The pilot must have aimed for what he knew was the deepest part of the ocean. And just how far below the surface is the wreckage of MH371?
How low can you go?
Reply
Yearly Archives: 2014
A tale of two airports
Government spending absorbs national saving. Unless those resources are used in a value-adding way, the economy becomes worse off rather than better off. Spending of itself is not the road to growth. Only spending that creates more value than is used up during production leaves you ahead. We in the supposedly capitalist economies of the West are systematically ruining our economies because our governments waste our resources at prodigious rates rather than creating value or leaving those resources to be used by those who can. The United States is in the midst of turning itself into the Argentina of the twenty-first century. And as Exhibit A, let me take you to these passages from a recent column by Peter Costello, a great Treasurer because he understood these issues intuitively and with great clarity. Here he is discussing what was unmistakeable on a fight from New York to Hong Kong:
The real thing that was troubling me on that long flight to Hong Kong was why countries like the United States do infrastructure so badly when places like Hong Kong do it so well. When I flew out of New York’s Kennedy Airport, the Airtrain wasn’t working. Passengers had to bus from one Terminal to another. People were squeezed in excess of safety limits, more like battery hens than human beings. The security staff were surly and difficult. The planes were late and the terminal was rundown.
Flying into Hong Kong was like returning to the developed world. The terminal is connected to the city centre by a fast rain. Massive purpose-built suspension bridges and tunnels link it by road. Hong Kong reclaimed the land to build the airport from the sea — just as it has for other major developments.
Both these airports are owned by government authorities. Before someone tells you that we need higher taxes to pay for more infrastructure just remember that Hong Kong, with its airport and its first-class Mass Transportation System, has one of the world’s lowest tax rates, with a top income tax rate of 17 per cent and no GST.
I suspect that Hong Kong airport may be like the Moscow subway, a much more ornate facility than would be justified by the return alone and heavily subsidised as a showpiece to the world. Whether other less visible infrastructure spending in Hong Kong is equally substantial I would have my doubts. But the airport in New York is falling to bits because the capital required for mere maintenance is unavailable because so much of it is already being wasted by governments. There is an immense amount of capital in the US to get through, but Obama and the Democrats, ably assisted by the Republicans, are wasting their inheritance. Ten more years of this and it will be a poor country, as much of the country already is. There are huge lessons for us if we have the wit to understand them. I only say again that modern textbook economic theory will explain almost none of this.
Picked up at Andrew Bolt.
The invisible woman made to appear
I have seldom experienced the tension of a movie in the way I did when watching The Invisible Woman . It is based on a 1991 book about a love affair between Charles Dickens and a young 18 year old girl, Ellen Ternan. Nothing of their correspondence has survived so the book was a recreation of how it might have been based on the few facts that are actually known. The Age reviewer gives it a very reluctant three stars but more accurate is the 84% given to it by audiences at Rotten Tomatoes. Even the critics were at 76%. And if you know nothing about the real Charles Dickens, or Wilkie Collins for that matter, watching the film is an education in both personality and the morality of the time. Highly recommended.
Economists then and now
Not often a blog post begins with a statement that I find profoundly true and important, but there was this the other day:
Economic Illiteracy and Global Economic Worries
An economist used to be a person who was able to explain why the economy works well without interference by the state, and, indeed, better than if such meddling were to be effected. Nowadays, an economist is a person who affirms that the economy can only work properly thanks to interventions by the state.
The economist – versed in knowledge about the invisible hand – has metamorphosed into a staunch proponent of economic policy, the politician’s advisor ambitious to steer the visible hand.
Which then continued as follows which was even more pleasing:
Steve Kates writes in his superb Free Market Economics. An Introduction to the General Reader:
The approach taken to teaching economics has become one in which the market mechanism is … taught only so that there is a basis for explaining why markets … [do] not operate properly. The market mechanism is seldom explained as what it is: the sole means to achieve prosperity and the basis for a continuing improvement in living standards for an entire population [p.284]. … [F]ew are any longer taught that economies have major properties for self-adjustment and are able to recuperate on their own without major government involvement. [p.287]
One of the great dangers of a state monopoly in education is that it provides inordinate leverage for uniform patterns of thought.
The massive distortions in the leading modern economies do seem to be intimately related to the prevalence of the politically both subaltern and ambitious(-for-power-and-status) “economics” of market failure and dirigiste conceit.
Cultural economics and the history of economic thought
I have submitted a paper to a conference on cultural economics and have been asked to explain how a paper on the history of economic thought belongs in a conference on cultural economics. Since the premise of the letter to me was, in the words of the conference organiser, “the more the merrier”, the query was entirely friendly. This is my reply:
I am all for the more the merrier and I must tell you that attending the conference does seem a very copasetic way to spend a few days in Montreal at the start of summer. So I will begin by saying that I have approval to attend your conference since I am already attending the HES conference in the previous week and my confreres will be there already. Nevertheless, I would very much like to help chisel out a bit more territory for cultural economics which is what I am hoping to do with my paper.
The notion that lies behind it came to me in this review of my Defending the History of Economic Thought written by my friend AW whom I am sure you know very well. There he wrote (using the initials IH for Intellectual History):
“More fruitfully, Kates reminds us that HET can be ‘a conversation with economists of the past on contemporary questions.’ Now we are talking IH, the opportunity cost of which needs to be justified. In my opinion, the value of IH to the apprentice economist depends on what kind of economist we are training. There is a large demand, in both the private and public sectors, for skilled technicians in essentially subordinate positions. IH is of no more professional importance to them than Shakespeare or Mozart. But if we are training high-status economists – the Krugmans and Stiglitzes of this world, who play a large part in public affairs and in elite universities – then we must encourage a wide and humane culture: literary, philosophical, historical, artistic and scientific. IH certainly belongs in the mix here. The great Paul Samuelson was a better economist (of this kind) for his ‘conversations’ – often quite disputatious – with Quesnay, Hume, Adam Smith, Thünen and Marx. At his Nobel Prize banquet he listed among the conditions for academic success in economics, fourthly: ‘you must read the works of the great masters.’”
In my book, I did not entirely neglect this side of the issue but I cannot say that I explored it thoroughly either. And while I completely agree with AW in relation to its necessity amongst the elite of the profession, I am not sure that I would wish to stop there since when someone is an undergraduate, or even a graduate student, it is impossible to know who is going to be at the elite of the profession 20-30 years hence. So that is why my abstract is written as it is:
“There is a growing recognition that economists need to study the history of their subject not just because it helps to understand how economies work, but also because it is part of the transmission of cultural traditions. It is not just that knowing the works of the great economists of the past, such as Adam Smith or John Stuart Mill, is valuable for their economic insights, but may be even more valuable for the traditions they represent. This paper looks at the importance of the history of economic thought in terms of the cultural transmission such studies represent. From that premise, it goes on to suggest how the history of economics should be taught so that both the economics of earlier times is understood as well as providing deeper insights into the cultures of both their own times and, by way of contrast, our own.”
Nor should you think that this is a late conversion. As part of the course I teach which is based on the book I wrote, there is a major section on the history of economic thought whose importance I explain not just in relation to helping them understand the theory we teach but also this, which is quoted from my Free Market Economics (Kates 2011: 181):
“It is also important, as a matter of general cultural awareness, to know the great economists of the past who have had an influence on the way in which we think about economic matters. For good or ill, these people have influenced our lives more than any other people in the social sciences because it is based on their theories that our economic structures are organised. This is true irrespective of the kind of economic system one happens to live within.”
I am always struck by how little any of my students know about the historical and intellectual traditions of their own culture. All of the following make at least walk-on appearances although most are treated at length: Adam Smith, J.-B. Say, T.R. Malthus, David Ricardo, James Mill, John Stuart Mill, Karl Marx, Charles Darwin, Stanley Jevons, Karl Menger, Leon Walras, Alfred Marshall, F.A. Hayek, Ludwig von Mises and J.M. Keynes. On more minor members of the economics tradition, I throw in Robert Torrens, Walter Bagehot, Henry Clay, Fred Taylor, Gottfried Haberler, Paul Samuelson, Gary Becker and William Baumol. It will not, of course, surprise you that even in my class of graduate students, the only one that any of them have ever heard of is Marx. To encourage someone to speak up, I always say (as a joke but they can’t be 100% sure) that I will give an automatic “A” to anyone who can tell me a single historical fact about John Stuart Mill. I have had only one taker in the last five years. Their cultural knowledge is pitiful. My course is a tiny experiment in trying to do better. And I might note that as I begin this three hour class on the history of economics, I always say to them that for some this will be the longest three hours of their lives but for others it will be amongst the best experiences they will have in a classroom during their entire university career. And at the break, around half don’t come back but the half that remain feel they have learned something worthwhile which gives them some sense of what they have missed out on had they actually had a genuinely liberal education.
Anyway, I hope you find this interesting as a subject for a paper. I have already written up some of what I intend to give but will leave it in your hands whether space can be found for me to present at the conference. I do, in any case, look forward to being there in June.
With kindest best wishes
Government ‘investment’ does not equal growth
Judy Sloan’s column from The Australian today goes under the heading, Public spending won’t fuel the growth engine. I mention this on the same day as I have received word that my paper on Mill’s Fourth Proposition on Capital has been accepted for publication.
First Mill. In 1848, John Stuart Mill in his Principles of Political Economy included his four propositions on capital which not only never challenged in his lifetime, the fourth, that demand for commodities is not demand for labour, was described by Leslie Stephen in 1876 as the “best test of a sound economist”. It was the pons asinorum of classical economics, the divide that separated those who could understand economics from those who could not. But what is remarkable is that since that date in 1876, not only has there not been another economist to have embraced this statement in full, but it has been challenged by some of the greatest names in the history of economics – Marshall, Pigou, Hayek are just some amongst a quite extraordinary array of economists from every side of the economics divide who have tried to explain what Mill meant. To my astonishment, I am literally the first person since 1876 who has argued in print that what Mill wrote is literally true. It is the best test of a sound economist.
And what the proposition meant, as the words plainly state, is that buying non-value-adding goods and services – and here the issue is public spending in particular – will not lead to increased employment because it does not lead to economic growth. A Keynesian stimulus is therefore doomed to fail, evidence for which has been accumulating at an astronomical rate since 2009.
Judy in her column has brought forward evidence from a paper published in the UK whose subtitle is, “Government ‘investment’ does not equal growth” and written by an economist by name of Brian Sturgess. Here is Judy’s conclusion:
If the government is intent on spending even greater proportions of GDP on infrastructure — which was already ramped up under the Labor government — it must ensure that only projects for which the benefits far exceed the costs are approved. Spending money on infrastructure is no silver bullet to achieving economic growth and better living standards. Let’s just hope the audit commission has taken on board some of Sturgess’s conclusions.
Yes, let us hope our government has taken on these conclusions which once went under the collective name Say’s Law.
One learns from the past only what one already believes
An article on the universalisation of Anne Frank as an example to us all of the dread of racism, not of what she actually represents which is the versatility of anti-semitism which can bring together so many diverse groups. This is the final para and the final sentences sum up all too accurately what has come before:
The most questionable connection of all, I find, is made between Anne Frank’s fate as a Jew and the need to tolerate each other in a diverse society. Sadly, modern anti-Semitism is not a negation of multi-culturalism, but in some respects a result of it. Perhaps the only occasion when the extreme right and extreme left sit down together in harmony is when they combine to descry the power of international Jewry (sometimes thinly disguised as ‘Zionism’). Here, diversity is not the solution, but part of the problem, because an extreme desire to respect it often means tolerating extreme intolerance. The exhibition could easily have ended with a poster containing portraits of the white extreme right-wing politician Jean Marie le Pen, the black comedian Dieudonne M’Bala M’Bala, an Iranian Mullahs, and assorted other extremists, with the question: “Which one of these is an anti-Semite?” Answer: “All of them.”
To survive life after Hockey, the ABC must change — if it can
In actuality, the headline comes from the Canadian National Post and really reads, To survive life after hockey, the CBC must change — if it can. In this case, however, it is the rights to broadcast the hockey (I don’t have to tell you which kind, do I?) which is why they discuss “life after hockey”. But with some luck we will be saying the same in a few months’ time except with the capital “H”. And from Small Dead Animals there is this assessment from The Friends of the CBC which I hope to see the Friends of our local media commune repeating in the near future:
From the Friends of the CBC
The full brunt of Stephen Harper’s hostility to our CBC is now in full view.
Today is a very bad day for those of us – and that includes the vast majority of Canadians — who believe in and support public broadcasting.
Please stand with me now in support of public broadcasting and to hold Harper accountable for what he has done.
Earlier today, the CBC announced it faces a $130 million shortfall. This is largely the consequence of Harper’s punitive cuts to the CBC’s budget which as of April 1st are now fully phased in.
As a result, the creative energy of 657 CBC people who make programs will be lost to our national public broadcaster and the damage to every program CBC audiences see and hear will be obvious. Sadly, the layoffs will be concentrated among CBC’s younger, digitally savvy staff with less seniority.
Harper is attacking our CBC from the outside. But he also has an insidious strategy to undermine our national public broadcaster from within.
Seven years ago, Harper handed the reins to our most important cultural institution to someone with no senior level broadcasting or management experience whatsoever.
That lack of experience is now painfully clear to see as the CBC – knowing this day would come – has failed to prepare.
CBC’s President Hubert Lacroix owes his job to Harper and, as Harper’s man inside the CBC, appears to us to be doing the Prime Minister’s bidding.
Public broadcasting in Canada desperately needs your help right now.
Please help FRIENDS mount a major campaign to hold Harper accountable and to deter the next attack, which is looming on the horizon.
Harper’s fingerprints can also been seen [sic] in a Senate Committee study of “challenges facing the CBC” that has turned into a campaign to strip all public funding from the CBC and give that money to the private broadcasters.
This is nothing less than a trial balloon straight from Harper that must be shot down immediately. We need your help now to expose this chicanery to public scrutiny.
Just days ago, Senator Leo Housakos, the Conservative Vice-Chair of the Senate Standing Committee on Transport and Communications – a man with close ties to Prime Minister Harper – placed this agenda firmly on the Committee’s plate.
Here is the question Housakos asked at the Committee’s hearing on last Tuesday:
“Is there a way to take the money we spend right now on a broadcaster (the CBC) and re-route that money to give that $1 billion-plus dollars to filmmakers and producers of Canadian content so they can make quality content and films? Once they make that quality Canadian content, wouldn’t there be an easier appeal made to the private broadcasters to start running it more.”
That last suggestion, by the way, seems like a good one that should really be looked at.
The hardest quiz I ever saw
The Guardian has set up a quiz based on a comparison of statements made, either by Patrick Bateman, the eponymous hero of American Psycho, and the other none other than our former Labor foreign minister, Bob Carr. As The Guardian explains:
One is Australia’s former foreign minister, the other a fictional investment banker and serial killer. But both share an obsessive attention to detail about diet, exercise and lifestyle. Can you tell who said what?
Here, as an example, is the first question in the quiz:
1. “I take a bran muffin, a decaffeinated herbal tea bag and a box of oat-bran cereal. A bowl of oat-bran cereal with wheatgerm and soy milk follows; another bottle of Evian water and a small cup of decaf tea after that.”
Bob ο
Patrick ο
You can do the rest of the test at the Guardian website online: Quotation quiz: Bob Carr or American Psycho’s Patrick Bateman – who said what?. But Bob, if The Guardian thinks you are a buffoon even with the Labor brand name, you are in some kind of new territory you have carved out for yourself.
[My thanks to JIK for sending it along.]
It’s absolutely and completely true, Tony
This is special, found at Andrew Bolt. Government spending is always related to some social good which often seems to make it beyond criticism, and certainly there are vast numbers who will not listen. But the NBN is almost unto itself in its vast oceans of waste. Here is the Minister for Communications discussing said NBN with Tony Jones.
MALCOLM TURNBULL: No. Look, this – the NBN is not a commercial project. It is the most – the single most expensive, irrational project of the Labor government. It should never have been undertaken in the way it is. It is completely non-commercial.
TONY JONES: “So let’s keep it going,” says Malcolm Turnbull.
MALCOLM TURNBULL: No, no – well the problem that we’ve got – the problem that we’ve got is is that if we were to pull the pin on it completely, we would lose at least – we’d write off at least $15 billion, probably more and have nothing to show for it. So, Labor has left us with a shocking mess. The best thing we can do is to complete the project as quickly and cost effectively as possible.
TONY JONES: Alright. If you can …
MALCOLM TURNBULL: And that’s the – and that is the – you know, now, can I just say this to you?: the way Labor went about the NBN was unique in the world. No other country did anything as mad as this. And …
TONY JONES: Yes, but we have heard this argument before (inaudible) …
MALCOLM TURNBULL: Yeah, but you don’t care about it because it’s the taxpayers’ money. – that’s the thing.
TONY JONES: That’s not at all true.
Ah, Tony, I’m afraid that it is entirely true and it takes a special ability to be unable to see this expenditure for what it is.
Law of Markets 