Asian Correspondent » John Quiggin Asian Correspondent Tue, 30 Jun 2015 18:59:21 +0000 en-US hourly 1 Towards a universal system of higher education in Australia Mon, 15 Feb 2010 09:29:59 +0000

As in other countries, the Australian higher education system is a set of institutions originally created to serve a small elite of the population, faced with a modern economy in which everyone needs some form of post-school education. As in other countries, this problem has been dealt with in haphazard fashion. The first big expansion in higher education, following World War II, was met with the creation of a number of new universities, institutes of technology and colleges of advanced education (mostly former teachers colleges). Then, in the 1980s, the latter two groups were converted into universities, with a corresponding expansion of their range of offerings. Meanwhile, existing universities opened a range of new campuses.

The process, already slowing in the early 1990s, came to a near-complete halt under the Howard government. The last new university in Australia was the University of the Sunshine Coast, opened in 1994. And, under Howard, new enrolments of domestic students stagnated, while the public contribution per student was cut.

The system was saved from financial disaster in part by increasing the fees charged to domestic students, but even more by an expansion in the number of full-fee paying overseas students, mainly from Asia. More than in any other country, Australian universities saw overseas students as representing a market that could profitably be served. Meanwhile, for rapidly developing Asian countries, the availability of Australian universities provided an alternative, or supplement, to massive expansion of their own higher education systems.

With the 2007 change of government in Australia, followed by the impacts on job prospects of the financial crisis, the growth of domestic enrolments has resumed, while demand from overseas students has remained strong. But the funding to support these developments, promised as part of the Rudd government’s ‘education revolution’ has so far fallen far short of what was promised. A big increase in higher education expenditure is needed, but it remains to be seen whether it can be delivered under the current system.

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Nuclear power and Australia Wed, 20 Jan 2010 23:31:58 +0000

There’s been some discussion about nuclear power lately, but it tends very much to the abstract. I thought I would look into the question of when, if ever, nuclear power might be a reasonable option for Australia to consider, and how we should go about it.

An obvious starting point is the Switkowski report commissioned by the Howard government, which I’ve uploaded here. There are two main points which allow me to provide an answer to the question, at least for the next decade or so.

(i) In the absence of a substantial carbon price nuclear power is not competitive with coal
(ii) First-of-a-kind (FOAK) nuclear plants are likely to be very expensive (above $80/MWh), not competitive with wind or gas (even with CCS).

The estimate is that ‘settled down’ long run costs could be $40-$65/ MWh, which is competitive with wind and cheaper (for the moment) than other renewables.

Let’s take “settled down” to refer to a design with at least five examples completed and operating in developed countries, at least some of them built on greenfield sites (that is, not next to existing nuclear power plants which already have a lot of the necessary infrastructure).  It seems clear that these minimal conditions can’t be met before 2025 at the earliest. The US, which has been attempting for a decade to restart its nuclear industries is still at the pilot stage, exploring a number of technologies, and offering to subsidise the construction of three (different) designs for each major option. Most of the proposals are on existing sites, only six have reached the point of a plant actually being ordered,  and none is anywhere near starting construction.  Given a sharp acceleration in progress, the emergence of a highly successful design and a lot of new orders towards the end of this decade, the 2025 date might just be reached.

That suggests that Australia should forget about nuclear power entirely for at least the next five years. If things are going well for nuclear, and not so well for renewables, that would be the time to start setting up regulatory structures, looking for sites and so on.

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Efficient markets hypothesis a zombie idea Mon, 18 Jan 2010 22:51:33 +0000

My column from Thursday’s Fin, with a not-so-subtle plug for my book.

Ideas are almost impossible to kill, especially when they serve powerful interests. There can be no better example than the efficient (financial) markets hypothesis, that is, the claim that the prices at which financial assets trade represent the best possible estimate of their value, taking account of all available information.

The efficient markets hypothesis ought to have been discredited once and for all by the absurdities of the dotcom boom a decade ago. But as soon as the immediate crisis had passed, with the help of the Greenspan Fed, financial market participants were singing the same old song. The one marginal piece of reform adopted in response to the dotcom disaster, the Sarbanes-Oxley bill was soon being derided as an overreaction.

If the dotcom boom was not enough, surely the near-collapse of the entire global financial system, brought to its knees by absurd speculation, ought to have killed the hypothesis. And indeed, some notable advocates such as Ian Harper in Australia and Richard Posner in the US, looked at the evidence and admitted it was decisive. But most supporters kept quiet when the crisis was at is worst. As soon as a partial recovery became evident they returned to preaching their gospel as if nothing had happened.

But even if no-one wants to admit it, the failure of the efficient markets hypothesis is making itself felt. An example of particular relevance to Australia is the collapse of the market for Public Private Partnerships. The case for PPPs rested directly on the belief, derived from the efficient markets hypothesis, that private financial markets would always outperform governments in assessing and managing risk. So, it was claimed, public infrastructure could be financed by transferring demand risk to private owners.

In the 1990s, governments were desperate to get debt off the books at any price, and signed deals that were massively profitable to the private ‘partners’ and even more costly to the public.

By the 2000s, governments had mostly wised up, and demanded that PPP projects should yield value for money when tested against a ‘public sector comparator’.

It was now the turn of the private sector to engage in over-optimistic dealmaking. With credit standards almost non-existent in the later years of the bubble economy, projects went ahead on the basis of absurd traffic projections, with disastrous results for investors.

In the wake of the financial crisis, illusions are less affordable. There is a big gap between the cost to governments of traditional bond financing for projects, and the return demanded by investors for taking on demand risk.

A traditional PPP deal makes sense only if the parties can find cost savings sufficient to offset the lower capital cost of government bond financing. For projects within the traditional scope of the public sector these conditions are rarely met – that’s why these activities were in the public sector in the first place.

Despite all this, everyone who matters is keen for PPPs to continue. The finance sector needs dealflow, and government bond financing does not yield the kind of fee income they need. Governments still want to get debt off the books, and remain absurdly terrified of the ratings agencies. And while the infrastructure industry is becoming disillusioned with the PPP model, it seems to be the only game in town for many projects.

The solution, for the moment, has been found in ‘availability payments’. The idea is that, instead of receiving a cash payment when the project is completed, the private partner gets a stream of payments, conditional on the project remaining operational. In economic terms, this is just the same as traditional public procurement with a bundled maintenance contract. Why then, go to the added expense and complexity of a PPP arrangement?

The answer may be found buried in a report on the website of Infrastructure Payments Australia which indicates that availability payments ‘may not be viewed as debt owed by the public entity’. That is, although it looks like a debt, and quacks like a debt, governments can pretend that the obligation to make availability payments is not really a debt. It remains to be seen whether Auditors-General will fall for this piece of creative accounting.

As the PPP example shows, the efficient markets hypothesis is a zombie idea. It is not so much dead as undead, buried by a mountain of contrary evidence, but still capable of emerging from the grave and doing immense damage.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland. His book, Zombie Economics will be published by Princeton University Press later this year.

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Pulped fiction? Fri, 08 Jan 2010 09:02:02 +0000

Talking of books, it’s been nearly a month since it was announced that Volume 3 of Keith Windschuttle’s fabrications would be released “next week”.  Such vaporous promises are typical of KW, but I would have thought that if a book was promised for next week it would have already been printed. Could it be that, with his lead story about Rabbit Proof Fence totally demolished, Keith has decided to pulp the book and try again?

<strong>Update</strong> Commenter Charlie, who obviously has a stronger stomach than I do, visited the <a href=””>Quadrant website</a>, and found an extract and cover art for the book, with publication details as follows: The Fabrication of Aboriginal History, Volume Three, The Stolen Generations 1881–2008, Macleay Press, $59.95, 656 pages, published in December 2009. But <a href=””>MacLeay Press</a> itself has nothing.

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Quiggin book in beta Fri, 08 Jan 2010 09:01:22 +0000

I just sent a draft manuscript of my <em>Zombie Economics</em> book off to the publisher at Princeton UP. It’s pretty much in beta stage now.The aim is to have it come out in the  Fall List.

Thanks heaps for all the praise and criticism. The praise has kept me motivated, and the criticism has been at least as valuable.

 I’ve got some more sections of the privatisation chapter and the afterword to post here for comments, and I’m now going to circulate the draft in the older version of the same process. I’m also updating the draft at <a href=””>wikidot</a> (lagging a little on this).

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Changing times Tue, 05 Jan 2010 00:19:56 +0000

Over at what was the Austrian economists blog, Peter Boettke announces a change of name, saying 

As an experiment, over the past six months we have been tracking the use of the term Austrian economics in the news and in the blogosphere.  Less systematically, we have also been listening carefully to the use of the term among fellow professional economists and what they think the label means.  The results do not fit our intention.  Google alert, for example, inevitably points to financial advice or libertarian politics, rarely to the research paradigm of F. A. Hayek, never to the scholarship of Israel Kirzner.  Mises is often mentioned, but Mises the ideological symbol, not Mises the analytical economist.  The “Austrian” theory of the business cycle is mentioned, but only in relationship to anti-fed politics and hard money advocacy, and never as an ongoing research program among professional economists.

These trends are not recent, but have been constant throughout our respective careers.  We have always been among those who attempted to offer resistance to this use of the term.  It has become evident to us that our efforts have been futile.  Rather than resist the pure ideological identification, we are choosing to devote our efforts elsewhere.  The name Austrian economics has been lost as a focal point for a tradition of economic scholarship, and is now a focal point for something else.  We have to let it go.

This is pretty much the view I expressed here

although the Austrian School was at the forefront of business cycle theory in the 1920s, it hasn’t developed in any positive way since then. The central idea of the credit cycle is an important one, particularly as it applies to the business cycle in the presence of a largely unregulated financial system. But the Austrians balked at the interventionist implications of their own position, and failed to engage seriously with Keynesian ideas.

The result (like orthodox Marxism) is a research program that was active and progressive a century or so ago but has now become an ossified dogma. Like all such dogmatic orthodoxies, it provides believers with the illusion of a complete explanation but cease to respond in a progressive way to empirical violations of its predictions or to theoretical objections.

Meanwhile, Rafe Champion points to this post suggesting that market liberals (the author prefers “classical liberals”) should abandon the use of the term “capitalism”.

It seems pretty clear that these developments are related to the global financial crisis and related events.  The adoption as a badge of pride by Forbes magazine and others of the previously pejorative term “capitalism” was one of the most extreme manifestations of market liberal triumphalism in the 1990s. But, in the wake of the crisis, “capitalism” is a much more problematic term. It works well enough as a generic term covering all advanced economies in which private capital plays a leading role, but one that is, as we have seen, ultimately dependent on government action for sustainability. We can then say that the relatively unregulated, finance-dominated form of capitalism that has held sway for the last 30 years is being supplanted by a different form in which the role of government as ultimate risk manager is more direct and obvious. But this has little rhetorical value for market liberals.

The story with Austrian economics is more complex. On the one hand, the crisis has increased the appeal of Austrian views of the business cycle, relative to other rightwing views like New Classical macro and Real Business Cycle theory. On the other hand, the label has been increasingly associated with gold bugs, critics of fractional reserve banking, neo-Confederates and general fringeness.


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Bookblogging: Privatisation – Beginnings Sat, 02 Jan 2010 06:41:27 +0000

I’m on the final chapter of my long-promised Zombie Economics, dealing with ideas refuted by the Global Financial Crisis. My target this time is privatisation – more precisely, the idea that privatisation will always yield an improvement over public ownership, and, therefore that market liberalism is an advance on the mixed economy that developed in the during the post-1945 long boom.

As always, comments, criticism and suggestions much appreciated.


     `We hope the fund is maintaining its push for a more flexible exchange rate, far- reaching reforms in the banking sector and more privatization.’’

Mr Timothy Ash, head of emerging-market research at Royal Bank of Scotland in relation to an IMF rescue package for Ukraine during the global financial crisis. The Royal Bank of Scotland had just been nationalised as a result of failed speculation and catastrophic mismanagement.

The ‘mixed economy’ in which public provision of a wide range of services and economic infrastructure, such as telecommunications and electricity networks, coexisted with a largely capitalist market economy was one of the most striking features of the political and economic settlement that emerged in Western economies after 1945. Public ownership was not new. Governments in many countries had played a role in providing infrastructure, social welfare systems and services such as health and education. But, before World War II these measures had generally been seen, by supporters and critics alike, as steps towards full-scale socialism, defined in traditional terms as the elimination of private ownership of the means of production.

The one exception, first noted by John Stuart Mill was that of industries that are ‘natural monopolies’ in the sense that the efficient scale of operation is so large that costs are minimised when there is only a single firm in the market. In this case, Mill noted, “it is the part of the government, either to subject the business to reasonable conditions for the general advantage, or to retain such power over it, that the profits of the monopoly may at least be obtained for the public.” The alternatives proposed by Mill, that natural monopolies should either be regulated or publicly owned have proved to be the only serious policy options, despite occasional attempts to argue that unregulated private monopolies may be benign, such as the theory of ‘contestable monopoly’ put forward by William Baumol and his co-authors in the 1980s.

The experience of the Depression and World War II produced a fundamental shift in thinking about the roles of governments and markets, described by Sheri Berman as ‘the social democratic moment’. Rejecting both 19th century classical liberalism, and the mechanistic determinism of orthodox Marxism, social democrats saw themselves, in the words of Australian historian as ‘civilising capitalism’. From the Swedish ‘Folkhemmet’ (people’s home) to the British reforms based on the Beveridge Report to Roosevelt’s New Deal and Four Freedoms, social democrats put forward a vision of a society in which markets and business enterprise played a central role, but one subordinate to the needs of a just society. In addition to Keynesian macroeconomic management and the social policies of the welfare state, this vision required governments to make investments in the physical and economic infrastructure needed to ensure prosperity.

The growth of government intervention was supported by a series of new developments in microeconomics, collectively called the theory of market failure. In the 1920s, AC Pigou developed the idea of externalities as a way of incorporating obvious (but previously  disregarded) features of industrial society such as air pollution into economic analysis. Pigou’s analysis is still in use today, and forms the basis for policy proposals such as the idea of a carbon tax to limit emissions of carbon dioxide and other greenhouse gases.

Then in the 1930s, Joan Robinson and Edward Chamberlin independently developed the idea of monopolistic competition, extending earlier work on industry structures such as monopoly (dominance of a market by a single seller) and duopoly (two sellers). The rise of game theory in the 1940s and 1950s, due to von Neumann, Morgenstern and Nash, provided a rigorous basis for analysing markets that did not fit the standard competitive framework.

The development of modern theories of information and uncertainty, also deriving from the work of von Neumann and Morgenstern suggested a range of ways in which market transactions might lead to suboptimal social outcomes. The classic instance was Akerlof’s discussion of the ‘lemons’ problem. This is the idea that the sharp decline in value of new cars, occurring as soon as they are driven out of the showroom reflects the fact that cars resold soon after purchases are likely to be those regarded by the initial buyers as ‘lemons’. In the absence of an easy way to detect such lemons, buyers of good cars will be unwilling to sell at the low price available for slightly used cars, producing a self-sustaining equilibrium in which the only near-new cars on the market are lemons.. Such ‘asymmetric information’ problems are particularly severe in the context of insurance markets where they go by the name ‘adverse selection’.

All of these possibilities were grouped under the heading of ‘market failure’. The view that governments should act to correct market failures where they occurred was  used to justify a wide range of government action, and in particular the provision of goods and services by governments and government owned enterprises. Government provision of health services, for example, could be justified by the limitations of insurance markets, while public ownership of infrastructure utilities was justified as a response to problems of monopoly and oligopoly.

Paradoxically,the crowning theoretical achievement of neoclassical economic theory, the demonstration by Arrow and Debreu of the existence and optimality of a competitive general equilibrium, also provided the theoretical basis for the theory of market failure. Arrow and Debreu showed that if competitive markets existed for every possible commodity, in every possible time and place and under every possible contingency, the resulting allocation of competitive resources could not be improved upon for everyone. But that’s a very big if.

It is obvious that the complete set of time-dated, place-specific,contingent markets required for the Arrow-Debreu proof does not exist, and cannot possibly exist. But a large literature in the economics of finance explores the idea that if financial markets are sufficiently well-developed, the instruments traded in this markets can effectively encompass all relevant possibilities, the real world will be close enough to that of the Arrow-Debreu model that conclusions about the optimality of competitive equilibrium remain valid. This idea does not have a standard name, but we can call it the complete financial markets hypothesis.

The complete financial financial markets hypothesis makes sense only if these markets are efficient, in the sense of the strong form of the efficient markets hypothesis discussed in Chapter 2. Given the powerful evidence against the strong efficient markets hypothesis, this is obviously problematic. But there are even bigger problems. The complete financial market hypothesis requires much more than the existence of markets for bonds, corporate stocks and associated derivatives. It requires that households should be able to insure themselves, at reasonable cost, against such risk as unemployment, business failure, ill-health or a decline in the value of their home. With the exception of health insurance, which exists mainly as a result of public mandates, and publicly-provided‘unemployment insurance’ which is not really insurance, none of the required markets exist.[1]

The problems explored in the market failure literature can be interpreted as pointing to the absence of many of the markets needed to satisfy the complete financial markets hypothesis and thereby guarantee the optimality of competitive market equilibrium. Arrow, in particular, made this point, and showed that general equilibrium theory gave only the most qualified support to economic liberalism.

For much of the 20th century, then, the general movement of economic policy in capitalist societies was towards an expanded role for the state, including an expansion of the scope and extent of public ownership of industry. In the light of movements towards a greater role for markets in communist countries, it was widely anticipated that capitalist and communist economic systems would converge in a ‘mixed economy’.

The term ‘mixed economy’ was popularised by British economist Andrew Shonfield to describe the economic system of the postwar era. This system was not a compromise between comprehensive state socialism and free market capitalism, as is often supposed. Rather, in seeking a market system actively managed by governments the mixed economy transcended this dichotomy. It was, and remains, unlike the vaporous offerings of Tony Blair and Bill Clinton in the 1990s, a genuine ‘Third Way’.

By 1970, the success of the welfare state and the mixed economy seemed undeniable. Hopes turned to the prospect of a further transformation, not fully defined, in which the remaining inequalities and injustices of capitalism would be greatly reduced, if not eliminated. The most promising proposals centred on notions of industrial democracy. In Sweden, the peak union body, the LO put forward a proposal, developed by economist Rudulf Meidner to require all companies above a certain size to issue new stock shares to workers, so that within 20 years the workers would control 52% of the companies they worked in.

In the event, of course, the real challenge to the mixed economy came from market liberals, who dominated the policy debate from the mid-1970s onwards. Milton Friedman’s success in macroeconomic debates attracted new attention to the market liberal position he presented in works such as Free to Choose where he argued that even core areas of state activity such as education could be left to private provision, funded through voucher schemes.

Theory turned to practice with the election of the Thatcher government in the United Kingdom in … Starting with popular proposals such as the sale of council houses to the tenants who occupied them, Thatcher began a program under which publicly owned enterprises in telecommunications, electricity, water and transport were sold, usually through public floats. Thatcher’s example was soon emulated by governments of all political persuasions in the English speaking world. By the 1990s, privatisation was part of the standard policy agenda, referred to as the Washington consensus and promoted by the World Bank, IMF and US Treasury as essential to sound economic management in developing countries.

The large-scale privatisation of publicly-owned enterprises in the 1980s and 1990s played a big role in promoting the triumphalist claims of market liberals. Commentators and thinktanks rushed to conflate the (real but manageable) financial difficulties of long-established public infrastructure services in countries like the UK, New Zealand and Australia with the collapse of Communism in Eastern Europe and the stagnation of North Korea.

Public ownership of infrastructure was seen as a relic of the past, doomed to vanish as governments rushed to sell off assets. Having claimed victory in the infrastructure sector, market liberals turned their attention to the core of the welfare state with proposals for privatisation of health services, prisons and the school system. In the US, the most ambitious assault on the institutions of the New Deal era was the proposal, pushed hard by the Bush Administration, to privatise Social Security.

Few would have predicted that, a decade or so later, governments would be debating, and in some cases undertaking, the nationalisation of such iconic capitalist enterprises as Citigroup, Bank of America and General Motors. Although  these rescue operations mostly involve only temporary public ownership, they make the rhetoric of the 1990s look absurd. And they raise the question of whether some or all of the privatisations of past decades should be reversed.

But despite these failures and reversals, systematic privatisation of public enterprises remains part of the standard package of policy reforms recommended by bodies like the IMF, and there has been little serious effort to reconsider the theoretical rationale for these policies, or to ask who gains and loses from their implementation.


During the era of the mixed economy, the boundaries between the public and private sector were regularly redjusted, and not always in the same direction. While the predominant trend was for the role of the state to expand through the nationalisation of existing private enterprises or the establishment of new public enterprises,  it was quite common enough for publicly owned enterprises to be returned to the private sector (the phrase commonly used at the time was ‘denationalisation’. Peter Drucker used ‘reprivatization. An earlier usage under the Nazis is noted The newly elected Thatcher government initially focused on monetarist macroeconomic policies. However, attention steadily shifted to the idea of privatisation. ).

It was not until the 1979 election of the Thatcher government in the United Kingdom that the mixed economy came under serious challenge. Following the failure of Keynesian macroeconomic management in the 1970s, the generally disappointing performance of the UK economy since 1945 (or earlier) and the full-blown crises of the late 1970s, the stage was set for a reaction against social democracy in all its forms.

Whereas previous conservative governments had denationalised some of the acquisitions of their immediate Labour predecessors, the Thatcher government began selling off enterprises, such as British Telecom, which had been in the public sector since their establishment.  The idea of privatisation, conceived as the systematic removal of the state from the production and provision of goods and services, was born.

Thatcher’s radical measures were much admired, and imitated, in Australia and New Zealand, which still tended to follow the British lead with respect to economic policy.  Surprisingly, in both countries, the crucial steps were taken by governments associated with the labor movement [2]. In Australia, the Hawke and Keating governments, in office from 1983 to 1996 moved slowly and cautiously, but eventually privatised the national airline, Qantas, and the main publicly-owned bank, outraging many of their traditional supporters.

In New Zealand, caution was thrown to the winds. Labour Finance Minister Roger Douglas rapidly gained a reputation as ‘more Thatcherite than Thatcher’. Among a series of radical free-market reforms, large-scale privatisation began with the sale (by public float) of the Bank of New Zealand, and continued apace thereafter with the sale of assets such as Air New Zealand. New Zealanders had tired of the reforms by 1990, and replaced Labour with the conservative National Party, which promised a more moderate approach. In office, however, the Bolger National government continued to push radical free-market measures notably including the sale of New Zealand Rail(1993) and corporatisation of the health system with a view to eventual privatisation. The Labour party split in Opposition, with the radical free-market group leaving to form the Association of Consumers and Taxpayers (later the ACT Party). The era of radical reform finally ended when Labour regained government under Helen Clark in 1999.

Thatcher’s radical reforms reversed the century-long trend towards greater state involvement in the capitalist economy. But it was the collapse of Soviet Communism that seemed to confirm that free-market reforms represented more than a swing of the political pendulum and constituted, in the words of the great triumphalist text of the age The End of History. It was inevitable, given the collapse of centrally planned economies, that large numbers of state-owned enterprises would be converted, one way or another, to private ownership. The ideology of privatisation encouraged the adoption of a radical ‘shock treatment’ approach based on wholesale privatisation.

In this context,it was inevitable that  privatisation should become part of the standard ‘Washington Consensus’, package of reforms advocated for less developed countries by the World Bank, International Monetary Fund (IMF and US Treasury.  And by the 1990s, the privatisation trend had spread to EU countries that were often dismissive of such ‘Anglo-Saxon’ notions.

[1] Robert Shiller has long argued that new financial instruments could reduce the riskiness of investments in home ownership, but his efforts to promote the development of such instruments have had only limited success

[2] For reasons lost to history, the Australian party uses the American spelling, Labor, while its NZ cousin uses Labour


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Last of the Mohicans/Singing the same old song Thu, 31 Dec 2009 20:56:37 +0000

For me the big change that came with the last decade was blogging. I started in 2002, and it’s been a big part of my life (sometimes too big) ever since.  So, when it came to review the decade, the obvious place to look was the Wayback Machine, which captured my old blogspot blog on 27 July 2002. Looking at the blog as it was then, two things jump out at me

* Looking at the blogroll, I feel like the last of the Mohicans. The bloggers of those days have nearly all retired, and almost no-one runs a solo blog like this one anymore.  I’ve long been a member of Crooked Timber, so I’ve put down two bob each way. And, of course, I recently started posting here at Asian Correspondent.

* I’m singing the same song now as I was all those years ago. The top post on the page is about how the financial crisis has discredited the efficient markets hypothesis, trickle down economics, privatisation and so on.  Of course that was the dotcom financial crisis of 2000-01. I think a few more people are paying attention this time around, but we will have to wait and see.

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Contrarianism update Sun, 29 Nov 2009 03:55:01 +0000

In this Newsweek piece, Sharon Begley suggests that a failure of the Copenhagen climate talks may not be such a bad thing, but hastens to add:

Seeing the failure of Copenhagen as something short of Armageddon is not contrarianism for contrarianism’s sake.

It’s good to see that reflexive contrarianism is falling into disrepute. Maybe one day we’ll see political reporters writing something like “I may not be ‘savvy’, but I call a lie when I see one”.

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Positive signs of Copenhagen deal Sun, 29 Nov 2009 03:40:05 +0000

While Australia has been transfixed by the meltdown of the Liberal party there have been a string of positive developments around the world which make a positive outcome from Copenhagen, leading over the next year to an intermational  agreement to limit greenhouse gas emissions, much more likely than it seemed two years ago, or even six months ago. Among the most important developments

* Obama’s commitment to a 17 per cent (rel 2005) target, which essentially puts the Administration’s credibility behind Waxman-Markey
* China’s acceptance of a quantitative emissions target, based on emissions/GDP ratios, but implying a substantial cut relative to business as usual
* The change of government in Japan, from do-little LDP to activist DPJ
* EU consensus on the need for stronger action
* Acceptance of the principle of compensation for developing countries, and acceptance by countries like India that they should take part in a global agreement and argue for compensation

A notable consequence has been the announcement by Canadian PM Harper that he will go to Copenhagen, having previously said he wouldn’t. Canada is a hotbed (coldbed?) of delusionism, and Harper has reneged on Canada’s Kyoto commitments. That was fine while Bush was in, but now he finds himself on the outer with Obama and threatened with suspension from the Commonwealth. More serious measures, such as trade sanctions, are being kept out of view for the moment, but they are already being discussed in both EU and US circles.

Harper’s embarrassing backflip is an indication of the silliness of the idea that Australia is in danger of “getting in front of the rest of the world”.  If fruit loops like Abbott and Minchin get any share of political power in this country, even the partial veto associated with control of the Opposition, we run the risk of finding ourselves at the back of the pack, and paying a hefty price.

As with most international agreements, the outcome from Copenhagen will prove far short of ideal. But once the world is on the right track, and it becomes evident that the costs of stabilising the global climate are far smaller than the delusionist doomsayers have pretended, it should be possible to improve. With luck we will be in time not just to save ourselves from the worst-case disasters but to give vulnerable systems like the Great Barrier Reef a chance at survival.

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Blackwater fever Wed, 25 Nov 2009 10:38:28 +0000

There have been rumours for quite a while of Blackwater employees acting as agents provocateurs in the terrorist attacks in Pakistan. It’s hard to believe that the Obama Administration would be crazy enough to have this rightly-detested outfit operating in Pakistan. But, that’s what this story in The Nation says, with apparent corroborating evidence. Worse still, Blackwater operatives are said to be posing as aid workers.

If proven, this will be an utter disaster for the US in its relations with Pakistan. The only plausible solution is to find and fire a suitably high-ranking scapegoat (or maybe, the idiot(s) actually responsible) and cut Blackwater off the US payroll once and for all.

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Refugees, Australia and the Sri Lanka problem Tue, 10 Nov 2009 05:40:17 +0000

The crushing military defeat of the Liberation Tigers of Tamil Eelam (LTTE) has had effects extending far beyond Sri Lanka, leading countries such as Australia to take a much more active interest in Sri Lankan problems than would normally be the case. The Australian political class, and much of the public, is transfixed by a stand-off involving a group of Tamil asylum-seekers rescued by an Australian vessel and now resisting a return to Indonesia. Meanwhile, in a case with some similarities but also lots of differences a ship that is apparently part of the remnants of the LTTE fleet has (my namesake, Tom Quiggin, has the goods on this) been used to transport Sri Lankans to Canada.

Australian politicians have been battering each other over how to deal with asylum seekers on boats, and, until recently, not coming to grips with the key issue. As long as the Sri Lankan government holds large numbers of Tamil civilians in camps for Internally Displaced Persons (IDPs), asylum seekers who can reach a country that is a signatory to the UN Refugee Convention will be able to make a very strong case that they have a reasonable fear of persecution.

It is unsurprising then, that Australia’s Foreign Minister has made a rushed visit to Sri Lanka to see if a combination of aid money and political pressure can accelerate the (so far glacially slow) process of returning IDPs to their homes, and the much trickier process of reaching a political settlement that matches, in generosity, the completeness of Sri Lanka’s military victory over the LTTE.

The Sri Lankan government has shown a fair bit of sensitivity to external interference in its handling of the war and its aftermath (which included credible claims of war crimes committed by the army as well overwhelming evidence that the LTTE was guilty of such crimes). But, as the current refugee stand-off shows, they are not going to get a sympathetic hearing. Sri Lanka’s problems have become the world’s problems.


John Quiggin

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The Afghanistan sideshow Fri, 23 Oct 2009 08:48:00 +0000

This is my first post on Asian Correspondent and I thought I would dive in at the deep end with an observation on the Afghanistan war that seems obvious to me but that I haven’t seen spelt out elsehwere. Maybe that’s because I haven’t been looking in the right places, maybe it’s too obvious for words, or maybe I’m just plain wrong.

It seems to me that, with the outbreak of full-scale war between the Pakistani state and the Taliban, what happens in Afghanistan is irrelevant, except of course to the Afghans. Either the Pakistani state will destroy the Taliban in that country, in which case the Taliban in Afghanistan will have no chance of overthrowing the government there, or the Taliban will prevail (bringing about the collapse of the government and the emergence of an alternative that is subject to their veto) in which case it won’t matter to the world as a whole who wins in Afghanistan, since al-Qaida will have a secure, nuclear-armed base of operations.

That analysis doesn’t allow for the possibility of a return to status quo ante where the government tolerated Taliban rule in the frontier provinces and the military actively supported various jihadist groups seen as assets against Indian ambitions in Kashmir and Afghanistan. After daily suicide bombings and direct attacks on the military, it’s hard to see that kind of coexistence re-emerging. If the state and military are incapable of breaking with groups like Jaish-e-Mohammed and Lashkar-e-Toiba, they will surely be destroyed by them.

So, that’s my go at grand strategy. Fire away in comments.


John Quiggin

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John Quiggin

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