John Quiggin

I’m out of the country at the moment, and possibly missing some nuance. On the other hand, I’m old enough to remember the ill-will the unions built up in the 1970s, with snap stoppages designed to inflict maximum disruption on the public and thereby maximise pressure on employers to settle quickly and on the government to broker a solution. The announcement, without warning, of a lockout by Qantas seems to be straight out of the same disastrous playbook. Even if it works, it must surely kill off any political goodwill for Qantas in the future, or at least as long as the current management is in charge. That’s bound to be costly given the importance of political decisions on things like landing rights for airlines, and the favourable treatment Qantas has had in the past (partly a leftover of its days as a national flag carrier).

Can anyone make a case that Joyce’s action makes sense?

That’s the title of my column in Thursday’s Fin, over the fold

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I’ve just read ‘Tales of Fiscal Adjustment’ by Alesina and Ardagna, which appears to be the founding text for the idea of expansionary austerity. The level of scholarship, at least as it applies to Australia (which is their first illustration) is exceptionally poor, to the extent that it requires a rescuscitation of the ancient Internet tradition of Fisking. I’m going to quote excerpts from their text (about 50 per cent of the total), and intersperse them with my comments.

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My Fin column from last week is over the fold. It’s mainly about the Occupy Wall Street protests, but in this post I want to stress a misleading comparison with the Tea Party. It’s often suggested that the Tea Party arose in response to the bailout of Wall Street, and until I checked, I had somewhat accepted this claim, even if it was obvious that the protest served the interest of its supposed targets.
In reality, though, there is no truth at all to this claim. To quote from the article

The first Tea Party protests were held in February 2009, shortly after the inauguration of President Obama, and four months after the Bush Administration bailed out the banks. The event that did most to drive the Tea Party protests was a rant delivered by journalist Rick Santelli from the floor of the Chicago Mercantile Exchange. To the cheers of traders, Santelli denounced bailouts, but not the bailout of the financial sector. His ire was directed against attempts to help struggling homeowners refinance mortgages taken out during the real estate bubble.

I used to see the Tea Party as having had some genuine elements, but co-opted by Wall Street and the Repubs. Now, it’s clear that Repub activists ran the show from day one. Some individual participants may have been sucked in by anti-bailout rhetoric but the organizers were on the side of the 1 per cent all along.

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Whenever I write anything about public expenditure and taxation, I’m likely to get someone commenting that Modern Monetary Theory has shown that a government with its own currency does not need taxation to finance public expenditure. I’ve tried a couple of responses to this, but now I think I can explain better why this argument is
(a) wrong in terms of (what I understand to be) the central claims of MMT
(b) regressive in terms of taxation policy
(c) politically pernicious
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Two great outcomes in successive days[1], and neither would have happened without a hung parliament. I never accepted the horror with which many commentators viewed the election results (after all, minority governments have been common at the state level and have generally worked fine), but now I’m a positive enthusiast. It would be a pity if the independents who supported the government are punished by their electors – I’d say we need more independents of all kinds as a check on the executive power of the PM and the majority party
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… but the legislation for a carbon tax/fixed price emissions scheme has finally passed the House of Representatives, and is assured of passage through the Senate. Assuming the government can survive that long, it will come into force at the beginning of 2012-13.

Before any analysis, some (qualified) congratulations are in order. The Greens (with my support at the time, for what that was worth) took a big gamble in rejecting the badly-compromised Rudd-Turnbull deal, and have contributed to the passage of a much better bill now. Still, it turned out to be a long-shot. If the Gillard government had either won an absolute majority or lost to Tony Abbott, there would be no carbom tax. Kevin Rudd laid a lot of the groundwork, but failed to call a double dissolution, which he would surely have won, when the first version of the emissions trading scheme was blocked. Malcolm Turnbull has been a voice of sanity throughout, but still voted the party line. Last but not least, Julia Gillard, having almost succeeded in killing the whole idea in 2010 demonstrated her skills in getting an exceptionally contentious piece of legislation through, despite disastrous polls and the most fragile conceivable majority.

Now, a bit of a look towards the future

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In the event that Julia Gillard lasts as PM until December, she’ll presumably be faced with a resolution making equal marriage rights part of Labor policy. Gillard’s handling of this issue is emblematic of her disastrous leadership in general – simultaneously unprincipled, unconvincing and politically unsuccessful.

Unlike our PM, I’m just old enough to remember when the phrase “living in sin” could be used with a straight face to describe living arrangements like hers. So, I find it hard to believe that her stated opposition to equal marriage rights is sincere (unlike with Kevin Rudd). Rather it’s the result of the kind of political calculation standard on the right wing of the Labor Party (see also Kristina Kenneally), in which the ‘real’ Labor voter is typecast as an aspirational bogan[1] whose views on social issues are unchanged since the 1950s. The key text here is Michael Thompson’s Labor without Class. There’s no evidence for this – views on social issues in Australia are largely uncorrelated with social class.

Allowing that some Labor voters are socially conservative, Gillard’s strategy is still politically stupid. Given the desperate state of the polls, she can’t hope to win by caution on an issue like this. It’s probably too late now, but a strong stand in favor of equal marriage rights might have done something to stop the drift of Labor voters off to the Greens, independents or the kind of apathy that makes it easy to shift to the Liberals, given an attractive promise or two.

fn1. To be boringly clear, I don’t use or endorse the term “bogan” to describe anybody. But the stereotypical image of a bogan coincides perfectly with the Labor Right view of Labor voters.

Another sandpit. You know the drill.

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

It’s time to talk about the Occupy Wall Street movement. As with the movement itself, I have more enthusiasm than analysis to offer at this point. I’m in Washington DC at present and i went to a (very small) meeting [1] a couple of weeks ago which was part of the planning for a similar protest starting on 6 October (more info here). Things have certainly grown since then, and it could be quite a big event.

In the generally undirected spirit of the movement, here is an open thread for your comments, predictions and so on.

fn1. As a visitor to the US, I’m not actually involved in the organization, but I was interested to hear about it and sympathetic to what I heard. Those at the meeting seemed more ordinary, and of all ages, compared to the media images of ragtag youth at the Wall Street protest.

A newspaper story I once read (almost certainly apocryphal) claimed that advertisement to this effect asked for a small payment in return for a guaranteed method of cutting energy bills in half. If you paid up, you received, by return mail, a pair of scissors.

A more serious version of this question occurred to me in relation to yet another dispute about the allegedly special character of energy as a commodity. It occurred to me to ask the following question: suppose that my family and I had to reduce my personal energy consumption, immediately and permanently by 50 per cent. How feasible would it be, and how much worse off would we be? So, assuming we attempted it evenly across the board, this would mean

* Reducing car travel by 50 per cent, until we could get a more fuel-efficient car, or share rides
* Reducing lighting by 50 per cent, until we could get more energy-efficient lightbulbs
* Reducing air travel by 50 per cent, until airlines introduced more fuel-efficient planes
* Reducing use of airconditioning and central heating by 50 per cent, either by turning it off half the time or by adjusting thermostats
* Reducing use of existing consumer durables and purchase of new ones by 50 per cent, until substitutes with less lifecycle energy use became available

To make it a bit tougher, we might try to achieve bigger reductions in these areas, to offset various forms of indirect energy use, such as the energy used in food production.

My assessment is that this would be very difficult. But do some comparisons, and it looks easy.

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