John Quiggin

A few pieces of data from the past few days:

* US Republican views on evolution have shifted significantly in the past 4 years. In 2009, 54 per cent said Yes to the question “Did humans and other animals evolve over time”, and 39 per cent said No. In 2013, those numbers have shifted to 48 per cent No, 43 per cent Yes. Other evidence shows that college-educated Repubs are more likely to have crazy views on evolution, climate science and so on than less-educated Repubs.

* Globally, November 2013 was the hottest November on record. In Australia, 2013 has been the hottest year on record.

* (Via Harry Clarke) Abbott’s senior adviser Maurice Newman has a piece in the Oz blaming the carbon tax/price for the decline of Australian manufacturing

Looking at the last point first, anyone who understands economics can see that the decline of Aust manufacturing is primarily due to the same long run trends that have reduced agriculture to a tiny proportion of economic activity, and secondarily due to the overvaluation of the $A (relative to PPP), reflecting the mining boom and other factors. If Newman doesn’t know this, he should. Newman’s nonsense on this point illustrates something more fundamental. You can’t deny climate science without screwing up your understanding of economics and politics.

This observation is strengthened by the second point. Climate “sceptics” claim to prefer data to models. But in fact they will all explain this data away. The truth is that they are all (I mean this literally, and without exceptions[1]) religiously committed to a position that no evidence will shake.

The final point illustrates the processes that are making it impossible to be a sane, honest rightwinger. The numbers reflect two processes
(i) People with sane views are ceasing to identify as Republicans, while those with insane views are shifting to become Repubs
(ii) Committed Republicans are resolving cognitive dissonance by becoming creationists

The processes are slightly different in Australia, where creationism remains a fringe position. But how can the likes of Akerman, Blair, Bolt, Devine and Stutchbury continue to parrot the arguments of American creationists without at least assuming that creationism is a defensible viewpoint?

The final step in the argument is addressed to a hypothetical sane, honest rightwinger. How can anyone take your stated views seriously when you fail to acknowledge that most people who share them are either fools or liars?

fn1. To be more precise, I don’t give up hope that some rightwingers will give up the entire package – climate denial, rightwing economics and all. But outside a conversion experience of this kind, these people are impervious to evidence.

Long-term readers of the comments section will recall Alanna Skelly, who posted here as “Alanna” and “Alice”. Yesterday, I received from her the sad news that she had lost her son to an overdose of drugs, purchased online using Bitcoin. Alanna has started a petition on change.org, asking that banks should stop facilitating such transactions by accommodating Bitcoin.

Readers will have different views on the policy issues, but this isn’t the occasion to discuss them, so there will be no comments on this post. Those who would like to support the petition can follow the link above.

Regardless of our politics, I’m sure everyone here will join me in extending to Alanna and her family our deepest sympathies.

I was enjoying my Xmas break too much to deal with the silliness of the Institute of Public Affairs. But Chris Berg was hard at work, writing a piece in which he claimed all the technological progress of the past two centuries as products of the “the market economy and consumer society”, and I guess I should respond.

Berg points to a comparison between a 19th century Xmas picnic in the outskirts of Melbourne, involving arduous and expensive travel, and costly communication, and the ease with which people in wealthy countries can travel, communicate and enjoy plentiful food today.

This would be a reasonable line of argument if Berg were defending the status quo. But of course he is not. He wants to argue that all the good things that have happened in the last two centuries are the product of the “market economy”, and that we should therefore scrap our existing social arrangements in favor of radical reforms in which market forces are given free rein.

In reality, modern society is characterized by a mixed economy, in which large components of economic activity take place outside the market, within households or through publicly funded and provided services. Even within the private business sector, the majority of activity takes place within corporations whose internal operations are characterized by central planning, not markets.

All of this reflects the fact that a pure market economy doesn’t work well. Rather than list all the problems which have led modern societies to constrain the role of markets (environmental pollution, inequality and so on), I’ll focus on the one discussed by Berg, that of technological innovation. Information is what economists call a public good: making it available to one person doesn’t reduce its usefulness to others. And while it’s possible to keep useful information secret for a while, it gets harder and harder over time. So, a pure market system often doesn’t provide much of a reward to people who come up with new ideas.

All sorts of solutions to the problem have been developed. They include patents (a temporary grant of government-enforced monopoly), prizes and awards, and publicly funded research institutions such as universities. These interventions played a crucial part in most of the innovations discussed by Berg. Most notably, the university sector developed the Internet, which makes debates such as this possible.

Berg’s argument is an example of a characteristic fallacy among advocates of market liberalism. Beginning with the fact that all modern societies are, in some sense, capitalist, they point to the successes of modern society to argue in favor of a particular version of capitalism (free markets, on the US model but taken even further) and against others that have been more successful in terms of human welfare (various forms of social democracy) or that might exist in the future.

I guess it’s possible to find symmetrical kinds of fallacies on the left, but I’ll leave that to commenters.

I’ve had a great break. I plan to resume regular posting now, though I still have some work-related travel to come.

It’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please.

The general reaction to various revelations of spying by the US on its friends and allies, particularly in contexts such as trade negotiations has been “everyone does it” and “in any case, there’s nothing anyone can do about it”. And, as regards direct retaliation against the US, that’s pretty much right. The situation is a bit different for junior members of the Five Eyes[^1], such as Australia. A case now being heard at the Permanent Court of Arbitration in The Hague could set a precedent that will make such spying a high risk exercise.
Read more…

I’m travelling at the moment, so updates are a bit erratic. A few days ago, I had a piece in The Guardian looking at the way the Abbott government is rejecting scientific advice on just about everything, notably including the Murray Darling Basin, on which I worked for a good many years. Comment here or there.

I’ve long been mystified by Julia Gillard’s position on equal marriage, and her almost complete silence on the matter. However, on a recent Google search, I found this, which left me even more mystified than before

“I do understand that the position I took on gay marriage perplexed many people, given who I am and so many of my beliefs. I’ve actually had lot of conversations with many of my old friends about this, some of whom have got a different view than me.

“But, I’m a lot older than you,” Ms Gillard told the young man, “and when I went to University and started forming my political views of the world, we weren’t talking about gay marriage indeed as women, as feminists, we were critiquing marriage. If someone had said to me as a twenty year old, ‘what about you get into a white dress to symbolise virginity, and you get your father to walk you down an aisle and give you away to a man who’s waiting at the end of the aisle’, I would have looked with puzzlement and said ‘what on earth would I do that for?’.

“I’m conscious that these may be views that have dated and that the way people interpret marriage now is different to the kinds of interpretations that I had. I think that marriage in our society should play its traditional role and we could come up with other institutions which value partnerships, value love, value lifetime commitment. You know, I have a valuable lifetime commitment and haven’t felt the need at any point to make that into a marriage. So I know that that is a really different reasoning that most people come at with these issues, but that’s my reasoning.

So, apparently she used to be against marriage altogether, but now wants to promote alternatives. If I read her correctly, she proposes to do this by stopping some people from getting married at all, while retaining “traditional” marriage for others. Is the idea that we could gradually extend the ban, for example, by prohibiting various kinds of mixed marriage until no-one at all could get married? Or is there some more coherent argument I’ve missed here?

A new sandpit for long side discussions, idees fixes and so on.

It’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please.

The High Court has ruled, correctly in my view, that the ACT legislation which briefly established equal marriage was in conflict with Commonwealth Law clearly intended to do the opposite, by defining marriage as “between a man and a woman”. We might not like the practical result, but consider how things would be if the court had gone the other way and was then confronted by a state trying to ban equal marriage after a change in Commonwealth law.

And, this is clearly a matter for the Commonwealth to decide. Abbott implied before the election that he would be open to a free vote in the New Year[1], and Labor should push him on this. The politics of this are pretty awful for Abbott – he’s using his control of the LNP to block a reform supported by the majority of Australians and already in place in most civilised parts of the world. On recent form, he’ll probably try to tough it out for a while, but will cave if enough pressure is applied.

The final question is whether equal marriage would pass on a free vote. The last vote wasn’t encouraging, in view of the number of Labor members who opposed it, but some of them have gone and others, I think, have followed Rudd and Obama in “evolving” on the issue. The Nats will presumably be solidly against, so the real question is: how liberal are Liberals?

fn1. In my view, Rudd should have bitten the bullet after his change of view, and demanded a free vote from Abbott (the alternative being a party line vote with Labor and Greens in favor). But, the same advisers who gave us the early election and the Northern Australia nonsense thought otherwise, with results we now have to live with.

With the closure of GMH locked in, it seems virtually certain that Toyota will follow the same path in the end, along with most of the supporting components industry. It’s possible that a well-designed policy, combined with a sustained depreciation of the $A, could keep the industry alive (the fact that it survived the end of the high tariff era was largely due to the Button Plan in the 1980s), but this is the Abbott government we’re talking about, so it seems unlikely.

The impending end of the car industry constitutes the effective end of large scale manufacturing in Australia, at least as the term is ordinarily understood. The remaining manufacturing sector consists mainly of basic processing of agricultural and mineral products for export, along with food and beverages for the domestic market. Elaborately transformed manufactures, on which such high hopes were pinned in the 1980s and 1990s have been declining for years, and will be confined to niche markets once we stop exporting automotive products.

An immediate policy implication of the end of car production is that it’s time to drop a bunch of policies whose rationale was to support the domestic industry. The most obvious candidate is the FBT concession, just reinstated by the Abbott government. But there’s also the maintenance of some of the worlds weakest fuel efficiency standards, driven by the desire not to tilt the playing field against Falcons and Commodores. More generally, a whole range of pro-car policies will need to be reassessed, given that they increase our dependence on imports and therefore our vulnerability to terms of trade shocks.

There are direct implications for employment policy, arising from the job losses that are about to take place, and longer term implications for education and training. More on these soon, I hope.

Another day, another stuffup from what already looks like the most incompetent government in Australian history. The Abbott government’s treatment of the car industry has been a disaster in policy terms, and just as bad as far as process is concerned. The key policy failure was the decision to retain fringe benefits tax breaks for cars (90 per cent of which are imported) at a cost of $1.8 billion over the forward estimates, while withdrawing Labor’s promise to give a much smaller amount in additional assistance to the remaining domestic manufacturers GMH and Toyota. Assuming Toyota also pulls out, every bit of the FBT concession will be public money sent overseas, with the exception of the slice creamed off by the salary packaging industry.

The policy process was even worse, announcing an inquiry, then pre-empting the result with a combination of leaks (of course, ABC stenographer Chris Uhlmann was happy to provide anonymity for the source) and Parliamentary taunts. Unsurprisingly, the new GM management in the US was sufficiently unimpressed to pull the plug immediately.

For the diehard fans of microeconomic reform, I guess this counts as a win. But even for them, it’s primarily a matter of cultural symbolism. The protection given to the car industry was so small that on a standard economic analysis, the welfare costs are utterly negligible. And of course, the benefits of protection were swamped by the costs of a chronically overvalued $A, which in turn reflects all manner of policy failures, from global financial deregulation to the subsidisation of the coal industry.

In the midst of proclaiming a budget crisis and sacking thousands of public servants, Campbell Newman’s LNP government announced that they were going to demolish the tired Executive Building, in which Newman and other senior ministers work, and get the private sector to build them a new one. This, we were told would cost the Queensland public nothing. As I pointed out at the time

it’s blatantly obvious that if you tear down a building and put up a new one with exactly the same purpose, you are taking on additional debt, whatever the accounts can be made to say.

That was obvious from first principles, but now the Auditor General has pointed out that the deal is even worse than that, saying

“Without a competitive sale process and given the significant difference between the book value and the sale price achieved, prima facie it raises the issue of whether the state can demonstrate that it obtained best value for money for the assets it sold.”

. This isn’t surprising. Whenever one of these “money for nothing” deals is pushed through, you can be sure that the public is being ripped off for more than if the payment had been out in the open.

The Opposition has estimated the net loss to the public at more than $2 billion, and that looks to me to be in the right ballpark.

As a comparison, if you take $100000 as a round estimate for the savings in salary, on-costs and so on from dismissing a public employee this luxury project blows, over its lifetime, the annual savings from cutting at least 20 000 jobs, the number originally proposed by Newman. This was later cut to 14 000, quite a few of them replaced by outside contractors. So, it’s probable that, over the first time of the LNP government, the loss on this one piece of public extravagance will wipe out more than half the savings made by the sackings. Let’s hope the first term will also be the last.

And, with the Abbott government doing its best to help at the Federal level, reports like this might finally help to demolish the silly idea that the LNP has some sort of advantage in economic management.

I’ve seen a number of interesting things in relation to road safety lately, some of which have caused me to revise my thoughts.

First, there’s the question of retesting for older drivers. This seemed self-evidently desirable to me, based on data showing very high fatality rates per km driven and that in most collision involving older (75+) drivers they are at fault. However, a Twitter discussion (must work out how to do Storify!) following this Background Briefing showed that things aren’t nearly so clear-cut. The fatality evidence isn’t really helpful, since it just reflects the fact that an accident is more likely to be fatal to an older person than to a younger one. The differential hazard is far greater for falls, which suggests that forcing older people out of cars may not be beneficial. And overall, the evidence on the benefits of testing appears to be mixed at best (the Monash expert quoted in BB overstates the case a bit, in my view).

More directly relevant to me (at least for the next decade or two) there are some suggestions regarding cyclist: a one-meter clearance requirement for cars , relaxation of abolition of helmet laws and requirements for licensing, rego and third-party insurance. The first is obviously sensible, the big issue being enforcement. On the third, I agree in principle with licensing and TPI, the main problem being what to do about children. Registration seems undesirable until we have a proper system of road pricing.

On helmets, I’m genuinely ambivalent, particularly after witnessing a head impact accident this morning (no injury, thanks to helmet). I would always use a helmet, but I’m not happy about the claim that Australia should have different helmet laws than Europe because our roads are more dangerous, and our drivers more aggressive. Granted that this is true we need to change these conditions. The obvious first step would be to reduce the current 60/50 speed limits for suburban streets and subarterial roads respectively to 50/40. This would greatly benefit road users (including both cyclists and older drivers) who can’t or don’t want to travel at or near existing speed limits. The welfare cost of slightly lower limits would, in my view, be trivial. I have zero sympathy for those (echoing smokers and polluters of all kinds) who want their convenience to justify imposing risks on others.

The other point though relates to those aggressive drivers. Whereas the evidence on older drivers is weak, there is ample evidence that aggressive driving, manifested particularly in traffic violations, is associated with higher crash risk, as is at-fault involvement in a previous crash. The current points system is absurdly lenient in this respect. The 12 point allowance lets drivers be convicted over a serious offence (running stop lights, speeding in a school zone etc) every year without any restriction on driving, and the suspension period for violators is only few months. I’d suggest a lifetime allowance of 24 points, with permanent restrictions thereafter, as well as reducing the three year allowance to 8 points, and increasing suspension periods.

The restrictive treatment of drivers at the older and younger ends of the age spectrum contrasts sharply with the treatment of a drivers license as a natural right for the 25-75 group, to be withdrawn only in extreme cases. In my view, aggressive drivers should be taken off the road to make them safer for the rest of us, including non-motorists and those whose reflexes aren’t sharp enough to cope with the high-speed high-risk driving of others.

Apparently, the dysfunctional Oz group blog is having another of its periodic meltdowns. The anonymous rant (no link, per usual policy) is mildly amusing, but the real fun is in the responses

Ben Pobjie
Crikey
Loonpond
Ben Jenkins
Independent Australia

There’s more I can’t locate now. Enjoy and suggest more in comments.

We’ve been used to imagining the global supply of euphemisms as limitless, but if Dennis Shanahan keeps at it, the world will be running short by the time the Abbott government leaves office. In a single column (Google it) he manages to refer to “accusations of broken promises”, “the shift on the Gonski education promise”, “the repudiation of Labor’s Gonski education promises”, “The management of the Gonski “unity ticket” on education funding”, ” accusations of broken promises” (again), “The readjustment of expectations on Gonski” “the painful Gonski process” and “a cusp of credibility”. Given his leader’s penchant for three word slogans, perhaps a three-letter word starting with “L” might be what Shanahan is reaching for here.