Month: November 2012

The Murray Darling Basin: the end of an era

John Quiggin18 Comments

I first started working on the problems of the Murray-Darling river system 30 years ago, just as the great expansion of irrigated agriculture was reaching its limits. I’ve done a lot of different things since then, but kept on coming back to this issue. For a brief moment after the election of the Rudd government and the implementation of the Water for the Future plan, it seemed like Australia finally had the policy right. The government would buy back enough of the water rights it had given away in the past, and use them to restore something close enough to natural flow patterns to protect the most vulnerable natural environments. The money spent on the purchases would ease the pain of the adjustments that have been going on for decades anyway, as a result of “closer settlement” policies that encouraged the creation of farms too small to support a family properly.

All of that fell in a heap with the disastrous mismanagement of the Draft Basin Plan, which led to its rejection first by irrigators instead of the government. At this point, the process reverted to the time-honored patterns of political horse-trading and I announced a year or so ago that I was moving on. Now the Basin Plan is finally law. The best that can be said is that it is not the disaster it might have been. Billions of dollars have been allocated to infrastructure boondoggles, and the allocation of water to the environment is less than what is needed. But the 2750 GL environmental allocation is much more than seemed remotely plausible a decade or so ago, and there seems to be some effort to stop the most wasteful infrastructure project.

Meanwhile, on the academic front, I’ve had one last gift from my decades of work on this topic, with a publication in Nature Climate Change, something I’ve long aspired to. Admittedly, I’m listed last among nearly 20 authors of an article that’s only a few pages long. I wrote a fair bit in the drafting process, but only a couple of sentences ended up in the final paper. Still, that’s the way things are done in the natural sciences, so I’m not going to complain. For those who can’t get access, the shorter version is that, while Australia hasn’t done a great job with the management of our water resources, we are still doing better than anyone else.

As I’ve mentioned before, I’ll be starting a new Australian Research Council Laureate project next year, on bounded rationality and financial crises. I’ll also continue working on climate change, and may touch on the issue as it relates to the Basin. But, apart from that, I think it’s time to declare an end to my work on the Murray. I think the work I put into this problem, along with many other natural and social scientists, led to a better outcome than we might have seen otherwise. And, sometime before too long, I really will take the family on the houseboat trip I’ve been planning since the beginning.

The Great Oil Fallacy

John Quiggin117 Comments

That’s the headline for a piece I published in The National Interest last week. Opening paras

Among the unchallenged verities of U.S. politics, the most universally accepted is that of the crucial strategic and economic significance of oil, and particularly Middle Eastern oil. On the right, the need for oil is seen as justifying an expanded and assertive military posture, as well as the removal of restrictions on domestic drilling. On the left, U.S. foreign-policy is seen through the prism of “War for Oil,” while the specter of Peak Oil threatens to bring the whole system down in ruins.
The prosaic reality is that oil is a commodity much like any other. As with every major commodity, oil markets have some special features that affect supply, demand and prices. But oil is no more special or critical than coal, gas or metals—let alone food.

This piece expands on my earlier argument that the US has no national interest at stake in the Middle East, just a set of mutually inconsistent sectional interests and policy agendas. I don’t talk about climate change explicitly, but we’ll never have a sensible debate about climate change until oil is demystified.

In which I agree with Megan McArdle (crosspost from Crooked Timber)

John Quiggin20 Comments

For quite a while, I’ve been arguing that the simultaneous occurrence of sustained depression in most developed countries provides fairly conclusive evidence that both new classical macroeconomics and standard versions of real business cycle theory cannot explain actual macroeconomic outcomes. That argument is directed both against US-based economists like Casey Mulligan and Narayana Kocherlakota, who are trying to explain the US experience in terms of problems specific to the US labor market[1] and to European advocates of austerity who blame the crisis in peripheral European countries on (mostly falsely) alleged government profligacy in those countries.

An immediate implication, drawn out here by Paul Krugman, is that the success or otherwise of the limited stimulus undertaken by the Obama Administration should be assessed by comparison to the performance of other countries, most of which undertook less stimulus, returned to austerity faster, and have experienced correspondingly weaker growth (as some Oz tweeps are pointing out, he might have mentioned Australia, which undertook a big stimulus and avoided recession altogether).

But, as Megan McArdle snarks here, there’s an implication more appealing to Republicans. If Obama can’t be blamed for a global recession, neither can Bush. Although McArdle’s argument isn’t watertight (the US is big enough that US actions have a big effect on the world as a whole), the conclusion is broadly correct. There’s plenty of blame to go around for the Global Financial Crisis and the subsequent depression, and the Bush Administration deserves only a small share. Bush’s main contribution was to introduce unfunded tax cuts at a time when the budget should have been in surplus, thereby reducing the fiscal space available for stimulus when the crisis came. But, given the weakness of the stimulus and the ferocity of the political response, it’s not clear that was a binding constraint in any case.

The primary culprit is market liberal economics, which may be considered both as a set of ideas with its own internal logic and as an expression of the class interests of those who benefit from the finance-dominated form of capitalism that produced the crisis and has prevented any recovery. My book Zombie Economics is a critique of market liberalism considered as an economic theory, showing how market liberalism produced the crisis. Colin Crouch’s Strange Non-Death of NeoLiberalism gives more of the class interpretation, explainign why these discredited ideas remain dominant.

In the name of God, go! (repost)

John Quiggin40 Comments

I don’t have much more to say about the systemic corruption of the NSW Labor party than I already said in this post from July, except that I now think Federal intervention is essential. Suspending Eddie Obeid is not nearly enough. Those who allied themselves with him including Tripodi, Roozendaal, Bitar, Arbib and Keneally must all go too. And Labor needs a new Parliamentary leader – John Robertson is too compromised to present a clean face. It will be a long while before Labor is electable at a state level in NSW. But a determined cleanup would help reduce the damage to the national party

Back around 1970, the Labor Party was unelectable because its biggest branches, in NSW and Victoria, were controlled by factional machines of the right and left respectively, who were still refighting the battles of the 1950s Split. The eventual response was Federal intervention to restructure both branches. The intervention was more successful in Victoria than in NSW, but overall the results were good enough to produce a revitalised Labor party. The election of the Whitlam government was one result, as was the strength of the early Hawke ministries, almost any member of which would outperform the great majority of both frontbenches today.

I doubt that an intervention would produce a similar result in NSW today, but the situation is now so dire that it could scarcely make matters worse. It’s hard to imagine a political party with less justification for its continued existence than NSW Labor. It sold out its stated principles with repeated attempts to privatise the electricity industry, then made a botch of the job anyway. It has made itself look stupid with repeated changes of leaders (the only one who tried any resistance to the machine was Nathan Rees, and he was promptly squashed). Its members are enmeshed in every kind of corruption, financial, ethical and sexual, above and beyond the routine corruption of political processes that turned the word “rort” from Sussex Street slang into an Australian byword for sharp practice. Electorally, it’s a disaster area, having gone down to the worst defeat in its modern history, under the sock-puppet leadership of Kristina Keneally. Even though the NSW Libs are, as they always have been, appallingly bad, the O’Farrell government is riding high.

And now, these geniuses have decided that it’s smart politics to make war on the party that’s keeping Federal Labor in office, and with which they will need to deal for the indefinite future if they ever want to pass legislation through the Parliament. Looking at this appalling crew, I can only quote Oliver Cromwell “You have been sat too long here for any good you have been doing. Depart, I say, and let us have done with you. In the name of God, go.”

Update My friends at the Oz take a keen interest in all my thoughts, so I wasn’t too surprised to see this post linked in their “Cut and Paste” section. However, the headline All the Climate Change Authority member would like now is to get rid of the NSW Right seemed both unwieldy and obtuse, in a fish-meets-bicycle kind of way. Why should my (widely shared and longstanding) views on the NSW Labor Right machine be of any more interest by virtue of my membership of the Climate Change Authority? And why should my enthusiasm about the election of the Rudd government (also linked by Cut and Paste) be relevant to either?

The answer, I would imagine, is this post by Sinclair Davidson at Catallaxy who (in a quite strange misreading) took the imprecation “In the name of God, go” to be directed, not at the Sussex Street machine repeatedly criticised in the post, but at the Federal Labor government. Terje Peterson tried to set him straight in comments (thanks, Terje), but I had to spell the point out before he added a correction on Sunday evening, which made the entire post rather pointless. By that time, I imagine, the cutter and paster had already set the story up and gone home, leaving the unfortunate sub-editor to do a salvage job with the headline (not the first time!).

“Southern White” as an ethnicity (crossposted from Crooked Timber)

John Quiggin64 Comments

A while ago, I posted about the supposed capture of the ‘white working class’ by Republicans, pointing out that the term was being used to refer to those with less than college education. On more traditional measures of class, such as income, the Democrats do much better, though still getting only about half the vote.

In response to this post a number of commenters pointed out that the data was not disaggregated by region, and that the South was anomalous. A couple of things I’ve seen recently support this. Here’s Charles Blow, reporting that 90 per cent of white voters in Mississippi supported Romney. Kevin Drum observes that Obama won about 46 percent of the white vote outside the South and 27 percent of the white vote in the South. Here’s a bit more from The Monkey Cage.

It strikes me that the best way to understand the distinctive characteristics of US voting patterns is to to treat “Southern White ” as an ethnicity, like Hispanic. With that classification each of the major parties becomes an coalition between a solid bloc vote from an ethnic minority and around half the votes of the “non-Southern white” ethnic majority, which is more likely to vote on class lines. The question then is which ethnic/class coalition is bigger. As in other countries, voting for the more rightwing party is correlated, though not perfectly with higher incomes and (conditional on income) lower education, and to shift according to broader ideological movements.
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A Xmas present from Campbell Newman

John Quiggin7 Comments

One of the jobs I had marked on my calendar for the holiday season was dismantling the second interim report of the Costello Audit Commission, due to be delivered on 30 November. While it’s obviously necessary to respond to these exercises in deception, I can think of plenty of better ways to spend the summer break. Fortunately, Campbell Newman turned out to be even less keen on defending the report than I was on attacking it. The government has announced the report won’t be released after all, so we won’t see anything more from Costello until February. Thanks, Can-Do!

Armistice Day

John Quiggin130 Comments

After more than a decade of war in Iraq and Afghanistan, there’s a chance Australia might finally be at peace next Armistice Day. Most combat operations in Afghanistan will cease early next year, and we can hope that the final pullout will take place not too long after that. In my lifetime, Australia has been involved in three long wars, none of which have produced the promised results. In two of them, Iraq and Vietnam, the pretext for war was clearly fraudulent. The overthrow of the Taliban regime, which had sheltered Osama bin Laden, was plausibly justified on grounds of self-defence, but the conduct of the war, and particularly the decision to invade Iraq, ensured that the effort would end in failure, as it has done. The best that can be said about the wars of the last decade is that they have been less costly, at least in Australian lives, than was Vietnam.

What is really striking, looking at the recent past, is how much has been achieved by peaceful means. In our own region, Indonesia has been transformed from a dictatorship (generally seen as representing a long-term military threat) to a stable democracy, which has largely overcome the challenges of terrorism, religious violence, natural disasters, and the attempts of the military to retain its central role in politics and business. With the aid of Australian peacekeepers, East Timor has made a start on a difficult road out of poverty. Elsewhere in the world from Eastern Europe to South America to the Arab world, seemingly durable dictatorships have collapsed or handed over power, mostly without the intervention of foreign governments.

Saying that war should be the last resort sounds like a platitude. But it is among the most important lessons we learn from history. Those who choose war rarely achieve the outcomes they expect and usually bring disaster on themselves as well as others. War in self-defence is sometimes necessary, and there are rare occasions when outside intervention can prevent an immediate human catastrophe. Fighting wars for justice, or democracy, or national honour, or to prevent future wars is a path to ruin.