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John Quiggin

Work and beyond

by John Quiggin on February 9, 2014

A little while ago, Ross Douthat tweeted a link to this Aeon article of mine, reflecting on Keynes ‘Economic Possibilities for our Grandchildren’, which gave rise to some interesting discussion (Memo to self: Find out about Storify). Now he’s addressed the topic in the New York Times, linking directly to Keynes essay. There’s some interesting food for thought here. Unfortunately, it’s mixed up with some silly stuff reflecting his job as the NY Times token Republican, in which capacity he has to do some damage control over the exposure of the latest Repub lie saying that Obamacare will cost 2.5 million jobs. As Douthat delicately puts it “this is not exactly right”. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons, or, in an even less-felicitous defence, mean-spirited and inaccurate but justified by the success of Reaganism thirty years ago.

More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while many at the bottom end of the income distribution, particularly poorer men have withdrawn from the formal labour force altogether (presumably, relying on disability benefits or scraping a living in the informal economy). One possible solution to this problem, is simply to give the poor more money, for example, in the form of a basic income, and not worry about whether they choose to work. Douthat isn’t too happy about this idea, saying

Both “rugged individualist” right-wingers and more communitarian conservatives tend to see work as essential to dignity, mobility and social equality, and see its decline as something to be fiercely resisted. The question is whether tomorrow’s liberals will be our allies in that fight.

But this position elides a bunch of crucial issues.

First, while work may be necessary to “dignity, mobility and social equality” in a market society, it certainly isn’t sufficient. For unionised US workers in the mid-20th century, earning middle-class incomes in relatively secure jobs and expecting better for their children, work was, arguably both necessary and sufficient to achieve a fair measure of these things. But an at-will employee, juggling two or three tenuous jobs that pay $7.25 an hour, and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

Equally importantly, market work isn’t the only kind of work people can do, and certainly not the most valuable. Most obviously, there’s the raising of children. The US the developed countries that does not provide any kind of paid parental leave, and even the legislative provision for unpaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) is incredibly stingy. The idea that the ‘rugged individualists’ who block any improvements to these conditions actually care about the dignity of the working class is simply laughable.

I don’t need to tell Douthat any of this. It’s all in his book Grand New Party with Reihan Salam, notably including a proposal for a full year of paid parental leave. The book received cautiously respectful reviews from many in the centre and centre-left, but fell entirely flat with its intended audience in the Republican Party.

I’ll have a bit more to say about the kind of technological determinism that seeks to explain labour market polarisation as arising from computers and the Internet a bit later. For the moment, I’ll repeat the conclusion of my Aeon essay that a response to technological change that will preserve the link between work, dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return

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Energy storage (dull but important)

by John Quiggin on February 3, 2014

OK, so energy storage isn’t the most exciting topic in the world, but it really matters. The problem of energy storage (or changes in energy use that make it unnecessary) is the biggest remaining obstacle to a transition to renewable energy. So, here are some observations, labelled for convenience and partly derived from this study by the US Department of Energy

(a) Any reversible energetic process represents a potential storage technology. Reversibility entails that some energy is stored (as potential or chemical energy) when the process goes one way, and released when it goes the other. Of course, the Second Law of Thermodynamics implies that we will always add entropy (that is, lose useful energy) in this process
(b) Any technical or social change that shifts the time at which energy is finally used replicates the effects of storage
(c)Energy storage is in much the same position as renewable electricity generation was, say, 15 years ago.
(d) There are a lot of potential approaches, most of which have been developed in niches where particular characteristics are required. For example, car batteries need to store a lot of energy for given weight, household batteries need to store energy for a long time and so on. The needs of a renewable-dominated electricity system are very different and will require substantial modifications of these technologies
(e) With one big exception, there is currently no price incentive, in most jurisdictions to use storage technologies and therefore none are used
(f) The big exception is off-peak hot water. Coal and nuclear systems generate baseload supply when it is not needed for consumption. Price incentives are used to encourage people to store the resulting excess energy in the form of hot water
(g) There’s no technological obstacle, given the availability of smart meters, to changing the timing of hot water systems to reflect actual availability of excess electricity rather than reflecting the assumptions of a coal-based system
(h) All of this applies to electric cars. Even ignoring the possibility of feeding power back into the grid, the economics of electric cars would be drastically improved if they could be charged using low-cost power in times of excess supply (in the case of solar PV, around midday when lots of cars are sitting in parking lots)
(i) Something I just found out from the DoE study: Electric car batteries are considered unfit for services when they fall to 80 per cent of their original charge capacity (recall that energy density is critical for car batteries). But they still have a long potential life as static storage devices. This enhances both the economics of electric cars (since the battery has resale value) and of storage (since the opportunity cost is zero)

Here’s an older post, with a really simple example of how the argument works, once you get away from the fixation on replicating the characteristics of a coal-fired system.

New Old Keynesianism

by John Quiggin on January 22, 2014

The term “New Old Keynesian” was coined by Tyler Cowen a couple of years ago, to describe the revival of the view that the Keynesian analysis of recessions caused by lack of aggregate demand is relevant, not only in the short run (in this context, the time taken for wage contracts to reset, say 2-3 years) but in the long run (5 years or more) as well. When Cowen was writing, in September 2011, the New Depression could still, just about, be seen as a short run phenomenon[1]. In particular, the anti-Keynesian advocates of austerity in the US, UK and Europe were predicting rapid recovery.

As 2014 begins, it’s clear enough that any theory in which mass unemployment or (in the US case) withdrawal from the labour force can only occur in the short run is inconsistent with the evidence. Given that unions are weaker than they have been for a century or so, and that severe cuts to social welfare benefits have been imposed in most countries, the traditional rightwing explanation that labour market inflexibility [arising from minimum wage laws or unions], is the cause of unemployment, appeals only to ideologues (who are, unfortunately, plentiful).

So, on the face of it, Cowen’s “New Old Keynesianism” looks pretty appealing. But what are the alternatives? Leaving aside anti-Keynesian views for the moment, the terminology suggests four logical possibilities: Old Old Keynesianism, Old New Keynesianism, New Old Keynesianism and New New Keynesianism.

But do these logical possibilities correspond to actual viewpoints, and, if so, whose?

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The Repubs won’t Douthat

by John Quiggin on January 13, 2014

Ross Douthat is something of a punchline in these [arts parts . But, as I’ve argued here, he’s just about the last member of the once-numerous class of committed Republican intellectuals, all the rest having either defected to the left (Bartlett, Frum, Lind, Ornstein, Sullivan and many others) or descended into hackery (Reynolds, Brooks, the whole of the AEI/Heritage/CEI thinktank network1). And, every now and then he writes something that raises important issues, at the cost of pointing up how hopeless his own program for Republican reform has become.

In this piece responding to the election of Bill De Blasio, Douthat tries to make a case that the Democratic Party won’t be able to take even the minimal steps needed to address the problem growing inequality (in both outcomes and opportunity). He starts with the obvious point that Obama came to office with a tax policy that could not possibly make a serious dent in the problem (repealing the Bush tax cuts for those with incomes over $250k) and proceeded to weaken it still further.

By itself this is pretty unimpressive. The fact that Obama is not a wild-eyed socialist, or even a traditional US liberal, but rather a moderate conservative may be a revelation in some Republican circles, but it is scarcely news to the rest of us.

Douthat’s more substantive claim is that the weakness of Obama’s tax policy is not a reflection of Obama’s own preferences but is dictated by the demands of the Democratic Party base. In Douthat’s telling, the base is dominated by socially liberal high-income earners who are absolutely resistant to any increase the taxes they pay.

This is a caricature, but most caricatures have some validity. As I’ve argued here, most people in the top 20 per cent of the income distribution, but outside the top 1 per cent, have done reasonably well in terms of income growth over the past thirty years, but have not, unlike the 1 per cent, been able to insulate themselves from the degradation of public services and the consequences of growing inequality.

Although only a minority of this group votes for the Democrats, their wealth and propensity to vote make them an important constituency. To have a plausible chance of political success, the Democrats need to convince at least some of this group that the benefits of living in a better society outweigh the costs of higher taxes.

But it’s important not to overstate this. Even if a more progressive tax program cost the Democrats some votes at the top of the income distribution, they could more than offset that by attracting middle and working class voters away from the Republicans, or simply by motivating them to vote.

It’s true, as Douthat says, that there is plenty of resistance to this program within the Democratic Party. But the once-overwhelming dominance of Wall Street and its advocates has been greatly weakened, notably because the financial lobby overwhelmingly supported Romney and shared his contempt for ‘the 47 per cent’. Unlike the situation in 2008, Wall Street is now clearly aligned with the Repubs.

And this is where the failure of Douthat’s own program (and the weaker versions proposed by other ‘reformers’ such as Levin and Ponnuru) becomes obvious. Douthat wants the Republican party to beat the Dems to the punch by offering an economic program that appeals to middle and working class voters. It’s patently obvious, however, that there is zero support for this program in any of the leading factions of the Republican Party, either among the leadership or in the activist base. There isn’t a single program benefitting the working class, from Social Security to the Earned Income Tax Credit to unemployment benefits to food stamps that can command the support of more than a handful of Republicans in Congress, and those few are likely to be driven out before long.

It seems clear, reading between the lines, that Douthat has already recognised this. As the NYT official Republican columnist, he faces some pretty big costs if he jumps ship (not to mention his tribal affiliation with conservative Catholicism). Still, I can’t see how he can go on pretending much longer.


  1. Some of these were always hacks, but we didn’t notice so much back in the day. 

Philadelphia Story

by John Quiggin on January 5, 2014

I’m in bitterly cold Philadelphia at the moment attending the meetings of the American Economic Association (and a bunch of related societies). I was at a very interesting session on long-run discounting, which had a panel of six with (as is common) one woman1. Looking around the room, I realised that the panel was actually balanced (inside econometric joke) when compared with the audience, which was about 90 per cent male.

I don’t think that the academic economics profession is quite as male-dominated as that. Some casual discussions suggested a couple of hypotheses:

(i) There were some parallel sessions on gender issues for which the audience was mostly female (not surprising, but kind of ambivalent)

(ii) Men were more likely to attend the sessions while female colleagues were more likely to be on the hiring teams. For those unfamiliar with this exercise, a large part of academic conferences consists of academics sitting in hotel rooms for days on end while a string of recent PhDs give a 15 minute pitch on a piece of research (their ‘job market paper’) followed by a ritual Q&A (a plausible but depressing story)

I get the impression that academic philosophy is even worse than economics, but that most other disciplines are better. Any thoughts?


  1. Maureen Cropper, who’s been doing great work in this field as long as I can remember 

The Great Oil Fallacy (repost)

by John Quiggin on January 1, 2014

Traditionally, in Australia at least, January is, or was, the time for reruns on TV. Keeping that tradition alive, I thought I would rerun some posts on topics that never seem to lose the interest of commenters. Interestingly, the discussion seems to change quite a bit from one posting to the next, though it rarely reaches a conclusion. Anyway, here’s one from last year, linking to a piece I published in The National Interest:

Update Probably worth reading the TNI article before commenting, as lots of points commonly made in comments are anticipated there.

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New Year’s Day open thread

by John Quiggin on January 1, 2014

Post your thoughts on 2013 and hopes/fears/predictions for 2014

The general reaction to various revelations of spying by the US on its friends and allies, particularly in contexts such as trade negotiations has been “everyone does it” and “in any case, there’s nothing anyone can do about it”. And, as regards direct retaliation against the US, that’s pretty much right. The situation is a bit different for junior members of the Five Eyes[^1], such as Australia. A case now being heard at the Permanent Court of Arbitration in The Hague could set a precedent that will make such spying a high risk exercise.
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A non-violent, unfunny trolley problem

by John Quiggin on December 3, 2013

So, you’re a controller for a municipal trolley system with a perfect safety record. You’ve just been alerted that one of your tracks, serving a community of 5000 people has suffered unexpected damage which could cause a trolley car accident involving fatalities among philosophers. You have no budget allowance for this, so the only way of fixing the line is to abandon planned maintenance of another line, serving 1000 people, which would then have to be closed until more funds become available. Presumably, in these circumstances, most people will decide to fix the more important line.

Now, we change the situation. You no longer control the funds for the other line, which are within the jurisdiction of your colleague the Fat Controller, so named for obvious reasons. If you draw management attention to his obesity problem, HR will force him to take leave until he can get his weight within acceptable limits. You will then be given temporary control over his line and the associated budget, which you can divert to fixing the more important line.

What should you do?

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Word targets and creative procrastination

by John Quiggin on November 26, 2013

I think I’ve written before about creative procrastination, but I can’t immediately find it, so I’ll restate my idea here. Whenever you have an urgent deadline, the desire to procrastinate becomes irresistible. Rather than trying to resist it, the optimal response is to succumb, but to have a list of necessary but non-urgent tasks at hand (as I’ve argued before, there’s no need to prioritise non-urgent tasks. Just divide them into those you are going to do, and those you aren’t, then do them in whatever order suits). Now, the guilt induced by the deadline should stop you goofing off on FB, killing boars or whatever, so the desire to procrastinate will force you to tackle the jobs on your list. Then, as the deadline approaches you will finish the job. This works even better if (as is usually the case) an extension of the deadline is possible, but you can conceal this knowledge from yourself until the last possible moment. That way, you get a second round of creative procrastination, plus you have enough time to do the main job properly.

That’s all revision. My new idea for today links this to my long-standing advocacy of word targets. I try to write 500 to 750 words of new material every day. 500 words a day might not sound much, but if you can manage it 5 days a week for 40 weeks a year, you’ve got 100 000 words, which is enough for half a dozen journal articles and a small book. So, that’s my target. If I haven’t written enough one day, I try to catch it up the next day and so on.

And here’s the link. If you’re involved in a big project like a book, or a PhD, there aren’t really any deadlines. But, if you make a rule of being caught up on your word target at the end of the week, you create an automatic deadline for yourself. While doing your best to avoid dealing with this deadline, you create an automatic opportunity for creative procrastination, during which you can deal with admin tasks, write blog posts, sort out your reference system and so on.

Obviously, everyone is different. But this has certainly worked for me and, as a by-product, for CT readers (at least, those of you who don’t just skip over my posts to get to the good stuff). The marvels of creative procrastination have produced hundreds of blog posts, some of which have even turned into books.

Konfrontasi

by John Quiggin on November 21, 2013

So far, the Snowden revelations regarding NSA spying, both domestic and international, have produced plenty of outrage, but not much in the way of effective pushback. As we already learned during the Bush years, the US government can do pretty much whatever it likes to just about anyone. Only Angela Merkel has received a promise that her phone won’t be tapped in future.

That’s not true for junior partners in the English-speaking “Five Eyes” agreement.[^1] It turns out that, under the recently defeated Labor government DSD (the Oz NSA equivalent) tapped the phone of the Indonesian President (generally known by the acronym SBY) and his wife. The new conservative PM, Tony Abbott has refused even the same gesture as Obama made to Merkel, defending Australia’s right to spy on anyone we want to. But Australia isn’t the US, and the Indonesians are furious. The Ambassador has been recalled, and all bilateral co-operation programs have been suspended or placed under review. THat includes co-operation with Australian efforts to stop the flow of asylum seekers, which Chris discussed recently.

I was going to write a more detailed analysis, but I can’t improve on this by Tad Tietze.

[^1]:.The Five Eyes are US, UK, Canada, Oz and NZ. It’s striking that this ethno-linguistic bloc has been maintained even though NZ has long pursued an independent (notably, anti-nuclear) line in foreign policy. It’s also unsurprising that (just out today), even here, http://www.computerworld.co.nz/article/532448/draft_memo_suggests_us_spying_five_eyes_allies/.

Wall Street Isn’t Worth It

by John Quiggin on November 14, 2013

That’s the title of my new piece at Jacobin, which links back to a variety of discussions we’ve had here at CT, in particular this one from Ingrid. Mankiw, whom Ingrid cites, offers an implicit defence of the 1 per cent, implying though not quite asserting, that the gains accruing to those in this group (largely senior executives and the financial sector) have been the price we pay for a process that benefits everyone, yielding a Pareto improvement. As Ingrid says, Pareto improvements aren’t as self-evidently desirable as Mankiw assumes. My argument focuses on Mankiw’s factual premise, concluding that the expansion of the financial sector has made the majority of people worse off. This implies that a response to the global financial crisis focused on attacking the financial sector is feasible as well as being, in my view, politically necessary as an alternative to rightwing populism.

Jacobin doesn’t appear to have a comments section, so feel free to comment and criticise here. I’ve had an interesting discussion with Daniel on Twitter already, but it’s not really a great medium when more than a few people are involved.

Armistice Day (crosspost)

by John Quiggin on November 11, 2013

I usually write a post on 11 November, the anniversary of the armistice that brought a temporary end to the Great War that engulfed Europe in 1914 and continued, in one form or another, until the end of the 20th century. But nothing I write could match this from former Australian Prime minister Paul Keating. The core of the piece

The First World War was a war devoid of any virtue. It arose from the quagmire of European tribalism. A complex interplay of nation state destinies overlaid by notions of cultural superiority peppered with racism.

The First World War not only destroyed European civilisation and the empires at its heart; its aftermath led to a second conflagration, the Second World War, which divided the continent until the end of the century.

But all of it is worth reading and remembering, along with Keating’s 1993 speech at the funeral of the unknown Australian soldier.

I’m not going to take comments on this at CT, but you can discuss it at my blog.

The macro foundations of microeconomics

by John Quiggin on October 25, 2013

Twitter alerted me to an amusing exchange between Chris Auld, posting a list of “18 signs you’re reading bad criticism of economics and Unlearning Economics, responding with 18 Signs Economists Haven’t the Foggiest. UL suggests that Stephen Williamson manages an impressive 9 out of 18 in his review of Zombie Economics (my response here with more from Noah Smith.

Scoring myself against Chris Auld’s list, I’d say I’m in the clear. But quite a few commenters on Zombie Economics have made complaints along the lines of his point 1, that I focus too much on macroeconomics (and finance). The implication is that, even if macro is totally wrong, only a minority of economists do it, and microeconomists are in the clear.

This defense doesn’t work, at least not in general.

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A minor life-hack

by John Quiggin on October 22, 2013

I’m currently reading Scarcity by by Sendhil Mullainathan and Eldar Shafir. At this stage, I’m inclined to sympathise with the unnamed colleague who commented “There’s already a science of scarcity. It’s called economics”. So far, it’s mostly straightforward applications of the observation that time and attention are scarce resources, combined with some fairly familiar observations from behavioral econ on how people fail to optimise either the first-order problems of allocating a tight budget or the second order problem of allocating time and attention to the first-order problem (my terms here, not theirs). However, I’m only part way through, and the authors promise to show how their approach differs from the way in which economists would normally think about this kind of problem.

This post is about a specific and well known observation cited by Mullainathan and Shafir. Faced with paying $100 for an item that could be had elsewhere for $50, most people are willing to put in a fair bit of effort (say, driving for an hour) to get the lower price.[^1] On the other hand if the item costs $1050 and could be had for $1000, people with reasonably high incomes mostly pay up, instead of driving to the other store. This is obviously inconsistent with standard opportunity cost. [click to continue...]