It’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please. Absolutely no personal criticism of other commenters.
I made this observation in comments on a Crooked Timber post, and got some pushback, so I thought I’d take a look back at the data
US Households in Poverty, 1959-2013
Both the number and the percentage of families in poverty dropped sharply during the 1960s when the “War on Poverty” was being waged actively, and remained near their all-time lows through the Nixon and Carter years until 1979, when the Volcker recession hit, followed by the election of Ronald Reagan. These events can reasonably be said to mark the point at which the government unequivocally changed sides.
The number of households in poverty has risen steadily since then and is now higher than in 1959, the year for which the poverty level was first defined by Mollie Orshansky. The poverty rate has remained consistently higher than in the 1970s, except for a brief deep at the peak of the late-1990s boom.
Read more…
I’ve just done a report on the Baird government’s privatisation proposals. Some coverage in the SMH.
Among the scary numbers in the Intergenerational Report was the estimate that, by 2050, life expectancy would have risen to 95/96 years, which would seem to imply a huge increase in the number of years spent in retirement. I checked and found that the report gave current life expectancy as 92/93 years, far higher than the 80 or so that is usually quoted. The reason, it turns out is that the standard estimate is done on a “period” basis, using the age-specific mortality rates of the present. The higher estimate is done on a “cohort” basis, taking account of expected future reductions in mortality. More on this here.
A few observations on this point.
* An increase of four years is neither surprising nor alarming. This is doubtless why this comparison ins not made in the IGR.
* In my last post, I noted the use of the obsolete 15-64 category to estimate the working-age population. One possible defence was that this was done in consistency with past practice. But clearly this can’t apply to the (unannounced) shift from the standard period basis to a cohort basis
* More importantly, the 95-year figure is an estimate of the likely life expectancy of children born in 2050, who would reach retiring age some time after 2115. Even the current birth cohort won’t be of pensionable age until near the end of this century.
A cohort measure of life expectancy is more relevant to projections of future pension expenditure than a period measure, though it requires the use of estimates of future mortality. But the relevant cohorts for the purpose of the IGR are those born before 1983 who will be 67 and over in 2050 and will then (assuming no policy change) be eligible for the age pension.
I have a piece in today’s Guardian, written before the release of the Intergenerational Report and making the case that the intergenerational equity problem, as it was conceived in the 1980s and 1990s has already been resolved. Key quote
The resolution of the intergenerational fiscal problem was a major public policy achievement of the reform era of the 1980s and 1990s. But a political class still fixated on the most ideological version of the reform agenda, in which cutting public spending is desirable in and out of season has refused to drop the club of intergenerational equity. The idea that (very modest) budget deficits and public debt levels constitute “robbing our children” remains a staple in calls for “reform”.
Having seen the IGR, there’s a single statistical choice that shows the entire exercise to be worthless. The key issue in all this is whether changes in our demographic structure will create an unreasonable fiscal burden. The Report chooses to summarise this by reference to what it calls the “dependency ratio”, defined as the ratio of people aged over 65 to those aged 15-64.
In what kind of world would this make sense? Essentially, one in which
* Children aged 14 and under cost nothing to raise and required no public expenditure on schools, daycare etc
* Children leave school at 15. After this, they not only support themselves, but contribute to the support of those over 65
* People retire become eligible for age pensions at 65
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
A new sandpit for long side discussions, idees fixes and so on. Unless directly responding to the OP, all discussions of nuclear power, MMT and conspiracy theories should be directed to sandpits (or, if none is open, message boards).
I’m doing some work on the proposed Trans Pacific Partnership Agreement, currently being negotiated in secret by diplomats and business representatives from 12 countries. Two facts of interest
(a) Australia’s Trade Minister Andrew Robb is claiming that a final agreement might be reached by mid-March. While this looks over-optimistic, it implies there is a near-final text
(b) Obama has sought “fast-track” negotiating authority, but there is no sign that this is going to happen soon, given that quite a few Democrats oppose the deal outright, and many Republicans are hostile to anything that would give Obama more authority.
The idea of “fast track” is that the Administration cuts a deal and Congress is bound (by having agreed to the fast-track rules) to give it a Yes/No vote, with no amendments. The assumption (I think) is that, if amendments were permitted, they would proliferate to the point where the legislation would fail to implement the agreement with other parties, who might then back out. Of course, the result is that Congress is, in effect, buying a pig in a poke. Given the unlikelihood of an outright rejection of such a massive deal, they have to accept whatever Obama puts before them. The flip-side is can no individual Congressperson has to explain why they didn’t seek protection for whatever local ox might be gored by the deal: they can respond that they had no choice.
My question is: Suppose that the final text is agreed and made public before fast-track authority is granted. What would be the chances of Congress agreeing to a Yes/No vote, and what difference would it make? There are a lot of issues to be raised here about international relations, trade agreements and US politics, none of which I have a clear feel for. So, I’d be interested to hear what others think.
I’ve been meaning to write this post for a while, and Paul Krugman has given me a nice jumping off point with this column on how to respond to economists (including highly credentialled ones) who push zombie ideas such as the threat of imminent hyperinflation. As Krugman notes, providing evidence-based criticism, whether politely or rudely, has no impact on people who have strong reasons for wanting to believe something. This is even more true on topics like climate change than it is on economics.
Read more…
Judging by the tone of media coverage, Tony Abbott’s Prime Ministership has now entered its terminal phase. Everything he does and says is being judged on that basis, with every slipup a potential disaster.
But having just beaten a spill motion, and with at least moderately good news from the polls, he can scarcely be removed immediately. On the other hand, as long as he stays in office, the government is effectively in lame duck mode, with its every decision open to reversal by his successor. To take the most recent example, if Abbott were replaced by Turnbull, the attacks on Gillian Triggs would cease instantly.
The big timing issue relates to the Budget, due in May. It’s obvious that, if Abbott goes, so does Hockey, which would be highly problematic if the removal took place after the budget was delivered but before it got through Parliament. Yet some reports I’ve read suggest that a lot of senior Liberals want to give Abbott & Hockey a chance to make a success of this Budget, then dump them if it fails.
On a side issue, the fact that the Prime Ministership is decided only by the Liberal Party members of the coalition is quite a big deal. Abbott would obviously do better if the two parties merged, or even if the Queensland LNP were part of the federal Liberal party rather than the bizarre camel it is now.
The Murdoch press has just about run out of scientists it can find to support its various anti-science jihads/crusades#. So, it seems to have come up with a new term of art. The word “researcher” is now the preferred Newscorp description of unqualified rightwingers doing bogus analyses that would never pass muster as peer-reviewed research. (Just to confuse things, the same term is used to describe genuine research.)
A couple of recent instances: Jennifer Marohasy*, a biology PhD who spent quite a few years heading the IPA Science Policy unit is cited as a “climate researcher” disputing the classification of Cyclone Marcia as a Category 5 (this is part of a general conspiracy-theoretic attack on the Bureau of Meteorology).
Steven Cooper, an acoustics engineer who conducted an anti-wind farm study with a sample size of six(!), is also described as a “scientific researcher”.
Are these isolated cases, or can readers point to more along the same line?
# The terms have the same meaning: pick whichever you prefer
* Her name is spelt Morohasy in some reports.
So, the latest round of the Greek debt crisis has ended in a typical European combination of delay and compromise, much as Yanis Varoufakis predicted a week ago. But in view of the obvious incompatibility of the positions put forward, someone must have given a fair bit of ground. The Greeks wanted continued EU support, and an end to the Troika’s austerity program. The Troika (at least as represented by German Finance Minister Schauble) wanted Syriza to abandon its election program and continue with the existing ND/Pasok policy of capitulation to the Troika.
Put that way, I think it’s clear that the Troika blinked. The new agreement allows Syriza to replace the Troika’s austerity program with a set of reforms of its choice, focusing on things like tax evasion. Most of Syriza’s election platform remains intact. Of course, it’s only for four months, and none of the big issues has been resolved. But four months takes us most of the way to the next Spanish election campaign, hardly an opportune time to contemplate expelling a debtor country from the eurozone with utterly unpredictable consequences.
If the negotations were a win for Greece (feel free to disagree!) how did it happen?
Among the handful of apparently reputable scientists who deny mainstream climate science, Willie Wei-Hock Soon, regularly described as a Harvard astrophysicist (he’s actually an aerospace engineer working for the Smithsonian, which has a joint centre with Harvard), has been among the most prominent and durable. His biggest hit was his 2003 paper with Sallie Baliunas* which brought about the resignation of half of the editorial board of the journal concerned.
Soon has finally come unstuck, having failed to declare his funding from fossil fuel interests and the Koch brothers in a number of articles, thereby violating the requirements of the journals that published him. The New York Times has a lengthy and unflattering expose.
The only surprise is that this took so long, and that Soon has been allowed to do so much damage to science. Still, the supply of seemingly credible deniers is small enough that discrediting even one makes a difference.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
A while back, in a context I can’t exactly remember, I made the point, which seemed to me to be obvious, that all property rights are derived from states governments, and so it’s impossible to sustain a claim that state government interference with property rights is inherently wrong. It rapidly became apparent that this point is controversial in all sorts of ways, so I thought it might be worthwhile to work out where the main lines of disagreement run.
The great thing about a blog like CT is that, on (almost) any topic, lots of my co-bloggers and readers know more than I do, and most aren’t shy about saying so. So, please point me to the relevant literature (about my only reference point here is James C Scott).
OK, threading still doesn’t seem to work. See what you think of the other tweak (100 comments, first page shwon first)
It’s time for another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I’m going to switch on threaded comments. If it works you can try it out here. I’m not sure what will happen to older posts.
Also, I’ve tweaked the settings to show 100 comments at a time, and to begin at the beginning, rather than showing the last page first.
Going through my settings in an attempt to block sockpuppet posts from a banned commenter (you know who you are, Mel!), I discovered that the WordPress setup now offers the option of threaded comments. Given the frequency of long debates between a handful of commenters, I think it’s an appealing choice, but I thought I would throw it open for discussion first.
The Murdoch press is touting a report from Price Waterhouse Coopers, predicting all manner of disaster for Australia if we do not mend our debt ridden ways. A typical example is a projection of $1 trillion in debt by (IIRC) 2037. There’s no link in the stories I’ve read, and nothing obvious on the PwC website, so I’ll make some more general observations.
* It’s startling to read this kind of sermonizing from an outfit like PwC, recently described by the British Parliamentary Public Accounts Committee as ‘promoting tax avoidance on an industrial scale’. If we are facing a fiscal crisis, shutting down firms like PwC seems like an obvious prerequisite to achieving a solution
* Even on the hypothesis that this was in fact a serious effort at assessing our fiscal condition, why would anyone give any credence to one of the accounting firms that gave us the Global Financial Crisis
* The projections are highly implausible, though without access to the report I can’t point to the specific dodgy assumptions used to derive them.
* The same issues are regularly examined by the Commonwealth Treasury in its Intergenerational Report. The 2015 report was legally required to be published on 3 February but has not appeared. Now instead of the IGR, the government’s media arm comes out with this piece of tripe. Was the IGR not alarmist enough for Hockey?
Update My point about the IGR was pure conjecture when I wrote it. But on TV last night I saw Hockey pushing the PwC “report” (still vaporware, AFAICT), even though he is supposedly too busy to fulfil his legal obligation to release the IGR.
Further update Commenters Megan and Liam have dug up a link to a two-page paper from a talk given a few days ago. This in turn links to publications from 2013 and 2014, drawing on estimates published in 2012 which (I imagine) rely on data going back even earlier. The same alarming projections appear, but still without any basis for the calculations. To sum up, this is a total beat-up.
In the early years of this blog, I spent a lot of time trying to find a sensible way of handling the word “reform”. But now I think it’s been corrupted beyond any hope of redemption. My conclusion is that we should never use the word, and be instantly suspicious of anyone who does. Most Australian voters have already reached this position, I think (see also, “productivity“).
Some recent statements by Chris Christie and Rand Paul[^1] have raised the prospect that vaccination, or, more precisely, policies that impose costs on parents who don’t vaccinate their kids, may become a partisan issue, with Republicans on the anti-vax (or, if you prefer, pro-freedom) side and Democrats pushing a pro-vaccine, pro-science line. Christie and Paul took a lot of flak from other Republicans and even Fox News, and tried to walk their statements back, so it seems as if it won’t happen just yet.
But there are some obvious reasons to think that such a divide might emerge in the future, and that Christie and Paul just jumped the gun. The outline of the debate can be seen in the ferocious response to Reason magazine’s endorsement of mandatory vaccination. And, while Reason was on the right side this time, they’ve continually cherrypicked the evidence on climate change and other issues to try to bring reality in line with libertarian wishes.
The logic of the issue is pretty much identical to that of climate change, gun control, and other policies disliked by the Republican/schmibertarian base. People want to be free to do as they please, even when there’s an obvious risk to others and don’t want to hear experts pointing out those risks.[^2] So, they find bogus experts who will tell them what they want to hear, or announce that they are “skeptics” who will make up their own minds. An obvious illustration of the parallels is this anti-vax piece in the Huffington Post by Lawrence Solomon, rightwing author of The Deniers, a supportive account of climate denial[^3].
As long as libertarians and Republicans continue to embrace conspiracy theories on issues like climate science, taking a pro-science viewpoint on vaccination just makes them “cafeteria crazy”. The consistent anti-science position of people like Solomon is, at least intellectually, more attractive.
Note Another issue that fits the same frame is speeding. Anti-science ibertarians in Australia and the UK are strongly pro-speeding, but I get the impression that this isn’t such a partisan issue in the US, the reverse of the usual pattern where tribalist patterns are strongest in the US.
[^1]: Christie was just pandering clumsily, but Paul’s statement reflects the dominance of anti-vax views among his base and that of his father (take a look at dailypaul.com).
[^2]: Of course, the situation is totally different in cases like Ebola and (non-rightwing) terrorism, where it’s the “others” who pose the risk.
[^3]: The Huffington Post used to be full of leftish anti-vaxers. But the criticisms of Seth Mnookin and others produced a big shift – Solomon’s was the only recent example I could find. Similarly, having given equivocal statements back in 2008, Obama and Clinton are now firmly on the pro-vaccine side.
A new sandpit for long side discussions, idees fixes and so on. Unless directly responding to the OP, all discussions of nuclear power, MMT and conspiracy theories should be directed to sandpits (or, if none is open, message boards).
At the minute of writing (1404 Sunday), it looks as if Malcolm Turnbull will replace Tony Abbott as PM tomorrow. Among his many challenges will be climate change policy, the issue that brought him undone last time around. The word appears to be that he will adhere to the platform from the 2013 election, which rules out a carbon price (tax or ETS) but gives him room to move in various directions.The assumption is that this compromise will buy both Turnbull and the climate deniers in the LNP enough time to work out some kind of solution.
What no one seems to have mentioned is that the Abbott government, in defiance of the 2013 platform, has been doing its best to make drastic cuts in the Renewable Energy Target. To the extent that the processes of government are going on during the current mess, negotations with Labor and the minor parties are still under way. Turnbull will have to decide, more or less immediately, whether to keep pushing for deep cuts.
There’s a further problem. Turnbull can’t simply drop the issue and leave things as they are. Abbott’s obvious intention to destroy the scheme has had a chilling effect on investment, particularly in the wind sector. Under the current rules, fossil fuel generators need to offset their generation with certificates from renewable generators. But it now seems unlikely that there will be enough certificates by 2020, which would result in the triggering of penalty clauses. So, the scheme needs some kind of change.
The Climate Change Authority, of which I’m a member put out a report just before Christmas last year, suggesting that the target date of 2020 be shifted out, and that the duration of the scheme be extended past 2030. That’s one possible solution, though not the only one.
The problem for Turnbull is that any realistic solution will instantly enrage the climate deniers, while continuing on the current path will put him in the position of owning Abbott’s broken promises.
One of the most politically effective arguments made for selling publicly owned assets, such as government owned corporations is that, by reducing debt, it will reduce the interest rate on government bonds. This is plausible enough, and not by itself a conclusive argument. The interest saving (including the benefit of lower rates on remaining debt) needs to be set against the loss of earnings. But it would be nice to know how large this saving might be.
The Queensland state election, just passed, provides something of a natural experiment. The LNP government proposed to sell $37 billion in public assets and repay $25 billion in debt ($18 billion associated with the enterprises to be sold, and $7 billion in general government debt). Going in with 73 of 89 seats, the LNP was almost universally expected to be returned. Instead, they lost their majority and will probably lose office. Although the result is not yet final, everyone is now agreed that asset sales are off the table.
So, we should be able to look at the secondary market for QTC bonds to see how much this surprise changed the interest rate demanded by bondholders (this is what’s called an “event study” in the jargon of academic finance). You can get the data from https://www.qtc.qld.gov.au/qtc/public/web/individual-investors/rates/interactive%20rate%20finder/!ut/p/a0/04_Sj9CPykssy0xPLMnMz0vMAfGjzOLdnX2DLZwMHQ383QwtDDy9DUIsPTwDDA2NTPULsh0VAVfZvz4!/
and I’ve included it over the fold (a bit of a mess as I can’t do HTML tables)
The data shows that interest rates have generally been tending downwards, as you would expect given the Reserve Bank’s much-anticipated cut. On the trading day after the election, rates on longer term bonds rose by between 0.05 and 0.1 percentage points (or, in the market jargon 5 and 10 basis) points. But all of that increase, and more, was wiped out the next day when the RBA confirmed its cut. Overall rates on QTC debt have fallen by around 0.25 percentage points since Newman called, and then lost, his snap election.
To sum up, the surprise abandonment of one of the largest proposed asset sales in Australian history caused only a momentary blip in interest rates on Queensland government debt, immediately wiped out by a modest adjustment in monetary policy at the national level.
When I posted on the Liberal leadership, I assumed that the right wing of the Liberal party was organized enough to persuade Abbott to go quietly and to install Bishop rather than Turnbull to replace him. Neither assumption looks safe now, and my overestimation of LNP organizational capacities has been shown up by the fiasco in Queensland. So, I’ll sit back and enjoy the fun, leaving you to offer whatever thoughts you have on the topic, or on related issues.
We just had an election in my home state of Queensland, and the outcomes will be of some broader interest, I hope. The governing Liberal National (= conservative) Party has (almost certainly) gone down to a surprise defeat, going from 78 of 89 seats at the last election to a probable 40 or 41 this time. The key issues were broken promises (particularly regarding job cuts) and government proposals for privatisation.
This can be seen either as a reversal or a repeat of the last election when the governing Labor Party went from 51 seats to 7. That election was also fought on broken promises and privatisation, but with the roles of the parties reversed (Labor had won an election opposing privatisation, then immediately announced it would go ahead).
Among the actual or potential ramifications
* The first instance of a woman Opposition Leader defeating an incumbent government at state or national level in Australia (there have been examples in the much smaller territory governments, but I think this is the first case at State level. The more common pattern has been for a woman to get a “hospital pass” when it is clear that the government is on the way out.
* At the national level, the replacement of the current conservative prime minister Tony Abbott
* The abandonment of the biggest coal mine project in Australia
Looking internationally, the outcome can be seen as a defeat for the politics of austerity and maybe as an example to suggest that Pasokification can be reversed, under the right circumstances.
Finally, I’ll link to my analysis of the asset sales, which got a reasonably prominent run during the campaign. It probably didn’t change many minds, but it helped to counter the barrage of pro-privatisation propaganda.
There’s been a lot of discussion about the fact that the Queensland LNP needs a Plan B, in case they are returned to government, but Campbell Newman loses his seat of Ashgrove.
No one seems to have noticed that they really need a Plan C, for the case when neither party wins an absolute majority, which would almost certainly imply a loss for Newman. A couple of points arise here
* Both Newman and Labor leader Anna Palaszczuk have ruled out a minority government. But with Newman gone, some other LNP leader might say his position was inoperative
* The Governor needs to call on someone to attempt the formation of a government. That could be Newman, Palaszczuk, some other LNP figure or even an independent.
In making my predictions for 2015, I was tempted to predict that Abbott would last out the year, mainly on the basis of inertia, but decided it was too risky (Commenter Fran B sensibly went the other way). I’m already glad of that: even before Sir Phil, it seemed as if he was on the skids.
Assuming Abbott goes (still not certain, but looking more likely with every hour), Julie Bishop looks like a sure thing to replace him. She has looked pretty good as Foreign Minister (if you’re willing to overlook a massive cut in foreign aid), but that’s relatively easy, largely a matter of not messing up. If she does take over, she’ll need to do more than that.
To demonstrate that there’s a real change, she’ll have to break with Abbott on some major issues. Presumably that will include dumping Hockey and the most unpopular of the 2014 budget measures, but most of those are already dead.
The really big break would be to return to some kind of bipartisanship on climate change. There’s some precedent, given the way she stood up to him over going to the Lima meeting. But it would entail a break with the (numerous) denialists and tribalists in the party room and the broader party apparatus (including the Murdoch Press and bodies like the IPA). Still, if she could carry it off, she would be a force to be reckoned with.
In the opening days of the Queensland election campaign, I thought the most likely outcomes were either a narrow LNP victory or a minority government of some kind*. But the campaign has been a disaster for the LNP and for Campbell Newman in particular. He is now in the ludicrous position of refusing to answer any questions, except to repeat scripted lines about jobs. And he is suing and being sued by all sorts of people, mostly from groups traditionally associated with the political right.
The big issue has been asset sales, and again the LNP strategy has been bizarre. Having cut services in breach of all their promises, they are now promising to restore them (notionally funded by the proceeds of asset sales) but only in electorates where the LNP wins. Labor has avoided matching these promises, and has offered a package that’s fiscally sustainable in the medium term, even if it doesn’t really address the fundamental problem of inadequate revenue. With public opinion solidly against asset sales, that should be enough to neutralise the LNPs perceived superiority in economic policy.
Newman’s main calculation, I suppose, is that holding an election in January ensures no one will pay any attention (though he had the hide to say that this is the most important election in Queensland’s history), and that may be right. Still, I now think that an outright LNP win is unlikely and that there is little chance of a minority LNP government being formed. There’s even less likelihood of Campbell Newman being re-elected in his own seat.
Labor leader Annastacia Palaszczuk has also (very foolishly, IMO) ruled out a minority government, but I doubt that she would be willing to follow through with another election if she had the option of forming one.
* I’m avoiding the silly phrase “hung Parliament”. By analogy with a “hung jury”, this implies a Parliament that is unable to produce a workable government. In reality, the existence of a disciplined majority, effectively at the command of a quasi-presidential leader, has generally produced bad government, particularly in a unicameral system like that in Queensland. By contrast, minority governments have often run their full term, and been more transparent and open than their majority counterparts.
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