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John Quiggin

Public Services: Excerpt from Economics in Two Lessons

by John Quiggin on December 28, 2016

Here’s another excerpt from my book-in-progress, Economics in Two Lessons. As usual, praise is welcome, useful criticism even more so. You can find a draft of the opening sections here.

In the section over the fold, I’m looking at public goods and publicly funded services
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Public Ownership: Excerpt from Two Lessons book

by John Quiggin on December 24, 2016

Here’s another excerpt from my book-in-progress, Economics in Two Lessons. As usual, praise is welcome, useful criticism even more so. You can find a draft of the opening sections here.

In the section over the fold, I’m looking at public ownership.

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The economics of open borders

by John Quiggin on December 21, 2016

A colleague recently sent me a paper on the economics of open borders, by John Kennan, which I hadn’t known of before, though it came out in 2013.
Kennan’s conclusion is striking

Liberal immigration policies are politically unpopular. To a large extent, this is because the beneficiaries of these policies are not allowed to vote. It is also true, however, that the enormous benefits associated with open borders have not received much attention in the economics literature.20 Economists are generally enthusiastic about free trade. But if free movement of goods is important, then surely free movement of people is even more important.
One conclusion of this paper is that open borders could yield huge welfare gains: more than $10,000 a year for a randomly selected worker from a less-developed country (including non-migrants). Another is that these gains are associated with a relatively small reduction in the real wage in developed countries, and even this effect disappears as the capital–labor ratio adjusts over time; indeed if immigration restrictions are relaxed gradually, allowing time for investment in physical capital to keep pace, there is no implied reduction in real wages.

So, is Kennan right about the benefits of open borders? And if so, is there a way of transferring some of those benefits to already-resident wage earners who would otherwise lose, or at least not gain, from expanded migration?
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Monopoly and Regulation: Excerpt from Two Lessons book

by John Quiggin on December 17, 2016

Here’s another excerpt from my book-in-progress, Economics in Two Lessons. Rather than work sequentially, I’m jumping between:

Lesson 1: Market prices reflect and determine opportunity costs faced by consumers and producers.
Lesson 2: Market prices don’t reflect all the opportunity costs we face as a society.

In the section over the fold, I’m looking at monopoly and regulation. Next up, public ownership.

As usual, praise is welcome, useful criticism even more so. You can find a draft of the opening sections here.

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The Grauniad has just resurrected Newcomb’s problem. I have a slightly special interest since the problem was popularized by one of my betes noires, Robert Nozick. So, in asserting that there’s a trivial solution, I have something of a bias.
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The day after Brexit

by John Quiggin on November 28, 2016

Since the collapse of faith in neoliberalism following the Global Financial Crisis, the political right has been increasingly dominated by tribalism. But in most cases, including the US, this has so far amounted to little more than Trilling’s irritable mental gestures. To the extent that there is any policy program, it is little more than crony capitalism. Of all the tribalist groups that have achieved political power the only ones that have anything amounting to a political program are the Brexiteers.

The sustainability of tribalism as a political force will depend, in large measure, on the perceived success or failure of Brexit. So, what will the day after Brexit (presumably, sometime in March 2019) look like, and more importantly, feel like? I’ll rule out the so-called “soft Brexit” where Britain stays in the EU for all practical purposes, gaining some minor concessions on immigration restrictions. It seems unlikely and would be even more of an anti-climax than the case I want to think about.

It’s easy to imagine a disaster, and maybe that will happen. But suppose everything goes relatively smoothly. That is, Britain leaves the EU and the single market, but gets deals in place that keep trade flowing smoothly, retains visa-free travel for visitors and so on.

What will the day after feel like?

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18th Brumaire, everywhere

by John Quiggin on November 27, 2016

One of the things I like about blogging, as opposed to academic writing, is the freedom to try out partly developed ideas and speculative hypotheses. On the whole, I think it’s worked well for me. But it does entail the risk of getting things badly wrong, as I did in this post a few years back, predicting the end of tyranny in the historical sense “absolute rule by an individual who has seized power, rather than acquiring it by inheritance or election”. Not only did I underestimate the number of such rulers who were still around (a point made in comments by Doug Muir), but, by ruling out election, I drew a spurious distinction about the way in which such rulers come to power.

More importantly, I posted at what looks in retrospect like a turning point. Dictatorship, or at least, authoritarian personal rule, seems to be re-emerging all around the world, mostly through the suppression of opposition by rulers who originally came to power through democratic elections

I was reminded of all this by the election of Trump in the US, which happened to occur on the same day (9 November or 18 Brumaire in the revolutionary calendar) as the coup that brought Bonaparte to power in France. That was followed by the death of Fidel Castro, the last big name among the old-style Bonapartist rulers about whom I was writing.
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Introducing the Sandpit

by John Quiggin on November 23, 2016

Among the many problems of comments threads, here and on other blogs, is the tendency for them to devolve into long debates between two, or a few, commenters. That often kills off any possibility of new comments coming in. On the other hand, people may want to continue these discussions, but get stopped when the thread is closed.

At my personal blog, one response I’ve tried, with some success, is the Sandpit, a post open to ” for long side discussions, conspiracy theories, idees fixes and so on”. Anyone who feels that they have something to write that fits these categories is welcome to post here. I’ll also invite participants in long side discussions on my posts to move them here.

There isn’t a general CT policy on this, it’s just an idea of mine, so we will see how it goes.

Remember that the rest of the comments policy applies. Particularly, in the context of debates with one other person, please be civil and avoid personal attacks.

Trade after Trump

by John Quiggin on November 19, 2016

The one policy issue that was an unambiguous loser for Clinton was trade[^1]. Her grudging move to oppose the Trans-Pacific Partnership, choice of Tim Kaine as running mate and some unhelpful remarks from Bill Clinton meant that Trump had all the running. How should we think about trade policy after Trump? My starting point will be the assumption that, in a world where Trump can be President of the US, there’s no point in being overly constrained by calculations of political realism.

A few points and some suggestions

  • So-called “trade” deals like the TPP were actually devices to enhance corporate power (and, in the case of the TPP, to isolate China), and deserved to be defeated regardless of views on trade
  • The idea of manufacturing jobs as “good” jobs is historically specific particularly to the US, and reflects the fact that the dominance of manufacturing coincided with the New Deal and the unionisation of the labour force. It’s unions, not manufacturing that we need to bring back.
  • The big problem facing workers, in the US and elsewhere, isn’t competition from immigrants, or from imported goods. It’s the fact that capital is freely mobile and unfettered by any social obligation. So, a profitable plant can be closed down if its owners get a better off elsewhere. Alternatively, the threat of a move can be used to bargain down wages.

So, instead of thinking about tariffs and trade agreements, the big question is: what can be done to change trade and capital flows in ways that yield more good jobs?

Some suggestions over the page

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The dog that didn’t bark

by John Quiggin on November 15, 2016

My election commentary in Inside Story is about

The dog that didn’t bark … the (assumed) majority of “decent Republicans” to whom Clinton sought to appeal. Although most observers (including me) assumed that many of them would turn against Trump, hardly any did so

Armistice Day

by John Quiggin on November 11, 2016

Peace now, more than ever.

There’s a lot of ruin in a country*

by John Quiggin on November 10, 2016

So said Adam Smith a couple of centuries ago, and he will, I hope, be proved right, in the US, and elsewhere in the world. Trump and the Republican majority in Congress and (imminently) in the Supreme Court will, in all probability, repeal Obamacare, restore and expand the Bush tax cuts for the rich, stop action on climate change, overturn Roe v Wade, expand deportation and more.

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Trump voters are (mostly) Romney voters

by John Quiggin on November 6, 2016

At CT and just about everywhere else, there’s been lots of discussion about who is voting for Trump and why. This began during the Republican primaries, when it made sense to ask “what kind of Republican would prefer Trump to Bush, Cruz etc?”.

This kind of discussion continued through the general election, even though the answer is now staring us in the face. Trump is getting overwhelming support from self-described Republicans and Republican-leaning independents, and almost none from Democrats and Democrat-leaning independents. The same was true for Romney four years ago, and for McCain and Bush before him.

This is well known, but few people seem to have drawn the obvious conclusion*. With marginal changes (I’ll discuss these below), the people who are voting for Trump now voted for Romney four years ago, and for Bush before that.
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Arguing against racism

by John Quiggin on October 30, 2016

A while back, I made the case that the political crisis evident in most developed countries could be explained in terms of a “three-party system” in which the political forces were divided between tribalism, neoliberalism and a somewhat inchoate left. This replaced a neoliberal consensus in which power alternated between hard/right neoliberals (in the US context, the Republican party), relying on the political support of tribalists, and soft neoliberals (in the US context, centrist Democrats) relying on the left to support them as a lesser evil. The first stage of this breakdown has been the capitulation of hard neoliberals to the tribalist right. The most obvious instance is Donald Trump, but the same thing is happening in Australia with Pauline Hanson, in England with UKIP/Brexit and in many European countries as well.

That this is happening is now obvious. What should the left do about it? It’s obviously insufficient to make the point that Trump, or Hanson, or Farage is a racist (or uses racism for political benefit) and expect that to settle the question. That doesn’t mean that we should maintain the long-standing taboo on using the word “racist” to describe such people. Rather, we should start developing a proper analysis of political racism and strategies to oppose racism and tribalism.

The problem we face today is new in important respects. The civil rights and anti-apartheid movements were was a struggle against overtly racist racist state structures. The success of those movements did not end racism, but drove it underground, allowing neoliberals to exploit racist and tribalist political support while pursuing the interests of wealth and capital, at the expense of the (disproportionately non-white) poor.

That coalition has now been replaced by one in which the tribalists and racists are dominant. For the moment at least, ahrdneoliberals continue to support the parties they formerly controlled, with the result that the balance of political forces between the right and the opposing coalition of soft neoliberals and the left has not changed significantly. However, unlike the Civil Rights era, where racists had a clear agenda of defending the status quo, the new politics of the right is driven more by a general expression of resentment (or, if you want to be fancy, ressentiment) than by coherent policy objectives.

I have some ideas about what kinds of strategies and arguments are needed here, but I thought I’d post this first, and wait to see what others have to say.

Unnecessary wars

by John Quiggin on October 22, 2016

I’ve written a lot here about the disaster of the Great War, and the moral culpability of all those who brought it about and continued it. It’s fair to say, I think, that the majority of commenters have disagreed with me and that many of those commenters have invoked some form of historical relativism, based on the idea that we shouldn’t judge the rulers (or for that matter the public) of 1914 on the same criteria we would apply to Bush, Blair and their supporters.

It’s fascinating therefore to read Henry Reynolds’ latest book, Unnecessary Wars about Australia’s participation in the Boer War, and realise that the arguments for and against going to war then were virtually the same as they are now. The same point is made by Douglas Newton in Hell-Bent: Australia’s leap into the Great War . He shows how, far from loyally following Britain into a regrettably necessary war, leading members of the Australian political and military class pushed hard for war. In Newtown’s telling, the eagerness of pro-war Dominion governments helped to tip the scales in the British public debate and in the divided Liberal candidate. I don’t have the expertise to assess this, but there’s no escaping the echoes of the push towards the Iraq war in 2002 and early 2003, when this blog was just starting out.

The case against war was fully developed and strongly argued in the years before 1914, just as the case against slavery was developed and argued in the US before 1861. Those who were on the wrong side can’t be excused on the grounds that they were people of their time.

The only defence that can be made is that those who were eager for war in 1914 had not experienced the disaster of the Great War and its consequences. The failure of today’s war advocates to learn from this disaster makes their position that much worse. But the same is true of anyone defending the warmakers of 1914 on any grounds other than that of their ignorance.