1000 posts, 10000 comments

John Quiggin6 Comments

According to MT, this will make 1000 posts on my weblog (for reasons i can’t figure out, it’s post #1005, but no matter). I did a word count on the file I exported from blogger and I’ve typed 250 000 words in a bit less than a year.

A much more conjectural question is the number of comments from readers. An average comment thread gets about 10, with a fair number of zeros offset by the occasional 30+ comments. So I’m going to claim 10 000 comments. Unfortunately, most of them are, if not lost, inaccessible. There are about 3000 in Haloscan’s database, if they haven’t been purged, and a lot more in the one c8to set up for me after I dumped Haloscan. While these are accessible in principle, there’s no easy way of reattaching them to the posts they belong to – a project for some later date perhaps. Older comments are gone for good with the site that hosted them.

Anyway, this is a good opportunity to thank all my readers, especially those who’ve bookmarked or linked to the new site, and invite anyone who hasn’t yet posted a comment to start doing so.

Quadratic taxes

John Quiggin11 Comments

My post on bracket creep brought up some discussion of the idea of a smooth tax curve in place of the piecewise linear one we have now.

I’ve long thought this was a good idea and I have what I think is a neat way to implement it. Instead of providing a table that lets taxpayers calculate their tax payment in one step at present (take the tax payable at the threshold below actual income and apply the marginal rate to income above the threshold), I’d provide a similar mechanism to enable calculation of the average tax rate which would increase linearly between threshold points, just like total tax in the current system. Calculating the tax payable takes one more step – multiplying income by the average tax rate.

The big merit of this it that it focuses attention on the variable relevant to social choices about tax – the average tax rate, rather than on the marginal tax rate, although you can still calculate the latter if you’re so inclined.

Word for Wednesday: Utilitarianism (definition)

John Quiggin7 Comments

Utilitarianism is important because it is the dominant philosophical viewpoint of modern times, although this is obscured by the way it is discussed.

Utilitarianism is usually presented as an ethical postulate, that good actions are those which promote ‘the greatest happiness of the greatest number’ or some such.

Considered as a guide to individual conduct, utilitarianism is impossibly demanding, since it requires complete selflessness (anybody else’s happiness is just as important as yours) without even the reward of a blessed afterlife.

In fact, utilitarianism only makes sense as a public philosophy, that is as a way of assessing public policy, and it’s pretty clear that this is how Bentham intended it. The only philosopher I know who’s made this point is Bob Goodin of ANU. Going further, utilitarianism only makes sense for a basically democratic society, in which everyone is equal in some formal sense. Obviously in an absolute monarchy, public philosophy is just individual ethics for the monarch, and something analogous is true for aristocracies, theocracies and so on.

In its role as a democratic public philosophy, utilitarianism lacks serious competitors. Ideas proposed as alternatives are usually jerry-built modifications of ideas about individual ethics that don’t scale up to the public sphere

With this background, utilitarianism can be seen as the combination of three principles

  • Consequentialism – actions should be judged according to their (likely) consequences
  • Equality – each individual counts equally
  • Happiness as preference-satisfaction – what matters is each individual’s happiness as they choose to pursue it

Within consequentialism, there’s an important dispute over whether it is best to seek, in every decision, the specific action that would (be likely to) produce the best outcome (act-consequentialism) or whether it’s best to find rules of action that produce the best outcomes on average and adhere to those rules on all occasions (rule-consequentialism). This distinction is critical when we come to consider issues of government policy. I plan to elaborate on it in a later post, and also continue previous discussions on equality and happiness.

Update My claim that utilitarianism lacks serious competitors leaves Lawrence Solum “gasping for breath”. He asks “what about Nozick and Rawls?”. My answer
(i) I don’t think Nozick provides a serious alternative to anything
(ii) Rawls attempts to provide an alternative to utilitarianism, but in the end only produces a variant that is more egalitarian than usual because the underlying preferences are more risk averse than most utilitarians assume [Harsanyi derives standard utilitarianism from an almost identical setup].

Bracket creep

John Quiggin10 Comments

The tax cuts announced in yesterday’s Budget essentially involve handing back bracket creep. But how much bracket creep? The threshold for the main (30 cent) tax bracket has been raised by 8 per cent from $20000 to $21600. If you take the common definition of bracket creep ‘inflation pushing people into higher tax brackets’ and assume inflation is running at about 2 per cent per year, that would mean the cuts gave back four years worth of bracket creep.

But, as the Treasurer is happy to point out, real incomes are rising. If the ratio of income tax to national income is to be held constant, tax brackets must be adjusted in line with increases in nominal income per person. At the income levels we’re looking at here, this basically means movements in average weekly earnings, which have been growing at 4 or 5 per cent per year lately, depending on the measure you use. So on this definition the tax cuts offset between eighteen months and two years worth of bracket creep.

The top bracket wasn’t adjusted at all, so those on incomes above $50 000 didn’t get much relief from bracket creep this time, however, you mention it. But they (or rather we) have done pretty well under this government, with big cuts when the GST came in and the halving of capital gains tax, as well as the absence of any serious attack on tax avoidance through trusts and companies.

Update 15/5 The last para of this post was completely wrong. All the thresholds were adjusted. The 42 per cent threshold was increased from $50,000 to $52,000 and the 47 per cent threshold from $60,000 to $62,500. Both are about 4 per cent, equal to two years inflation or one years wage growth.

Request for suggestions

John Quiggin11 Comments

I’m doing a book chapter on The Politics of Australian Economic Policy which needs “suggestions for further reading”, and one thing I need to suggest is a couple of good sources (preferably books, but reports or survey articles would do) giving a summary of the general case in favour of microeconomic reform in Australia and a positive evaluation of the reform experience.

I’d normally cite Productivity Commission reports, but I’d like something a bit less technical [the main audience is undergraduate political science students]. On the critical/sceptical side, I plan to suggest my own book Great Expectations and books by Michael Pusey and Fred Argy. Any other suggestions would be gratefully received.

Another question Thanks for comments and suggestions so far, which basically confirm my view that there isn’t a book of the kind I am looking for. I would also be interested in a book covering the period 1945-75 in Australia with a focus on economic policy from a political viewpoint. Perhaps I should follow the suggestion of one of my commentators and write it myself

Meet the New Europe …

John Quiggin5 Comments

Running about a month behind the Zeitgeist, PP McGuinness picks up the Old Europe/New Europe meme (the new European states will be pro-market, more friendly to the US etc). Oddly enough he picks on Vaclav Klaus, who recently became President of the Czech Republic, succeeding his former ally and more recent opponent Vaclav Havel.

In fact, Klaus’ career is an illustration of why the Old Europe/New Europe thesis is wrong on nearly every point, and McGuinness tacitly concedes as much.
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Shortchanging Iraq

John Quiggin1 Comment

Kevin Drum at Calpundit posts on the disarray in the reconstruction plan in Iraq. He focuses on the fact that postwar Iraq has been very different from what was expected by the Administration – many fewer refugees but much more civil disorder and much less enthusiastic cooperation with the occupying powers.

The big problem, though, is lack of commitment.
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Monday Message Board

John Quiggin24 Comments

For the first (at least the first functioning) time on the new MT weblog, it’s time for Monday’s Message Board. Post comments on any topic (no coarse language and civilised discussion only please). I’m still interested in feedback on the new site, suggestions for additional features and so on.

Update Be sure to read Observa’s account of his family’s brush with paedophilia. It will help to inform discussion of this difficult problem.

Excuses, excuses

John Quiggin14 Comments

Kevin Drum at Calpundit says:

But why do I get the feeling that most people who complain about traffic cameras are actually just people who routinely push their luck at intersections and are afraid of getting caught? Is it because their principled arguments always strike me as completely lame?

Yeah, that’s it.

I’d note that, in my experience, complaints about enforcement of road safety laws of all kinds come mainly from the political right, and, as Kevin notes, mostly from people who routinely break the law themselves.

By contrast, suggestions for more lenient treatment of burglars, drug users etc come mostly from liberals, most of whom are not prone to burglary or even (relative to the general population) illegal drug use. This, along with the Bill Bennett affair, leads me to the following gigantic overgeneralisation. Conservatives make excuses for their own wrongdoing, liberals for the wrongdoing of others.

Prestige in economics

John Quiggin4 Comments

Kieran Healy fresh from defending sociology against attacks from ignorant economists, returns fire with this sly dig in a post about the underrepresentation of women

Even the lower-status fields in Economics (e.g., those that involve looking at data of any sort, hem hem) require a very high degree of competence in formal methods.

Actually, Kieran is out of date here. The availability of large cross-section data sets and the development of new techniques for analysing them has led to a resurgence in the prestige of empirical methods accompanied by a decline in the status of abstract theory. Steve Levitt’s Clark Prize is the most recent example (of winners in the last decade, I’d say only Matt Rabin is primarily a theorist).

What remains striking is the ambiguous status of policy. Although quite a lot of high-profile economists are engaged in the policy debate, there’s still quite a strong undercurrent of academic disdain for such a grubby activity, especially when it involves being embroiled in controversy (Stiglitz, Krugman etc). The situation in Australia was quite different in the generation preceding mine, when the top economists were almost automatically those actively involved in making or criticising public policy (Gruen, Gregory and Pitchford, just to name a few of the ANU contingent), but we now conform to the global norm. For the general public, an economist is someone who shills for a bank, and within the academic profession, involvement in policy is at best an optional extra . As in many things, I prefer the attitudes and institutions of the past, to those of the present in this matter.