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John Quiggin

For quite a while now, I’ve been working through my book-in-progress, Economics in Two Lessons (partial draft here), focusing on applications of Lesson 2

Lesson 2: Market prices don’t reflect all the opportunity costs we face as a society.

Thinking about the standard market failures (monopoly, externality and so on), I’ve come to the conclusion that I need to say more about the interaction between market failure and income distribution. I’ve already looked at the opportunity costs involved in income redistribution and predistribution, but different kinds of questions are coming up in relation to issues like monopoly, privatisation and for-profit provision of public services.

The discussion here and at my blog has been very helpful in stimulating my thoughts, but I need to do a lot more clarification. Some preliminary thoughts are over the fold: comments and criticism much appreciated

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Education: Excerpt from Economics in Two Lessons

by John Quiggin on December 29, 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 education.

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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.
and
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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