John Quiggin

Amid the general chaos of the Liberal Party, the idea of a split has turned from fantasy to serious possibility. If Joe Hockey does the decent thing, and doesn’t run against Turnbull, it now seems quite likely that Turnbull would prevail against the unelectable Abbott and the still less electable Andrews. But that might easily provoke some rightwingers to Bolt from the party, more on grounds of collective insanity than any kind of calculation.

And, if Turnbull loses, there are increasingly* credible suggestions he might move to the cross-benches and stay on, perhaps attracting some followers. The appeal for moderate Liberals would not be that such a party would have good long-term prospects but that they are multiply doomed if they stay with the sinking ship. First, most moderates are in marginal urban seats that are likely to be lost. Second, those that survive will have no prospects for advancement in a regime where Hockey (while he lasts) is the puppet of Minchin and Abbott. And finally, advancement is of little use in a party that looks set to be out of office for a decade or so. For those who believe in the necessity of tackling climate change, and can see the difference between Turnbull’s willingness to take a stand and the prevarication and vacillation of Hockey and Abbott, a third party might be the shot. If they somehow survive the election, the Libs would be forced to take them back sooner or later, on their own terms.

* Apologies for paywalled link

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

While Australia has been transfixed by the meltdown of the Liberal party, there have been a string of positive developments around the world, which make a positive outcome from Copenhagen, leading over the next year to an intermational agreement to limit greenhouse gas emissions, much more likely than it seemed two years ago, or even six months ago. Among the most important developments

* Obama’s commitment to a 17 per cent (rel 2005) target, which essentially puts the Administration’s credibility behind Waxman-Markey
* China’s acceptance of a quantitative emissions target, based on emissions/GDP ratios, but implying a substantial cut relative to business as usual
* The change of government in Japan, from do-little LDP to activist DPJ
* EU consensus on the need for stronger action
* Acceptance of the principle of compensation for developing countries, and acceptance by countries like India that they should take part in a global agreement and argue for compensation
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A day ago, it looked as if Malcolm Turnbull could survive at least long enough to implement his deal with Labor, a deal that would deliver a drastically weakened emissions trading scheme with massive overcompensation of every possible big business interest. It would be marvellous to report that a popular uprising against rent-seeking lobby groups changed all this. But, in fact, Turnbull’s leadership has been rendered untenable by a Liberal Party base, and commentariat, that has entered a state of collective insanity in which the most absurd conspiracy theories are taken as a starting point for reasoning. Over time on this blog, I’ve seen even seemingly sensible commenters of a libertarian or conservative cast of mind succumb to this tribalist lunacy. The handful who have resisted (hi, Tokyo Tom) are increasingly regarded as “beyond the pale”.

From delusional beliefs on climate science follow equally delusional beliefs on political strategy, symbolised by the 37 votes for a Kevin Andrews spill yesterday and by the apparent certainty that, assuming Turnbull holds his ground, a majority of Liberals will vote for the delusionist candidate, Tony Abbott

Amazingly, even the editorialist at the Oz, whose columnists have uniformly promoted delusional conspiracy theories recognises the hopelessness of such a stance. as the Oz says

In truth, there is nowhere for Coalition members to go on this issue, other than to support the amended and improved bill and claim as their work the concessions they have wrung from the government. The introduction of a cap-and-trade ETS has been bipartisan policy for more than two years and it is supreme folly for rebels within the Liberals to believe they can go to an election as the destroyers, rather than the enablers, of such a scheme.

There may be room for the Nationals to argue against an ETS in the bush, but it is politically naive to think that voters in the inner-city areas of Melbourne and Sydney would welcome such regressive policies from their MPs. How exactly would Mr Abbott, for example, propose campaigning on this issue in seats such as North Sydney and Wentworth, where Liberal voters are determined to see action on climate change? Having a bob each way on the issue will not go down well with voters who have followed the debate and who expect, as Mr Turnbull says, responsible political parties to take responsible action

There is no reasoning with lunatics, and my attempts to do so have gone nowhere. At this point, we just have to hope that they will remain, as they are at present, in the minority, and that they can be kept as far as possible from political power.

There’s no guarantee that sanity will prevail. As the conman in Huckleberry Finn says ‘Hain’t we got all the fools in town on our side? And ain’t that a big enough majority in any town?” But, as I recall, he ends up tarred and feathered and run out of town on a rail.

The failure of the Senate to pass[1] the CPRS today means that the Rudd-Turnbull deal is dead, and that Rudd now has little choice but to go for a double dissolution, early in 2010. Assuming he does, and that Labor wins, the worst outcome we can get is the original bill. But, given that Labor will have no choice but to deal with the Greens for the foreseeable future, it would make much more sense to go for something better. Whereas a couple of days ago it looked like we would get a shabby deal, politically profitable for Labor, mildly embarrassing for the Coalition and barely passable for the environment, we now have the prospect of getting it all – a decent emissions trading policy, an open debate in which the delusionist conspiracy theorists are exposed for the loony fruit loops they are, and a split in the Liberal party that will keep it out of office until it dumps its current base and moves a long way to the left (see UK Tory party)

Some observations over the page

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I’ll be on ABC radio 612 at 0905 this morning, debating (Qld) State Treasurer Andrew Fraser on the government’s case for asset sales.

Suppose that the delusionists can manage to force a party meeting tomorrow, and move a spill motion which will surely succeed. Then presumably, even if Hockey gets up, the Libs will kill the ETS deal. At this point, it makes sense for Labor to want a double dissolution. More it makes sense for them to keep Parliament sitting as long as possible to get extra triggers. Obviously the Reps is no problem. For the Senate, the Libs presumably need their votes + 2 more to pass a motion to adjourn. So, if Labor can keep Xenophon and the Greens onside, which would make sense for them in a lot of ways, they can keep Parliament sitting for another couple of weeks while the Libs tear each other apart. Any thoughts on the practicality of this?

Tony Abbott’s resignation must surely mark the end for Malcolm Turnbull’s leadership and therefore, in all probability, for the deal with Labor over the ETS.

Ultra-optimistic scenario: Turnbull quits and Abbott is installed, the deal is cancelled and Rudd calls a double dissolution based on the original bill, winning easily. Since the original bill clearly needs amendment he doesn’t use the joint sitting mechanism but instead makes an agreement with the Greens who now have the balance of power.

Rudd’s preferred scenario: Turnbull holds on long enough to deliver seven senate votes tomorrow and pass the watered-down ETS. He is promptly rolled and the Liberal party splits. Abbott as new leader, starts with a commitment to repeal the scheme, but abandons it because this is the last thing big business wants. Labor reduces the divided opposition to rump status at the next election, and ends up dealing with three or four different parties in the Senate, needing only one to get its legislation through. This is probably more plausible than mine, but the timing will be very tight tomorrow. The decision is to be made at 3:45pm, apparently.

I’ve been very busy with asset sales, the problems of the Murray-Darling Basin, my still-in-progress book and other commitments too numerous to list, with the result that I’ve had no time to comment on the spectacular events in the climate change debate. But it’s finally too much to ignore.

I’ve long pointed out the “parallel universe” nature of the discussion that goes on under the name of “scepticism”. Over the last couple of days, that parallel universe has collided with the universe of Australian practical politics, with catastrophic results for Malcolm Turnbull in particular.

The timing is particularly galling for the delusionists who are uniformly convinced that the University of East Anglia emails they have stolen and promulgated prove beyond doubt … well, something sinister. Surely, they think, this will persuade the weak-kneed Liberals to stop while we hold a full inquiry. Following the analogy of Newtongate it’s as if, just as the vorticists had found the crucial ‘smoking gun’, a letter exposing Newton’s use of hired thugs to beat up Cartesian critics, they looked out from their shiny new antigravity machine and realised that some very hard ground was approaching them at a speed of hundreds of metres per second.
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It’s striking that we have to declare a special National go Home on Time Day, and also striking (to me anyway) that I have only just found time to blog about it. My own chronic state of overcommitment is more of a personal choice than an imposition from above, but I have to take constant care not to expect a similar overcommitment from the members of my research team. On the whole, Australian bosses and managers are failing in that obligation, or don’t even recognise it. Anyway, knock-off time is coming up soon, so everyone, head for home, beach or pub as the fancy takes you.

I’m one of a group of more than 20 academic and business economists who have put together a statement criticising the Queensland government’s case for asset sales and arguing that we need a proper public debate. The group includes some of Australia’s leading economists, including Joshua Gans, Stephen King, Warwick McKibbin and Adrian Pagan, as well as ten professors of economics from UQ, and more from other Queensland universities. But maybe the most surprising, and heartening, signature is that of Henry Ergas who has been one of my sparring partners on many occasions, most recently a debate on whether government should be the ultimate risk manager, held by the UQ Alumni Association (Henry won, by popular vote). Although Henry has been a strong supporter of privatisation in many instances where I have opposed it, we agree that these issues should be decided on the basis of costs and benefits, and not by spurious claims that privatisation provides governments with money they can invest in schools and hospitals.

Update I just did an interview on Madonna King’s ABC Radio program, and have promised to debate the issue with Andrew Fraser. I will also probably do a TV interview.

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It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

I’m finally collecting my thoughts in response to Chris Bertram’s CT post on Consequentialism and Communism, particularly this remark imputing to consequentialists in general

the very same disregard for, or scepticism about, the rights of individuals, the same willingness to sacrifice individual lives for valuable goals

that characterized the Bolsheviks and their successors.

As regards willingness to sacrifice individual lives for valuable goals, I think this is an unfair criticism of consequentialists. Look at any of the standard anti-consequentialist philosophical examples – trolley car, organ bank, survival lottery, violinist and so on. It’s always the hard-nosed consequentialist who is supposed to want to save as many lives as possible, and the noble anti-consequentialist who proposes to sacrifice individual lives for “valuable goals” such as clean hands, natural rights and bodily integrity.
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It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

I’ve been pretty relentlessly critical of the coverage of climate change issues by The Australian, and unsurprisingly, they’ve struck back in their editorial column, which attacks my opinion piece in yesterday’s Fin (over the fold). It doesn’t appear to be online, but the line is that since Australia only contributes some small proportion of global emissions, it doesn’t matter what we do, and therefore we shouldn’t feel bad about the impending destruction of the Great Barrier Reef.

Somewhat unusually for Oz editorials of this kind, I got mentioned by name, rather than being given a description obvious to those in the know but darkly obscure to readers in general. So, I’ll give them a serious reply. Of course, as stated in my article, what matters is that all developed countries should cut emissions. As in all international negotiations, our capacity to affect the outcome is limited but not zero. The only real capacity we have for influence is to make a clear demonstration that we will do our part (given our past laggardliness, the notion that we can “take the lead” is just silly) and it seems obvious that, in deciding whether or not to do this, we should focus on impacts of particular relevance to us, hoping that others will do likewise.

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It’s been slow going, but I’ve finally finished the draft chapter of my book-in-progress that looks forward to a new research program for macroeconomics, an absurdly ambitious task, but one that needs to be tackled. Of course, what I’ve written isn’t fundamentally new – it’s a distillation of points that Old Keynesians, post-Keynesians and some behavioral economists have been putting forward for a while. But I hope I’ve got some positive contribution to make. More than ever, comments are much appreciated.

Update In response to comments, mostly at Crooked Timber, I’ve fairly substantially revised the section on “avoiding stagflation”. While I don’t back away from the points I made previously, I took for granted some things that I’d mentioned in other places in the book. The result made for a fairly unbalanced treatment with an excessive focus on the role of labor militancy. I’ve now tried to put this into proper context. I don’t expect that will satisfy everybody, but this is closer to what I meant to say all along.End update
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For the past few days, I’ve been mostly focused on a statement on climate change and the Great Barrier Reef, made by a group of scientists (+ me as an economist) organised by the Federation of Australian Scientific and Technological Scientists, and called, not suprisingly, the FASTS Great Barrier Reef Climate Change Alliance. I’ve put the media release, issued on Tuesday, over the fold. There’s more on the web page including a link to a very valuable document entitled “When is Science Valid?”.

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Accidental duplicate post – please comment on the other thread

It is I think, comparatively rare for a senior political figure to describe equally senior members of their own party as  ”fruit loops” and “f…wits”, going on to observe that “They don’t know how crazy they look, because crazy people never do”.

It is I think, comparatively rare for a senior political figure to describe equally senior members of their own party as “fruit loops” and “f…wits”, going on to observe that “They don’t know how crazy they look, because crazy people never do”.

But that was exactly the reaction to last Monday’s Four Corner’s program in which Liberal Party Senate Leader Nick Minchin and others went on camera to spout delusionist conspiracy theories of the type Kevin Rudd had pre-emptively denounced only two days previously (i guess he had an idea what was going to be on Four Corners). Minchin described the scientific consensus view that human activity is driving climate change as the result of a communist plot, saying

For the extreme Left it provides the opportunity to do what they’ve always wanted to do, to sort of deindustrialise the Western world. You know the collapse of communism was a disaster for the Left, and … they embraced environmentalism as their new religion.

This is, of course, standard stuff on the political right – I had a string of people pointing me to the latest silly talking point in which a British unfair dismissal case was supposed to prove that global warming is a religion – but it was a big mistake to say it on Four Corners.

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It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. I probably won’t do Monday Message Board (at least not on Monday), so this one has a few days to run.

I’ve started doing occasional posts for a new venture, Asian Correspondent. You can find me here. Only occasional, so RSS is probably the way to go.

Update 12/12: This was initially posted here and emailed to QIC on the morning of 10 November. As yet, no response. And, apart from a snark by Andrew Fraser, no public response to my piece in last week’s Fin pointing out that the government’s case for privatisation was entirely spurious

Dear Doug,

As you may be aware, I have been very critical of the “Myths vs Facts” booklet which is, as far as I know, the only document released by the Queensland government to present its case for sales of public assets. In today’s ABC News, you are quoted as supporting the sales and saying

It can curtail its spending on its infrastructure program and let service quality deteriorate, it can raise taxes to pay for the interest bill that’s building up, or it can rearrange its balance sheet – sell those assets which don’t have a particular need to be in Government hands and own assets that should be,

This statement appears to endorse the government’s claims that investment in non-income generating assets can be financed by the sale of income-generating assets, with no need for additional revenue to service the associated debt. In my view, these claims are obviously fallacious, and I would appreciate clarification on a number of questions. I think these questions admit an unequivocal “Yes” or “No” answer, with supporting argument if desired.

1. Do you believe that the “Facts and Myths” booklet presents a fair statement of the arguments for and against privatisation, offering Queenslanders sufficient information on which to make an informed judgement?

2. Do you endorse the statement that ‘Keeping these businesses would cost the Government $12 billion over the next five years. That’s $12 billion spent on new coal trains and new wharves that can«t be spent on roads, schools or hospitals.?

3. Do you regard the statement that “The total return from all five businesses in 2008-09 was approximately $320 million … When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments” as providing a fair basis for assessing the fiscal costs and benefits of privatisation?

With my regards,
John Quiggin

Note: A previous version was addressed to Bernie Fraser, but Doug McTaggart’s comments appear more directly relevant.

91 years ago, the world marked the end of the Great War that had consumed tens of millions of lives, mostly those of young men sent to die far from home in a cause that few could explain, then or now. It was a false dawn. The chaos unleashed by the Great War spawned more and greater wars, revolutions and genocides that continued through most of the 20th century and still continue, in places, even to this day.

Posted via email from John’s posterous

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Test

Posted via email from John’s posterous

I managed to get something of a response from the Queensland Treasurer, Andrew Fraser to my critique of the case for privatisation put forward by the government. Fraser says

The global financial crisis has ripped a $15 billion hole in the state budget. There is no evidence to suggest the state is about to see that hole repaired despite the marginal turnaround in the economy.

“The fact is, Queensland will be better off.

“The myth is that John Quiggin represents the view of mainstream economists.

“The Government is not undertaking this process for the fun of it.”

A couple of responses.

First, the sale of $15 billion of assets does not in any way resolve a $15 billion shortfall in income (the “hole” in Fraser’s statement). The sale value of $15 billion (assuming it’s realised) represents the private sector valuation of the earnings from the assets. Perhaps (though this hasn’t been shown) the value in continued public ownership is less than $15 billion, but it can’t be much less. The coincidence between the two numbers is, intentionally or otherwise, deceptive.

Second, if Fraser is right, it ought to be easy to find mainstream economists to agree that his comparison between last years dividends to general government and the $1.8 billion interest saved (mostly by the GOCs) themselves if the assets are sold and $12 billion of investment is foregone. Any takers?

Finally, it’s worth asking why the government is doing this. My guess is that they place much more weight than they should on the AAA rating, and that Treasury is still pursuing the ideological goals of the 1980s and 1990s.

The right-left Culture Wars have sputtered to a halt, and now, one of the longest-running of culture wars, that of Mac vs PC (or rather, Mac OS vs MS-DOS and then Windows) can finally be declared at an end. After this piece by Charlie Brooker, nothing more need ever be written on the subject (hat tip, Nancy Wallace).

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic.

I’ve been very critical of the Queensland government’s proposed asset sales, which, I think, will worsen the fiscal position of the state in the long term. But, the combination of economic downturn associated with the global recession and continuing needs for infrastructure expenditure mean that the government is right to point out the problems and to state the need for politically unpalatable responses. I don’t have the resources of the Treasury, which means, among other things, that I can’t tell how big the problem is now, given that there has been a substantial recovery since the budget in June. So, I’ll just list some possible responses, some of which can be undertaken unilaterally, others requiring co-operation among the states, and, last but not least, action required from the Commonwealth government.

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