Internationalism and intervention

John Quiggin17 Comments

Jason Soon links to this Telegraph report in which Blair and other centre-left leaders give an in-principle endorsement to internationalist military intervention, saying

Where a population is suffering serious harm, as a result of internal war, insurgency, repression or state failure, and the state in question is unwilling or unable to halt or avert it, the principle of non-intervention yields to the international responsibility to protect

Jason gives his own qualified support and says

I’d be interested to see how the usual suspects will react to it

. Like Jason, I have no love for national sovereignty arguments, and would welcome the emergence of the kind of international order that would permit intervention in cases of state failure or to overthrow repressive regimes. The danger is, of course, that without a clear framework of international law, the principle of intervention could be used to justify wars of revenge, conquest and so on.

Unfortunately, by his acquiescence in the Iraq war, Blair has discredited himself as an advocate of this kind of policy, and greatly eroded potential support for such a policy.

To get Blair on board, the US Administration went through UN processes in the expectation that they would produce an ultimatum that Saddam Hussein would defy. When, instead, Saddam acquiesced, Blair and Bush embarked on a campaign of lies and spin that included vigorous abuse of the UN Security Council. Even now, when it is clear that, on all the factual issues, the UNSC majority was right and Bush and Blair were wrong, there has been nothing resembling an admission of error.

In retrospect, there were two options available to Blair and consistent with his stated principles. One would have been to focus the attention on human rights issues from the start, and seek an international consensus for the overthrow of Saddam on the basis that he was an evil dictator. The problem here is that this would have required Saddam to be charged in the International Criminal Court, and the Americans would not allow this. The alternative would have been, having gone with the weapons inspections process, to stick with it to the end and accept the half a loaf of ensuring that Saddam’s weapons had been destroyed.

Until Blair recognises that the US determination to run the world without interfence is a greater obstacle to internationalist intervention than is residual support for national sovereignty, he’ll continue to flounder on issues of this kind.

A cascade down the Murray

John Quiggin4 Comments

The cascade mode of debate in which an initial post attracted comments, followed by responses, to which further responses were then attached, all indented with quotes, made the old USENet nearly unreadable. Blogs have generally avoided this style. The most notable exception, Fisking, seems to have gone out of style with the winding down of polemics about war and terrorism.

But, in a more civilised form, a question and answer cascade might be helpful. so I’m going to try it in response to Gary Sauer-Thompson’s response to my Murray post. I’ve put Gary’s contributions to the discussion in italics, a device not available in USENet days.

Gary says

John says:

I thought of the following as a back-of-the-envelope exercise in cost estimation. Suppose the government bought back 1500GL of water at $40/ML/year, this would be an annual payment of $60 million, which could be financed from a capital sum of $1 billion at 6 per cent interest. I’d guess that increasing natural flows would solve about half the problem, which would imply a total cost of the order of $2 billion. This is incredibly crude, but I’d think the order of magnitude $1 billion – $10 billion is about right, and that we are likely to end up spending something around the low end of this range.”

I have some queries.

First, this seems to imply that governments enter the water market each year and buy the 1500 gigalitres required for enviromental flows. Why that option? Why not reduce the cap by 10-12%. Why not buy back water licences permanently? Why not take farm land out of production–pay the farmers to leave?

I’m not proposing this as the optimal policy, just one that allows for easy cost estimation. Reducing the cap would have much the same effects, but costs would be borne by farmers rather than the community as a whole. One of the aims of my research project is to look at policies that give both a relatively low-cost (efficient) solution and an equitable sharing of costs and benefits.

Secondly, we have $1 billion for environmental flows and $1billion for the other half of the problem. What is the other half of the problem? Land restoration? Reducing water consumption? Shifting to sustainable agriculture?

Some combination of land restoration and more sustainable agriculture. Again, at this stage I’m just trying to estimate costs, not laying out concrete proposals

Thirdly, how do we go from $2 billion to $10 billion? Is this an insurance for the rapid rise in the cost of water due to increasing shortage?

This just reflects the imprecision of the exercise. I prefer to represent this imprecision in order of magnitude (log scale) terms, rather than as an additive error range.

Fourthly I appreciate its back of envelope calculations but John does talk in terms of “fixing” the Murray. It is not clear what ‘fixing’ means in this context. It is often suggested that the “fixing” problem is about the demand of the domestic consumers, who are unwilling to pay a higher price for their vegetables.

This was implied by Tricky (Ticky, actually) Fullerton in her 4 Corners Sold Down the River. Sure those living in the cities need to change their habits in the use of water, and we need to redesign our cities to make them more sustainable. But the centre of the “fixing “problem is the unsustainable agricultural practices of farming systems (wine industry) geared to exporting their products to an overseas markets.

I’ll look more into this, but I think you’ll find that, given tradable water and a reduction in total allocations, the big reduction in water use will be in irrigated pasture for dairying, which is mostly for domestic markets. Other likely losers of water are rice (mostly domestic) and cotton (mostly export). Horticultural crops like grapes are generally high-value uses of water

.The queries are offered in the spirit of dialogue and debate.

And the responses similarly.

Thought for Thursday

John Quiggin10 Comments

My column in today’s Fin (subscription required) is about work and work intensity. The takeaway

According to the Australian Bureau of Statistics. Average working hours for full-time employees increased from 42 to 45 hours a week between 1982 and the mid-1990s, levelled out, and have declined slightly over the past two years. It is reasonable to assume that work intensity has followed a broadly similar pattern.

The productivity statistics reflect the easing-off in effort. The best single measure is multifactor productivity, which takes account of capital inputs and working hours, but not of changes in work intensity. After two decades of fairly poor performance, ABS estimates of showed a strong increase in multifactor productivity from the end of the recession in 1992 to the late 1990s, when work hours and work intensity reached their peak.

In the last few years, however, as work intensity has eased off, so has (measured) productivity growth. The figures have bounced about, but the average rate of multifactor productivity growth since 1998-99 has been below 1 per cent.

Can the Howard government claim, then, to have delivered a relaxed and comfortable Australia? Certainly it could not do so on the basis of its first term in office. The government ditched its pre-election commitments as Înon-coreâ and used the Black Hole and the Commission of Audit to justify a new round of reforms and Budget cuts. But the pace of reform has eased significantly since then.

Many commentators have criticised the slowing pace of reform, arguing that it has contributed to slower productivity growth. They may be right, but a slowing pace of reform, along with worker resistance to the erosion of leisure time, has also contributed to more Îrelaxation and comfortâ.

Word for Wednesday: managerialism (again)

John Quiggin11 Comments

Nobody agreed with my attempt two weeks ago to link neoliberalism, and particularly ‘new public management’ with the ideology of managerialism, and the supporting academic ‘discipline’ of management as embodied most notably in MBA programs (for more on the reason scare quotes are appropriate see this piece by Henry Farrell).

I agree that the two are superficially dissimilar, and that their practitioners do not have much to say to one another. I also concede that my supporting argument, resting on the proposition that the two are united in opposition to professionalism was inadequate. Still, I believe it is an empirical fact that the two are generally found together and this fact can be given a theoretical basis. So I’m going to reformulate my argument.

The central assumption of new public sector management is that, if organisations are given the right (financial) incentives, they can deliver socially desirable outcomes without reliance either on direct political control or on any assumption that the organisation is committed to some concept of public service. In practice, in the sentence above the first occurrence of ‘organisation’ should be replaced by ‘managers of organisations’ while the second refers to the members of the organisation considered collectively.

So new public sector management embodies the hypothesis that managers can ensure that organisations pursue whatever objectives are determined for them by policymakers choice of incentives. From a free-market viewpoint, the most congenial way this hypothesis could be satisfied would be for the incentives to be transmitted from top management through the levels and departments organisation. In effect, this would imply a system of piecework with the prices mirroring the incentives chosen by policymakers. But if everything could be done by piecework, there would be no need for the organisation and particularly no need for the senior managers.

So in practice, new public sector management applies direct incentives only to top management and assumes that there exist a set of generic management skills that can produce the desired outcomes even when the individual interests of the organisation’ staff are not directly tied to those outcomes. So, new public sector management depends on managerialism.

The converse link is weaker, particularly since managerialism is first and foremost a private sector doctrine. However, it’s clear that, even in the private sector, managerialism and neoliberalism reinforce each other. Managers clearly get more of the autonomy they want in a neoliberal policy setting, and neoliberal policies of Îlight-handedâ regulation are justified by the assumption that, provided the rules of the game are set correctly, unfettered managerial discretion will yield the best possible outcome.

PM Lawrence on canals and railways

John Quiggin1 Comment

Occasionally my comments thread gets a contribution that deserves a fully-fledged post of its own. I posted one from Observa some time ago. Now regular commenter PM Lawrence has presented a history of transport in the UK, which I think deserves a bit more prominence than a comments thread.

Here is where it begins

As promised – an overview of the economic history of UK transport since the canal age (much omitted, obviously, e.g. no stage coaches or aircraft).

Of course, this should also provide some insights of wider applicability. I shall take the opportunity of making a few asides about things they told me during my Monash MBA studies that weren’t true, which I had more sense than to tell them at the time.

The idea and practice of canal building reached England in the late 17th century, from Holland, which had got them in turn from northern Italy (the term “canal” actually comes from the Italian).

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Monday Message Board

John Quiggin34 Comments

Roll up yet again for the Monday Message Board. All topics welcome, civilised discussion, no coarse language please.

Suggested discussion starter 1: Why do the great majority of visitors read blogs, but never comment?

Suggested discussion starter 2: What’s your favorite self-referential paradox?

Update Although others came close, Chris Sheil gets the prize for recognising the subtle link between my two topics. Anyone who comments on topic 1 instantly disqualifies themselves, since I want to find out what motivates non-commenters.

Further update Controversy rages in the comments thread, with some participants maintaining the c8to should have been given the prize, and others rejecting the identity politics inherent in my supposition that commenters are not qualified to comment on the motivations of noncommenters. All this makes James Russell’s head explode. Read, enjoy, and comment!

Libertarianism, continued

John Quiggin6 Comments

Jason Soon has settled down in London and written a long response to my post on libertarianism. I agree with his conclusion that

the non-purist libertarians can be seen simply as a species of utilitarians/consequentialist who have arrived at different results from their fellow utilitarians/consequentialists who end up as left-liberals or social democrats because of different interpretation of history/policy/economic paradigms.

and I didn’t intend to say anything inconsistent with this. My point, perhaps not stated clearly enough, was that acceptance of the liberal/consequentialist position of say JS Mill doesn’t imply a conclusion one way or the other on free markets vs social democracy, and Jason clearly agrees with this.

It’s clear from reading our blogs that, even though our views on policy issues are usually different, Jason and I are working within a common philosophical framework, and can therefore engag with each other’s arguments. By contrast, as I said in my critique, I find the claims of ‘purist’ libertarians to be fundamentally incoherent. And conversely, although I often agree with the postmodernist left on specific issues, I find it difficult to engage in any sort of debate in this framework.

There’s a bit more on libertarianism, from a newish member of the ubersportingpunditempire, Objectivist John McVey.

What I'm reading, and more

John Quiggin4 Comments

Riemann’s zeta function by HM Edwards (includes translation of Riemann’s original paper as an Appendix) . What with A Beautiful Mind and the proof of Fermat’s Last Theorem a few years back, the Riemann hypothesis is the last big maths question accessible to amateurs like myself. It’s hard going though – heaps of complex analysis applied to concepts as simple as those of prime numbers and factorials. In fact, the zeta function is a relatively simple modification of the factorial n!, extended from positive integers to complex numbers in general, and the Riemann hypothesis says that all zeros of this function lie on a given line. With a bit more work I hope to understand this better, and will try to post or link to a good explanation.

Meanwhile, Sunday being the day of religious observance in Australia, I finally did something about the change of religion I announced last year, taking the family out to the Gabba. I’m pleased to report an exciting victory by the Brisbane Lions over the Hawthorn Hawks, 14.9 (93) to 11.15 (81). As a neophyte, I was happy,if surprised, to learn that my new club song is to the stirring tune of La Marseillaise.This set me thinking about other possibilities -perhaps the Horst Wessel Lieder would fit Carlton and Rupert Murdoch’s rugby league teams could use The Star-Spangled Banner.

This was the first AFL game I’ve ever been to, and the first top-grade Aussie rules game I’ve been to since I followed West Torrens in the SANFL 40 or so years ago (In the intervening years, I’ve lived in rugby league territory almost continuously). Things have changed in all sorts of ways, but the change in relative prices is the most obvious. Back then (B&W) TV was a luxury while going to the footy was taken for granted. Today I could get a brand-new colour TV for the price I paid for tickets for the family (not the cheapest on offer, but nothing special). It’s not hard to explain given technology, wages and so on, but it’s striking nonetheless. And despite the prices, the ground was packed.

Producers and consumers

John Quiggin11 Comments

I was struck by a recent exchange in the comments thread to my post on libertarianism” in which commenter 24601 took violent exception to the suggestion by another participant in the debate that libertarians focused on the concerns of producers rather than consumers. This, 24601 said, was like asserting that libertarians are “greedy, nasty, evil people who like to kill babbies and don’t care about those silly consumers.”

Allowing for the overstatement characteristic of comment threads, this captures an important point about the free-market side of the policy debate in Australia. Concern with the interests of people considered as producers, in preference to the interests of the same people, considered as consumers, is regarded, quite literally, as evil.

I wrote about this in the Fin last year, also covering the themes of managerialism and professionalism. Some extracts

The last ten years have not been good ones for producers in Australia, whether the item produced is as basic and solid as steel or as abstract and intangible as academic research. Work is central to life, but disillusionment with and demoralisation about work has never been greater. Demoralisation is particularly evident among those groups of workers who derive meaning from theh good or service they produce, rather than just their paypacket. Examples include nurses, teachers and many workers in skilled trades.

It is not surprising that producers are having a hard time. Public policy has been dominated by economists who are openly hostile to ‘producer interests’ and see their mission quite explicitly as ‘shifting power from producers to consumers’. …

The fable of the straw that broke the camel’s back is, among other things, a warning about overburdening those who actually do the work. Economic reformers and enterprising managers have been adding straws to the bundle for at least a decade. It’s time to reduce the burden.

The alignment of free-market economics with a focus on consumers is not surprising. The most appealing feature of capitalism, after all, is the shopfront glittering with an unimaginable variety of goods. It’s during the eight (or nine or ten) hours a day spent producing those goods, if you have a job at all, that you get to see the less pleasant aspects of the system.

The economic record of the Howard government

John Quiggin23 Comments

I’m writing a chapter for a book on the Howard government, in which I’m assessing its economic policies. Here’s my draft conclusion (comments much appreciated).

The experience of seven years of nearly uninterrupted expansion under Howard, following three or four years of tentative economic recovery under Keating has given the government a reputation for good economic management. This reputation has been reinforced by the maintenance of low interest rates.

It is hard to see, however, that the government has contributed much to these outcomes. As in standard nowadays, the Reserve Bank is primarily responsible for the maintenance of macroeconomic stability. The Reserve Bank has judged monetary policy well since the mid-1990s, and, as a result, Australia has gradually recovered the ground lost in the 1989-92 recession.

But whereas the then Treasurer, Paul Keating, must share significant responsibility, along with the Reserve Bank, for the disastrous misjudgements that gave us ‘the recession we had to have’, the current government can claim little credit for the correct judgements of the Reserve Bank. It cannot even claim credit for not interferign. The policy of central bank independence has turned out well in Australia in the last, but it failed badly in New Zealand, where bad monetary policy contributed to a string of recessions in the 1990s.

In its first term in office, the government claimed credit for the decline in interest rates on the basis that the tight fiscal policies associated with the 1996 Budget cuts. The merits of the ‘crowding out’ hypothesis underlying this claim are debatable, particularly in a world of unrestricted capital movements.

More importantly, the government has abandoned any claims to fiscal rectitude since 2001 when it dissipated what remained of the budget surplus, Since then, the government has more or less officially adopted a zero budget balance (on whichever of the various accounting systems seems most appealing in any given year) as its target. This policy ensures that an economic downturn will produce large budget deficits and a substantial reduction in public sector net worth. If the government took its own rhetoric about fiscal prudence seriously it would be running surpluses to prepare for such an event.

Similarly at the microeconomic level, it is hard to see any basis for claims of superiority in economic management. The government has neither produced an alternative to the microeconomic reform agenda of its predecessors nor made any significant contribution of its own beyond the completion of unfinished business and some desultory swipes at the trade unions.

In retrospect, it seems likely that the long expansion of the 1990s will be viewed as a missed opportunity. Such a period of economic stability does not come along very often and is unlikely to persist indefinitely. Yet Australia has surprisingly little to show for this long period of prosperity, except for massive additions to an already impressive stock of housing, now valued at equally impressive prices. Unemployment has fallen a little but is still above the low points reached in previous expansions. No new initiative has been made to deal with the problems of financing retirement for an aging population; there has not even been much progress in tidying up the tangled web of policies inherited from the Keating government. The most important single investment in the future is education: if anything, we have gone backwards in this respect, particularly in relation particularly in relation to post-secondary education, the main area of Commonwealth responsibility.

In 1964, Donald Horne described Australia as ‘a lucky country, run by second-rate people who share its luck’. This epigram could be applied, with equal or greater justice, to the Howard government and its term in office, particularly as regards economic policy. Sooner or later, however, this kind of luck will run out.

Update Lots of useful comments already! I’m grateful for substantive, stylistic and typographical corrections and suggestions. As well, the comments thread has some good discussion of things like measures of unemployment. I’m very encouraged by this and will probably post more.