John Q

Having vague ideas of Parliamentary supremacy, I’m struck by reports that Boris Johnson could simply ignore a vote of no-confidence, and remain office to push through a No Deal Brexit, even in the face of legislation prohibiting such a course of action. As far as I can tell, these arguments are based on the premise that Parliament must nominate an alternative, and the assumption that neither Corbyn nor anyone else would prove acceptable to a majority. (Update: On more careful reading of the linked article I see that the new boss, Cummings, saying that Johnson could, for which I read would, ignore a vote for a new PM).

That might be true, and then again it might not. The question that occurs to me is whether Johnson could also ignore a vote in favour of a new PM, and if so, what could be done about it? One possibility is that the Queen could dismiss him, and invite the new PM to form a government, which would presumably hold immediate elections.

That, pretty much, is what happened in Australia in 1975, though the government’s position was far more tenable than in the hypothetical that I’ve outlined above. The government had a majority in the House of Representatives (our equivalent of the Commons). However, the government was unpopular and the Senate (similar to the US Senate in most respects) refused Supply, creating a financial crisis. The Governor-General (representing the Queen) sacked the PM (Whitlam) and installed the Leader of the Opposition (Fraser) in his place. Fraser called an election and won.

I honestly have no idea whether if Johnston refused to go, he could be removed, by the monarch or otherwise. For that matter, could he get the Queen to prorogue Parliament indefinitely, and govern by decree? That sounds inconceivable, but maybe only in the sense of Vizzini in the Princess Bride.

It’s worth noting that the absence of a written constitution isn’t the critical issue here, or at least not to the extent often claimed. Australia has a constitution, but it’s silent on all the relevant issues (it doesn’t even mention the office of a PM).

That’s enough from me. Useful links and informed comments much appreciated.

In the course of attempting to threadjack Harry’s post on advice to new students, a commenter made the often-repeated claim ““Forty years ago (1970’s) global cooling was all the rage!””. As it happens, just before reading this comment, I received a link to some files from the Jimmy Carter Presidential Library and Museum. It’s a daily log or similar, and starts with a response to someone named Frank Press who had written to Carter raising concerns about CO2 emissions and global warming. The advice given to Carter was as follows:

The issue raised by Press is not new. The experts all agree that more infor­mation is needed. The energy plan indicates that nearly $3 million was being requested for ERDA to study the long-term effects of co2. (James) Schlesinger feels that the policy implications of the issue are still too uncertain to warrant presidential involvement or poli­cy initiatives. Schlesinger is examining the issue in the preparation of the FY 79 budget, and will, at that time, have the full report of the NAS study and further results from ERDA.

That accords with my memory, but not, apparently that of numerous others. Both warming and cooling were discussed in the 1970s, but there wasn’t clear evidence either way. By the 1980s, it became clear that the trend was towards warming, though it took another decade or so to produce broad scientific agreement that greenhouse gas emissions were the most likely cause and another decade for this agreement to reach near-certainty.

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That’s the provisional title I used for my latest piece in Inside Story. Peter Browne, the editor, gave it the longer and clearer title “Want to reduce the power of the finance sector? Start by looking at climate change”.

The central idea is a comparison between the process of decarbonizing the world economy and that of definancialising it, by reducing the power and influence of the financial sector. Both seemed almomst impossible only a decade ago, but the first is now well under way.

There’s also an analogy between the favored economists’ approach in both cases: reliance on price based measures such as carbon taxes and Tobin taxes. Despite the theoretical appeal of such measures, it looks as if regulation will end up doing much of the heavy work.

Looking at the array of ignorant and vindictive old men attacking Greta Thunberg and other young climate activists, the case for lowering the voting age is just about unanswerable. Anything that could be urged in justification of stopping 16 year olds, as a group, from voting, is equally applicable to those over 60 (a group to which I belong). Over 60 voters are, on average, poorly educated (the school leaving age in Australia was 15 when they went through and I assume similar in most places), and more likely to hold a wide range of false beliefs (notably in relation to climate change).
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Among the few replicable findings from research on higher education, one of the most notable is that student evaluations of teaching are both useless as measures of the extent to which students have learned anything and systematically biased against women and people of color. As this story says, reliance on these measures could lead to lawsuits.

But why hasn’t this already happened. The facts have been known for years, and potential cases arise every time these evaluations are used in hiring or promotion: arguably every time the data is collected. And student evaluations are particularly popular in the US, where litigation is the national sport. Yet no lawsuits have yet taken place AFAICT.

Maybe the zeitgeist is changing. I was going to write this post before seeing the linked article, which turned up in my Google search. Any lawyers or potential litigants want to comment?

One of the vanished joys of academic life is the experience, after publishing an article, of getting a bundle of 25 or 50 reprints in the mail, to be distributed to friends and colleagues, or mailed out in response to requests from faraway places (if you live in Australia, everywhere is faraway), often coming on little postcards. Everything is much more efficient nowadays, and I just finished throwing away my remaining collection of reprints. But now, an electronic ghost of the reprint has come to visit.

Earlier this year, I contributed an article to a special issue of Globalizations on “The diffusion of public private partnerships: a world systems analysis”. This is a fair way outside my usual academic area of expertise, a fact which may be apparent to readers who know more about the topic than me, but I wanted to say something about Australia and New Zealand. I just got an email from the publisher offering 50 free e-prints . I don’t think my fellow economists will be much interested, and most would have library subscriptions anyway. So, I’m opening it up to my readers. As I understand it, the first 50 to download it get it for free. After that, anyone really interested can email me for a copy.

Update If you want a copy just click on the link

Back in 2004, I wrote that

There is only one real instance of political correctness in Australia today and that is that you are never, ever allowed to call anyone a racist. It’s OK to say that Adolf Hitler was a racist, and that apartheid was racist, but the idea that any actual Australian could be a racist is utterly taboo.

Of course, the same was true in the US. But after two and a half years of an openly racist Trump Presidency in the US, the taboo seems finally to be open to challenge. Opinion writers and individual Democratic politicians have been calling out Trump’s racism for some time, but news reports have stuck with lame euphemisms like “racially charged”, or saying that “critics have called it racist”

In the wake of the House resolution condemning Trump latest racist tweets, the ground may have shifted, at least a little. Quite a few news organizations have used the R-word, in their own voice, to describe Trump’s “go back to where you came from” tweets, and others have tiptoed towards the line.

Most notably. CNN and Washington Post political reports are now referring to Trump’s racist tweets in matter-of-fact terms, noting that Trump sees them as politically advantageous and discussing the implications for the 2020 campaign. (Hat tip: Daniel Quiggin). 

There’s still quite a few steps to go before the taboo is ended. Even moving from “Trump’s racist tweets” to “Trump’s racism” will take a fair bit of courage. And so far only CNN has used the word routinely. The NY Times hasn’t even got past “widely seen as racist.” . (For that matter, it’s still calling Trump’s lies “falsehoods” to avoid feeding ” the mistaken notion that we’re taking political sides.”

This isn’t just a matter of rhetoric. It’s difficult to do any kind of political analysis clearly if one of the main political tendencies can’t be named. Trump’s re-election hopes depend to a large extent on motivating racist Republicans to vote and on peeling off the remaining racists from the Democratic Party. Try to make this obvious point without using the R word and you end up with obfuscation or worse, such as the use of”working class” as code for racism.  

A lot of discussion of immigration is framed around the distinction between movers and stayers. Until recently, most of what I’ve seen has framed “stayers” as those who see their economic interests as being threatened by competition from immigrants. To protect themselves, they want to restrict immigration, even if the consequence is to restrict the opportunities for “movers” from their own country. The harm to these “movers-out” is just collateral damage

But lately I’ve been seeing a different account, in which it’s the departure of the movers-out that is causing problems by reducing the supply of workers to provide services to, and pay taxes to support, the stayers (particularly, the old). In economic terms, the obvious solution would be to replace the movers-out with movers-in, but they are of the wrong religion, skin colour and so on, and are therefore rejected. That exacerbates visible economic decline, particularly in terms of the level of economic activity, even when income per person holds up or is sustained by transfer payments. This in turn produces support for Trumpism and its variants.

This story comes up most clearly in relation to Eastern Europe (most notably Hungary) following accession to the EU, but I think it’s applicable to many rural areas in richer countries.
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Recent elections (notably including those for the European Parliament) have shown the evolution of what I’ve called a three-party system, replacing the alternation between soft and hard versions of neoliberalism dominant since the 1980s. The three parties in this analysis are the (a) remaining elements of the neoliberal consensus, (b) Trumpists[1], and (c) leftists, defined as broadly as possible to encompass greens, feminist, social democrats, old-style US liberals, as well as those who would consciously embrace the label “Left”.

When I wrote in 2016, the biggest loser from this process seemed to be the kind of soft neoliberalism exemplified by Blair, and many of the European social democratic parties. But that was before Trump and Brexit.

The striking development of the past few years has been the capitulation of the mainstream rightwing parties to various forms of Trumpism. That’s most obvious with the US Republicans. And, while some advocates of Brexit may still hope for a free-market utopia, its pretty clear now that this is unlikely to happen. The continuing desire to get Brexit done at all costs is all about culture wars, with Leavers cast as the British people and Remainers as out of touch elites. The same pattern is evident in Australia, where free market policies have been abandoned in favour of culture wars, to the extent that the government is seriously considering building coal-fired power stations, just to make a point.

I’m not well enough attuned to the nuances of European politics to discuss developments at the national level. In aggregate, though, it seems clear not only that the mainstream conservatives are losing ground electorally, but that they are moving towards Trumpism.

This suggests that the current three-party system might rapidly resolve itself into a new two-party system: Trumpists against everyone else, with the remnants of the old neoliberal duopoly being forced to take sides. This is already happening to some extent.

In this context, it was striking to read a piece in the Washington Post, of all places, slamming the “economically conservative, socially liberal” centrism of Howard Schultz, and pointing out that

Centrism,” in other words, has become a byword for the politics of the business elite. Defined left to right, on an x-axis, it may approximate the center of the political spectrum. But on a y-axis that represents socioeconomic status, it sits at the very top.

It’s hard to say where centrists will end up. On the one hand, they mostly benefit from the regressive tax policies and weak regulation that Trumpists have carried over from hard neoliberalism. On the other hand, the Trumpists have abandoned free markets for crony capitalism, typically favoring well-connected national insiders, exemplified by the US First Family. That poses problems for global corporations and fans of globalized capitalism like Tom Friedman, who still yearn for the halcyon days of the 1990s.

As ought to be obvious, I’m still working this out, so I’ll leave it to commenters from here.

fn1. I previously called this group “tribalists”, which was problematic. The Key characteristic is the identity politics of a formerly unchallenged dominant group facing the real or perceived prospect of becoming a politically weak minority, as with white Christians in the US. As Trump and others have shown, this kind of politics leads naturally to support for demagogic dictators and would-be dictators.

I’ve been busy for the last week doing events for Economics in Two Lessons, so I didn’t have time to take part in the discussion arising from Harry’s post on alternatives to Sanders’ proposal to wipe out college debt.

In one way, that’s a pity because the key point of the book is the idea of opportunity cost – the true cost of anything, for us as individuals, and for society as a whole, is what you must give up to get it. More precisely, it’s the best alternative available to us.

Harry’s post was all about opportunity cost – what would be the best use of $1.6 trillion in public funds. However, the discussion was inevitably enmeshed in the complexities and inequities of US education, while comments making broader arguments about opportunity cost reasoning weren’t discussed in detail.

One of those broader arguments is the idea that, thanks to Modern Monetary Theory, there’s no need to worry about such questions. In the “chartalist” reasoning underlyng MMT, the fact that governments can issue their own sovereign currency means that there is no need to “finance” public spending by taxation; rather taxation is a tool used to manage aggregate demand so as to keep the economy fully employed but not at a point where excess demand creates inflation. That (essentially correct) position can easily slide into the (only subtly different, but radically mistaken) view that governments can spend money on anything they like with no need for any increases in taxes or cuts in other spending.

As I will argue over the fold, a correct version of MMT makes no such claim. Unfortunately, while avoiding the error themselves, a lot of MMT theorists have not shown much willingness to set their more naive followers straight.

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In my previous post about globalization, I concluded that plausible policy shifts (essentially, the continuation and widespread adoption of Trump’s current policies) could bring about a substantial reversal of one element of globalization – the complex global supply chains that now characterize the production of goods. In this post, I’m going to look at migration, which is now the most politically salient aspect of globalization, and argue that even draconian policies are unlikely to do more than slow the most important consequences of migration.
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The term “globalization” came into widespread use in the 1990s, about the same time as Fukuyama’s End of History. As that timing suggests, globalization was presented as an unstoppable force, which would break down borders of all kinds allowing goods, ideas, people and especially capital to move freely around the world. The main focus was on financial markets, and the assumption was that only market liberal institutions would survive.

The first explicit reaction against globalization to gain popular attention in the developed world[1] was the Battle of Seattle in 1999, but the process, and the neoliberal ideology on which it rested, didn’t face any serious challenge until the Global Financial Crisis of 2008. The Crisis destroyed Neoliberalism as a political project with positive appeal, but its institutions have remained in place through inertia.

Now, however, globalization is finally facing serious threats, most immediately from the nationalist[2] right, seeking to restrict movement of people and goods across national borders. There hasn’t yet been any serious challenge to financial globalization, but faith in the wisdom and beneficence of financial markets has disappeared.

An obvious question here is: can globalization be reversed? My short answer is: within current political limits globalization can be reversed least partially in the case of trade, but can only be slowed in the case of movements of people. I’m still thinking about financial flows.

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The 100th anniversary of the Treaty of Versailles is coming back. I have a piece in The National Interest which ran under the headline (selected by the subeditor, as is usual), America Needs to Reexamine Its Wartime Relationships. Keynes first came to public attention with his critique of the Versailles Settlement, The Economic Consequences of the Peace, whith foreshadowed, in important respects, The General Theory of Employment, Interest and Money.

I argue that the rise, fall and rise again of the standing of Keynesian macroeconomics runs in parallel with views on the justifiability of the terms imposed at Versailles and more generally of the use of war as a policy instrument.

Looking back at past posts, it’s enjoyable to find those where I went out on a limb and have been proved right by events, or at least supported by subsequent evidence. A couple of examples

• My 2015 prediction that vaccination would become a partisan issue in the US now seems to be widely accepted. To forestall a repetition of some previous debate, it’s obviously bad that Republicans do bad things, and it would be good if they didn’t. But it’s better to know what we are dealing with than to pretend that it isn’t happening.

• My 2006 analysis of advertising as a public bad is supported by a study claiming to show that advertising is a major source of human dissatisfaction.

It’s less fun when things don’t go as expected. Take Bitcoin as an example. Its uselessness is now even clearer than it was when I started writing about it 2013. Use in legitimate market transactions is almost non-existent, while the darknet illegal markets in which it is the preferred currency are being busted so frequently as to suggest that anyone using them is taking a big risk of losing their money, or worse. Meanwhile, the dream that Bitcoin would justify itself through the magic of blockchain has evaporated. As far as I can tell, cryptocurrencies on the Bitcoin model are the only genuine examples of blockchain technology in actual use (the label has been attached to some other projects for marketing purposes.

I’ve always said that, given the irrationality of markets, no one can predict when Bitcoin will reach its true value of zero, and I was careful to maintain this position when I posted on Bitcoin’s decline below $4000 late last year. Still, I have to admit that I expected this mania finally to come to an end. That hasn’t happened; in fact the price has doubled.

I won’t worry too much about the occasional (or not so occasional) error. My track record is still far better than that of the many pundits who predicted success for the Iraq war and continued claiming imminent victory years after the disaster had become evident. And most of them are still in business, apparently just as credible as ever to their audiences.