The end of neoliberalism?
By jquiggin | September 8, 2008
Measured by the dollar amount involved, the nationalisation of the mortgage guarantors Fannie Mae and Freddie Mac, announced today by the Bush Administration, is the largest in history. No less than $5 trillion of obligations have been taken over by the US government in one hit.
Of course, that debt had long been regarded as having an implicit government guarantee and the companies involved were quangos (in the original sense of quasi-NGOs) rather than genuine private firms. So even though the US government will now guarantee virtually all new mortgages, this is more an admission of existing reality than a big step towards socialism.
While the quasi-governmental status of Fannie and Freddie was always problematic, this wasn’t the reason for their failure. Rather, they were pushed to accept increasingly bad loans made by the private sector. And when their difficulties became acute, the most satisfactory solution, under normal conditions, would have been to formalise the government guarantee of the existing loan book, then put them into run-off mode, writing no new business. But given the failure of the private sector, that would, mean, in effect, making it impossible for anyone to write a mortgage contract.
The fact that the credit crisis has reached this point marks the failure of the central claim of the neoliberal program, namely that private capital markets, free from intrusive government regulation, can enable individuals and households to handle the risks they face more flexibly and efficiently than a social-democratic welfare state.
In the boom that created this crisis, every part of the financial system (retail banks and mortgage businesses, major Wall Street banks, the financial engineers who designed new securitisation assets, investment funds, ratings agencies and bond insurers) had a major role to play. All have failed miserably, even though most will get to keep the rich rewards they received when things were going well.
Topics: Economics - General | 14 Comments »
Monday Message Board
By jquiggin | September 8, 2008
It’s time once again for the Monday Message Board. Post your thoughts on any issue. Civilised discussion only. Please avoid snarks and trolling and strictly no coarse language.
Topics: Regular Features | 6 Comments »
Brown coal
By jquiggin | September 6, 2008
I’m planning a full-length post on Garnaut, but I thought I’d do a quick check on what would be involved in meeting the target of a 10 per cent reduction in emissions between 2000 and 2020. My guess is that the increase in oil prices we’ve already seen will be enough to bring consumption of petrol and diesel back to the 2000 level, and that other sectors like agriculture will be roughly stable. That means that most of the reduction will have to be found in energy generation.
My rough estimate is that the use of brown coal in energy generation contributes around 10 per cent of total emissions (Update: I’ve revised my estimate to 15 per cent), so, as a first approximation, the Garnaut target could be met shutting down the brown coal sector and replacing it with enough renewables to cover the brown coal share of existing electricity, and any growth in final consumption. Consumption growth would be constrained both by increasing prices and by conservation measures.
That would certainly require a substantial adjustment assistance program in the Latrobe valley and similar locations. We’ve done this kind of thing before, for example, with the end of the steel industry in Newcastle, sometimes well and sometimes poorly.
My guess is that the actual outcome would involve keeping some brown coal stations, with drying technology that reduces emissions to a level comparable with black coal, and some expansion of gas-fired power stations, offset by a combination of domestic offset measures and purchases of international offsets. The Garnaut cost estimates of around 1 per cent of GDP look pretty plausible for this. This story actually suggests a lower value, since $35 billion over 10 years is around 0.3 per cent of GDP.
Topics: Environment | 22 Comments »
All change in NSW
By jquiggin | September 5, 2008
One thing I’ve learned in life, though not always applied, is that if you ignore a job long enough, it often goes away. I was going to write a post excoriating Maurice Iemma and Michael Costa for their handling of the electricity privatisation issue, but it doesn’t matter much now (retail privatisation may still go ahead, but that’s not such a big deal either way). The earlier departure of deputy premier John Watkins is more of a loss, though no real surprise.
Labor now has a chance to salvage a government that looked to be utterly doomed. It’s a long shot, but the NSW Liberals have a long record of snatching defeat from the jaws of victory, so who knows.
Topics: Oz Politics | 27 Comments »
Double dissolution ahead
By jquiggin | September 5, 2008
A week ago my Fin column (over the fold) predicted a double dissolution over legislation to establish an emissions trading scheme. The rejection of the government’s changes to luxury car tax shortens the odds considerably. The government made a number of compromises to satisfy the Greens and Nick Xenophon that highly fuel-efficient vehicles would be excluded, but that only made it harder (in the end, impossible) to deal with Steve Fielding of Family First. The same problems will emerge, in spades, with an emissions trading scheme.
It seems likely that lots of legislation will be rejected between now and the time an ETS becomes a trigger,. If the government can hold its nerve, and its popularity, a double dissolution will look very attractive by then.
Topics: Oz Politics | 35 Comments »
Methane
By jquiggin | September 4, 2008
I spent most of yesterday at a symposium organised by the Australian Institute of Agricultural Science and Technology. A lot of topics were discussed, but one that interested me was methane, mainly that emitted from both ends of ruminants such as cows.
There’s plenty to to say about this, but I’m just going to repeat one point that I made briefly and that subsequent speakers like Snow Barlow from Melbourne expanded on. Methane belched or farted by a cow is not just a greenhouse gas, it’s nutrition wasted by the digestive process. So, if we can find ways to reduce methane emissions, they should also increase the productivity of agriculture.
That’s not to say that there are $50 bills lying in every cowpat, waiting to be picked up. If there were a cheap and easy way of improving digestion it would have been found by now. But there’s certainly a potential for increased output to offset the costs of finding, developing and implementing ways of reducing methane emissions, for example by making cows fart like kangaroos
As an illustration of the complexities, some other research reported at the symposium showed that having more CO2 in the atmosphere will increase the growth of some tropical grasses (this was a bit of a surprise because these are C4 plants, generally thought to benefit less from this effect), but will reduce the nutrient quality which makes digestion more difficult and therefore tends to increase methane emissions. For any “Greening Earth’ fans out there, I should point out that, as in previous work, studies reported at the symposium found that adverse effects of higher temperatures and more variable rainfall will outweigh any net benefits of CO2 fertilisation
Topics: Environment | 36 Comments »
Oil and war
By jquiggin | September 2, 2008
It’s pretty widely assumed that several recent wars (most obviously those in Iraq and Georgia) have been motivated, in part at least, by the desire to control oil and other valuable resources including natural gas and (one that is close to my heart) water. The other side of the same coin is the idea (again evident in both these cases) that countries with control over valuable resources can use that control to further their own geopolitical ends.
But examples where either of these strategic ideas has been applied with success are thin on the ground to say the least. While I don’t subscribe to simple ideas of “war for oil” in relation to Iraq, it’s pretty clear that one of the many motives for going to war was the desire to put Iraq’s oil under the control of a government friendly to the US (and preferably not so friendly to rivals like France and Russia). The war has been as spectactular a failure in this respect as in many others. With the best part of a trillion dollars already spent and trillions more to come, the US is worse off in the oil market than it has ever been.
On the other side, the oil embargo of 1973 signalled the change from a market dominated by a buyer cartel to one dominated by a seller cartel. But in geopolitical terms it was a disaster. The Israeli occupation arising from the 1967 war, then only six years old, is still almost intact 35 years later (the Egyptians got the Sinai back, but not because they had any oil).
More generally, I suspect that countries wanting oil can’t do better than to buy it at the going price, and that those wanting to maximise the benefits from owning oil would be best off selling it for the same price and using the money to promote their strategic goals (or, more sensibly, investing it in projects like education).
Of course, showing that it’s stupid to go to war over oil doesn’t prove that people won’t do it. Empirical observation gives us plenty of evidence of the fact that people are more than usually stupid when war is concerned. In the early 20th century, Norman Angell’s Great Illusion demolished the idea that modern nations could secure economic benefits by fighting over war and resources. He was proved right in the most appalling way possible: the Great War that began in 1914 led to the ruin of all the parties.
Topics: World Events | 26 Comments »
Monday Message Board
By jquiggin | September 1, 2008
It’s time, again, for the Monday Message Board. Comments on any topic, civilised discussion, no coarse language please.
Topics: Regular Features | 43 Comments »
More MWF blogging: Who are the gatekeepers
By jquiggin | August 30, 2008
I’ve been to some great sessions at the Melbourne Writers Festival, most recently meeting and listening to Andrew Davies who’s written of the lot of the great BBC adaptations of classics like Pride and Prejudice, not to mention Bridget Jones’ Diary.
My first session last night was about blogging, under the title “Who are the Gatekeepers” with Margaret Simons and Antony Loewenstein, both of whom, unlike me, had an actual book to talk about. I read both The Content Makers (made even more relevant by the Fairfax job cuts and strike happening as the Festival got under way) and the Blogging Revolution and both are well worth it.
The topic led me to think about the gatekeeping function of the mass media (this is cultstud jargon for deciding what’s important and who’s authoritative). My assessment, based on recent experience was fairly negative. I see three ways in which the old media gatekeepers have failed, and in which bloggers have been effective critics.
Topics: Economics - General | 11 Comments »
Real and fake
By jquiggin | August 30, 2008
Until now, the blogospheric fuss over former TNR diarist Scott Beauchamp has been notable only for the amount of attention paid to disputing utterly trivial anecdotes. But the Beauchamp saga has suddenly and surprisingly collided with the reality of war in Iraq, as Moon of Alabama explains.
Topics: World Events | 1 Comment »
MWF blogging
By jquiggin | August 29, 2008
I’ve only been to a couple of events at the Melbourne Writers Festival so far[1], but already this statement from Nobel Prize winner Peter Doherty has been worth the trip for me. Responding to a rant against Darwinism as religious orthodoxy, coming not from a creationist but from a neo-Lamarckian viewpoint[2], Doherty said:
Science is revolutionary, which is why George W. Bush and John Howard hate it so much
Well said!
I’ll be talking about blogging and gatekeepers at the BMW Edge, Federation Square this evening at 5:30 and on Parched, the Politics of Water tomorrow (nearly sold out, so hurry if you’re interested). More details here.
fn1. I had to go to a climate change symposium in Canberra en route which made for a hectic trip, but also allows meant I could do the Canberra gig while minimising extra CO2 emissions.
Topics: Economics - General | 11 Comments »
Fortunes of war
By jquiggin | August 27, 2008
Things have gone better than expected (certainly better than I expected) in Iraq over the past year[1]. On the other hand, things are going very badly in Afghanistan. For those, like me, who have supported the war in Afghanistan and opposed the war in Iraq, this raises some points to consider.
Most obviously, war is inherently unpredictable and dangerous, and there is no necessary correlation between the justness of a cause and its military success. That means, among other things, that launching a war (or revolution) on the basis of a cause that seems justified to those starting it, but which has little or no hope of success (indeed without strong grounds for expecting a good outcome after the inevitable loss of life on all sides is taken into account), is not glorious but criminally reckless.
Topics: World Events | 56 Comments »
Blogging about water
By jquiggin | August 26, 2008
I haven’t really overcome my backlog, but I am going to appear at the Melbourne Writers Festival on Friday and Saturday this week, talking about blogging and water, so it seemed like a good idea to run a blog post about water.
My piece in the Fin a couple of weeks ago appeared simultaneously with the news that the government would accelerate its buyback of water, definitely a step in the right direction. It’s become fashionable to suggest that the government is all review and no action, but compared to the decade of paralysis we saw from the last lot, culminating in the farcical National Water Plan, the pace of change is amazing.
Still, the situation bequeathed by Howard (and, it must be said, Turnbull) is truly dire
Topics: Environment | 18 Comments »
Hiatus
By jquiggin | August 14, 2008
I’m taking a break for a while, in an attempt to catch up on various real-life backlogs. I may post a bit at Crooked Timber. While I’m away, check out the many excellent blogs in the blogroll.
Topics: Metablogging | 1 Comment »
War again
By jquiggin | August 13, 2008
The short, but miserable, war in South Ossetia seems to be over for the moment at least. Some not very original observations over the fold
Topics: World Events | 115 Comments »
Monday Message Board
By jquiggin | August 11, 2008
It’s time, again, for the Monday Message Board. Comments on any topic, civilised discussion, no coarse language please.
Topics: Regular Features | 74 Comments »
The CIS and delusionism
By jquiggin | August 10, 2008
As I mentioned a couple of posts back, the claim that mainstream science is totally wrong about global warming is an orthodoxy that is almost universal among commentators, bloggers and thinktanks on the political right in Australia, even though the great majority of ordinary Australians, including Coalition supporters, believe the science.
The great majority of Australian take the view that, while scientists aren’t always right, it’s much better to act on the basis of the best available science than to assume that the scientists are wrong. For this, they are attacked by rightwing commentators as religious fanatics or, at best gullible innocents.
One limited exception to this appeared to be the Centre for Independent Studies. A while back Andrew Norton got stuck into Clive Hamilton for listing CIS in the delusionist camp on the basis of some fairly tenuous links. As Norton observed, the CIS had never published much on the topic (though what it did publish was in line with delusionist orthodoxy) and had published nothing since 2003.
CIS has made up for it now, with this piece by Arthur Herman (also published, less surprisingly, in the Oz). It’s got everything - “global warming as a religion”, Al Gore conspiracy theories, Godwin’s Law violations on eugenics, the Spanish Inquisition and so on, backed up by some typically dodgy Internet factoids. As with much in this genre, it’s important to note the call for the replacement of science, as it currently exists, with “real science” in which people like Herman (self-described as “an historian and author”) will lay down the rules.
What’s striking here is the contrast between the willingness of just about everyone on the political right to sign up to a set of beliefs that are dictated entirely by political tribalism and their self-perception as brave heretics, spelt out in more than usually ludicrous fashion by Herman.
Tim Lambert does garbage pickup on Herman’s “facts”. Strikingly, given that he’s supposed to be an (sic) historian, Herman seems to have a lot of trouble with dates and references. And there’s more from Nexus 6 and Gary Sauer-Thompson.
Update: In a comment from Jennifer Marohasy it was announced that Michael Duffy was willing to give $1000 to anyone who would nominate ““Some work/some research results that have been published in reputable scientific journals that:
1. examine the causal link between anthropogenic carbon dioxide and warming, and
2. quantify the extent of the warming from anthropogenic carbon dioxide. ”
Several people provided responses and, after coming back from my hiatus I wrote to Duffy asking the status of my offer. He replied “I asked Jennifer Marohasy about this, because she’s the one who needs to be satisfied. ” and appended a response from her indicating that she was, in fact, not satisfied.
From the original statement, I didn’t realise that Duffy meant to include “satisfactory to Jennifer Marohasy” as a term of the offer. Now that we’ve cleared that up, I think we can regard the offer as in line with the Socratic irony approach to scientific discussion.
There seems to have been something of a meltdown chez Marohasy, so I think we can take this offer as being off the table for all practical purposes
Topics: Economics - General | 178 Comments »
Weekend reflections
By jquiggin | August 10, 2008
It’s time for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.
Topics: Regular Features | 17 Comments »
Gender-neutral
By jquiggin | August 8, 2008
Via BitchPhD (69F, 31M) I found this fun site which checks (but doesn’t save) your Google cache, and looks at the popular sites you visit to predict your gender. The comments suggest both some striking hits and some big misses. I got 51 per cent probability female, 49 per cent male.
Topics: Economics - General | 15 Comments »
Information and energy
By jquiggin | August 7, 2008
Via Felix Salmon, I found this interesting piece by Tim Wu, comparing monopolies in broadband and energy, and looking at ways to make better use of currently idle spectrum. Wu’s starting point is that “Like energy, bandwidth is an essential economic input”. In fact, as he implies, information is more essential than energy to a modern economy. It’s massive amounts of information, rather than massive amounts of energy, that distinguishes our economy from that of 50 or 100 years ago.
Topics: Economics - General | 51 Comments »