For Fathers’ Day, the family took me out to lunch, down the hill to the St Lucia golf course, where you can have a very pleasant, moderately priced, meal overlooking the 18th hole. This is definitely the way to enjoy golf as a spectator sport.
The imitation of Christ
While we enjoyed a barbecue tonight we were entertained by a skywriter tracing out “Jesus saves”. Australians and Americans would do well to follow his example.
Right-wing postmodernism
Josh Marshall observes
the administration’s main obstacle has been the experts themselves–the economists who didn’t trust the budget projections, the generals who didn’t buy the troop estimates, intelligence analysts who questioned the existence of an active nuclear weapons program in Iraq. That has created a strong incentive to delegitimize the experts–a task that comes particularly easy to the revisionists who drive Bush administration policy. They tend to see experts as guardians of the status quo, who seek to block any and all change, no matter how necessary, and whose views are influenced and corrupted by the agendas and mindsets of their agencies. Like orthodox Marxists who pick apart mainstream economics and anthropology as the creations of ‘bourgeois ideology’ or Frenchified academic post-modernists who ‘deconstruct’ knowledge in a similar fashion, revisionist ideologues seek to expose “the facts” as nothing more than the spin of experts blinded by their own unacknowledged biases.
This is a point I’ve been making for some time.As the debates over Aboriginal history, global warming and even creationism show, the same is now true for large sections of the Australian right, most notably those who take their line from Quadrant. Of course, as Marshall points out, there are plenty of precedents for this kind of thing on the left, but with Marxism moribund and postmodernism in terminal decline, it’s now much more prevalent on the right.
Freedom of speech part 3
Partly because I’ve only had intermittent access to the blog over the past week, I haven’t got around to responding to Jason Soon and Andrew Norton on the debate over neoliberalism and free speech. Given this lag I thought it would be good to summarise the positions as I see them.
Neoliberals like Andrew and Jason are opposed to government restrictions on political freedom of speech with the usual narrowly-drawn exceptions (fraud, defamation of individuals and so on) but argue that
private property rights trump free speech as a general rule
. So, for example, employers and property owners can impose whatever restrictions they like on speech by their employees, tenants and so on, and government should not intervene.
I disagree with this, though not to the extent of arguing that no private restrictions on freedom of speech should be permitted. To give some substantive examples, I believe
- Employers should be prohibited from discriminating against employees on the basis of political beliefs or off-the-job political activities
- Similarly, landlords should be prohibited from discriminating against tenants
- Governments should ensure that there is sufficient public space (both physical and media space) to permit the free expression of political views.
On the other hand, assuming that there are a range of media outlets, I don’t believe that individual media outlets should be required to be ‘balanced’, except for a requirement to correct defamatory falsehoods.
Having summarised the two positions as best I can, there are a lot of questions that remain. Most obviously, there’s the question of which position is right, that is, which produces the best consequences? Second, there’s the semantic issue of whether issues like those of raised are, as Jason says
nothing to do with free speech at all.
Third, there’s the history-of-thought question WWMS (What would Mill say?). Finally, there are some more specific issues regarding press freedom and academic freedom that I’d like to discuss further.
That’s enough for now. I hope to pick up the pace a bit on this one, but I’d appreciate it if anyone who thinks I’ve mischaracterized the neoliberal position speaks up now.
Micawber
This piece by Paul Krugman covers a range of interesting issues. One is the attempt by US Treasury Secretary John Snow to push China into floating or revaluing (upwards) the yuan. Similar pressure is being applied to other Asian governments whose central banks have been resisting appreciation of their currencies and buying US dollars. Obviously if the yuan and yen go up, the dollar goes down. Despite this doublespeak from the US Treasury, the Snow initiative marks the abandonment of the misconceived strong dollar policy, which has helped to drive a 20 per cent reduction in US manufacturing employment over the past three years (for a detailed PDF file on employment and productivity, go here). But as Krugman implies, any serious adjustment of the dollar relative to Asian currencies will necessitate a significant rise in US interest rates.
The other point that comes through the whole piece is how rapidly the rhetoric of US hyperpower is becoming obsolete. The US has an impressive, and unique, capacity to deliver overwhelming military force anywhere in the world. But in economic terms, it produces about 21 per cent of world output and consumes about 22 per cent. The result, as Mr Micawber said is misery (or, if things are managed very well, unaccustomed austerity).
New on the website 3
I’ve added a new section to the Website containing reports on a range of subjects including privatisation, greenhouse gases, competition policy and casinos.
Feet of Clay 2
I asked a few days ago of a piece by Glenn Milne, highly critical of Howard
does it reflect a nascent Press Gallery consensus that Howard is consistently dishonest, and therefore should not be PM?
Judging by Greg Hywood in today’s SMH and Michelle Grattan in yesterday’s Age, the answer is a definite Yes. Grattan and, to a lesser extent, Hywood are opinion leaders for the Press Gallery; they set the assumptions by which others assess the action (more on this Real Soon Now).
So the cumulative impact of ethanol, Tuckey and Hanson has been substantial, even though the government has ridden them all out. Perceptions won’t have been helped by the recent arrival of the Tampa refugees (the government’s official assessment, not mine) who Howard promised would never be allowed to set foot on Australian soil. Even for those who supported the government’s policy, it must now be clear that this episode showed the Howard government at its sordid worst.
Identity
For those who’ve been following the John Lott/Mary Rosh affair, this set of links to bogus identity cases on the Web, and earlier on UseNET, might be of interest. I found this MIT paper quite interesting, though the content is of course familiar.
Negative savings in America
I was looking at national savings figures for the United States when the Australian National Accounts came out yesterday, which is why I belatedly noticed the negative households savings figure.
The US has also experienced a big decline in household savings, but they remain positive at around 3 per cent of GDP. Retained corporate earnings are between 0 and 2 per cent of GDP depending on how you measure depreciation. These small positive contributions are wiped out by the government budget deficit (around 5 per cent for the Federal government – the states are also in deficit, but I don’t have a number yet). More on all this is available from the Bureau of Economic Analysis.
One interpretation of all this is that people from outside the US (and, for that matter) Australia, are eager to buy US assets, and Americans are simply cashing in the consumption benefits. I don’t agree. A steady decline in household savings seems to be occurring wherever financial markets have been liberalised. At the moment, the whole system is being kept in balance by massive purchases of US dollars by Asian central banks, but this can’t continue indefinitely.
It’s therefore time to invoke Stein’s Law – if a process can’t continue indefinitely, it won’t. There seems no prospect of an exogenous shift in the behavior of households or of a return to fiscal probity by the US government. I conclude that a return to equilibrium must involve an increase in real and nominal interest rates, probably facilitated by inflation. Even allowing for an inflationary cushion, this will not be a pleasant process for heavily indebted Australian households. American householders are protected by the structure of mortgage contracts, which allows them to lock in low rates, but the costs will be borne elsewhere in the financial system.
Negative savings in Australia
Apart from showing near-zero GDP growth for the quarter, the latest national accounts released today by the Australian Bureau of Statistics include the startling (to me, anyway) information that Australia now has negative household savings. I’ve reproduced the relevant bit of the release below.
Household saving ratio
In both trend and seasonally adjusted terms the household saving ratio was negative in the June quarter 2003 implying that household consumption was greater than household disposable income. In trend terms the ratio was -1.2% in the June quarter and in seasonally adjusted terms it was -1.3%. The deterioration in the saving ratio in recent quarters has been driven by both a slow down in the rate of growth of disposable income and the continued strength of household consumption expenditure. The movement in disposable income has been affected by the very weak income results for the farm sector arising from the drought. The impact occurs because the household sector defined in the national accounts includes unincorporated businesses and therefore includes most farm businesses. Consequently, most farm income (included as a significant component of ‘gross mixed income’ ) is also part of total household income. Although seasonally adjusted household saving has been negative in the past three quarters, net national saving has been positive over the same period. The net national saving ratio in the June quarter was 2.5% in seasonally adjusted terms.
Caution should be exercised in interpreting the household saving ratio in recent years, because major components of household income and expenditure may still be subject to significant revisions. The impact of these revisions on the saving ratio can cause changes in the apparent direction of the trend. The following graph presents the household saving ratio derived from trend and seasonally adjusted data (see Explanatory Notes).
As the graph shows, although the latest figures may be distorted by the drought etc., the long-term trend has been clearly negative, and the decline goes back further than this (the Fitzgerald report on declining national savings was commissioned at the beginning of this period.
When I responded to the Fitzgerald report, I argued that it was misleading because it failed to take account of investment in human capital. But we’ve done miserably on this score in the last decade or so, with school completion rates declining in the early 90s (they’ve since recovered a bit) and domestic higher education commencements frozen since 1996. In both cases, there was a direct link to expenditure cuts imposed in the name of economic efficiency.
I haven’t yet managed to work through to an aggregate national savings figure. But with the Federal government budget roughly balanced in accrual terms, the contribution from government savings can’t be large, and I’d be surprised if retained earnings of corporations accruing to Australian owners amounted to more than 3 or 4 per cent of GDP. So this suggests that Australian national savings are approximately zero, or in other words, that all net investment in Australia must now be financed by foreign debt or equity investment.
One reason for this negative saving is the fact that, thanks to the property bubble, people can spend more than they earn and still, apparently, get richer. But there’s a fallacy of composition here. We can’t all sell our houses to cash in this wealth – if we did, prices would fall and the wealth would disappear.
Of course, if we could persuade some overseas buyers to purchase a million or so houses at current prices, our problems with foreign debt would be over. But although it’s not precisely true that the only potential buyers of Australian houses are Australian residents, it’s a good enough approximation for economic analysis. A few thousand wealthy HongKongers may want a Sydney bolthole, and there are probably a few thousand more footloose global professionals in the market, but not enough, I think, to make a real difference.
Update My wife Nancy, who’s paying more attention than I am, tells me there’s nothing new in the negative household savings story, which is confirmed by a look at the graph (savings have been negative for three or four quarters now) and a quick Google. As so often, I’m a bit behind the times, but I’m still surprised there hasn’t been more comment on this.
John Quiggin 