It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.Slipstream divx
My column from yesterday’s Fin is over the fold
download It’s Alive III: Island of the Alive
The observation that most of the falsehoods in George Will’s notorious Washington Post column on global warming have appeared in many previous columns, some going back as far as 1992, raises some interesting questions. The obvious ones like “How does this guy justify getting paid” and “Why is this paper still being published” have already been asked, so I thought I’d look a bit more at the question of recycling.
As an opinion columnist, I certainly repeat arguments from time to time, and make no apology for doing so. There’s a lot of noise out there and if you want to be heard, you have to push your viewpoint reasonably hard. At the same time, I try pretty hard not to say the same thing in the same way more than once (at least without acknowledging that I’m doing so), and to update my arguments in the light of new evidence. I may not always succeed, but I don’t think I’ve ever sent the Fin anything as thoroughly dog-eared as Will’s piece (and this is only one of a dozen or more iterations).
To repeat the same tired collection of second-hand talking points decade after decade displays not only intellectual dishonesty but a basic lack of craft values. As an academic, I’m of course more upset about the first, but as an opinion columnist I’m almost as annoyed about the second. As Chris Mooney says, this guy isn’t even phoning it in, and yet he’s regarded as a star.
Will’s talking point “they were predicting an ice age in the 1970s” might have been reasonable back in 1992, considered as a suggestion that we should not jump to conclusions on the basis of limited evidence and analysis. But the factual basis of the claim has long since been shown to be worse than dubious, and after four IPCC reports and thousands of scientific papers, the case for anthropogenic global warming rests on much more evidence than some tentative papers and a few shock headlines in newsmagazines.
Moreover, the switch from newsprint to digital publication has changed things in a couple of important ways. On the one hand, self-plagiarism is now much easier to detect. Anyone with Google can check you it. On the other hand, the justification for repetition is much more limited. When yesterdays brilliant insights lined today’s bird cage, you could be forgiven for repeating them a few months later, for readers who might have missed them the first time. But now that every column is preserved for ever, there’s much less need. And when your column consists largely of a string of tattered talking points that anyone who wants to can already find on the Internet, it has very little justification for existing.
As if it wasn’t already embarrassing enough to be a rightwinger, here’s Dennis Jensen.
Update Judging by the comments, rightwingers are pretty hard to embarrass (after eight years of Bush, and the complete collapse of their economic ideology, I guess this isn’t so surprising). No-one from the dexter side has showed any inclination to disown Jensen as a crackpot and a goodly number have solemnly refuted the jocular suggestion that a PhD in ceramics might be a little cracked.
When a car swerves sharply to avoid an obstacle, anything unsecured inside it continues travelling in its original direction, often with unfortunate consequences. We can see something similar happening with the Rudd government’s fiscal policy. The $42 billion stimulus package is as sharp a swerve as you can imagine, justified by the correct expectation that private investment and consumption demand, along with export demand, is about to collapse, leaving government to fill the gap.
Yet the noises coming out of the Budget process suggest that no one has even noticed this. Lindsay Tanner is still talking about spending cuts, as if the emergency measures of the last week can be put into reverse in only a few months time.
And, despite the disappearance of the forward surpluses that were to pay for them, and of any possible economic rationale for aiding high income earners, the government is still promising to proceed with the tax cuts promised in the utterly different world of 2007. Unlike many economists, I supported the government’s delivery of the first-stage tax cuts, on the basis that, while they were bad policy, nothing had changed since the election to justify repudiating a promise. But now, everything has changed. Like Ross Gittins, I hope the government will summon up the courage to say that tax cuts are off the agenda for the foreseeable future.
Update
I spell out the rationale for this a bit more over the fold
I watched Penny Wong on the 7:30 report defending the government’s emissions trading scheme against the criticism, made here and elsewhere, that initiatives such as the government’s home insulation scheme will have no effect except to reduce the price of permits and therefore the costs faced by large emitters. She did a very professional job, neither denying the criticism (which she couldn’t honestly do) nor conceding its validity.
In a long interview, she made only one substantive point, which has also been made elsewhere. By reducing the cost of reaching an emissions target, initiatives like the insulation scheme will make it easier for the government to set more ambitious targets.
I’m happy to take her at her word. The policy debate leading up to the choice of a 5/15 target was undertaken before the full severity of the financial crisis and the need for a $42 billion stimulus became apparent. So, having introduced a new measure to reduce emissions, the government is already in a position to tighten the target by an amount equal to the emissions saved.
If the package is passed unamended, there won’t be another opportunity until 2020, at least without hugely increased competition. So, I’m waiting eagerly for the announcement.
Apparently cut off the Costello drip, Glenn Milne breathlessly publishes some startling news from Sydney
Bound by Honor ipod . According to his anonymous source:
* The current leader of the NSW Right is trying to secure absolute control over the faction and crush his rivals
* The current leader of the NSW Right is keen to diminish the power of the Victorian Left.
In more breaking news, the traffic in Sydney is bad, but the beaches are great.
In one sense, the blogosphere has reached a near-universal consensus on climate change. Everyone who follows the issue at all closely agrees that there is no real debate. Instead, it’s generally agreed, we have a situation where (1) a large body of people devoted to serious scientific research on one side is confronted by (2) pushers of silly Internet talking points who are ideologically motivated, financially driven or just plain delusional . The only disagreement is which group is which. Is group (1):
* The Australian Academy of Science, all other similar organisations and the vast majority of active climate scientists;
or is it
* The 650 “sceptical scientists” identified by Marc Morano (aide to US Senator Inhofe) including such Australian luminaries as David Evans, Louis Hissink, Warwick Hughes and Jennifer Marohasy (Morano’s list includes numerous genuine scientists whose views he has misreprented
but he’s right to include all those I’ve mentioned )
Broadly speaking, for anyone from politically left or centrist blogs the first answer is correct, and for anyone from the political right, the second answer is correct. As far as the mainstream media is concerned, Fox News, the Australian and some other outlets know where they stand.
But for establishment outlets like the Washington Post, the idea that either (nearly) all scientists or (nearly) all right-of-centre politicans and commentators are liars/hacks/self-deluded is rather hard to accept. So we get episodes like this one. (via Tim Lambert)
Two big news items from Queensland in the last 24 hours. Standard & Poors has downgraded the State’s credit rating to AA+ and Anna Bligh has called an early election.
The fact that these two events happened in this order is striking. Until six months ago, a government that had been downgraded in this way would be holding off an election until the last possible day in the hope of burying the bad news, or else would have gone early, before releasing the bad budget news that triggered the downgrade. Now, the government calculates:
* Everyone knows that the state’s finances are a lot weaker than they looked six months ago, and that this has very little to do with the government
* No-one who has been watching the news could possibly place any weight on ratings issued by Standard & Poors (or Moodys – Fitch has been marginally better). If credit rating agencies were subject to election, or to any kind of proper market test, these guys would be out of business. The fact that they aren’t is yet another indication that the global financial sector is in need of reform far more drastic than has been contemplated so far
* The policies ‘demanded’ by S&P to keep the rating (drastic cuts in infrastructure spending) would have been economically disastrous
Coming to the election itself, the uncertainties created by the global financial crisis are such that I’m not going to venture a prediction. Overall, the government has done a reasonable job, but not a great one, and it remains to be seen whether the cumulative impact the ethical troubles of numerous ministers, ex-ministers and backbenchers over the years will come back to haunt them. There are also a bunch of policy decisions (including some good ones, like fluoridation, and not-so-good ones like chickening out on water recycling) that need to be taken into account. And it remains unclear how much progress has been made, and perceived, in fixing the health system. The government’s performance on indigenous issues has been lamentable, but that probably won’t cost them many seats.
On the other side, the opposition moved from being unelectable to conceivably electable with the merger that created the Liberal National Party. But they remain deeply unimpressive. This election will be won, or lost, by Labor.
John Hewson’s public denunciation of Peter Costello “‘Lazy, disloyal, no balls, unelectable'” is one of the more effective examples of the genre I’ve seen*. At least, it is for me, since it’s exactly consistent with my own judgement. Money quote
I also doubt you have the skills, experience or self-confidence to have accepted the obvious job after losing the last election, namely shadow treasurer. You’d be lost without Treasury. You may have delivered 11 budgets but ask yourself honestly how many of them were actually yours, rather than Treasury’s. I am told Treasury is now drawing a sharp contrast between your little interest and involvement and that of Wayne Swan.
And Hewson gets in a very effective jab at Howard along the way
Both sides of politics know from painful experience that disunity is death- although, like you I’m sure, I found it a bit galling to hear Howard now saying so, having been disloyal to every leader he ever worked for.
* It would have been more effective without the gratuitous reference to testosterone, which doesn’t at all suit an academic/finance type like Hewson.
With resurgent debate over the relative merits of carbon taxes and emissions trading, attention has turned again to Europe where the market price of emissions permits has fallen sharply as a result of the financial crisis and recession. Most commentators have seen this as a strike against emissions trading, but actually it’s a positive. The big concern about price uncertainty arises when we are very uncertain about the cost of reducing emissions. Under cost uncertainty, setting the emissions target too low could impose unexpectedly high costs on the economy.
What’s happening here is that we are uncertain about the rate of growth of the economy. An emissions target is countercyclical since it imposes a relatively high cost when the economy is strong, and a much smaller cost when the economy is weak. This is a Good Thing.
My view, for what it’s worth, is that a well-designed emissions trading scheme is the best available option. But given the weaknesses of the government’s proposed scheme, I’m prepared to consider alternatives.
Note also that different macroeconomic shocks give different outcomes. Warwick McKibbin has done some work showing that an upward shock to growth in one country will benefit other countries less (and perhaps not at all) under global emissions trading than with a price cap or hybrid policy. That’s because the growing country will demand more emissions permits, pushing up the global price.
It’s easy to see that McKibbin’s modelling result is consistent with the analysis here. By symmetry, a negative shock in one country will harm others less under emissions trading than under the price-based alternatives. And the same logic applies to sectors within countries. It’s easy enough to see then, that for any economy with a fixed aggregate target, or for the world as a whole, emissions trading will tend to reduce the benefits of booms and the cost of slumps.
It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
With even Alan Greenspan Smother move and Lindsey Graham now in support, and the alternatives canvassed in the Geithner “plan” thoroughly discredited (even Wall Street hated it), large-scale nationalization of US banks now looks inevitable. But, as Obama has observed, this kind of thing seems alien to US culture.
This looks like a classic Lakoff framing problem. How can the obviously necessary, also be made to seem natural? There have been a couple of approaches so far.
The first is to emphasise that the Federal Deposit Insurance Corporation routinely takes over failed banks. So, as Paul Krugman puts it “nationalization is as American as apple pie“.
The second is to focus on the ultimate goal which is to return the banks to solvency and private ownership. Hence the lovely euphemism coined (I think) by Calculated Risk “preprivatisation”
Tim Lambert links to this article by Eric Pooley in Slate’s The Big Moneye which points out that, for all the disagreement among economists regarding the details of climate change policy, there is substantial consensus on the following main points
(i) the cost of action to stabilise atmospheric concentrations of CO2 and other greenhouse gases will be of the order of 1 per cent of GDP
(ii) a strong mitigation policy is preferable to business as usual
There is also widespread, though not universal, support for the view that it is best to act early and strongly rather than waiting for more information.
The article makes the point that the quarrelsome nature of economists obscures the level of consensus and that has certainly been my experience.
Also from experience, I know that quite a few readers of this blog are unwilling to believe that (i) can be right. But the argument from personal incredulity is not a sound basis for reasoning. It’s easy to check that the cost can’t be much more than 10 per cent of GDP (about five years worth of economic growth), which contradicts the common intuition that cheap energy is economically vital. Once you accept that upper bound it seems silly to disagree with the experts on the best estimate in the range 0-10.
The Victorian government has produced an interactive Google map of events organized in response to the bushfires. If it works (I’m a novice at this) you should be able to add your own.
I’m one of ten economists who has signed a statement criticising the inadequacies of the Rudd government’s emissions trading scheme. The statement is over the fold.
The weakness of the scheme and the fact that emissions reductions achieved through voluntary action or the newly announced home insulation scheme don’t attract credits have led to a revival of the debate over the merits of a carbon tax, as an alternative to emissions trading. Of course, it is possible to have both, as in hybrid schemes such as that proposed by Warwick McKibbin.
The question of whether to go with a carbon tax, emissions trading or a hybrid turns on two main issues. First, with a tax, or with a hybrid scheme where the emissions price is capped, we get price certainty at the expense of uncertainty about how much emissions will be reduced. With a pure emissions scheme, or a hybrid scheme in which the tax acts as a price floor, we have certainty about achieving at least the target level of emissions reductions, but uncertainty about how high the price might be. As I’ve argued before, the risks of not cutting emissions enough outweigh the risks of setting the price too high.
The other question is more pragmatic. Which approach gives the best chance for Australia to contribute to a global agreement that will actually stabilise the climate. In the past, I’ve been of the view that a pure emissions trading scheme is the way to go in this respect, and I still can’t see that an international agreement is likely to be reached without general adoption of emissions trading schemes. . But there’s no doubt that developments over the past year or so have strengthened the case for making a carbon tax part of the mix.
Now, here’s the release
I’m extending the appeal until this evening (Monday). There were some problems with links which led to a lot of people being unable to find the thread. These have now been fixed, I hope and the total is up to $9425 as of Monday morning. You can record contributions here, or in the original thread.
Update
It’s Monday evening, and the grand total for the appeal is $10,025 which is a marvellous effort. It’s certainly a big achievement for a blogosphere which is so often castigated as being trivial, self-absorbed and so on.
Let’s all give ourselves a pat on the back for this, then resolve to show similar generosity all year around, in public policy as well as private charity, and regardless of whether the suffering we aim to alleviate is spectacular and newsworthy, or grinding and prosaic.
Having reached our target, I’m closing off the appeal, but of course there’s still time to donate to this appeal (details in the post below) and it’s always a good time to give some help to others in need.
After-dinner speeches are generally best forgotten after the dinner even when (perhaps particularly when!) they are extremely funny. My speech to the Australian Agricultural and Resource Economics Society dinner wasn’t funny at all (at least not intentionally), but a couple of people asked me to write it up for the blog. So I’ve done it. I didn’t have notes when I talked, so this is not an accurate record, more like a reconstruction of what I meant to say
As with similar tragedies in the past, I’m using the blog to promote an appeal for donations to help those affected by the terrible bushfires. I’m kicking it off with a donation of $500. Anyone who’d like to take part can record the amount donated in the comments thread below. I’ll report the total from time to time. Past appeals have raised as much as $5000, and it would be great to match that.
You can donate to the Red Cross Appeal here or make a direct deposit to the Victorian Bushfire Relief Fund –
BSB 082-001, Account number 860-046-797. Once you’ve done that post your comment, and encourage the rest of us.
If anyone has any new ideas for fundraising, or would like a repeat of some of the old ones please feel free suggest them.
I’d like to confine comments on this post strictly to fundraising and other expressions of support. There’s already a discussion of the fires, and metacommentary on fundraising can go in the Monday Message Board (running late, but up soon).
Update 12:50pm We’re already over $1000, from donations big and small. Small donations from those who are short of cash themselves are more significant in a lot of ways, than bigger amounts from those who have plenty to spare.
Update 8:20pm
The total by my estimate is $3650, which is exceptionally generous. If only we could maintain this level of solidarity all the time, and in response to the everyday tragedies of poverty and hunger, as well as in times of disaster, is there anything we couldn’t accomplish?
Update 1:50pm Wednesday
We’re now at $4530 by count, so I’ll offer an incentive. A free post, written by me, on any topic within reason for whoever pushes us over $5000. To avoid some game-theoretic complications I’ve just thought about, I’ll be offering a special award for anyone who contributes between now and the $5000 target, however large or small their donation.
Update 8:50am Thursday The total has now reached $5750, which is a huge success and a tribute to the generosity of readers of this blog.
The donation that tipped the total over $5000 was from commenter “Mike” who gets to propose a topic for a post by me. Honorable mentions to James Farrell and GDavies whose generous donations pushed us very close to that total and thanks again to everyone who has contributed.
I’ll probably wrap this up tomorrow evening, so get in now with your contribution.
Update 9:50am Friday
The total is over $7300 which I think is our best ever. Get in quick with your contributions, as I plan to finish the appeal here this evening. (Of course, you can still make contributions to the Red Cross or Bushfire Relief Funds if you’re running late).
Further update To co-ordinate a joint appeal with Larvatus Prodeo, I’m keeping the appeal open for the weekend. With LP readers joining those here, I’m confident that we can raise at least $10 000.
Update Saturday AM Total is now $8185, enough that I’ve stopped trying to do it in my head, and put all the info into a spreadsheet. I know most people have already donated by now, but if you haven’t, or haven’t got around to recording the fact, here’s your chance.
With the sudden collapse of the main ideas of the political right, the need for debate and discussion over social democratic and socialist ideas has become much more urgent.
One new venue for this is Left Focus, a blog that has been set up by longtime reader Tristan Ewins, with the aim of being open to a variety of left perspectives. The announcement says:
A new forum of the broad left. Contributions from around the world – and from the webmaster’s home in Australia – are welcome. We welcome Green, socialist, social-democratic, left liberal, and libertarian left perspectives.
All interested parties are welcome to visit and comment on the posts…
The webmaster will be publishing his work gradually through the site – but maybe you would like to contribute too?
Posts of good quality and of interest to a broadleft audience will be considered.
Anyone wanting to post contributions can write to Tristan Ewins at: [email protected]
It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
I’ve been in Cairns for the last few days, at the annual conference of the Australian Agricultural and Resource Economics Society. Although the city hasn’t been much affected by the floods, roads to the south were cut until today, so fruit and vegetables have been in short supply.
The conference opened with an address by Ross Garnaut, who got stuck into the government’s proposals Soldier buy for free permits and exclusions under the proposed ETS. My research group (Risk and Sustainable Management Group) presented a paper on this topic, and a number of others on modelling risk and uncertainty and the complex trade-offs between environmental flows, trees for carbon capture and irrigated agriculture. As well, I presented a paper with Terry Hughes of JCU on the future of the Great Barrier Reef, and gave the after-dinner speech, which I’ve promised to write up and post when I get a free moment. More soon, when I get a free moment or two.
I’ve thought some more about the home insulation component of the stimulus package and I’ve come to the conclusion that (drum roll!) my immediate reaction was correct. In the absence of a corresponding lowering of the aggregate emissions target, the package will have no effect at all on emissions. The Australia Institute has come to the same conclusions, and IPART (the NSW utility regulator) has made the same point in a more general context.
Some minor qualifications to this. As Joshua Gans points out here The Russell Girl divx the effect of the scheme will be to reduce the demand for permits and therefore the equilibrium price. If the “safety-valve” price in the CPRS is binding, the scheme will reduce the government’s obligation to supply permits at the safety valve price. And, if home insulation is a cost-effective method of reducing emissions, which householders are neglecting for reasons such as credit constraints, the scheme could allow the target to be reached at lower social cost. This might, in the long run, encourage more ambitious targets
But there is no need to wait for the long run. The Greens and any other Senators who care about saving the planet should demand a reduction in the emissions target, equal to the savings from the scheme, as part of the stimulus package.
I was travelling yesterday, so the Monday Message Board is a day late. Post comments on any topic. As usual, civilised discussion and no coarse language.
The news from the fires in Victoria just keeps getting worse, with whole towns wiped out and more than 60 people confirmed dead. We can only hope the change in the weather will give firefighters a better chance. The loss of life in the Queensland floods has not been so severe, but there is still widespread devastation.
Looking at various topics that have been covered by both journalists and bloggers, I’ve noted a common theme in which journalist deplore bloggers’ habit of speculating about subjects instead of “just picking up the phone” and asking those directly involved (examples here
and here). The implied (and sometimes expressed) view of bloggers is that of lazy amateurs.
It struck me though, that asking questions of total strangers is both a distinctively journalistic activity and one that implies and requires a special kind of professional license. In fact, “Journalists do interviews” comes much closer to a definition of what is distinctive about journalism than formulations like “journalists report news, bloggers do opinion”.
It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
As the financial crisis has developed over the past year, I’ve been struck by the near-complete absence of any comment on the economy from Peter Costello. He would seem to have all sorts of reasons for commenting, from a desire to defend the previous government’s record, to enhancing his public profile and even, perhaps, contributing to public understanding of the issues and improving policy outcomes.
But, until the last couple of days, there’s been nothing. Now, however, he seems to be talking, and inevitably, this sudden end to reticence is being interpreted in terms of leadership aspirations.
For me, though, the more interesting question is how Costello performs without the Treasury, or even the staff allocated to a shadow minister to back him up. You can make your own judgements on this Lateline interview. My take: Costello performed reasonably well, as you’d expect from a sharp lawyer and Parliamentary debater, and he made some good debating points. But he didn’t give the impression that he had, or was interested in, any deep understanding of the financial crisis or the choices facing the Australian government, and other governments in responding to it.
Jim Henley asks a lot of good questions
There’s an awful lot of right/conservative/soft-libertarian economics I consider well and truly refuted by events. That said, I haven’t seen progressive thinkers grappling with the global nature of the current downturn, which seems to be falling on the social democracies and neoliberal regimes and post-mercantile states alike. What does it mean that pretty much all national economies are in a tailspin, regardless of model? Are the safety-net features of the social democracies successfully blunting the impact on their citizens? In ways that can be sustained through another year, say, of recession? Is the protectionism of post-mercantile states in East Asia protecting their industries more than the less protectionist regimes of the neoliberal countries?
I’ll try and answer these, with more confidence on some points than others.
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