Club Troppo

A lot of nonsense is being written by pundits about Julia Gillard’s supposedly terminal leadership situation in the light of the carbon tax issue. The reality is that if she manages to broker a deal that gets through Parliament this year, then she’ll be seen as a strong leader who had the determination to force through a solution to an extraordinarily difficult issue where others have failed. Moreover, as with Kim Beazley in the wake of implementation of Howard’s GST, everyone will realise that it was no big deal and that Abbott was lying to them. On the other hand, if she fails to nail down and implement a carbon tax, Gillard is almost certainly dead meat whatever happens.

In the meantime, all Gillard can do is take the fight up to her opponents and seek to persuade as many people as possible about the facts and the necessity of a carbon price as part of the solution. She won’t achieve a decisive majority in that time, because it’s just too easy to sow doubt, fear and confusion about any proposal that hasn’t actually been implemented (or in this case even spelled out in detail). Look at the Republic Referendum a few years ago. A more innocuous constitutional change would be hard to frame, but monarchists had no difficulty in totally confusing an electorate that had little time for the Royal Family but equally saw little compelling reason for change. Fortunately Gillard doesn’t have to carry a clear majority of Australians with her at this point, just the Greens and Independents in Parliament. If she can do that the people will follow in due course after the carbon tax is in place. I’m sure Tony Abbott knows that too. Both leaders are playing high stakes poker.

So far I think Gillard is doing well. ¹1. KP: Leaving aside the fact that, as I argued in a recent post, she would be much better advised to flesh out more of her proposal now with enough qualifiers to allow for the detailed negotiations that certainly need to take place before any policy is finalised. [↩] Her performance on Q and A the other night was very impressive despite a quite skeptical audience. She was strong, persuasive and well briefed on all issues. To me this was the money passage of the evening:

AUDIENCE MEMBER: Prime Minister, isn’t the whole point of having a carbon tax to affect the prices that consumers pay? If there’s no change in consumer behaviour, you’re not going to achieve what you’re trying to achieve to reduce carbon pollution. So if it’s compensating households, aren’t you simply undermining the effect that your tax is going to have and ultimately make no change?

JULIA GILLARD: That’s a very perceptive question and I think a lot of people are thinking about his, about how does it work? If I’m getting compensation, what’s actually changing? Let me just explain that. The carbon price affects the big polluters. Yes, they will cause some price impacts for consumers. That’s true. We will then assist consumers and I can understand why people then intuitively go, well, how does all of this work? Isn’t, you know, sort of money going in and money going out? What’s the effect? Well, the effect is that in the shops when you come to buy things, products that are made with relatively less carbon pollution will be cheaper than products that are made with more carbon pollution. So you’re standing there with your household assistance in your hand. You could still keep buying the high carbon pollution products if you want to or what you’re far more likely to do is to buy the cheaper, lower carbon pollution products. That means that the people who make those things will get the consumer signal, gee, we will sell more, we will make more money if we make lower pollution products. That drives the innovation. So I want you to have that household assistance in your hand but I also want you to see price effects which make cleaner, greener things cheaper than high pollution commodities. That’s why it works.

Quite so. Now let’s hear more of it.

Happiness is a recurrent topic in the blogosphere, not least at Troppo where several of us have  posted about it more than once. There’s even a strand of economics that focuses on studying happiness.

In part that’s why it struck me as a bit strange that Australian writer David Malouf appears to have written an entire essay on the subject for The Monthly without engaging with the economics literature on happiness, or for that matter philosophical discourse about it. Nevertheless Malouf seems to have reached by intuitive and literary means a conclusion fairly similar to the economists: money doesn’t buy happiness, or at least not as much or for as long as some may have hoped and imagined. We tend to revert to a mean that’s significantly less than constant ecstasy. As Malouf observes:

We do complain, of course, but our complaints are trivial, mostly ritual. Our politicians lack vision, interest rates are too high, the pace of modern living is too hectic; the young have no sense of duty, family values are in decline. The good life, it seems, is not enough. We have nothing to complain of, we are “happy enough”; but we are not quite happy. We are still, somehow, unsatisfied, and this dissatisfaction, however vaguely conceived, is deeply felt.

If pressed, our friends or neighbours will probably tell us that what they are suffering from is “stress”; a sense, again vaguely conceived, that in the world about them, as they feel it and as it touches their lives, all is not well. They do not, in the end, feel secure or safe.

We know too much about the world these days, Malouf thinks, and that results in our substituting wider foci of unease and anxiety that we wouldn’t even have perceived let alone had time to worry about when life was an unrelenting struggle for subsistence.

No doubt Malouf is right as far as he goes, but these aren’t new thoughts or even especially profound ones.  I reckon it’s hard to go past what Immanuel Kant had to say about happiness about 250 years ago:

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I liked this brief piece from Peter Drysdale introducing a recent East Asia Forum Weekly Digest and asked if I could reproduce it here and he agreed.

‘Be not afraid of greatness,’ wrote William Shakespeare in Twelfth Night. ‘Some men are born great, some achieve greatness and some have greatness thrust upon them.’ Whether the bard’s injunction is reassuring to those who have greatness in them, achieve it, or have it thrust upon them may be problematic and whether the three routes he suggests to greatness are unique and independent equally so. But certainly, in the end, it appears that greatness is thrust upon those that come to exercise its power.

As Jonas Parello-Plesner writes in this week’s lead essay, great powers, too, are moulded by events as much as, if not more than, by grand strategy. In 1898, the United States — at the time an isolationist and anti-colonial power — entered upon the world stage after Spain allegedly sank the USS Maine in Havana Harbor. This event propelled Theodore Roosevelt into the historical firmament and was a driver behind America’s emergence as a great power.

The commercial adventures of the East India Company compelled the British state to intervene in China in the 1840s, sparking the Opium Wars. In 1850, the British foreign secretary, Lord Palmerston, ordered the British navy into the Aegean in order to protect Don Pacifico, a British subject born in Gibraltar, and to reclaim his lost property. After an eight-week blockade, the Greek government paid compensation to Pacifico. When challenged in Parliament, Palmerston justified his actions referring to the declaration ‘Civis Romanus sum’ (‘I am a Roman citizen’), a declaration that would protect a Roman from harm anywhere in the ancient Roman empire.

All were defining historical moments in the emergence of great powers. They demonstrate that the greater a rising power’s economic interests in a foreign land, and the more nationals it has involved there, the more likely it will feel compelled to act should events threaten either.

Has China’s defining ‘great power’ moment been thrust upon it by the Libyan crisis?

This week China joined the international community in voting for a unanimous UN Security Council resolution that includes a travel ban, an asset freeze on Muammar Gaddafi and his family, and referral of Gaddafi’s actions against his people to the International Criminal Court. This takes China’s exercise of its international responsibilities to an unusual and an entirely new level.

The crisis forced China to bend its principle of non-intervention, and to launch its biggest-ever rescue mission of some 32,000 Chinese nationals in Libya. A Chinese frigate participating in anti-piracy operations in the Gulf of Aden was deployed in the rescue efforts. Four Chinese military transport planes were also dispatched from Xinjiang. This marked a departure for China as a great power, as it sought to square principle with the practical reality of finding solutions to immediate problems that arise from its global reach.

All this is in stark contrast with China’s past stance against interference in the affairs of ‘imperfect regimes,’ such as those in North Korea and Zimbabwe. The need to get its nationals out of harm’s way in Libya — as well as its search for international respectability — have thrust China into its new role as a great power. Chinese citizens are starting to feel the same need for protection all over the globe, and they will expect protection, forcing Beijing to shoulder one of the many burdens of great-power status. In the Libyan crisis this is an entirely welcome development for the West. But it is a development that will have many consequences.

This is no trivial turning point. It is a significant change that will require a major re-assessment of China’s view of itself and the international community’s view of China’s stance in world affairs.

Saul Eslake asked a bunch of people for comments on the recent Grattan Institute study of productivity and I sent him back a long email which I reproduce with some editing here. Nothing very surprising for people who are regular visitors here, but perhaps worth posting in case it provokes any thoughts.

• We’ve done a lot of micro-economic reform in basic goods and services and it’s driven productivity up.
• There’s only a bit more to do here.
• What we do to follow up on that brings in sectors like health, education, government services of various kinds.

 
These areas are different in a variety of ways:

• They are areas in which government is much more inextricably involved than they are in lots of the more easily ‘privatisable’ areas.
• They’re areas in which it’s not nearly as clear how to reform things (though there are admittedly some self evidently destructive things that one can reform – like egregious incentives to cost shift in health).
• They’re areas in which it is difficult and sometimes essentially impossible to measure productivity.
• Indeed, I was intrigued by a blog post I recently blogged about myself that many of these sectors are not just producers of ‘credence goods’ to a substantial extent, which is to say they produce goods which the customer may never know the quality of (even after consuming them). They are goods where the practitioners are feeling their way also. A teacher for instance often doesn’t know what works but plugs away doing the best they can.

• There’s a sense in the paper that ‘reform’ is fairly unproblematic, and I think the well of unproblematic problems is drying up. This amounts to more than saying that the low hanging fruit has been picked – though it has mostly been picked. It also means that further progress requires a lot more thought – not just action and bemoan  – or to change the metaphor the low hanging fruit has to a substantial extent been picked.
• That having been said there are many areas of potential micro-economic reform that have barely been spoken about.  To give just one example, our legal system is a ramshackle mess requiring people to bet their life savings on resolving disputes, many of which could be solved much more fairly, quickly and cheaply by a better designed system.  That would have huge benefits for many other areas of economic activity where a range of rigidities exist simply because the legal system is so dysfunctional.  Anyway I’ve set out some possible areas in the attached piece I did for Crikey a while back.

Regulatory reform is currently virtually useless. 
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I was contemplating writing a post about an ignorant, self-interested op-ed by billionaire mining heiress Gina Reinhardt until I asked myself the question: what’s the point?  It’s a question whose answer increasingly constrains my blogging output after almost 9 years at the game.

However, one of Reinhardt’s particularly stupid “cookie-cutter” RWDB observations was this:

Our crime record is unacceptable: we should all be able to live safely in our homes and suburbs …

In fact, with the noteworthy exception of non-sexual assaults, crime rates in Australia have mostly fallen significantly over the last decade or so.  Moreover, as far as one can tell (international crime rates for most categories aren’t comparable because they’re compiled on radically different bases in different countries) Australia’s crime rates are not high by world standards; about the same as Canada, Japan and the European Union but significantly lower than the US.

I was going to muse about the reasons for the anomalously increasing assault rate.  Experts think it’s partly an artefact of changing collation methods (domestic violence is now classed as an assault whereas police didn’t previously classify those offences as assaults!), and partly a result of increasing binge alcohol and party drug consumption by young pub and club-goers.

However, I can’t help wondering whether another reason might be an increasing trend for police to simply charge people with assault without any exercise of commonsense discretion, where previously no such charges would have been laid.  What aroused my suspicion was the apparent facts surrounding rugby league superstar Benji Marshall’s alleged early morning assault of  a loud-mouthed yob:

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According to recent media reports an explosion has blown the roof off an unstable reactor north of Tokyo. The reactor is Fukushima Daiichi nuclear power station’s unit no 1. World Nuclear News reports:

Television cameras trained on the plant captured a dramatic explosion surrounding unit 1 at around 6pm. Amid a visible pressure release and a cloud of dust it was not possible to know the extent of the damage. The external building structure does not act as the containment, which is an airtight engineered boundary within. The status of the containment is not yet known.

Here’s some background on Fukushima Daiichi and the events leading up to the incident.

Number of reactors: The Fukushima Daiichi nuclear power station has six reactors. According to the Tokyo Electric Power Company (Tepco), when the quake hit three of the reactors were shut down for periodic inspection (units 4, 5 and 6). The other three (1, 2 and 3) were shut down in response to the quake.

Type of reactor: The reactors at Fukushima Daiichi are boiling water reactors (see diagram below).

According to the US Energy Information Administration:

In a typical commercial boiling water reactor the reactor core creates heat, a steam-water mixture is produced when very pure water (reactor coolant) moves upward through the core absorbing heat, the steam-water mixture leaves the top of the core and enters the two stages of moisture separation where water droplets are removed before the steam is allowed to enter the steam line, the steam line directs the steam to the main turbine causing it to turn the turbine generator, which produces electricity. The unused steam is exhausted to the condenser where it is condensed into water. The resulting water is pumped out of the condenser with a series of pumps, reheated, and pumped back to the reactor vessel. The reactor’s core contains fuel assemblies which are cooled by water, which is force-circulated by electrically powered pumps. Emergency cooling water is supplied by other pumps which can be powered by onsite diesel generators. Other safety systems, such as the containment cooling system, also need electric power.

What caused the problem?: After a reactor is shut down it needs to be cooled. According to Ron Chesser, director for the Center of Environmental Radiation Studies at Texas Tech University:

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How did you sleep last night? Thousands of kilometers away in the cities of Japan, people are trapped under rubble crying out for help. According to recent news reports 1000 people may have died in yesterday’s earthquake and the tsunami that followed.

If 18th century philosopher Adam Smith is right, you probably slept just fine. In his book, The Theory of Moral Sentiments he imagined what would happen if the whole nation of China was swallowed up up by an earthquake. How would "a man of humanity" in Europe respond? According to Smith, he might express great sorrow, reflect on the precariousness of human life, speculate how the disaster might affect trade and then go happily about his business:

If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own.

Smith wasn’t worried about this — in fact he thought it was a good thing. He goes on to complain about whining moralists "who are perpetually reproaching us with our happiness, while so many of our brethren are in misery". This self imposed misery just makes people unpleasant to be around and according to Smith it doesn’t serve any useful purpose.

So is Smith saying it’s OK to just ignore other people’s suffering and do nothing to help? No he isn’t. What he’s arguing is that in situations where there is something practical we can do to help, moral behaviour doesn’t depend on strong feelings of sympathy. We don’t need to respond more strongly to other people’s suffering than we do to our own to do the right thing. If there is something we can do to prevent or ease other people’s suffering, most of us won’t sit by and do nothing.

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I haven’t had time to put together the usual Missing Link post today. So I’ll turn it over to you. If you’ve read something enlightening, thought provoking, amusing or annoying that you’d like share then go right ahead. The comments thread is open.

It’s a high res picture if you want to download it and read the detail – which is fascinating.

See over page for Troppo’s exclusive revelations.

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