Back again with another Monday Message Board.
Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link
http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page and at my Economics in Two Lessons page
I haven’t done a fundraiser for a while, but this seems like a good time. Like everything, the Brissie to the Bay cycle fundraiser for Multiple Sclerosis isn’t going ahead as usual. It’s been replaced with a challenge where participants record their own efforts and set targets for distance and fundraising. I aim to cycle at least 400km in June (my average is around 200), and raise $1000 or more in the process.
Feel free to suggest challenges of your own, with a donation to back them. For example, if anyone is willing to stump up $100, I’ll cycle around Mt Coot-Tha in Brisbane (only 10km, but very tough).
You can donate here and also sign up yourself if interested.
Our policy on fights between the US and China, until now, has been to avoid them, regardless of the merits. On the coronavirus, both are badly at fault, arguably the US more so. And there’s no obvious reason why Australia has any special interest in working out who is to blame.
I was contacted by a Greek language newspaper with questions about the next steps in economic policy. On the assumption that most of my readers don’t read Greek, I’m posting my response here
The Morrison government’s economic policy response to the pandemic so far has been broadly appropriate, putting practicality ahead of ideology in general. There are numerous anomalies arising from the haste with which the program was developed and from some residual ideological constraints (such as hostility to the university sector)
The program should facilitate a rapid recovery from those economic impacts directly linked to lockdown measures as these are relaxed. However, there has so far been little recognition of the problems that will continue in the medium and longer term. The economy will undergo a substantial restructuring reflecting the effective end of international travel, at least until a vaccine is developed and globally distributed.
To deal with these continuing problems the government needs to
(i) Convert the JobSeeker payment into a Guaranteed Livable Income, available to everyone unable to find paid employment and willing to make a social contribution in other ways, such as volunteering(ii) Use the JobKeeper payment as the starting point of a Job Guarantee, in which the government commits to achieve full employment through a combination of wage subsidies, training programs and direct job creation.
A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. I’ll open this by saying I agree with the view that even an optimal response to the pandemic by China would have given the world only a few days more notice, and that most Western governments would have wasted that time anyway.
As the author of a book on opportunity cost, I might be expected to be enthusiastic about the idea that trade-offs are always important in economic and policy choices. This idea is summed up in the acryonymic slogan TANSTAAFL (There Ain’t No Such Thing As A Free Lunch). In fact, however, a crucial section of Economics in Two Lessons is devoted to showing that There Is Such A Thing As A Free Lunch. It is only when all free lunches have been taken off the table that we reach a position described, in the standard jargon, as Pareto-optimal[1].
If a policy is not Pareto optimal, it’s possible to find one that is better in every respect. In the jargon, the first policy is dominated by the second.
That observation is relevant in a couple of crucial contexts. Lots of climate deniers want to claim that there is a trade off between reducing carbon emissions, through investment in renewables, and improving the living standards of poor people, by building coal-fired power stations. In reality, renewables are cheaper and more reliable than coal, and millions of poor people living near coal-fired power stations die every year from particulate pollution. Even without considering global heating, coal fired power is a dominated option.
Exactly the same is true in relation to pandemic policy. Any policy which leaves R > 1 (the pandemic keeps spreading) is dominated by stricter policies that ensure R < 1. The first policy will not only lead to continuing deaths, but it can never be relaxed. So, it will entail more economic losses in the longer run. By contrast, once the prevalence of the disease is reduced to zero, the stricter policy can be relaxed (to be slightly more realistic, it may need to be reintroduced on a temporary basis to deal with local outbreaks).
In this context, it’s striking that none of those talking about an R > 1 policy in Australia are prepared to spell out the trade-offs they envisage. That’s because any attempt to do so would expose the bankruptcy of their reasoning.
fn1. I also point out how Pareto’s economic analysis foreshadows his embrace of Fascism.
Most of us are six weeks or so into some kind of lockdown by now, so it would be interesting to read some comments on our experiences. From the discussions I’ve had (almost entirely online rather than in person) my perception is that people with office jobs and no kids at home are finding it much easier than might have been expected, but that those with kids at home are finding it every bit as hard as you would think. So far, the impact on those who have lost jobs (or work like conference organization) has been cushioned by income support, in Australia at any rate. Less online discussion with those still working, of course.
Experiences and thoughts?
