For most of my academic career, I’ve been working on (more precisely, trying to demolish) the idea of private investment in public infrastructure, exemplified by the Private Finance Initiative in the UK and the Public Private Partnerships program in Australia. Here’s my first published article on the subject, from 1996. I conclude that

The current enthusiasm for private infrastructure, like the enthusiasm for public ownership which it replaced, has been based more on ideological beliefs in the virtues of one sector and the vices of the other than on any systematic economic analysis …Analysis of the relative performance of the private and public sector in different phases of infrastructure provision suggests that, in most cases, the private sector will be most efficient in the construction phase but the public sector will be best equipped to handle the risks associated with ownership.

Twenty years later, this analysis seems finally to have been validated. The UK Auditor-General recently reported that

Analysis of the 2012-13 Whole of Government Accounts (WGA) implies that the effective interest rate of all private finance deals (7%–8%) is double that of all government borrowing (3%–4%)

As a result of the excess costs, and some spectacular failures, bipartisan enthusiasm for the PFI has finally turned to disillusionment. Here’s the Telegraph, correctly putting much of the blame on New Labour. And, for balance, here’s the Guardian. There hasn’t been a similar admission of failure in Australia, but the flow of PPP projects has greatly diminished, and most new ones rely on a substantial component of public capital.

Unfortunately, the failure of private finance hasn’t led governments to resume the high levels of public investment that prevailed in the Keynesian era of the 1950s and 1960s. So, even with central bank lending rates at zero, there has been no real recovery in infrastructure investment. Apart from the direct effect of lower investment, there’s a strong case that infrastructure investment increases the returns from private investment in general and therefore stimulates growth.

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Nothing learned, nothing forgotten

by John Q on November 18, 2015

I haven’t posted on the recent terror attacks, or the various responses, because I have nothing new to say, and nothing old to repeat that hasn’t been said, or repeated, better by others. It appears that no one has learned anything in the decade or so since the Iraq war began. This 2003 post from the Onion just needs the dates changed to be applicable (or not, for those who support the side being satirised here) to the current debate.

Having said all this, have I learned anything myself? The Iraq war turned me from being a liberal interventionist (though opposed in the case of Iraq) to a strongly anti-war viewpoint.

By December 2005, I had this to say[^1]

It would be a salutory effort to look over the wars, revolutions and civil strife of the last sixty years and see how many of the participants got an outcome (taking account of war casualties and so on) better than the worst they could conceivably have obtained through negotiation and peaceful agitation. Given the massively negative-sum nature of war, I suspect the answer is “Few, if any”.

The ten years since 2005 have confirmed me in the rightness of my views[^2]. But since the same is true of nearly everyone on all sides, that’s not very helpful.
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The Stuff Nietzsche Said

by John Holbo on November 18, 2015

My last Nietzsche post got some folks hot and bothered. [click to continue…]

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Frazetta Auction – and French Academic Art

by John Holbo on November 16, 2015

Doc Dave Winiewicz is auctioning off his famous Frazetta collection. Here’s his blog. Please note that you can download a high quality 200+ page PDF of the catalog from the auction house, so click that link. You won’t see some of that stuff elsewhere. (Well, I say it’s great. So make fun of me if you like.) Looking through, I noticed something rather odd.
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Sunday photoblogging: Paris

by Chris Bertram on November 15, 2015

Paris café at night

I’ve no words to add to what others have written. Solidarity and care for the dead and those who mourn them and for the wounded and those who care for them are the most important thing right now. Here’s a picture of ordinary life, people in a café.

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Mourn not just for Paris, but for the World

by Ingrid Robeyns on November 15, 2015

After the horrible attacks in Paris, a day of mourning is only appropriate. But we’d better mourn for all victims of extreme and systematic violence – not just in Paris, but also in Beirut, Baghdad, and other places.

The day before the Paris attacks, 41 people where killed in an attack by IS/ISIS in Southern Beirut.

In Baghdad, an IS/ISIS attack on a mosque killed 18 people, and 2 earlier this week when a Shiite place of worship was hit by two road bombs.

In the meantime, thousands of refugees that are fleeing for the violence of IS/ISIS are trying to get into Europe in horrific circumstances, many losing their lives along the way.

Let us not compare these tragedies. Yet let us also not just mourn for the tragedy that happens in places that we know best, or people we most identify with. Instead, let us mourn for all those lost lives, for all the suffering that could be avoided, if only we, as the human species, hadn’t gotten ourself into this horrific mess.

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Paris

by John Holbo on November 15, 2015

I was going to post some more stuff about Nietzsche’s wild political philosophy but instead I’ll declare a CT day of mourning for Paris. I see Paris comments are starting to show in some of the other threads. That’s fine, if it’s relevant to those other threads, but maybe if you have Paris-related thoughts or feelings you can leave them here. It’s a tragedy that will lead to more tragedy. That’s about all I can think to say myself.

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Time to take the “con” out of reformicon ?

by John Q on November 13, 2015

Ramesh Ponnuru has an article in the National Review, making the case that Hillary Clinton is likely to win the 2016 election. His central reason: Clinton has policies that will benefit middle-class Americans, and the Republicans do not. As he says

The Republican presidential candidates have not built their campaigns on offering conservative ideas that would give any direct help to families trying to make ends meet. Their tax-cut proposals are almost all focused on people who make much more than the average voter. So far, Republicans do not seem to be even trying to erode the Democratic advantage on middle-class economics.

All this is obvious enough, but it raises the question: rather than asking the Republicans to be more like Clinton, something they are obviously not going to do, why not just vote for Clinton? Or, for that matter, Sanders, who looks even better on these criteria.

The answer is pretty obvious. For whatever reason, Ponnuru is on Team Republican, as are other “reformicons” like Ross Douthat. But the Republican Party has shown little interest in his ideas, and the presidential aspirants none at all. So, he is in the position of a committed football fan who thinks his team is pursuing a bad strategy, or has picked the wrong players: the idea of following a different team is not an option.

As Damon Linker says here, this isn’t just a problem for the reformicons, but for anyone who aspires to the description “conservative intellectual”, and wants to engage with party politics.

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Steven Salaita and UIUC Reach Settlement

by Corey Robin on November 12, 2015

Steven Salaita and the University of Illinois at Urbana-Champaign have reached a settlement. According to a press release from the Center for Constitutional Rights, which helped represent Steven, Salaita will receive $875,000 from UIUC. According to this press report, $275,000 of that amount is for legal fees. The UIUC has already spent $1.3 million in its own defense. All told, this effort to silence an outspoken critic of Israel has cost the university nearly two and half million dollars.

Many of us had hoped that a settlement would include Steven getting his job back. For his sake and ours: to vindicate principles we all hold dear. I would be less than honest if I didn’t say I was disappointed.

But while this was a major battle for principle, there was a person at the heart of that battle: Steven. Since he first got the news of his firing, he and his family have been through hell. A protracted legal battle would invariably have been long and difficult, its outcome uncertain. It’s all well and good for those of us on the sidelines to say he should keep fighting—and he himself might have wanted to do so—but Steven has a family to support and a life to live. If this settlement helps him do that, I stand with him. Firmly. Throughout this fight, he has had my firm support, respect, admiration, and affection; now that it is over, he has all those things even more.

I know many of you will wonder about the fate of the boycott: though different statements voiced the demand differently, many statements had insisted that the boycott would continue till Steven was reinstated. It’s difficult now to know how to proceed. Because there was never a formal body that called for the boycott, there isn’t a formal body to call it off. So I’m only going to speak for myself. The boycott, I think, has been tremendously successful in raising awareness, in turning what might have been a backdoor, behind-the-scenes legal case into a full-on battle for free speech in the 21st century; certainly the university was always very mindful of it and its effects. I’m proud of that. But I don’t see a point in continuing a fight when its chief protagonist has resolved it. I know the boycott has been tremendously hard on many departments at UIUC, particularly those departments that were most in support of Steven. For all these reasons, I see no reason to continue it. Others may reach different conclusions. I respect their decisions.

As I was finishing up this post, Steven responded to an email I had sent him with the following:

We fought hard.  I tried my very best to represent those invested in the issue with dignity and decency.  And I hope this sort of thing never happens to anybody else.

I would say that Steven did more than try his very best to represent those invested in the issue with dignity and decency. He actually did represent those invested in the issue with dignity and decency. And while I don’t have a crystal ball, I’d be surprised if any university ever tried to pull this kind of stunt again.

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What In God’s Name is the Head of PEN Talking About?

by Corey Robin on November 12, 2015

I find this statement in a New York Times oped, coming from Suzanne Nossel, the head of PEN America, absolutely stunning:

SOME of the most potent threats to free speech these days come not from our government or corporations, but from our citizenry.

Anyone who can write a sentence like this simply doesn’t know what they’re talking about. Which is fine, but not fine when the person is the head of an organization dedicated to freedom of expression.

By “our citizenry,” Nossel is referring to the recent round of free speech wars on college campuses. Now when these issues of free speech arise on campus, you usually see an explosion of conversation about it: on the campus itself, and in the media. Far from dampening down discussion, the controversy over free speech on campus actually ignites discussion. Everyone has an opinion, everyone voices it.

And while I wouldn’t diminish the challenges to free speech that these controversies pose, the notion that that campus curbs on speech, if that is what they are, are far more common and threatening than what governments or corporations do is risible. Though given that Nossel is a former State Department higher-up, perhaps understandable. She is after all someone who has said:

To advance from a nuanced dissent to a compelling vision, progressive policymakers should turn to the great mainstay of twentieth-century U.S. foreign policy: liberal internationalism…should offer assertive leadership — diplomatic, economic, and not least, military — to advance a broad array of goals.

When there are not just threats but actual abridgments of speech at the workplace—Nossel says “corporations,” referring I guess to firms’ financial lock on the political process, but as I’ve argued many times, it’s in their capacity as employers that firms really do damage to free speech—there is no such explosion as there are on college campuses. Partially because people like Nossel and the media are completely uninterested in the topic, even when the workplace in question is a university: if Nossel wrote an oped in the New York Times when Columbia prohibited its workers from speaking Spanish, I missed it.

But more important, there’s no explosion because abridgments of speech at work are so lethally effective. Workers are silenced, that is the end of the story. We never hear about it.

At one point in her oped Nossel does give a nod to the status of speech in the workplace. Here’s what she says:

Who would trade their [universities’ and colleges’] free-range spirit for the dreary sameness of a corporate office, with its federally sanctioned posters on what constitutes unlawful discrimination?

That’s where Nossel sees the threat to freedom of speech at work: in the “dreary sameness” roused by government efforts to inform workers of their rights against discrimination. There’s a suspicion on the left that freedom of speech is little more than a rationalization for racism or indifference to racism. I try to fight that suspicion all the time. But when the head of PEN America writes sentences like these, it makes that job infinitely harder.

Whatever one thinks about the current controversy over free speech at Yale and the University of Missouri, if the head of PEN America is going to leverage her pen on behalf of freedom of speech on the pages of the New York Times, she would well do to consider where the real threats to such speech lie.

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Beware the commissars of political correctness!

by Henry Farrell on November 11, 2015

I actually quite like Jonathan Chait’s work – he’s mostly very competent at a certain kind of centrist trolling. But the tune he’s whistling is getting a little boring. Today, he asks whether we can take political correctness seriously now, and provides his own answer to his own rhetorical question: Yes – And We Must Do It Before It Is Too Late.

It is possible — and, for many sympathizers on the left, convenient — to dismiss these sorts of incidents as just so much college high jinks. “College students have been saying stupid things since the invention of college students,” argues Daniel Drezner, in a passage that attracted widespread support on the left. … Colleges have disproportionate influence over intellectual life … the academy is one of the few bastions of American life where the p.c. left can muster the strength to impose its political hegemony upon others. The phenomenon also exists in other nonacademic left-wing communities … It’s the expression of a political culture with consistent norms, and philosophical premises that happen to be incompatible with liberalism. The reason every Marxist government in the history of the world turned massively repressive is not because they all had the misfortune of being hijacked by murderous thugs. It’s that the ideology itself prioritizes class justice over individual rights and makes no allowance for legitimate disagreement. … American political correctness has obviously never perpetrated the brutality of a communist government, but it has also never acquired the powers that come with full control of the machinery of the state.

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Armistice Day

by John Q on November 11, 2015

As Armistice Day comes around again, I find it more and more difficult to avoid despair. Each new war seems even more brutal and pointless than the last, bringing nothing but ruin and destruction to all concerned. And yet, opposition to war in general, or even to involvement in any particular war, is increasingly being seen as unpatriotic.

My annual ritual of writing a post on this day hasn’t helped at all. I’ve repeatedly had it explained to me by learned commenters that the mass slaughter of 1914 to 1918 (and, by implication, the even more massive slaughter that followed it over the 20th century) was a right and necessary response to German imperialism, or that it must be understood in its historical context. I need only change a few place names, and substitute different enemies, to hear the voices of our present leaders, explaining the need for our armed forces to deliver more death and destruction, because “we must do something”. The fact that our current enemies are of our own direct creation, and that a decade or more of these wars has succeeded only it making matters worse, seems irrelevant.

Just about the only consolation is the fact that the scale and loss of life from war has been decreasing over time. Large areas of the world once riven by war now seem to be free of it, or nearly so.

Against that, however, is the ever-present shadow of nuclear cataclysm. The world has managed to survive, permanently within a few minutes of catastrophe, for 70 years now. But can that continue indefinitely? when belief in the rightness of war and the need for military strength is such a powerful force among ordinary people, and even stronger among the rulers who have the power to launch these weapons. Without radical changes in thinking, it seems almost certain that nuclear weapons will be used, sooner or later. Even a limited nuclear war, between India and Pakistan for example, would be a disaster as bad or worse than the World Wars of the 20th century.

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The estimable Heather Cox Richardson sympathizes with George Will in his despair over Bill O’Reilly’s book, Killing Reagan. Will decries “today’s cultural pathology of self-validating vehemence with blustery certitudes substituting for evidence.”

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Poppy Love

by Maria on November 9, 2015

E and I give money to the Royal British Legion every year. We sit down towards the end of the year and talk about who to support, which direct debits to keep and which to swap out. The Legion is the one item in our charity basket that stays in with no need for discussion. It supports serving and former members of the armed forces, and isn’t choosy about which wars the veterans fought in. Its appeal is based on the need to keep faith with a life-long social covenant, rather than the dangerous conceit that all soldiers are heroes.

But most of the Legion’s funding seems to come not from regular donors but the annual November – now shading into mid-October – frenzy of poppy-selling. In its drive to sell as many poppies as it can for Remembrance Day, the Legion has allowed itself to become part of an increasingly nasty annual tradition of bullying of people who choose not to wear a poppy or are somehow ‘caught’ without one.

Today, the Legion announced an astonishingly tone-deaf campaign for celebrities to film themselves silenced by a poppy held across their lips, ahead of the official two-minute silence on Wednesday. The dark irony of using the poppy to literally silence people in public life seems to be beyond the ken of the Legion’s hyperactive communications team.
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Are recessions abnormal ?

by John Q on November 8, 2015

I’m on to the macroeconomics section of my book in progress, Economics in Two Lessons. The key point of this section is that, whereas the academic economics profession has wasted most of the last thirty years on the project of founding macroeconomics on (some near approximation of) standard neoclassical microeconomics, the validity of the core results of neoclassical microeconomics depend on the assumption that the economy is operating at full employment[^1]. This observation isn’t original – it was why Keynes saw his theory as saving capitalism from itself. Even the title I used in this post on the macro foundations of microeconomics turns out to be a reinvention of the wheel.

Having noted the importance of the full employment assumption in the abstract, how relevant is it? If the economy is, with notably rare exceptions, at, or close enough to, full employment, then it seems safe enough for economists to continue, as the profession has for 40 years or so, to treat macroeconomics as a special subfield with little relevance to the rest of the discipline.

To put the question simply, are recessions abnormal?

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