For some reason, my career seems to have gone exceptionally well since I started blogging. I had two pleasant surprises last week. First, I was told that I’d been elected as a Distinguished Fellow of the Australian Agricultural and Resource Economics Society. This is a big honour for me, as agricultural and resource economics is where I started out, and still a core focus of my research (particularly on the Murray-Darling Basin). Admittedly, once academics reach a certain age, we like nothing better than to give each other awards, but that doesn’t detract from the pleasure in getting one.

Much more unexpected was receiving an email from Kenneth Arrow. There are a lot of very smart and insightful people in the economics profession, but in most cases I tell myself that, if only I work hard and think clearly I have a shot at matching them (this may not be true, but it keeps me motivated). Then there are a handful of people like Arrow, Paul Samuelson and Milton Friedman. Reading their stuff, I get the feeling I could work for a hundred years without matching them.

Anyway, the email had a fairly generic title and I expected I was just on an address list. But when I opened it, it was an invitation to me to give a series of lectures on the economics of risk, in Jerusalem next year. Of course, I plan to accept.

I mucked up the first guest posting, putting up what was intended as a comment-length version. So here’s the full version of Brian Bahnisch’s thoughts.

The steel decision and the WTO

While the WTO steel decision poses a significant domestic dilemma for Bush, the implications for international trade relations are interesting. Pascal Lamy of the EU was very quick to remind the Americans about their taunts by saying that the cheese eating surrender monkeys are now biting back. You’d have to think they will hit hard with retaliatory tariffs.

Australia usually follows the correct pure free trade line, even against the US. On this one we did special deals, so can afford to sit back.

Japan, though, is considering sending a shot across the bows with a few hundred million dollars worth of sanctions against the US. It’s symbolic, but very significant.

The WTO has been a joint project of the US, the EU and Japan. With Canada, they make up the famous “Quad”, which calls the shots in the WTO. Dangerous cracks have opened up in Quad solidarity prior to Cancun and were unsuccessfully papered over. It was Japanese and South Korean intransigence above all that sunk Cancun.

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Another Monday, another message board. Have your say on any topic you fancy (civilised discussion and no coarse language, please).

Darwin’s Dangerous Idea by Daniel Dennett. Dennett’s main concern is to ram home the point that, much as we might like the idea of some sort of special exemption from processes of undirected natural selection (a skyhook) we’re not going to find one.

Dennett naturally lines up with Richard Dawkins and Steven Pinker, but I find him much more satisfactory than either of these. While he’s remorseless in his basic argument, he’s careful to avoid slides into what he calls ‘greedy reductionism’. To caricature, the typical ‘greedy reductionist’ slide goes from “The existence of (say) the High Court” is the result of evolutionary events on the African savanna many thousands of years ago” (trivial true, except perhaps for some details about location) to “The best way to explain the decisions of the High Court is with reference to evolutionary events on the African savanna many thousands of years ago”. (silly).

As I observe in this review of Pinker, this kind of slide from trivially true to indefensibly strong arguments runs all the way through The Blank Slate. Dawkins is prone to the same fault, though not as much so.

A widely-noted feature of the debate over the monarchy, both in Australia and the UK, is that the Queen is considerably more popular than the Monarchy. Although there are a lot of factors of work here, one is a curious accident.

In a system where the monarchy is inherited by male primogeniture, the par outcome is that the monarch should be an old or middle-aged man who has spent most of his adult life waiting for the job. This was the case for most of the 18th century, for example. By some odd chances, however, more than half of the last 200 years of the British monarchy havs been occupied by two long reigns by women. As at the end of the 19th century, only a minority of people can now recall a time when the current Queen was not reigning. The only reign of the last 150 years that really fits the model I’ve described was that of Edward VII, and was not a great success.

In the past, when most positions of authority were held by men whose main qualification was to have lived a long time, the operations of primogeniture helped the monarchy, although even then the really successful kings were mostly those who started young. But I doubt that a modern monarchy could survive if the par outcome occurred regularly. Assuming the British monarchy sticks to the existing rules and Prince Charles doesn’t die prematurely, this is the likely pattern for the foreseeable future.

In the AFR of 14 November there was an excerpt from the editorial in The
Wall Street Journal of November 11 stating that as a result of the steel
tariffs domestic steel prices hiked by 30 per cent. The International Trade
Commission found that in their first year the levies inflicted a $US680
million hit on the US economy. The editorial continues:

“A study done earlier this year for the Consuming Industries Trade Action
Coalition went further. It found that the higher steel prices cost 200,000
American jobs and $US4 billion in lost wages from February to November
2002.”

“Those 200,000 jobs were more than the total number of people employed by
the steel industry itself. That’s one reason more than 200 companies and
organisations representing steel-consuming and related industries sent [US
President George] Bush a letter last month begging for relief.”

By any sensible measure it seems that Bush has shot himself in the foot big
time. Why did he do it?

My best guess was that he was trying to prove his credibility on trade
matters to Congress. Hence the steel decision and the hike in farm subsidies
demonstrated his ostensible commitment of the national interest. The reward
was the Trade Promotion Authority (TPA). The TPA, granted by Congress to the
President, allows the President to negotiate trade agreements without the
formal involvement of Congress until the final approval stage.

What will Bush do now? Who knows, I don’t!

I’ve had one or two guest posts in the past, and I’ve decided to make this a little more frequent if I can. I’m taking this slowly as, in keeping with my conservative standpoint, I don’t want to make radical changes to something that is, I think, working well. For the moment, I’ll aim at putting in one guest post a week, if I get an an adequate supply.Mainly I want to give regular commenters the chance to put together something a bit longer from time to time.

I find comments hard to read when they get past about 150 words, and I’ll be looking for guest posts in the range 200-600. I’ll be posting one by Brian Bahnisch fairly soon.

For the moment, I’m not going to run posts that are clearly inconsistent with the blog’s social democratic perspective, but I’m not going to impose any sort of narrow party line. So if you’ve got something to say that would burst the seams of my comment box, now’s your chance.

Thinking about the chronic mess in the Middle East, it struck me that, for the last decade or so, no-one has known what to do about Iraq, but lots of people have been determined to do something.

On the other hand, everyone knows what needs to be done about Israel-Palestine, but no-one who matters has been prepared to do it.

The answer to the Israel-Palestine is simple and well-known and has been proposed many times over from the Clinton plan to the more recent Geneva Accord, which varies only marginally from Clinton. The elements are

• Two states with the 1967 borders, allowing modest adjustments but no net transfer
• Sharing of Jerusalem as capital of both
• Compensation of refugees from pre-1967, but no right of return

. The problem is that Sharon and Arafat are beholden both to the groups within their communities who would lose out (the Israeli settlers and the Palestinian refugees) and to outside ideologues with maximalist demands (Islamic rejectionists and American neocons like Daniel Pipes). This seems unlikely to change until the West presents them both with an offer they can’t refuse: either accept the Clinton plan (under a new name natch) in full and without negotiation, or face a withdrawal of all dealings with whichever side refuses it. And of course, that won’t happen as long as Bush is in office.

On Iraq, until the invasion of Kuwait, pretty much everyone in the West was happy to deal with Saddam as both a wealthy customer and the enemy of the Iranian mullahs. And there was fairly general agreement about throwing him out of Kuwait by force if necessary. From then until 2003, opinion has been divided into three camps regarding Saddam: forgive and forget, sanctions and containment, and war. Behind that was a debate about what should be done after a war, which is, of course, the relevant issue now. There are all sorts of options, none of them appealing from “cut and run” to “stay the course, for decades if need be”.

A secondary but still important issue raised by Peter Saunders in his CIS paper is that of the lifetime impacts of redistribution. Given that the same person may be poor in one period, and rich in another, is anything gained if we tax the rich and give to the poor?

To think sensibly about this question, we need to distinguish a number of different processes that may be at work in changing people’s relative income positions over time.

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Update In view of continuing interest in this topic, I’ve put it back up to the top of the page. New commenters include PM Lawrence and John Craig. Now read on …

My column in today’s Fin (subscription required) is an expansion of points I’ve made previously on this blog. After defending the bicameral system, I go on to the polticisation of the GGs office and advocate direct election (following Ken Parish and David Solomon). My final para

Of course, an elected President would be more likely than an appointee to come into conflict with the Prime Minister and therefore with the majority in the House of Representatives. To analysts fixated on the idea that Westminster is the model of democracy, this seems like a catastrophic outcome. The Australian public knows better and has voted for checks on the autocratic power of Prime Ministers whenever it has had the chance.

As a result of this piece I received a paper by Clerk of the Senate, Harry Evans which, with his permission I’m making available here (word file). The key quote on Westminster

The Westminster system as described in the current paradigm is a relatively recent development. Originally, the system was described (classically, by Walter Bagehot) as the electors choosing a parliament, the parliament choosing a government, and the parliament holding the government responsible, if necessary by ejecting it from office between elections. Similarly, the mandate theory, that governments have a mandate to govern by legislating as they wish after an election, is a recent rationalisation of this relatively recent development of so-called Westminster government. In sum, the Westminster/mandate paradigm is a rationalisation of what may reasonably be regarded as a degeneration of a system.

Certainly Australia does not have, and was not intended by its founders to have, a Westminster/mandate system. In so far as it was known to the framers of the Constitution, as an emerging phenomenon, they rejected it

As is apparent from the names of our houses of Parliament, the framers of the Australian constitution preferred the American model of democracy to the Westminster system, still theoretically based on a mixture of democracy, aristocracy and monarchy.

It’s important to note that the mandate doctrine does have a role to play in Britain which still has an unelected Upper House. I had a bit more to say about mandate theory here.