Month: August 2003

Feet of Clay

John Quiggin14 Comments

This opinion poll reported in the Sun-Herald shows Labor 4 points ahead on the two-party preferred vote. I don’t imagine that this will persist – the government has had a particularly bad week. Still there are a couple of lessons that can be drawn.

One is that, contrary to what was, at least a week ago, the conventional wisdom, Howard does not bestride the political scene like a colossus. Given some bad luck at the right time (for example, a Tampa-style stunt that went wrong), he could easily lose the next election.

The second is that the view of the government as ‘mean and tricky’ is well-established for a large section of the electorate. Episodes such as the ethanol scandal, Abbott’s efforts over Hanson and the WMD lies all fit into this perception.

As long as the housing bubble continues, the odds are in Howard’s favor. But, the bubble will burst sooner or later. When it does, the accumulated costs of mean and tricky government will burden the Liberal Party for years to come.

Update 1/9/03: Glenn Milne agrees with much of this, and emerges as a Costello partisan and strong critic of Howard. Is this new, and does it reflect a nascent Press Gallery consensus that Howard is consistently dishonest, and therefore should not be PM?

Further update 2/9: Dave Ricardo and Tim Dunlop, who follow Milne more closely than I do, say that he is a longstanding Costello partisan. And Mork raises the more general issue of the Press Gallery and its role. This will require a big post some time.

Blast

John Quiggin3 Comments

Regular reader Jim Birch has been in touch by email to advise me that this site has been inaccessible and suggests the problem may be access restrictions introduced in response to the Blaster worm. I am looking into this, but haven’t made any progress yet. I’ve had lots of similar problems with other blogs in the last couple of weeks so it seems as if this worm is still doing lots of damage. To anyone who can read this and has any helpful suggestions, please make them.

What I'm reading, and more

John Quiggin

A Universal History of Infamy by Jorge Luis Borges. Among other interesting features is the fact that Borges has drawn on sources including Gangs of New York (which was only recently published at the time Borges wrote) and Life on the Mississippi. I haven’t read either and also missed the film of Gangs of New York when it came out. So I’ll have to follow Borges’ pre-hyperlinks. I think he would really have loved the Internet.

I also went to see Life + Debt, a documentary about Jamaica and its troubles with the IMF. Insofar as there was a ‘line’, it was the standard anti-globalisation story of farmers being driven out of business by import competition and so on. A couple of things struck me about the film. One was that Jamaica seemed to have tried everything (self-sufficiency, free trade zones, general liberalization) and nothing seemed to work. So while the analysis implicit in the film was inadequate, it didn’t seem to me that the IMF had any better answers.

The other point, discussed previously in Ozplogistan, is how bad economists look on film. The film gave a lot of time to Stanley Fischer and wasn’t obviously unfair to him, but he came across dreadfully nevertheless.

Werewolves

John Quiggin2 Comments

This piece by Daniel Benjamin in Slate attacks the idea, being popularised by Bush Administration figures like Condoleezza Rice and Donald Rumsfeld that the occupying forces in Germany after World War II faced resistance from ‘Werewolves’, that is diehard remnants of the SS and Hitler youth similar to those found in Iraq today. The story seems to have been started by this National Review Online piece by Mackubin Owens

This story rang a bell with me, and, digging back I found this NRO piece by John O’Sullivan from early April which seems to have been the first mention of Werewolves. Interestingly, though, O’Sullivan, writing before Baghdad fell, was using this precedent to predict that no resistance would emerge.

Not a single “Werewolf” emerged from his lair. And the allies, who had arrived as conquerors not liberators, soon found themselves handing out food parcels to a grateful German population. That will happen in Iraq too. When? That no one can predict with certainty. But happen it will � and not long after the battle of Baghdad is joined.

So O’Sullivan’s account of the facts matches Benjamin’s and is exactly the opposite of his NRO colleague. I don’t know who’s right, though the fact that O’Sullivan’s version came first and that I had never heard anything of postwar German resistance before it became a Republican talking point suggests that O’Sullivan is correct.

I’ve never been a big fan of the ‘meme’ metaphor, but this example may force me to reconsider. Obviously, the Werewolves image has a good deal of reproductive power, and the virus changes its coat to survive in changing environments.

Age before beauty

John Quiggin3 Comments

Here in Brisbane, the buses still have signs admonishing students (who get concessional fares) to give up their seats to adults. I hadn’t seen this in action until yesterday, when I was on a bus from the University to the city, which was standing room only when I got on. An elderly lady got on the next stop and the driver used the PA system to call on students to get up and “give their seats to the older people”.

I was pleased to see that one student immediately offered her seat to the old lady. I had slightly more mixed feelings when another student followed suit, offering her seat to me. After declining one such offer, I decided it was better to age gracefully and accepted a second – the old knees aren’t what they used to be, after all.

New on the website

John Quiggin2 Comments

A piece I wrote for the Fin on the ‘generation game’ several years back, but omitted to post on my website is finally online. Here’s a couple of paras.

One of the standard ploys in journalism, marketing and political commentary is the generation game. The basic idea is to label a generation ‘X’ or ‘Y’, then dissect its attitudes, culture, and relationship with other generations. The most famous generation, of course, is that of the Baby Boomers, born between the end of World War II and the early 1960s, and their most enduring contribution to the generation gap is the ‘Generation Gap’ between children and their parents.

At first sight, discussion of this kind can carry with it an air of fresh insight, but most of it stales rapidly. Much of what passes for discussion about the merits or otherwise of particular generations is little more than a repetition of unchanging formulas about different age groups ö the moral degeneration of the young, the rigidity and hypocrisy of the old, and so on.

Update 30/8/03 As if to prove my point, today’s Fin (subscription required) runs a particularly silly generation game, with an even sillier lead on the front page. After recycling the the usual cliched half-truths, the article turns to a complete furphy as its main theme. Boomers are blamed for grabbing the old age pension and leaving nothing for the young. In reality, boomers paid taxes during the 1970s and 1980s to finance a universal non-means-tested pension, with access for women at 60 and men at 65. Even when the pension was means-tested, tax concessions for superannuation and easy access to lump sums gave lots of early retirees the chance to double dip.

Now pensions are tested on both income and assets, the women’s age is being raised to 65 (just in time for the first boomers) and there’s talk of pushing the pension age up to 67 after that. Concessions for superannuation, while still generous compared to most other investments, have been scaled back significantly, as has the generosity of employer contributions. On any reasonable assessment, it’s the Depression kids who have done well on this score and the boomers who have paid for schemes whose benefits they will never enjoy.

Walmart and productivity, Round 2

John Quiggin2 Comments

Brad de Long slams as ‘fast food journalism’ a piece in the Financial Times by John Kay, on the topic of US and European retail productivity. His main complaint is that Kay implies that productivity statistics for retailing take no account of differences in the quality of service between friendly local retail markets and gigantic US-style megamarts. As Brad correctly says, the Bureau of Labor Statistics in the US takes a lot of trouble over this kind of thing.

Brad goes on to say, or at least imply, that Kay’s preference for the friendly local market over the Carrefour supermarket is snobbish and takes no account of the benefits to low-income workers from low-margin stores like WalMart, which are denied them by European regulation. This seems a bit unfair – as I read Kay, he’s saying that the regulations are superfluous and that the local markets can survive the competition.

Turning to the more general issue of productivity comparisons, Brad’s post raises quite a few points. First, while the BLS no doubt does its best, it is still true that retail productivity is hard to measure, and that claims of large gains must be taken with a grain of salt. For example, in principle, the BLS should take account of the increased travel time required for shoppers to go to edge-of-town Walmarts, but I don’t think they do so.

Second, as I pointed out in another recent post on this topic, the quality adjustments undertaken by the BLS do not take account, even in principle, of the negative externalities arising from people driving long distances, externalities that include traffic congestion, the loss of green space and thousands of extra road deaths every year.

Third, the BLS generally does a lot more of this ‘hedonic adjustment’ than do European statistical agencies (or, as far as I can tell, the Australian Bureau of Statistics). I think the BLS estimates are probably more accurate on balance. Regardless of which estimates are better, the inconsistency means that comparisons of US and European GDP and productivity growth are systematically biased in favor of the US, by about 0.5 percentage points per year.

Finally, the really big question is whether the differences in US and European consumption patterns, working hours and so on are driven by different tastes, different relative prices and regulatory constraints or some complex combination of the two. I’m still planning a big post on this question Real Soon Now.