It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
I tried to ignore it, but Employment Services Minister Mark Arbib’s resurrection of the (Tony Abbott?) “job snobs” line has turned into yet another tiresome round of the generation game. This time it’s Generation Y who are copping the flak for being “Generation Lazy”, a collection of job-hoppers and dole bludgers.
How many times must these cannonballs fly? Arbib (born 1971) was barely out of nappies when the phrase “dole bludgers” was coined and applied to the unemployed members of Generation Jones (the younger boomers who missed out on the fun of the 60s), a group to which I briefly belonged. That continued right through the late 1970s, and into the recession of the early 1980s. And even before that, the older boomers had been routinely labelled as work-shy hippies.
The recession of the 1990s hit all groups of the population, with older workers suffering even more than youth. Still, the old cliches were dragged out and applied to Gen X-ers (remember the Paxtons?)
Now the economy has soured again, and Gen X bosses and pollies are kicking their Gen Y subordinates. If the slowdown drags on as long as I expect, it will be the turn of Gen Z/Millennial/Potter before long.
As I said back in 2000
Much of what passes for discussion about the merits or otherwise of particular generations is little more than a repetition of unchanging formulas about different age groups Ð the moral degeneration of the young, the rigidity and hypocrisy of the old, and so on.
You couldn’t get a better example than the latest round of recycled cliches.
Australians and others who were happy to be included on Senator James Inhofe’s list (PDF, may need converting) of “scientists” whose “work” contradicts the mainstream view on anthropogenic global warming (scare quotes deliberate) may be interested to know that Inhofe has now emerged as a Birther, or at least a fellow traveller. Of course, Inhofe is also a young earth creationist, and his list includes people like creationist weathercaster Chris Allen who has no more (and no less) relevant qualifications than most of the Australians on Inhofe’s list.
It’s sad to see people with distinguished careers like those of Don Aitkin and Ian Plimer ending up supporting lunatic conspiracy theorists like Inhofe. But the whole basis of climate science delusionism is a conspiracy theory. It’s only by invoking a conspiracy among mainstream climate scientists that delusionists can argue that any attention should be paid to the views of a minority so tiny that even a list of 650 has to be padded out with economists, retired historians, weathercasters and lots of cranks: the number of active, regularly publishing climate scientists on the list is in the single digits.
I really, really hate endnotes. But now that I am writing a book I have to decide whether I have to swallow my pride and use them, and if not, what alternative to adopt.
To start with, I want to distinguish between explanatory notes, spelling out a point that is marginal to the main text and references giving authority for some claim made in the text, or examples or a person making a claim that I may endorse or criticise. In academic work, I’m used to the Harvard format where explanatory notes are placed as footnotes, and references cited in the body of the text as “Quiggin (2009)”, then listed in full at the end. This is much better than the all-footnotes system used, for example, in legal writing.
For a popular book on a technical subject like “Zombie economics”, there are a few options, which can be mashed up in various ways.
* The standard endnotes setup with explanatory notes and references listed at the end of the book
* Footnotes for explanation only: this leaves open the question of how to deal with references
* A further reading section at the end of each chapter, in place of references
* A book without references, but with an online hypertext version in which readers who want to chase references can find them.
Any thoughts?
Its time once again for Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
I got more very useful comments on my section on the rise of the Efficient Markets Hypothesis, and I will get down to editing it before long. In the meantime, here’s my draft section on Implications of the EMH
At least in the draft, I’m following a standard structure: One chapter per dead/zombie idea, with sections on Beginnings, Implications, Failure and What Next? It seems to go OK for EMH, and we’ll see how it works for the others.
As before, comments of all kinds, and particularly pointers to (putative) errors, are most welcome.
I’ve had an increase in disruptive troll comments here and at Crooked Timber, and have now discovered that a large number of them appear to be from someone who has posted here and elsewhere in the past as “John/Jack Greenfield”. I discovered it when “Greenfield” put up a comment at Catallaxy identical to one posted by a trollish commenter here posting as “S. Haines”. I challenged Haines on the point and he/she/it promptly disappeared. An IP check has now revealed numerous similar trolls several of whom had already been banned. The list includes:
Greenfield
S. Haines
Phyllis P.
Jake Bowden
Belgian Dentist
Methusela
Milton Keynes
Myron
Mark Milankovitch
Ian. Mc
IP numbers vary, but all begin with 203.171.192 or 203.171.195. If any of the above want to dispute their sock puppet status, they are welcome to email me. Bloggers who don’t wish to encourage trolls, sockpuppets and other such lowlifes are welcome to contact me for further details, and are urged to ban “Greenfield” and associated socks.
I’ve been meaning to do reviews of a couple of books, but the task of writing my own book means that I need to get rid of distractions (of course, it also means I’m even more tempted by every distractoin that comes along). Anyway, I thought I’d just give a recommendation and very quick summary for two of them.
Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street by Kate Kelly has a self-explanatory title. At the time, the failure of Bear Stearns seemed sure to be the biggest financial event of 2008, if not the whole decade. A little over a year later, it’s still interesting to read a blow-by-blow account of the collapse. I doubt if we’ll ever get anything like this for the October meltdown – even with this isolated case, it’s a bit hard to keep track of the varied cast of characters.
Recovering the Lost Tongue is a fascinating story of environmental struggle in central India. The link is to Amazon, but there’s also an Indian edition (details here).
Finally, here’s a link to a review of The Spirit Level a book arguing that inequality is bad for (almost) everyon.
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
John Roskam of the IPA in today’s Fin makes the correct opening point that the banks can’t have it both ways, benefitting from government guarantees while resisting close regulation. Since no one is suggesting removing the guarantees any time soon, the implications are, I think pretty obvious.
I gave two talks yesterday, one in Wollongong and one in Parramatta, about different aspects of the financial crisis. In both cases, my initial destination was the corner of Church and Market Streets and the person who had organised my trip was taken ill and couldn’t attend the talk. By this morning, I was a bit confused as to my location and status.
I did two presentations four hours apart which made for something of a rushed day. I’ve attached them over the fold in PDF format.
For the last decade or so, the Brisbane Institute has played a prominent and constructive role in the intellectual life of this city. I’ve attended, and sometimes spoken at, quite a few of its functions. But I just got the news that the Institute is presenting a piece billed as an attack on Al Gore and presented by Jay Lehr of the US based Heartland Institute.
Even judged against the low bar set by climate delusionists in general, the Heartland Institute is a disgrace. Its most notable achievement was the publication of a list purporting to be of scientists whose work contradicted mainstream climate science. Such lists, common in the delusionists attempts to deny that they are pushing fringe science, usually contain large numbers of name with few or no relevant qualifications. The Heartland list was different. It contained the names of lots of genuine scientists, but misrepresented their position. Even when scientists protested against this misrepresentation, Heartland refused to take their names off the list on the basis that they (a bunch of rightwing hacks with no qualifications whatsoever) were better placed to interpret the results of scientific research than were the authors of that research.
The Heartland Institute has no legitimate place in public life and anyone who works for or with it brands themselves as a charlatan. It is to be hoped that the Brisbane Institute’s decision to promote Heartland’s lies is the result of a negligent failure to check on the credibility of their speakers rather than a decision to legitimise this body. Still, I suspect it will be a while before I am willing to work any more with them.
(Hat tip: Mike Smith)
A bit more from my book-in-progress. I’m currently toying with the title Zombie Economics: Seven Economic Ideas that Aren’t Dead but Should Be. As always, I’m keen to get suggestions on this, and on improvements to the text. I’m particularly happy to have putative errors pointed out. If I agree with you about the error that saves me from putting it in print. If not, it will be a point I need to anticipate and respond to.
Today’s Fin has a leader arguing that we should be laying the ground for a move to nuclear power. It’s commendably realistic about the long time lags involved, and argues we should get started on preparations now. My view is that it would be better to wait and see if the US makes progress on its (currently faltering) attempts to revive the industry there. But the thing that really got me going was the repetition of the claim that alternative energy sources are problematic because they can’t meet “baseload power demand”.
I’ve said before that this claim is wrong, but I think it’s time to sharpen my position, and state two claims:
*There is no relevant sense in which baseload power demand is a meaningful concept in our current electricity supply system.
*Any electricity supply system likely to exist in the next 40 years and capable of meeting peak power demand will have no problems meeting baseload demand.
Pioneering Australian law blogger (now retired) Kimberlee Weatherall has asked me to plug the 2009 Fulbright Symposium, in Canberra 24-25 August 2009, which goes by the title “US-Australia Free Trade Agreement: The Last 5 Years, the Next 5 Years”. Speakers include original negotiators (Stephen Deady, and I think Mark Vaile), academics and trade commentators; including Professors Mac Destler, Bryan Mercurio and Justin Hughes as well as a range of Australian faces – right across the subject areas. There’s a full list/program at http://www.law.uq.edu.au/fulbright-program.
Yesterday, I have made a submission to the Senate Economics Committee Inquiry into the Bank Funding Guarantees.
I’ll be speaking at two public events on Thursday. First there is the University of Wollongong Economic and Social Annual Public Lecture, 11:30 Thursday 23 July 2009 (details here) where I will speak on Climate Change & the Global Financial Crisis. Then I’ll be speaking in the Whitlam Institute Series on the Financial Crisis, in Parramatte, along with Steve Keen and Guy Debelle, on the topic “After the Crisis”. (details here).
Last week, I did a videorecording which was presented at the ACTU jobs summit on Monday 20 July. My paper is here (PDF).
This NYT story about moon landing “sceptics” provides some interesting evidence on the broader phenomenon of anti-science thinking on climate change, AIDS, UFOs and other issues. The moon landing case is of particular interest in a number of respects
* There is no real ideological or interest group motive for scepticism beyond a generalized suspicion of governments and scientists
* The style of argument is virtually identical to that of the other cases mentioned above. As the NYT notes
Ted Goertzel, a professor of sociology at Rutgers University who has studied conspiracy theorists, said “there’s a similar kind of logic behind all of these groups, I think.” For the most part, he explained, “They don’t undertake to prove that their view is true” so much as to “find flaws in what the other side is saying.” And so, he said, argument is a matter of accumulation instead of persuasion. “They feel if they’ve got more facts than the other side, that proves they’re right.”
* The claim seems transparently absurd, but actually, it’s not much different from the other cases. All of them require that thousands of scientists and government officials should, for venal or sinister reasons, promote claims they know to be false that they should have fooled millions of other people qualified to examine such evidence, not to mention the public at large, but that, nevertheless, a minority of people with no particular qualifications or expertise should be able to detect the imposture.
My column in Thursday’s Fin was about the case for an inquiry into the Financial system. I quoted well-known free market economist Ian Harper who observed that the breakdown of the efficient markets hypothesis undermined the basis of our existing system of financial regulation, a point reinforced in today’s Fin by former Reserve Bank Deputy Governor, Steven Grenville. This elicited a letter from Sinclair Davidson, offering a faith-based defence of the efficient markets hypothesis as tautologically true, combined with a rather more interesting argument – since the EMH was only developed in the 1960s, it can’t have been responsible for earlier financial crises and therefore can’t be blamed for the current crisis.
This seems to me like an all-purpose Get Out of Jail Free card for economic theories. For example, since inflation occurred on many occasions before Keynes wrote the General Theory, it must be wrong to blame Keynesian macro theories for the inflation of the 1970s.
The problem here is that, even assuming that there is a 1-1 relationship between policies and outcomes, there are many different theoretical rationales for any given policy. EMH justified weak financial regulation and a laissez-faire attitude to financial innovation, but the same policies were justified in different ways long before EMH, and produced the same outcomes on a regular basis.
Its time once again for Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
Discussion on the first post in this series went really well, so I’m carrying on. Here’s the proposed introduction.1 Again, comments, both favorable and critical are very welcome and the best will be rewarded with a copy of Dead Ideas from New Economists (I’m back with the original title at present).
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. JM Keynes
It might be thought, more than 200 years after Adam Smith’s Wealth of Nations set out the classical framework that still guides much economic thought, that economics might have progressed beyond the stage conflict over basic ideas. But economic ideas do not develop in a historical vacuum. Big changes in economic thinking depend on major events such as economic crises, and such events occur only rarely.
The Great Depression of the 1930s was such a crises and it produced a revolution in economic thinking still associated with the name of its originator, John Maynard Keynes. Responding to what he perceived as the absurdity of a classical economic theory proclaiming that a market economy would inevitably return to full employment ‘in the long run’, Keynes observed tartly that ‘in the long run we are all dead’. In his General Theory of Employment, Interest and Money, Keynes developed a model of the economy in which high levels of unemployment could represent a persistent equilibrium. The classical full employment model was reduced to a special case of Keynes ‘General Theory’.
In the hands of Keynes’ successors, such as John Hicks, the Keynesian model of the aggregate economy became the new subject of ‘macroeconomics’, contrasted with the classical model of individual makrets, now christened ‘microeconomics’. Hicks produced a graphical synthesis of Keynesian and classical macroeconomic ideas, taught to generations of students as the IS-LM model after the two curves on which it relied. In the process, Hicks relied heavily on some of Keynes’ ideas, but ignored or discarded others, much to the dismay of more purist Keynesians such as Joan Robinson.
Whether or not it was entirely true to Keynes, the Hicks synthesis produced a theoretical framework to justify policies Keynes had long advocated, of using public works programs and other fiscal policy (that is, changes in tax rates and public expenditure) measures to stimulate demand for goods and services during periods of recession. Conversely, as Keynes argued in How to Pay for the War, the government should use budget surpluses in periods of strong economic growth to restrain demand and reduce the risk of inflation.
The combination of Keynesian macroeconomics and neoclassical microeconomics provided both an ideological justification for the ‘mixed economy’ that emerged after World War II and a set of practical policy tools for its economic managers. The mixed economy was, arguably, the first and most successful example of a ‘Third Way’ between the traditional antagonists of socialism and unrestrained capitalism. The increased macroeconomic role for government went hand in hand with the postwar expansion of the welfare state, already anticipated by such developments as the New Deal in the United States, and the anti-depression policies of social-democratic governments in such far-flung countries as Sweden and New Zealand.
The contrast between the privations of the Depression and war years and the prosperity of the 1950s and 1960s was striking, and transformed the political landscape in the developed world. The laissez-faire doctrines of economic liberalism were discredited, seemingly forever. While conservative parties continued to employ the rhetoric of the free market, the social-democratic reforms adopted in response to the Depression formed the basis of political consensus.
For the next thirty years, the combination of Keynesian macroeconomics and the liberal and social democratic versions of the welfare state were associated, at least in the developed world with strong economic growth, full employment, enhanced equality and improvements in public services of all kinds. It was these developments, and not the posturing of the Reagan era, that guaranteed the defeat of Communism.
During these decades, the victory of the Keynesian revolution was universally recognised and generally perceived as final, despite the grumbling of a relative handful of neoclassical critics, centred on the University of Chicago, and, on the left, an even smaller handful of post-Keynesians and Marxists who derided the new synthesis and its tools as ‘hydraulic Keynesianism’ and ‘a permanent war economy’.
But by the late 1960s, a counter-revolution was brewing. Inflation rates were rising, and the most compelling analysis of the problem was provided by Chicago economists such as Milton Friedman, who argued that expansion of the money supply would inevitably cause inflation, whatever fiscal policy responses Keynesians might propose.
The economic chaos of the early 1970s, including the breakdown of the ‘Bretton Woods’ postwar system of fixed exchange rates, the OPEC oil shock was seen as vindicating Friedman. The biggest blow to Keynesianism was ‘stagflation’, the simultaneous occurrence of high unemployment and high inflation. In the standard Keynesian model of the day, which postulated a trade-off between unemployment and inflation (the famous ‘Phillips curve’), this could not occur. Friedman’s model, which took into account expectations of inflation that were incorporated into wage bargains, appeared to explain stagflation.
In the space of a few years, Friedman’s ‘monetarist’ macroeconomic policies had largely displaced Keynesian demand management. But the counter-revolution did not stop there. In macroeconomic theory, Friedman’s relatively modest (and empirically well-founded) changes to the Keynesian IS-LM model were succeeded by a full-scale return to the orthodoxy of the 19th century, under the banners of ‘rational expectations’ and ‘new classical’ macroeconomics.
Friedman’s macroeconomic success prompted widespread acceptance of the free-market views on microeconomic issues he had long advocated both in academic research and in popular works such as Free to Choose and Capitalism and Freedom. Other advocates of the free market such as FA von Hayek enjoyed a similar vogue. The new version of free market ideology that emerged from the 1970s has been given various (mostly pejorative) names such as neoliberalism, Thatcherism and economic rationalism. I prefer the more neutral term ‘economic liberalism’.
Speculative activity in financial markets had been seen by Keynesians as a crucial source of economic instability. During the Bretton Woods stringent controls were imposed on national financial markets and international capital flows. During and after the monetarist counter-revolution, these controls broke down, ushering in an era of financial deregulation. Over the ensuing decades, the financial sector, a minor and tightly controlled industry during the postwar years, experienced an explosion in the volume and complexity of trade, the profitability of the industry and the lavish rewards to industry participants.
This development called for, and received theoretical support from the economics profession in the form of the efficient markets hypothesis. Building on the relatively innocuous observation that the efforts of stockmarket ‘chartists’ to predict the future movements of stock prices from their past behavior were futile, the efficient markets hypothesis was developed to the point where it was seriously suggested, in the wake of the September 2001 attacks, that the best way to predict terrorist attacks would be to open a futures market.
The general acceptance of the anti-Keynesian counter-revolution was predicated first on the necessity for a way out of the economic chaos of the 1970s and early 1980s and then on the widespread prosperity it delivered from the 1990s onwards. Although problems became steadily more evident, they were ignored as long as profits kept rising and economic growth kept on keeping on.
The economic crisis that began in the US housing market in 2007 and had engulfed global financial markets by late 2008 showed clearly enough that there was something wrong with the dominant economic paradigm. While old-fashioned Keynesians on the left, and advocates of the Austrian School on the right, had pointed to growing economic imbalances as a source of impending disaster, economic liberals continued until well into 2008 to argue that any problems were minor and easily contained.
While it may be satisfying to observe that so many experts got the crisis wrong, it is not really useful. The big question is “What economic doctrines have been refuted by the crisis and what new doctrines (or improved versions of older doctrines) should replace them?”. This book aims to answer the first of these questions, and to provide at least some suggestions on the second.
1 I’ve been out of order so far, but, after correcting with this post, I plan to offer excepts in the order I want them to appear.
A DC-based friend wrote today to say that he had finally abandoned the Washington Post, a paper he used to really like. The final straw was this piece allegedly written by Sarah Palin, a substance-free rant claiming that a cap-and-trade scheme for CO2 emissions would be economically ruinous. But much more damaging is the observation that, if this piece had come out (with the obvious stylistic variations) under the byline of George Will, Robert Samuelson, David Broder or any of the other rightwing/Villager hacks on the Post op-ed page, it would have slipped by without any real notice. The sooner this insult to the memory of Katherine Graham and Ben Bradlee1 goes out of business, the better.
1 Yes, I know Ben Bradlee is still alive, and even still associated with the paper. But his memory will be forever associated with the Post in its glory days, and not with the travesty produced by Fred Hiatt and Katharine Weymouth.
Its time once again for Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
A short extract from my proposed book, over the fold. Lots more like this to come! Comments and criticisms much appreciated, with free books for the top ten!
I was willing to believe a headline stating that Biblical knowledge is in decline, but after looking at the story, I think the decline must be located somewhere else. It starts off by observing that
Forty per cent did not know that the tradition of exchanging Christmas presents originated from the story of the Wise Men bringing gifts for the infant Jesus
I’ll confess to being among the 40 per cent before I read the story, and remaining among them afterwards. Let’s leave aside the observations that the custom of midwinter giftgiving almost certainly predates Christianity, and has nothing to do with Christianity in the religious sense of the term. Even in the fictional universe of what might be called folk Christianity I didn’t (and don’t) believe that this claim is canonical. There seem to be all sorts of stories to account for Chrissy presents – the one I would have offered unprompted relates to Saint Nicholas, a prototypical Father Christmas figure.
Then there’s the observation that only one in 20 can name all ten commandments. Maybe I’m wrong, but I suspect if you popped this question up to a bench of bishops with no notice, and required the commandments to be given promptly and in order, you’d get a fair few failures, though maybe not as amusing as this one
.
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
has responded to the call for a new inquiry into the financial system with a snark-filled piece which is of sociological, if not intellectual, interest. Let’s jump to his last para.
What next then? Setting up a government-owned home-buying service at the Post Office? Presumably two others among the ‘six-pac’, Nicholas Gruen and John Quiggin, would love that, provided it directed the trusting unsophisticated only into carbon neutral homes.
The most charitable interpretation of McCrann’s reference to carbon-neutral homes is that he is indicating a tribal affiliation. He knows that the typical reader of the Herald-Sun business pages has delusional beliefs about climate change, and is assuring his readers that he shares these beliefs. This alone would be enough reason to dismiss the rest of the column. If McCrann is prepared to dismiss a vast amount of scientific evidence on a topic on which he has no particular expertise, simply because members of his social group don’t like the conclusions, his judgements are worthless. In the absence of any new factual evidence (and, all the facts mentioned in his column are well-known), his arguments have no evidentiary weight. In essence, they amount to the statement “if you’re on my team, you shouldn’t agree with these guys, because they are on the other team”
My Icerocket self-search (admit it, we all do it), led me to this marvellous project. The Invisible Library is a collection of books that don’t exist, except in the pages of other books. It is physically manifesting at the Tenderpixel Library in London, but will resume invisibility after 12 July.
The connection?
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