in which he discusses the stock market’s reaction to the Challenger disaster, the crucial point being

Did you know that within minutes of the January 28, 1986 space shuttle, Challenger, disaster, investors started dumping the stocks of four major contractors, Rockwell International, Lockheed, Martin Marietta, and Morton Thiokol, who had participated in its launch? Morton Thiokol’s stock was hit hardest of all … the market was right. Six months after the explosion, the Presidential Commission on the Challenger revealed that the O-ring seals on the booster rockets made by Thiokol became less resilient in the cold weather, creating gaps that allowed the gases to leak out.”

It struck me reading this, that I’d heard of Rockwell, Lockheed and MM in many contexts, but I’d never heard of Morton Thiokol. It turns out that they are a specialist builder of booster rockets and similar items (they’re now a division of ATK).

This seems to suggest a prosaic explanation of the market reaction. Whatever the cause, the space shuttle program was going to be shut for a long time. This would do a bit of damage to everyone involved, but much more to the rocket specialist Thiokol than to the other three big diversified companies.

The ATK website indicates that they still have plenty of shuttle contracts, so it seems as if the faulty O-rings didn’t do them much long-term damage over and above the effect on the shuttle program.

I haven’t got the full book or the study cited there, so it may be that this explanation has already been ruled out in some way, but I thought the easiest way to find it was to post and see what response I got.

Anonymous comment in peril ?

John Quiggin30 Comments

I’ve just come back from an appearance before the Parliamentary Electoral Matters Committee Inquiry into the Conduct of the 2004 Federal Election and Matters
Related Thereto, where I presented a submission arguing that blogs, and commenters, should not be required to identify themselves when commenting during an election campaign. It was a pretty vigorous session, and some members of the Committee were clearly not convinced. So I wouldn’t be surprised to see an attempt to restrict anonymous Internet comment coming out of the Committee’s report.

My immediate analysis is that, if anonymous comments were prohibited, the only way to be safe would be to close down comments during election campaigns. Even if people gave full names and addresses, I don’t have the resources to verify them.

Anyway, it would be good to hear other views: I’ll need to think more about my own views.

My submission (PDF file) is over the fold
Read More »

Elasticity and progress

John Quiggin29 Comments

The question of whether technological progress is slowing down has been around for a fair while, and is up for discussion again (hat-tip Jack Strocch(. In many sectors of the economy, notably transport, the answer is very clearly “Yes”.

On the other hand, Moore’s Law (speed doubling every 18 months) still seems to hold for computer chips and they are playing an increasingly important role in the economy. So although progress in most areas is slower than the historical average, progress in this central area is faster.

In the end, it all comes down to the long-run price elasticity of demand for computation. If this is less than one, total revenue from the sale of computational services will eventually decline relative to national income, and the ultimate situation will be one where computation is effectively free, but no longer an important source of progress. If the elasticity is greater than one, the computation-based share of GDP will rise over time, as previously separate sectors like music, video and so on are computerised.

My reading of the evidence is that the value so far is very close to one, which accounts for some of the ambiguity surrounding this question

Assume we have a can-opener

John Quiggin7 Comments

A lot of my work at the moment is bound up with a model of the Murray-Darling River system. As all students of economic methodology know, such models involve more or less unrealistic assumptions designed to allow us to calculate some results while maintaining some connection with reality. One tricky issue in the model, and in reality, is what to do about demand for water for residential use in Adelaide. A member of my research team (who shall remain nameless) has proposed a drastic simplifying assumption, with a very pleasing implication

Here are the model results excluding Adelaide.

I have assumed that Adelaide doesn’t exist.

Therefore the Lions actually won 4 straight.

if only!