John Quiggin

I’ve been off the grid for the last few days, during which the Rudd government seems to have been making big decisions, or repudiating old ones, every day. The biggest, clearly, was the dumping of the ETS. In one sense, it’s hard to regret the abandonment of the failed deal with Malcolm Turnbull, which was probably worse than no policy at all. But the government should be negotiating with the Greens and holding the Liberals and independents to account, instead of caving in to the politics of fear, tribalism and ignorance.

On the positive side, the end of tobacco labelling is an important step forward in drug policy. It would be good to see drugs like marijuana treated in the same way as we are going with tobacco: legal but discouraged in every way possible.

A striking feature of these two issues was the appearance of the Institute of Public Affairs (long the paid mouthpiece of Big Tobacco and Big Coal) which was happy about the first, and critical of the second. Anyone who deludes themselves that they are “making up their own mind” to disregard the scientific consensus on the risks of tobacco smoking and climate change should realise that they have been sucked in by the IPA and similar hacks.

That’s all I have time for, and there’s the Henry Review and the Budget to come. Have a good weekend.

My last post, arguing that the left needed to offer a transformative vision as an alternative to rightwing tribalism has drawn lots of interesting responses, and generated some great comments threads, both here and elsewhere (Some of them: Matt Yglesias,DougJ at Balloon Juice, Democracy in America at the Economist,Aziz Poonawalla at BeliefNet,Geoffrey Kruse-Safford |, and Randy McDonald).

Since my idea was to open things up for discussion, I don’t plan to comment on particular responses. I do want to respond to one theme that came up repeatedly, a combination of discomfort with words like ‘transformation’ and ‘vision’, and a feeling that a politics in which such words are employed is inconsistent with the pursuit of incremental reforms. Even though I stressed the need to learn from such critics as Burke, Hayek and Popper about the need for reform to arise from organic developments in society and to avoid presumptions of omniscience, the mere use of words like ‘vision’ set off lots of alarm bells.

To me, the difficulty of getting this right reflects my opening point in the previous post. After decades of defensive struggle, we on the left no longer know how to talk about anything bigger than the local fights in which we may hope to defend the gains of the past and occasionally make a little progress. But the time is now ripe to look ahead.

My main point in this new post is to reject the idea that there is a necessary inconsistency between incremental progress and the vision of a better society and a better world. (I’ll link back here to my earlier post on Hope, which might be worth reading at this point, for those who have time and interest.)

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It’s time, for a Monday Message Board, delayed by the long weekend. Post comments on any topic. As usual, civilised discussion and no coarse language.

We’ve had a lot of discussion here of the difficulties of integrating solar PV (and wind) into an electricity network. Even leaving aside some obstinate reiteration of the baseload demand fallacy, I think it’s fair to say that most of us are arguing on the basis of very little information

Here’s a link to a US government agency studying High Penetration Solar Deployment. No results as yet that I can see, but this should prove interesting.

We’ve had a bit of fun at Crooked Timber lately, pointing out the silliness of those who are supposed to be the intellectual leaders of the right, in its libertarian, neoconservative and Republican tribalist versions. But, as quite a few commenters have pointed out (including Jack Strocchi using the same phrase that occurred to me) the exercise does seem to savor a bit of flogging dead horses.

It seems to me necessary to go beyond this, which was one reason for my post on hope the other day. To make progress, we need to reassess where we stand and then think about where to go next. This is bound to be something of a confused and confusing process. Over the fold, I’ve made some (quite a few) observations, making for a very long post, which is mainly meant to open things up for discussion.

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On this day, nearly 100 years ago, thousands of young Australians and New Zealanders ran on to the beaches of Gallipoli. Many of them died before the day was out, along with many more among the Turkish defenders and troops from Britain, Canada and many other places. By the time the campaign ended in failure, over 100 000 were dead and hundreds of thousands more severely wounded. A small toll by comparison with the main Western and Eastern fronts, but quite sufficiently horrific to be remembered a century later.

The Anzacs had no quarrel with the Turkish soldiers who were trying to kill them, nor did the people of Australia and New Zealand have any quarrel with those of Turkey. Their bravery and their lives were expended in the course of a bloody and pointless war between alliances of which the armies fighting at Gallipoli were tiny parts, over pretexts no one alive now, and very few at the time, could comprehend as the basis for a cataclysmic war.

By the time the Gallipoli attack was planned, the dreams of rapid and glorious victory that had led both sides to war had drowned in the mud of France and Flanders. It should have been obvious that this was a war no one could win. But, a peace that restored the status quo ante would mean an admission that it had all been for nothing.

Instead, the war planners kept coming up with futile strategic ideas like Gallipoli, secret weapons like poison gas, and new tactics previously considered unthinkable such as submarine attacks, without warning, on merchant shipping. By the time of the armistice in 1918, ten million or more had died, and the seeds of future wars had been sowed.

For all those who died, bravely following their country’s call to unknown battlefields, lest we forget.

Possum at Pollytics reports that Andrew Leigh, economist and blogger has won Labor preselection for the seat of Fraser. A great choice by the preselectors.

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.

The Bligh government’s case for asset sales rests in part on a supposed fiscal emergency arising from the global financial crisis and in part from the general ideological claim that putting infrastructure assets into the hands of the private sector will promote economic efficiency. Both parts of the case have taken a knock in the last couple of days. A study by Access Economics confirms the findings of the union-commissioned study by Bob Walker and Betty Con Walker (derided by the government and state Treasury at the time) that the budget position is much stronger than has been admitted so far.

On the second point, Liberal Lord Mayor of Brisbane Campbell Newman has conceded that the days of private toll roads are probably over. As I’ve been saying for years (getting on for decades now) these projects always involve a social loss. In the 1990s, it was almost always the public that took the loss while private operators made out like bandits. In the easy money environment of the 2000s, private investors made silly investments, and often lost the lot. Now that everyone has wised up, there will be no more deals like this.

By far the best solution would be for the state government to buy back all the toll roads, and replace ad hoc tolls with a coherent system of congestion pricing. The Bligh government instead, plans to sell off its own toll roads. As for congestion pricing, Anna Bligh has made her view pretty clear “not while this government is in office”. In reply to which I can only quote Men in Black – “Your offer is acceptable”.

H/Ts Darren Godwell, Tom Miller, Nancy Wallace

Tony Abbott’s latest move, floating the idea that people under 30 should be denied access to the dole, is clear evidence of why he should never be Prime Minister. For that matter, it’s an illustration of the weaknesses that made him a second-rate (at best) minister under Howard.

The political calculation is obvious, although the arithmetic looks dubious to me. The idea is to appeal to the anti-youth prejudices of the older voters who form the core of Liberal party support. But older voters are hard to shift in general, and the kind of people who would like this proposal are mostly rusted-on Liberals, though they might once have been One Nation types. By contrast, Abbott’s overt appeal to bigotry against the young will surely cost the Libs votes among this group at a time when their attitudes are still being formed

Coming to the policy merits, Abbott’s supporting “reasoning” if such a term can be justified is that this measure will encourage people to move to “areas where there are skills shortages, such as in the Western Australian mining sector.” We are talking here about the age group where most people start forming long-term relationships and having children (median age for first child is 29, and appears to be declining at the moment). And, even if they are temporarily unemployed, most people in this age group have made career choices that are unlikely to be consistent with a flit to WA to work in the mines. And, even with relatively strong conditions, I doubt that the demand for labor in the mines extends say, to a cry for hairdressers, or bartenders or shop assistants, to pick a few occupations at random[1].

This idea seems too silly even to come from a focus group. In fact, it seems about on a par with the ideas I come up with after a triathlon and a few glasses of muscle relaxant. I usually manage to refrain from communicating these marvellous ideas on the blog, let alone announcing them to the public at large.

fn1. ABS used to publish data on unemployment by usual occupation, but they seem to have stopped.

(H/T Nancy Wallace).

Update: More from Kim at LP

When we were at the supermarket the other day, I noticed, and made use, of some helpful new information for buying toilet paper. Next to each of the various offerings was the price per sheet. Since the brand was the same, it was easy to identify and buy, the cheapest offering, rather than doing a complex estimation and calculation.

I vaguely assumed I was enjoying the benefits of the market for corporate control, as the supermarket, formerly a small Coles outlet had been taken over by Foodworks. But this article by Ross Gittins informs me that a requirement for unit pricing has been introduced by the Rudd government. Gittins is sceptical, saying:

It’s a nice idea – the kind that appeals to economists – but I doubt it will do much good. It assumes shoppers are a lot more diligent and coldly calculating – a lot more ”rational” – than most of us are.

Since I’m an economist, my delight in this innovation is consistent with the first part of Gittins’ claim, but as a shopper I disagree with the second part. The great thing with this is that I don’t have to be diligent or calculating – the calculation has been done for me. Certainly, I’m benefiting from this without even knowing there was a policy, whereas I never even looked at the unlamented Grocery Watch site.

I posted this at Crooked Timber. I plan something a little more specific to Australia when I get some time

One reason that many on the left of politics preferred Obama to Hillary Clinton is that his rhetoric, at his best, promised something more than incremental reform, a promise summed up by slogans like “Change we can believe in” and “Yes we can”.

Given the political realities of the US, and the obvious fact that Obama is instinctively a pragmatist and centrist, it was never likely that this would translate into radical policy action in the short run. Still, it seemed at least possible that an Obama presidency would begin a renewal of a progressive project of transformation, setting out the goal of a better world. One respect in which this hope has been fulfilled, for me, is in Obama’s articulation of the goal of a world without nuclear weapons, and in the small but positive steps he’s taken in this direction.

I plan to talk about the specific issue of nuclear disarmament in more detail in a later post. The bigger point for me is that after decades in which the left has been on the defensive, it’s time for a politics of hope. We need hope to mobilise a positive alternative to the fear, anger and tribalism on offer from the right. Centrist pragmatism provides nothing to match the enthusiasm that can be driven by fear and anger, as we have seen.

What the politics of hope means, to me, is the need to start setting out goals that are far more ambitious than the incremental changes debated in day-to-day electoral politics. They ought to be feasible in the sense that they are technically achievable and don’t require radical changes in existing social structures, even if they may set the scene for such changes in the future. On the other hand, they ought not to be constrained by consideration of what is electorally saleable right now.

Over the fold, I’ve set out some thoughts I have for goals of this kind. At this stage, I’m not looking for debate on the specifics of these goals or the feasibility of achieving them (again, more on this later). Rather, I’d welcome both discussion of the general issue of what kind of politics the left needs to be pursuing, and suggestions of other goals we ought to be pursuing

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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.

Serious action to reduce CO2 emissions has been stymied in Australia and the US for the moment. So, to get an idea of what is likely to be feasible, and on what timescale, we have to look at Europe, which has both a working Emissions Trading Scheme and a bunch of special incentives to promote renewable energy. At least on the latter point, there is some cause for optimism.

Here’s a graph of new installed capacity and decommissioned capacity for 2009 from The European Wind Energy Association (link here was broken and is now fixed-JQ). The results pretty much speak for themselves, but I’ll add a couple of observations.

The fact that solar PV was a major source of new installed capacity surprised me. Until now, solar (along with fusion) has been one of the contenders for the tag “the energy source of the future and always will be”. But, on current trends, solar is set to be a major contributor in the future. Of course, the outcome so far has been the result of large subsidies, such as feed-in tariffs. But, even as the subsidies are cut back the volume of installations continues to grow. Before long, solar could be competitive with coal on the basis of the ETS and peak-load pricing, without the need for an extra “renewable” subsidy. Gas is likely to be cheapest for some time to come, but there are sound reasons for not wanting to depend entirely on an energy source that can be cut off at short notice.

The other point is that for coal (and also, less surprisingly for nuclear) installed capacity showed a net decline. The combination of the ETS and strong political opposition has made the construction of new coal-fired power stations in Europe almost impossible, at least without a commitment to CCS or some other sweetener.

On this issue, where Europe has led, the rest of the world will follow sooner or later. The big question is whether it will be too late. The good outcomes we are seeing in Europe suggest that, even with a few years’ slippage, big reductions in emissions will be possible in time to stabilise global climate.

At dinner last night (an event to celebrate various research awards won by people at UQ) I was talking with an engineering professor about the question of how to promote innovation without reliance on patents and forms of monopoly rights (usually referred to as intellectual ‘property’). One solution is to offer prizes for valuable discoveries[1]. This is a nice idea, but there are lot of practical problems in setup and administration. Nicholas Gruen has an interesting startup, aiming to simplify this process. Read about it here.

fn1. This doesn’t rule out IP, but it offers a potential alternative.

Both here and at Crooked Timber, libertarianism is getting a bit of a run. So, can anyone find me a copy of Hayek’s prescient 1944 book, The Road to Serfdom, which predicted that the policies of the British Labour Party (policies that were implemented after the 1945 election) would result in relatively poor economic performance, and would eventually be modified or abandoned, a claim vindicated by the triumph of Thatcherism in the 1980s? This book, and its predictive success, seem to play an important role in libertarian thinking.

Despite a diligent search, the only thing I can find is a book of the same title, also written by an FA von Hayek in 1944. This Road to Serfdom predicts that the policies of the British Labour Party, implemented after the 1945 election, would lead to the emergence of a totalitarian state similar to Soviet Russia and Nazi Germany, or at least to a massive reduction in political and personal freedom (as distinct from economic freedom). Obviously this prediction was totally wrong. Democracy survived Labor’s nationalizations, and personal freedom expanded substantially. Even a defensible version of the argument (say, a claim that, Labor’s ultimate program included elements that could not be realised without anti-democratic forms of coercion, and that would have to be dropped if these bad outcomes were to be avoided) could only be regarded as raising a hypothetical, but unrealised, cause for concern.. Presumably, this isn’t the book the libertarians have read, so I assume there must exist another of the same title.

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

I spoke yesterday at a Forum on the Bligh government’s privatisation program. I got a presentation ready (it’s over the fold) but spoke off the cuff instead.

As well as my oft-stated critique of the government’s case for privatisation, I took a look at the broader budget problems facing Queensland. Although the government has overstated these problems to promote the privatisation push, they are real enough.

The fundamental problem is that the government is committed both to high quality service and to keeping Queensland a low tax state. According to standard measures, Queensland’s tax effort is about 85 per cent of the Australian average, which amounts to a shortfall of around $1.5 billion, or pretty much the gap the government is trying to fill. In addition, Queensland provides more business subsidies and incentives than any other state, most notably the indefensible Investment Incentives Scheme. To the extent that these incentives actually attract new business to the state they increase the demands on infrastructure and thereby create even more problems. Mostly, though, they are just a waste of money.

The government has committed itself clearly and publicly to providing Queenslanders with services that are as good as those in other states. That can’t be done while also holding down tax revenue.

Looking at the political situation regarding the asset sales, it seems to me unlikely that they can be stopped while Bligh and Fraser are in charge, and unlikely that Labor will change leaders unless electoral defeat appears inevitable. I’ve therefore concluded that, in the absence of such a change, I’ll be giving the Greens my first preference and the LNP my second.

In a democracy, it’s important that parties should alternate in office to some extent, and it follows that it can’t be reasonable always to prefer one major party to the other. As a general rule this hasn’t had any practical implications for my vote – for most of my life, long-running Labor governments were a rarity. But Queensland Labor has been in for 20 years, with only a brief interruption under Borbidge, and it shows. It looks like it’s time to give the other side a go, unimpressive as they are.

Update More from Mark Bahnisch at LP

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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.

The announcement that Malcolm Turnbull will not recontest his seat is a big loss to Australian politics, though maybe not as big as some of his admirers have claimed. He is undoubtedly a man of great ability. But, all in all, I’d rank him below all those who’ve held the office of PM in my adult life (that is, from Whitlam to Rudd). On the other hand, I’d rank him above everyone else in that time who has been seriously mentioned as a possible PM, but hasn’t made it[1].

Looking back, Turnbull did surprisingly well in straight political contests – displacing a well-liked sitting member for Wentworth, forcing his way into the Howard Ministry, taking the Liberal leadership and most startling of all, coming within one vote of retaining it when everyone had written him off. On the other hand, he was far less successful on substantive policy issues, even though he was usually on the right side.

On the Republic, Turnbull and the ARM made the totally mistaken judgement that most Australians love the current system, and that the most saleable republic is one that changes nothing – with a president appointed, in effect, by the PM, just as currently happens with the GG. He managed to push this model through the Convention, thereby falling into a trap laid by Howard. For the average person (including me) the idea that we would throw the Queen over for a President, but then have the President chosen for us by a politician, is just silly.

Turnbull also made a bad misjudgement in taking on the water portfolio. I met him when he was in this job, and it was clear he understood the issues and that, left to himself, his policy line would have been identical with that of Penny Wong. But, with Howard as PM, he got nowhere. Howard’s National Water Plan set Australian water policy back a decade and Rudd and Wong are still trying to clean up the mess. Turnbull was in a strong position, and should have insisted on a free hand before he took the job on.

The Grech fiasco, I guess, could happen to anyone, and a large share of the blame belongs with other Liberals, notably Eric Abetz – Abbott is crazy to put this guy up as Senate leader, but that’s by the way.

Finally, there was the ETS. Turnbull’s decision to cut a deal with the government was strategically correct. Strategically, Abbott’s embrace of climate delusionism is a disaster that will haunt the Liberals for decades, if, indeed, they survive it. No matter how many talking points can be brought up, the fact of climate change will force itself on the attention of even the most wishful thinkers, and those who have denied and delayed will pay a high price. Tactically, however, Turnbull was out of luck. Oppositions are naturally predisposed to oppose, and the failure of the Copenhagen talks to come up with a binding agreement made this look like a winning strategy.

There’s no doubt that he leaves a great gap. Add up everyone whose name I can remember on the Opposition front bench (Abbott, Hockey, Bishop, Truss, Abetz, Robb, Joyce) and put them together. They don’t match Turnbull in ability or capacity to make a serious contribution to policy. For that matter, they don’t match up to any of the leading figures on the Labor side (Rudd, Swan, Gillard, Tanner, Faulkner). Put them all together as a tag team and they’d be a good match for, say, Steven Conroy or Jenny Macklin.

fn1. If you agree with this point, that the set of PMs {Whitlam, Fraser, Hawke, Keating, Howard, Rudd} absolutely dominates the alternative set {Bury Snedden, Hayden, Peacock, Hewson, Downer, Beazley, Crean, Latham, Nelson, Turnbull, Abbott} as well as the coulda’been contender set {Bjelke-Petersen, Costello, Elliott, B. Bishop, Hanson, maybe some others I’ve forgotten} it looks as if the Australian political process is doing a good job of putting the most able people into the top job.

Further point Taking this exercise back to WWII adds three PMs of exceptional ability (Curtin, Chifley, Menzies), one definitely sub-par (McMahon, who got the job by intrigue, and lost it at the first election he faced) and two (Holt and Gorton) who are hard for me to assess because they served brief terms before I was old enough to worry much about politics. Of those who missed out, Evatt and Barwick were both reminiscent of Turnbull. Calwell was a fair average opposition leader, comparable to the others I’ve listed, but not outstanding.

Over the fold, a couple more paras on population, which is becoming a very hot issue.

It will be interesting to see how Abbott handles it. As with the parental leave tax, he has run with a populist position, apparently taking no trouble to square it with his business base, which is already causing trouble. Since he was supporting high immigration intakes only a couple of months ago (in the context of an attack on asylum-seekers), it’s hard to see how he can escape charges of opportunism. In fact, it’s hard to think of a major issue (tax, climate change, parental leave, WorkChoices) on which Abbott has not been, in Malcolm Turnbull’s memorable description, a weathervane. I suppose that’s what authenticity means.

It will also be interesting to see how his 9-day, 1000 km cycling/listening tour affects both his substantive position, and his ability to manage the debate[1]. Presumably, touring through rural areas, he’ll find it hard to back away from calls for a cut in immigration, but the Liberals are all over the shop on this.

The government has its own problems. Rudd’s “big Australia” is popular with business and some elite groups, but the case hasn’t been made to the rest of the country and I doubt that it can be. As I say over the page, it would probably be better to make the case for migration at the individual level (why should person X not be allowed to come/stay here) than in terms of aggregates. But if the Libs keep on messing things up, it will be relatively easy for the government to adjust both its rhetoric and his substantive position.

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I’ll try to write a bit about Malcolm Turnbull’s career when I get some free time. In the meantime, with Minchin also leaving, I thought I’d point out how little is left of the Howard era in Australian politics, at least on the conservative side. Howard, Costello, Downer, Vaile, Nelson, Turnbull, Minchin and a host of lesser lights have all gone, one way or another. Assuming, as seems plausible, that Abbott will lose the next election and be dumped thereafter (I don’t think a losing conservative leader has ever avoided this fate in national politics, though both Peacock and Howard managed comebacks), there will be hardly anyone left except Joe Hockey and Julie Bishop, both very junior figures under Howard.

I don’t have a good feel for how unusual this is. Quite a few Labor figures left after 1996, but I don’t think it was such a wholesale cleanout. Commenters are invited to do the spadework on this.

I’m still working through the backlog that built up while I finished my book manuscript. In the process, I forgot to post my Fin column from Thursday 25 March, which points out that we will, sooner or later, need more tax revenue. Here it is

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I’ve been meaning, for a while, to write a post about Australia’s population, and the announcement that a new position of Minister for Population has been created is a good place to start. It takes some of the edge off what would have been my first complaint, namely that policy decisions implying a large increase in population have been taken without any real public debate. This has been a bipartisan process, driven by increases in net overseas migration which took off under Howard (reaching about 200 000 a year) and have continued under Rudd (reaching nearly 300 000).

However, the figures are distorted by the increase in numbers of overseas students arriving here. According to demographer Peter MacDonald, the long-run intake is around 180 000, and hasn’t changed nearly as much as the net arrivals figure would suggest. However, a substantial number of overseas students are seeking permanent residence from the outset. Gaming the system in this respect had become a more or less overt racket, until recent policy changes, and it remains to be seen if these policy changes are effective. Leaving aside such manipulation, a significant number of people who arrive here as students are likely to seek to remain in Australia for one reason or another, for example because they meet and marry an Australian resident, or simply because they make lots of friends and like the place.

The consensus has broken down, now that the Opposition is promising a cut in migration and doing a little rewriting of history in the process, as with Senator Scott Morrison’s disingenuous reference to an average intake of 125 000 under the Coalition, an average that conceals a rising trend.

For practical purposes, population policy in Australia means immigration policy (as Madonna King points out here, the fact that Tony Burke is combining the population portfolio with agriculture, fisheries and forestry, rather than with immigration, makes very little sense). Unfortunately, there are few issues surrounded by more misconceptions, on both sides, than immigration.

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I sent the manuscript of Zombie Economics off to Princeton University Press last night. There’s still plenty of work (figures, index, copyediting, some last-minute changes, galleys) to be done for a planned release at Halloween. But this is the official submission. In writing the preface I checked over the comments I’d received, here and at Crooked Timber. Several thousand in total, from more than a hundred different commenters. Thanks to everyone who took part. It was a huge help and encouragement to me.

My publisher just told me the publication date for my book has been moved forward, and the due date for the manuscript is “…well, now”. Lots needing to be done, and zero time to do it, but I’m sure I’ll manage somehow.