Four more years?

John Quiggin13 Comments

The announcement that Ralph Nader will again run for the Presidency raises the (almost) unaskable question -are there any circumstances under which we should hope for, promote, or even passively assist, the re-election of George W. Bush as against either of the remaining Democrat contenders? I feel nervous even raising this question, but I think it’s worth a hard and dispassionate look.

Regardless of their political persuasion, most people will agree, at least in retrospect, that it would have been better for their own side (defined either in ideological or in party terms) to have lost some of the elections they won. Most obviously, this was the case for the US Republican Party in 1928. Hoover’s victory, and his inability to cope with the Depression, paved the way for four successive victories for FDR and two generations of Democratic and liberal hegemony, which didn’t finally come to an end until the Reagan revolution in 1980. The same was true on the other side of poltiics in Australia and the UK, where Labour governments were elected just before the Depression, split over measures of retrenchment demanded by the maxims of orthodox finance and sat out the 1930s in Opposition, watching their own former leaders implement the disastrous policies they had rejected, but had been unable to counter.

So, is 2004 one of those occasions? The case that it is rests primarily on arguments about fiscal policy. Bush’s policies have set the United States on a path to national bankruptcy, a fact that is likely to become apparent some time between now and 2008. Assuming that actual or effective bankruptcy (repudiation of debt or deliberate resort to inflation) is unthinkable, this is going to entail some painful decisions for the next President and Congress, almost certainly involving both increases in taxation and cuts in expenditure. On the expenditure side, this will mean a lot more than the obvious targets of corporate welfare and FDW[1]. Either significant cuts in the big entitlement programs (Social Security and Medicare) or deep cuts in everything else the government does will be needed, even with substantial increases in taxes (to see the nasty arithmetic read these CBO projections, and replace the baseline with the more realistic “Policy Alternatives Not Included in CBO’s Baseline”)
Read More »

New on the website

John Quiggin3 Comments

I was getting badly behind on my website, so I called in some help from our local (UQ Economics) webmaster Craig Mosely. So far he’s eliminated the backlog of newspaper articles, putting up articles from September 2003 to January 2004. Responsibility for the uninspired webpage design is still mine.

Please visit , read the articles and give me comments, either on the substance of the articles or on the organization and layout of the site.

Don't believe the polls?

John Quiggin14 Comments

It’s not unusual for a politician, faced with an unfavorable poll result, to say something like “the only poll that counts is the one election day”. And we all know that poll questions can be slanted to give the desired result, and correspondingly dismissed by those who don’t like the pollster’s choice of question. But I can’t recall a previous occasion on which a pollster has dismissed the results of his own polling, particularly when we are talking about a margin of 72 to 9. Yet, if we are to believe the editorial in today’s Oz, that’s exactly what Sol Lebovic of Newspoll did when his polling produced a result unfavorable to his client’s campaing for lower taxes. (thanks to reader Jethro for pointingthis piece out).

As discussed in more detail below, when asked whether they preferred a tax cut or more spending on health and education, the answer was 72 to 9 in favour of more spending. The same poll found 50 per cent of respondents believing that the top marginal rate was too high. In an editorial with the astounding (in view of the data) heading, Cutting income tax is a political winner, the Oz calls this a conundrum and cites Lebovic as saying

voters may be giving the “socially acceptable” answer on what they want the Government to do with the surplus.

The Oz goes on to say

In other words, while their consciences may be uneasy about cutting back the welfare state, their gut instincts are telling them we should be cutting back taxes. Mr Howard and Mr Latham would be well advised to respect the voters’ instincts.

It’s not clear whether Lebovic would accept this gloss, which suggests that his poll results should be discarded whenever they disagree with someone’s gut instincts (note that the claims about the instincts of the voters are baseless – the Oz editorial writer is expressing their own gut instincts and those of the political elite).

Lebovic is of course, correct to say that survey respondents often give socially acceptable, rather than accurate, answers. For example, surveys find that far more households take National Geographic than National Inquirer, but circulation figures tell a different story. Unfortunately for the Oz, it’s not a good basis for a political campaign if the viewpoint expressed is so socially unacceptable that only 9 per cent of people will confess to holding it. Moreover, voting is itself an expressive act. Someone who would secretly like a tax cut but doesn’t want to admit can’t actually secure the tax cut for themselves by voting that way – they only get the cut if a majority agrees with it.

A second problem, which undermines the idea of a ‘conundrum’ is that of the shifting majority. 72 per cent of people favored more health and education spending while 50 per cent said the top rate is too high – the number giving both responses could be as small as 22 per cent.

More importantly, there’s no necessary contradiction here. People might support cuts in income tax but think that health and education spending are more important. They could resolve the implied problem for the budget either by favoring a higher deficit, or by making up the difference somewhere else, for example through a higher rate of GST ( a suggestion raised in the previous comments thread by James Farrell) or lower defence spending.

Finally, it’s worth observing that the gut instincts of the voter have been tested in a number of recent state elections. Kerry Chikarovski went to the voters offering a literal fistful of dollars and was buried under a Labor landslide. Jeff Kennett cut services and was defeated by a Labor Party widely viewed as unelectable.

The Oz is grasping at straws when it claims that the overwhelming rejection of its policy line by respondents to its own poll is some sort of pretence. If I were Sol Lebovic, I’d be asking for more respectful treatment of my results.

Tax and spend

John Quiggin13 Comments

Reader Jack Strocchi, pointed out this Newspoll report in today’s Australian, concerning voter preferences on taxing and spending. Written by George Megalogenis, who usually gets things straight, it bears the marks of intervention designed to adjust the finding’s to the anti-tax line that has been running hard in the Oz editorial column for some time.

The problems start with the headline Top rate too high, say half of voters. It might be inferred that the other half say that the top rate is not too high. But despite the fact that the excessively high top rate is the central theme of the article, we never find out the distribution of the remaining 50 per cent between “about right”, “too low” and “Don’t Know”. Looking at the partial numbers, I’d estimate that the “Don’t Know’s” at no more than 10 per cent of respondents, implying that about 40 per cent of respondent’s rejected the view that the top rate is too high.

The really interesting news comes in the second paragraph. By the overwhelming margin of 72 per cent to 9 per cent, voters would prefer more spending on health and education to a tax cut. Even among those paying the top rate, most of whom think it is too high, the margin is 69 to 13. If the Australian wasn’t determined to push its opinions into the news pages, this would be the headline.

The implication is that, as regards taxing and spending, the electorate is overwhelmingly more social-democratic than the current government, and arguably more so than the current opposition. It’s no wonder that even mediocre Labor state governments have routinely crushed their opponents since the Howard government was elected.

There are some interesting framing issues here. The “top tax rate” question appears to be framed in a “free good” way – that is, respondents are asked whether the rate is too high, but the fact that a cut would have to be financed somehow is not explicit. By contrast, the tax cut vs spending question makes the trade-off clear.

What really interests me, but isn’t clear in the report is the sequence of the questions (the Newspoll site hasn’t yet been updated). The preference for spending over tax cuts would be even stronger if, as the Oz report tends to imply, the “top rate too high?” question was asked first. Conversely, if the tax cuts vs spending question had been asked first, the framing bias in the top rate question would be reduced.

UpdateIn the comments thread, Don Arthur advises that the paper-based version of the Oz story gives the numbers as 50 per cent too high, 34 per cent about right, 8 per cent too low. Bearing in mind the absence of any mention that reducing rates might mean giving up services, I don’t find this too surprising.

Further update 24/2Andrew Norton at Catallaxy has a post on the same topic, with the same title. and with much the same conclusion. The only difference is that he regrets the outcome and I don’t. A fine illustration of the positive-normative distinction.

What I'm reading

John Quiggin13 Comments

The Middle East: A Brief History of the Last 2000 Years by Bernard Lewis. Among much useful information, this book contains the interesting snippet that the name Palestine was imposed by the Romans after crushing the Jewish revolt of about 70CE and referred to the long-departed Philistines, and the claim that the first state religion, incorporating heresy hunts, persecution of unbelievers and so on, was Zoroastrianism in Persia.

I’m also rereading Climbing Mount Improbable by Richard Dawkins. I agree with Dawkins on a lot on the issues he disputes with, for example, Stephen Jay Gould. Nevertheless, and particularly in relation to human society, he reminds me of those economists who have been so dazzled by their exposure to the powers of the market mechanism that they are unwilling to recognise either defects in the mechanism or the possibility that many phenomena are better explained in other ways. The most obvious example, in Dawkins’ case, is the attempt to model the development of culture in terms of memes. As with, for example, public choice theory or the economics of the family, there’s enough going for the idea that it can’t be demolished in a sentence. But, again as with these examples, and depending on way in which it is applied, it either:

  • explains only relatively trivial instances of cultural evolution, like jokes and catchphrases
  • is rendered vacuous through the use of redifinitions that render the theory irrefutable, for example by making ‘memes’ synonymous with ‘ideas’; or
  • provides an account of important phenomena that is obviously wrong, for example by failing to observe that political ideologies like, say, Marxism or political sociobiology owe more to conscious design than to selection and recombination

The relative absence of this kind of stuff is one reason I prefer Climbing Mount Improbable to much of Dawkins’ other work.

Axis of Evil, Part 2

John Quiggin3 Comments

My post on Cyprus raised some eyebrows with its reference to the relative insignificance, in geopolitical terms, of the invasion of Iraq and the overthrow of Saddam Hussein. Looking back, I’m not surprised that this was controversial. After all, the idea that the war in Iraq is crucially important is a common background assumption in most of the debate, shared by both supporters and critics. Of course, geopolitics isn’t the only criterion of importance – the costs and benefits in terms of lives lost and saved, human rights and so on need to be discussed, not to mention economic impacts. But still, I think it’s fair to say that most people assumed that the presence in Iraq of more than 100 000 US troops, with a demonstrated capacity and willingness to overthrow governments, would make for big changes one way or another.

The most obvious candidate for such effects is Iran1. It is number 2 country in the Axis of Evil (and everyone knows North Korea was only thrown in at the last moment for rhetorical balance). It has advanced weapons-of-mass-destruction-related-program activities. And its current rulers are the same ones who humiliated the US in 1979 and who were, until Saddam’s invasion of Kuwait, US Public Enemy Number 1 in the region.
Read More »

Equal opportunity for what ?

John Quiggin4 Comments

In the middle of yet another scandal about American college sports, the NYT chooses to run an editorial calling for cheerleading to be recognised as a competitive sport (It is implied, though not clearly stated, that this sport would be open only to women).

I prefer watching cheerleading to watching American football and I have no problem with claims about its athleticism and so on. And I’ll concede Allen’s arguments that injuries might be reduced if the activity were run on a more professional basis (of course she doesn’t use the dreaded word ‘professional’, anathema to the NCAA).

Nevertheless, this seems to me to be a case where unsound premises have been pushed to their logical conclusions, with predictably bizarre results. The basic problem is the mixture of higher education and professional sport, which makes about us much sense as if high school cafeterias doubled as French restaurants.

Isn’t there even one university president prepared to take up the banner of Robert Maynard Hutchins and get universities out of the entertainment industry?

Cyprus

John Quiggin20 Comments

No one much has noticed, but what will probably turn out to be the biggest geopolitical event of the year took place last weekend. I’m referring to the announcement by Kofi Annan of a referendum on the reunification of Cyprus to be held on 21 April this year. There’s still room for something to go wrong, but I’ll present my analysis on the basis that the referendum will be held and approved, which seems likely at present.

Why should settlement of a long-running dispute on a Mediterranean island, with no recent flare-ups, be so important ? Let me count the ways.

First, this is another victory for the boring old UN processes so disdained by unilateralists.

Second, a settlement of the Cyprus dispute would mark the end of hostilities between the modern states of Greece and Turkey that go back to the achievement of Greek independence from the Ottoman Empire 200 years ago. Taking a longer historical view, the predecessor states of the modern Greece and Turkey have been at the frontline of hostilities between Islam and Christendom for 1000 years or more. By comparison with this dispute, the troubles in Ireland are of recent vintage.

Third, and most important, the positive role played by the Turkish government, until now the sponsor of the separatist government in Northern Cyprus, will greatly strengthen Turkey’s case to become a candidate for admission to the European Union. Admission of Turkey, which could be expected to follow by around 2010 would dramatically change the dynamic of Middle Eastern politics. Iraq, Iran and Syria would all have borders with Europe. With membership of the EU, Turkey would provide a model of an increasingly prosperous, secular and democratic state in a predominantly Islamic country. By comparison, the replacement of the odious Saddam Hussein with an imperfectly democratic Islamist government dominated by Shiites (the most plausible current outcome for Iraq) would fade into insignifance.

A decision by the EU to reject Turkey, despite its dramatic progress towards a fully democratic system of government, would be equally significant, but in the negative direction. The advocates of rejection, most notably the German Christian (!) Democrats would correctly be seen as being motivated primarily by anti-Islamic prejudice. This would be a big setback in the struggle against terrorist forms of Islamism.

Welcome !

John Quiggin10 Comments

My long-threatened change of hosts has finally come to pass. This is an occasion for lots of thanks. First, to Rob Corr who helped me make the move from Blogger to Movable Type, set me up on mentalspace and gave lots of technical support along the way. Second to everyone associated with mentalspace.ranters.net – I’ve enjoyed your company. And last but not least to Brad Choate, author, among many other things, of the marvellous Textile plugin for MT, who’s now doing my hosting, and guided me carefully through the process of transferring the blog.

In the process, I’ve managed to recover a large number of posts lost in the great database disaster . There’s still a gap of a couple of months (maybe I was hanging out with GWB in the Air Force Reserve), but I have hopes of restoring the entire blog in due course.

Please update bookmarks, links and so on.