John Quiggin

My piece from last week’s Fin is over the Fold. Report on the Rowat study is here.
Read more…

With the major issues in the scientific debate over climate change having been resolved, attention has now turned to the economics of stabilising the climate and to the costs of doing nothing. Following the House of Lords economic committee inquiry last year, which spent most of its time promoting denialist attacks on climate science, and had little of value to say on the economic issues, the UK government commissioned Sir Nicholas Stern, former chief economist of the World Bank to look at the issue properly.

His report is about to be issued in the UK today, and previews have given the major conclusion – it’s much more costly to do nothing than to do something. According to the reports, the estimated cost of stabilising CO2 emissions is 1 per cent of GDP by 2050. This is at the low end of the range of estimates I’ve obtained from back-of-the-envelope exercises.

The striking feature of the reported findings relates to the potential costs of doing nothing, from 5 per cent to 20 per cent of GDP. I assume the latter estimate is based on worst-case scenarios, which have relatively low probability but are nonetheless important in working out an expected cost of doing nothing.

The credibility of the report has been enhanced by the first critical responses noted in the press. One is from Exxon shill Steven Milloy, who repeats the discredited attacks on climate science he’s been pushing for years, with a few new variations. He even drags out cosmic rays. The Guardian mentions his affiliation with the Cato Institute, apparently unaware that they dumped him a year ago over his unethical behavior.

Even more interesting is the reference to “a group of nine rightwing economists”, including the former chancellor Nigel Lawson, who criticised Stern’s discussion papers in January. What’s not noted here is that it was Lawson who launched the House of Lords exercise, rigged the process to ensure that most of the witnesses were denialists and drafted the carefully ambiguous discussion of the scientific issues which, on the one hand, correctly disclaimed any relevant expertise on the part of the committee, and on the other hand, dishonestly promoted the denialist view that the debate is still wide open. Now that this exercise has turned out to be a massive own goal for Lawson and his allies, they are naturally upset.

More tomorrow (or maybe later today) when the report is released. In the meantime, responses to Stern’s earlier discussion paper, including mine, are here

It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.

I just upgraded WordPress and, as usual, I’m a bit slow about restoring my formatting. I’ll try to get the essentials like recent comments back soon. In the meantime, feel free to make suggestions.

My former ANU colleague and occasional co-author Bruce Chapman is well-known as the progenitor of the HECS scheme, and as a proponent of income-related loans more generally. He and I along with Arie Freiburg and David Tait worked on a proposal for income-related fines for criminal offences a while back.

Both schemes and others are discussed in Bruce’s new book, to be launched next week. It should be well worth reading.

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

My knowledge on this topic is limited, so perhaps others won’t be surprised as I was, by the information in this Washington Post story that Russia, as a member of the Council of Europe, is subject to the European Court of Justice Human Rights, and that

Russians now file more complaints with the court — 10,583 in 2005 — than people from any of the 46 countries that make up the Council of Europe, according to court statistics

Among other stats, the Court has issued 362 rulings on Russia, all but 10 going against the government.

This and other things point to the fact Russia’s primary strategic relationship nowadays is not with the US, where things are still viewed through the prism of residual Cold War rivalry, but with Europe. And this relationship is full of ambiguities, starting with the old question of whether Russia is part of Europe, part of Asia, or belongs in a special category of its own.

This is a big problem on both sides, but it’s hard to see any positive alternative to the logic of gradual integration implied by membership of a growing range of European institutions, and ultimately of the EU itself. Europe could try to draw permanent lines that excluded Russia (and maybe also Belarus), rather than deal with the problems of integration, but that seems unlikely, even with the recent backlash against expansion. More plausibly, Russia could turn in on itself, perhaps repudiating bothersome institutions like the Court of Human Rights. That would be bad for (nearly) all concerned, but clearly there are powerful forces in Russia pushing in that direction.

As I said, lots of people here understand more than me about all of this, so I’d be interested in comments, pointers to further reading and so on.

There’s been a bit of publicity about a recent study of the effects of the Australian gun buyback. The central finding of the authors was that, while gun homicides declined after the buyback this was merely a continuation of a pre-existing trend.

I’m dubious about the whole approach. In the absence of a well-founded explanation for the trend, there’s no reason to treat maintenance of the trend, rather than the level, as the null hypothesis. The rate of gun homicides has clearly fallen (the authors find the same for suicides), so the data supports the policy, contrary to the claims.

And eyeballing the data, I’m doubtful that it’s even sufficient to establish the existence of a declining trend for the period up to and including 1996. It might be argued that the Port Arthur massacre in 1996 should be excluded and that a downward trend would then emerge, but, given that this was the even that precipitated the buyback, this seems like begging the question to me.

In any case, Andrew Leigh has the ultimate knockdown objection. If you look at the confidence intervals, the only way the gun buyback could have been shown to work, on the authors’ tests is if gun homicides fell below zero by 2004. Clearly, even if you buy the declining trend story, a linear trend is just wrong.

Mark Bahnisch has more, though quite a few commenters don’t seem to appreciate how conclusive Leigh’s refutation has been.

The Washington Post is having a good day. There’s a nice article by Shankar Vedantam linking the research of Kahneman and Tversky on anchoring heuristics to widespread unwillingness to believe estimates of 600 000 excess deaths arising from the Iraq war.

And the Post which has kowtowed to Bush ever since he got in, finally seems willing to call him on obvious lies. Here’s Peter Baker and Eugene Robinson.

No doubt the collapse of hope regarding Iraq has something to do with us. The US media has finally come face to face with the reality that all the alternatives now on offer are disastrous. Even the hawks have now recognised that the costs of the war have far outweighed any benefits that might be achieved. Unfortunately, this recognition has come a few years too late for the people of Iraq, but there’s at least time for US voters to cast their verdict in November.

The Risk and Sustainable Management Group has implemented a carbon-neutrality policy. Read all about it.

Comments closed. Please comment on the main post at RSMG. I’ve moved earlier comments there

It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.

Old: Sense and Sensibility. Probably my favourite among Jane Austen’s novels. By the way, has anyone else noticed that while Austen’s heroines are interestingly different, all her books seem to feature the same two male characters – the attractive, but dishonest younger man (Willoughby, Wickham, William Elliot, Frank Churchill) and the seemingly reserved, but really passionate (and usually older) man (Darcy, Brandon, Knightley, Wentworth). I wonder if this is just a handy plot device or whether it reflects some event in Austen’s life, of which we know little.

New Anansi Boys by Neil Gaiman. A great story, and also interesting for the link between Anansi, the West African trickster-spider and Brer Rabbit, which is obvious enough once pointed out (there’s even a tar baby story) but was still new to me.

As everyone knows (or ought to know by now), one of main reason controversy over climate change is continuing in the face of overwhelming evidence is the fact that ExxonMobil has the cash spigot open to fund anyone willing to deny the evidence – the Competitive Enterprise Insitute, George Marshall Institute and the old tobacco industry network run by Steven Milloy, Fred Seitz and Fred Singer have been among the main beneficiaries. The Royal Society wrote to them recently, asking them to turn off the money tap.

Exxon’s response

The Royal Society’s letter and public statements to the media inaccurately and unfairly described our company.”

It went on: “We know that carbon emissions are one of the factors that contribute to climate change – we don’t debate or dispute this.”

So, they know the groups they are funding are lying, but they need to promote the idea that there is so much uncertainty that we should do nothing. The best way to do this is to create as much Fear, Uncertainty and Doubt as possible.

A few days ago, cracks were discovered in the on-ramps to the Riverside Expressway, Brisbane’s main access route to the city. The decision was made to close the ramps and a large section of the freeway immediately and, not surprisingly, chaos ensued. The debacle was used to make the case that we need more freeways, tunnels, bridges and so on.

But three days later, the ramps are still closed and everything is working as smoothly as you could imagine. I took the ferry to Southbank at 8am yesterday to teach a course. It was full, but not overcrowded, and the traffic was zipping over the bridges as if it was Sunday. There’s been a big shift to public transport and people have been avoiding or rescheduling trips into the city. Obviously, the second of these is, in large part, a temporary adjustment that won’t be sustained indefinitely, but quite a few people have discovered that taking the train or bus into town is actually easier than driving.

Looking at this experience, it seems as if having the freeway closed for a while has done us some good. We should try it again some time.

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

Lots of interesting new stuff on the RSMG blog.

Nanni writes on Schumpeterian entrepreneurship versus nuclear energy and Improving eco-efficiency and addressing skill shortage.

Mark gives the news on the MDBC council meeting and claims that the States are ‘failing’ on the water crisis

And I have yet another piece on the drought, pointing out that High security for water is not high enough

With Blair on the way out, the British military leadership seems to be in open revolt. Following the admission last week by the army chief that the Iraq war had made terrorism worse, there’s this

The invasion of Iraq prevented British forces from helping to secure Afghanistan much sooner and has left a dangerous vacuum in the country for four years, the commander who has led the attack against the Taliban made clear yesterday.

Brigadier Ed Butler, commander of 3 Para battlegroup just returned from southern Afghanistan, said the delay in deploying Nato troops after the overthrow of the Taliban in 2002 meant British soldiers faced a much tougher task now.

Asked whether the invasion of Iraq and its aftermath had led to Britain and the US taking their eye off the ball, Brig Butler said the question was “probably best answered by politicians”.

Not original, but significant by virtue of the source.

The only reading I can make of this is that the British top brass are desperate for a quick withdrawal from Iraq, as soon as Blair goes, and are applying as much pressure as possible (even at the cost of violating conventions about military comment on political issues) to ensure that Gordon Brown does not succumb to threats or blandishments from Washington.

Update Brigadier Butler claims he was misquoted

I’m using my blog to beg for help on a minor point.

The Wikipedia article on pscyhological egoism, which draws on the e Stanford Encyclopedia of Philosophy includes

Finally, psychological egoism has also been accused of using [[circular logic]]: “If a person willingly performs an act, that means he derives personal enjoyment from it; therefore, people only perform acts that give them personal enjoyment”. In particular, seemingly altruistic acts must be performed because people derive enjoyment from them, and are therefore, in reality, egoistic.. This statement is circular because its conclusion is identical to its hypothesis (it assumes that people only perform acts that give them personal enjoyment, and concludes that people only perform acts that give them personal enjoyment).

I’ve added the claim, based on memory that “This objection was made by William Hazlitt in the 19th century, and has been restated many times since then”, but Google only produces reference to a previous occasion on which I made the same claim. Can anyone point to a good citation of Hazlitt on this, or to any other versions of this argument from the 19th and 20th centuries?

If a global emissions trading system is to be implemented, there needs to be a method of deterring free riders – countries that choose not to limit their own emissions. The obvious candidate is a border tax on embodied CO2 emissions. This possibility looks a lot closer with the EU considering trying it out for cement. The issue is unlikely to go away, and will no doubt cause huge ructions in WTO and similar bodies if it goes ahead. (via Dan Drezner).

As everyone knows by now, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel went to Edmund Phelps. Phelps award is one of the relatively rare cases where the Economics Nobel has genuinely been awarded for a single big discovery rather than for a research program. By incorporating inflation expectations into the Philips curve, Phelps killed the idea of a stable long-run trade-off between unemployment and inflation, and, in effect, predicted the emergence of inflation in the 1970s. As Phelps himself noted, the implication of the new model that there exists a ‘natural’ or ‘non-accelerating inflation’ rate of unemployment has not fared nearly so well, but the central point that there is nothing to be gained, in the long run, by allowing inflation rates to rise, remains valid.

Congratulations also to the winner of the Peace Prize, Muhammed Yunus who founded the microcredit provider Grameen Bank

Even more belatedly, Australian Terry Tao shared the Fields Medal in mathematics back in August for his contributions to partial differential equations, combinatorics, harmonic analysis and additive number theory.

It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.

I don’t imagine John Howard reads this blog, or even my columns in the Financial Review, but it was striking, after the discussion we had here to see him make an explicit link between climate change and the severity of the current drought. This is big progress even on his position of month ago, where he was still trying to have a bit each way.

It will be interesting to see how denialists in the commentariat and blogosphere, most of whom are also Howard partisans, respond to this.

Also, while I’m praising Howard, the training package he announced recently was a good thing, and seems to mark an abandonment of the silly idea that it’s OK to finish your education at year 10. Not everyone needs a university education, but failing to finish school (or achieve an equivalent outcome) and get some sort of post-school qualification is a recipe for low wages and regular unemployment.

The Holden blimp flew over my house at the weekend, close enough to see the screen.

Not surprisingly, the publication by the Lancet of new estimates suggesting that over 600 000 people have died (mostly violently) in Iraq, relative to what would have been expected based on death rates in the year before the war, has provoked violent controversy. A lot of the questions raised about the earlier survey, estimating 100 000 excess deaths in the first year or so appear to have been resolved. In particular, the lower bound estimate is now around 400 000, so that unless the survey is rejected completely, there can be no doubt about catastrophic casualties.

One number that is striking, but hasn’t attracted a lot of attention is the estimated death rate from air strikes, 13 per cent of the total or between 50 000 and 80 000 people. Around half the estimated deaths in the last year of the survey, from June 2005 to June 2006. That’s at least 25 000 deaths, or more than 70 per day.

Yet reports of such deaths are very rare. If you relied on media reports you could easily conclude that total deaths from air strikes would only be a few thousand for the entire war. The difference between the numbers of deaths implied by the Lancet study and the reports that shape the “gut perceptions” that the Lancet must have got it wrong are nowhere greater than here. So are the numbers plausible?
Read more…

Due to the fact that a well-known leftwing political ideology contains the name of a drug for male performance problems, much touted by spammers, my blog software is rejecting all comments on the football post below. Sorry about this – I’m going to raise it with my hosting service. In the meantime, please comment here.

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

My piece in yesterday’s Fin was on the attention economy, and, in particular, the kerfuffle over Holden’s use of a blimp to advertise at sporting events sponsored by Ford.
Read more…

There’s nothing remarkably original about the observation that of the world’s football codes, soccer* is the one that is consistently organised on capitalist lines. Most sporting leagues have a whole series of redistributive taxes and regulations, such as drafts and salary caps, designed to keep the competition open. Even if you follow a team that hasn’t won for decades, like South Melbourne/Sydney in AFL before last year, it’s reasonable to hope that your turn will come again.
Read more…

The Oz reports on the “infiltration” (or maybe “infiltrazione”) of Italian by English words.

Prime recent examples were flop instead of the Italian fiasco, and trend instead of tendenza.

Umm, does anyone notice un problema here?

Seriously, I’m all for linguistic diversity, but if these are, as claimed, the prime examples, it’s hard to see that there’s a big imbalance of trade here.

There’s been a lengthy debate in the comments threads of recent posts about whether the dry weather in much of Australia in recent years can be attributed to climate change, or is just another round in the natural cycle. One point that’s emerged is the crucial role of evaporation in exacerbating drought conditions. This was first observed in relation to the 2002 drought. The steady increase in global temperatures, including average temperatures in Australia, means that even when rainfall is at or near the historical average, conditions are drier than before because evaporation rates are higher. When we get a drought, as at present, conditions that would once have been bad are now extreme.

The combined effects of low rainfall and high evaporation are amplified when it comes to runoff, since the amount (net of evaporation) absorbed by the soil does not change much. And land use changes such as the construction of farm dams have reduced the amount of runoff that makes it into streams (these are now being restricted, but it’s often a case of too little too late). It’s not surprising then, as reported by Mark Neal at the RSMG blog, that, in terms of inflows to the River Murray system, 2006 looks set to be the driest year ever recorded.

So far, the effects on flows and allocations of irrigation water have been offset to some extent by accumulated storage, but with a run of dry years, that can’t be sustained. At the end of September 2006, total River Murray
system storage was 3 550 GL or 37 per cent of capacity, which is only half the long-term average for September of 7 000 GL. With winter and early spring being extremely dry, the chance of significant improvement this year is low, given that 60% of inflow typically occurs during July to October.

But if the situation is bad now, imagine the possibilities if the Cap on extractions hadn’t been imposed back in 1994. We would have started with lower storage levels, and there would have been that much less to draw on.