John Q

The NY Times says that Iraq is the third most corrupt country in the word after the failed states of Somalia and Myanmar (Burma). The article gives plenty of examples at all levels, but is striking in the way it represents US forces as dismayed, but largely helpless, onlookers.

It’s time, obviously, to dive into the memory hole, and point out that the looting that started the downward spiral was a matter of deliberate Coalition policy. As this report in the London Times stated in April 2003

The British view is that the sight of local youths dismantling the offices and barracks of a regime they used to fear shows they have confidence that Saddam Hussain’s henchmen will not be returning to these towns in southern Iraq.

One senior British officer said: “We believe this sends a powerful message that the old guard is truly finished.”

This report focuses on the British but the US and Australian governments were at least as culpable

[click to continue…]

Political events in Australia have been moving so fast, no one has really caught up. A week ago, Labor looked very likely to win the election (held last Saturday) and there seemed a good chance that Liberal (= pro-business right) Prime Minister John Howard would lose his own seat. Those things duly happened, and that seemed to be about as much as we could expect or hope for. Instead, there has been a meltdown of spectacular proportions on the losing side.

[click to continue…]

Not only has the Labor party won a crushing victory in Australia’s national election but conservative Prime Minister John Howard has, very probably, lost his own seat. Details here.

Given that the economy is going very well, and that the Iraq war, while unpopular, was not a central issue in the campaign, I think it’s reasonable to mark this down as the first national election in which climate change played a pivotal role. Howard, following Bush, refused to ratify Kyoto. This was highly unpopular, and served as a more general symbol of a government stuck in the past.

The other big losing issue for the government was the passage of a package of anti-union laws called Workchoices.

The NY Times has an interesting piece on statistical studies of the deterrent effect (if any) of the death penalty. For those who want to get straight into fact-free debate, the bottom line is that the evidence is too weak to allow a firm conclusion one way or the other. What’s interesting to me, though is the way in which debates within different disciplines proceed, and the lags in transmission between them. Here I think the NYT story, while excellent in many respects, is quite misleading, presenting a story of deterrence-hypothesis economists facing off against legal critics.

That was pretty much the way things stood in the 1970s, after the publication of Isaac Ehrlich’s study in the American Economic Review claiming that one execution deterred 7 or 8 homicides. Ehrlich used multiple regression analysis (quite difficult and computationally demanding in those days, and correspondingly highly regarded) in an attempt to control for other factors affecting homicide rates and isolate the effect of the death penalty.

Over the next decade, economists learned a lot about the limitations of regression analysis. With limited amounts of data, it’s impossible to avoid mining the data for patterns which are then used to fit the model. And if you try enough specifications on weak data, you can get just about any result you want. A classic exposition of this point was Ed Leamer’s 1983 article “Let’s take the con out of econometrics” which pointed out the fragility of regression analysis on time-series data and picked, as an example, the deterrent effect of the death penalty.
[click to continue…]

Dani Rodrik’s book opens with a discussion of the policy approach that dominated the development debate for much of the 1990s, and to some extent still does. The term ‘Washington consensus’ was coined by John Williamson of the IIE, to described the views of Washington-based institutions (IMF, World Bank and US Treasury in the 1980s, but escaped from its creator and came to encompass a program of dogmatic adherence to a revived version of 19th century economic orthodoxy, commonly referred to as neoliberalism.

[click to continue…]

As I mentioned a few days ago on my blog, using current market exchange rates, Australia now has a higher income per person than the US. Matthew Turner observed the UK passing the US a few months ago and estimated several years ago that the critical value for the Eurozone is around $1.46, which was reached in the last couple of days. I haven’t checked on the GDP comparison, but the yen and franc are also rising

Of course, it would be silly to use these numbers to support a claim that Americans are, on average, worse off than people in other developed countries. The Purchasing Power Parity indexes produced by the International Comparisons Project of the World Bank provide a much better (though far from exact) basis for comparisons of this kind, not affected by short-term exchange rate movements, and on this basis the US is near the top of the ladder.

But, for advocates of free markets who’ve used the economic performance of the US as the basis for their case, there’s a rhetorical problem here. You can, I suppose, argue along the lines “The market values the output of the average American less than that of the average European (or Australian) but analyses prepared by international bureaucrats show that Americans are actually better off, and therefore we should prefer the market to the state”. But it’s not a position I’d want to defend.

[click to continue…]

It’s election time here in Australia, and there are some reasons why readers Down Under (from our perspective)

might be more interested than usual.

George Bush has no more reliable ally than the Liberal (=conservative) government of John Howard. Howard has backed Bush straight down the line on Iraq and climate change, and (unlike Tony Blair) raised no objection when Australians were held in Guantanamo Bay for years on end. The general assumption among political hardheads until about a year ago was that, although these positions might be unpopular, Australians would not vote against an incumbent government when the economy was going well. Labor was ahead in the polls, but no-one really believed it. But after a change of leaders at the end of 2006, Labor moved to a large lead in the polls, which it has kept ever since.

[click to continue…]

As Andrew Sullivan notes, Glenn Reynolds no longer even claims to be a libertarian[1] and his repudiation of this former position is shared by a number of leading shmibertarians, who are now happy enough to identify as orthodox Republicans. I haven’t yet seen anything similar from some others, such as the Volokhs, but the idea that a relaxed attitude to sex and drugs, and support for economic policies that favour your own social class (note that shmibertarians happily square their anti-tax line with support for higher taxes on the poor), can trump the authoritarian implications of militarism, from Gitmo to collusion in government lies, is now pretty much dead. Insofar as an idea can be tested by experiment, prowar libertarianism has been tried and failed (a bit more on this from Jim Henley).

The implications go further I think. Given that the Republicans are now definitively the war party (not that the Democrats have yet become the peace party, but that’s another story), it’s hard to see how libertarian Republicans can survive, any more than Dixiecrats survived Nixon’s Southern strategy. The recent decision by RedState to ban Ron Paul supporters is a pretty clear indication of how real Republicans think about this. This has big implications for a thinktank like Cato, which has opposed the war (but very sotto voce – a visitor to their website would be hard pressed to tell that there even was a war) while remaining within the Republican tent. They had a good discussion of the issues a while back, but it doesn’t seem to have had any effect.

This process cuts both ways. It’s hard to witness the catastrophic government failure that has characterized every aspect of this war without becoming more sympathetic to certain kinds of libertarian (and also classically conservative) arguments, particularly those focusing on the fallibility of planning. As our recent discussions about freedom of speech have shown, there are still plenty of disagreements between libertarians and the kinds of views represented at CT (what kinds of speech need protection, and from whom), though I suspect some of these differences are sharper in theory than in practice.

fn1. Apparently my ignorance of the further reaches of US party politics may have led me to overstate Reynolds’ candor. What’s being announced is, apparently, a break with the Libertarian Party, leaving him free to label himself a (small-l) libertarian. Thanks to Kevin Drum for pointing this out. Jim Henley, linked above, also commented on this distinction, concluding “I doubt it matters. In a corrupt political discourse, no label is much use.” and that’s about where I stand.

I’m writing a piece (in the form of a debate with Jason Potts) on the Internet and non-market innovation (open source, blogs, wikis and Web 2.0 more generally) and the editors asked us to say something about digital literacy. I’ve never paid much attention to this metaphor, maybe because of excessive exposure to its predecessor, computer literacy.

It strikes me though, that discussion of digital literacy focuses almost entirely on reading (how to navigate the Web, find reliable information and so on). The things I’m talking about are forms of writing.

Thinking about the rise of text literacy, the distinction tends to be blurred a bit, because most (not all) people who learn to read also learn to write. Still, there’s plenty of discussion of the importance of writing to groups (women, working people) traditionally excluded from written culture.

So, I’m surprised at the neglect of this point in relation to digital literacy, especially because the Internet has done so much to break down the asymmetry between a small group of writers and a large group of readers that characterises most communications media. Having said this, I’m sure this point has been made many times before, and I invite readers to write in with good references.

As an aside, “computer literacy” programs in the late 70s and early 80s had, if anything, the opposite problem. Lots of emphasis on how to code in BASIC and very little appreciation of the potential for computers as tools for general use.

Not surprisingly, this Nature article by Gwyn Prins and Steve Rayner entitled Time to ditch Kyoto, has attracted plenty of attention. I’m responding quickly and therefore somewhat brusquely. I’ll try to write something more considered a bit later.

Before giving a detailed response, let me observe that a reader with limited time need only look at the following few sentences

In September, the United States convened the top 16 polluters. Such initiatives are summarily dismissed by Kyoto’s true believers, who see them as diversions rather than necessary first steps. However, these approaches begin to recognize the reality that fewer than 20 countries are responsible for about 80% of the world’s emissions.

This argument is premised on the assumption that the Bush Administration, representing the world’s largest source of emissions (though China is catching up fast), sincerely wants to do something about climate change and called the September meeting with this purpose in mind. If anyone believes this, I have just become aware of a business opportunity from Nigeria in which they may be interested.
[click to continue…]

I thought, at first that he worked far harder than most of the men I knew. Later, I came to doubt this, finding that Quiggin’s work was something to be discussed rather than tackled and that what he really enjoyed was drinking cups of coffee at odd times of day

Anthony Powell, in A Dance to the Music of Time. Any of my co-authors will recognise this much of the picture, at least.

I spent the last couple of days in Canberra at the Coral Reef Futures Forum, as part of my new Federation Fellowship is to look at economic approaches to management of the Great Barrier Reef. As one of the speakers said, a lot of the talks had people staring at their shoes in gloom, though the tone got a little more positive towards the end. I’m an optimist on ecological issues which is fortunate, because when you look at the threats facing coral reefs, you need a lot of optimism. Looking at historical data, even the GBR, which is much better managed than most reef systems is significantly degraded relative to 100 years ago, and a large proportion of reefs are at or near the point of no return, thanks to overfishing, destructive fishing methods and marine pollution. When you add regular bleaching due to climate change, and also acidification due to higher CO2 levels, the chances of saving much of the world’s coral reef systems do not look too good.

The most hopeful view is that, if we can fix the local threats like overfishing and poor water quality, the resulting increase in resilience (part of my project is to develop a more rigorous understanding of this popular buzzword) will offset moderate global warming, so that if we can stabilise the climate (an increase of no more than 2 degrees) we might save at least some reef systems.

[click to continue…]

Following up my post on consumption and living standards in the US, there was a fair bit of discussion of what’s been happening to leisure. Juliet Schor and others have argued that the long-term trend towards reduced hours of work and more leisure reversed some time in the 1970s, and people have been working harder since then. A study by Aguair and Hurst (the final QJE article is subscription-only, but I found a preliminary version here) has been widely quoted as proving the opposite (here, for example, by Tyler Cowen) and the abstract seems to support this interpretation, saying “We find that a dramatic increase in leisure time lies behind the relatively stable number of market hours worked between 1965 and 2003.”

However the data periods don’t exactly match up. It turns out that, using any of the definitions of leisure considered by Aguair and Hurst, the majority of the increase in leisure time took place between 1965 and 1975, and most measures show little change since 1985.

There’s an important gender/family dimension too. On Aguair and Hurst measures 1 and 2 (which exclude child care), leisure time for women peaked in 1985 or 1993 and has declined since then, while leisure time for men has been increased marginally since 1985.

So that readers can make their own comparisons, I’ve extracted the relevant table, which is over the fold. I’d say it matches Schor’s story (increasing leisure until the late 70s followed by a decline) at least as well as that suggested by the authors (“dramatic” long-term increases in leisure)

There’s lots more data in the Aguiar and Hirst paper and one point worth noting is that the trend in the distribution of leisure time is the opposite of that in income. High income, high education people have experienced a significant decline in leisure relative to those with low income and low education. That somewhat offsets the growth in income inequality over the same period. Also, combined with the gender pattern I already mentioned, it almost certainly means that educated women have, on average, less leisure than in the late 1970s.

[click to continue…]

One of the striking features of US economic data is that, at least on its face, it shows that most measures of median income (wage rates, household incomes and so on) haven’t changed much in recent decades. Here’s a fairly typical example, reporting that American men in their 30s have, on average, lower wages than their fathers did at the same age. Median household income did a bit better in the decades after 1970, because of greater labour force participation by women, but hasn’t shown any any clear increase since about 2000. Average household size may have decreased a little bit, but the effect is not large. In summary, the general evidence is that the average (median) American depending on labour income hasn’t seen a significant improvement in real income for a long time.

That doesn’t seem to square with casual observation suggesting that consumption of most things by most people has gone up. Of course, savings have declined, but that can scarcely be the whole story. An obvious implication of declining incomes is that, if consumption of some things has gone up, consumption of others must have gone down. This is all the more so, given that there are new items of consumption (computers, for example) that didn’t even exist a few decades go, leaving less for expenditure on goods and services that were available then.

So, I’m always on the lookout for examples suggesting that consumption of some category of good or service has declined in real, quality adjusted terms.

Here’s one example I’ve found. According to the NYT, Americans have worse teeth now than a decade ago.

[click to continue…]