About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.

Is the world better off with a Bigger Australia, or with more Australians?

Michael Fullilove, of the Lowy Institute, last week gave a speech espousing the established (non-radical) centrist view that more immigration to Australia is highly desirable – that migration is an essential step to A Bigger Australia.

I like immigration. In fact, my gut supports something a flea’s dick away from open borders, and my head constantly feels its not being fair dinkum when trying to justify policy much more restrictive than that.

Yet I am utterly unconvinced by the Bigger Australia arguments, of which Fullilove is but one proponent.

I like immigration because of the (modest) benefits to existing Australians, and the (immense) benefits to new Australians.

It is probably the single best way Australian policy can help the welfare of humanity (whether measured in in crude economic metrics like GWP or otherwise), but entails costs that are so modest we’ve had to create a vigourous passtime imagining them on talkback radio and odious comment threads[1].

In short, my gut tells me that the freedom and productivity of people can be immensely increased by a free choice to move country, at no net cost to others, then restricting that choice is not just irrational, it is deeply immoral, whatever the practical politics are.

But it does not seem to be welfare of Australians old and new that motivates a Bigger Australia advocate, and least not primarily. Their concerns do not seem to lie with Australians, but an entity called Australia.

Fullilove automatically links a more populous Australia with bigger defence budgets. Big Militaries are something Big Nations Do. He invokes the weight a Bigger Australia can have at international summits, and that a bigger force of DFAT bureacrats is needed for the Bigger Australia to throw its bigger bulk around.

We seem to be coming to the similar policies in radically different ways. Continue reading

Sakura Tsukamasa-Green: 2013-2013

Phone 20130518 017One year ago our daughter died and was born.

We called her Sakura, for the cherry blossom. Sakura is a thing of beauty that does not, and cannot last, longer than a short time. But we meet its brief time in this world with joy and not sorrow.

Not surprisingly, I guess, thinking about her this way doesn’t make it hurt any less.

This is no epic tragedy. There are no scoundrels or blackguards here. No might-have-beens or woeful choices. No one to blame – not even ourselves as much as we have tried. It was just an indifferent shuffling of chromosomes that determined that she should never live.

So why am I writing this? To prove that she existed? We have the papers to prove that, and a tiny urn in the bedroom holding that part of her ashes I could not bear to give to the sea. To let others know that they are not alone? Why? I cannot offer them any comfort, or pretend it is there to be had.

Maybe we just want to know why we miss so much someone we never knew.

All we know is she was beautiful.

 

There are none so soft minded as those that think themselves hard headed

AKA “Intellectual vanity and policy poseurs”

AKA “Contorting sophistry in favour of contractionary monetary policy”

AKA “The global Serious id hrumphs again”.

Part 3 of a series (1, 2).

Via Matt Cowgill I see weak corporate governance beneficiary [1] Richard Goyder humphs a hrumph about interest rates.

trollgill

Really, what (if any) process of logic is behind this?

A monetary policy stance that targets consistent low, but positive, inflation is largely targeting a level of output that is at “capacity” (given current technology, laws, people etc.).

By definition we can’t produce more than capacity, because we don’t have the capacity to produce it. We’d just have inflation instead.

If you’re achieving consistent low, but positive inflation, your monetary stance is neutral.

Promoting monetary policy that is tighter than this, your policy is putting artifical contraints on an economy producing what it is enitrely capable of.

Naturally, producing what we can is reliant on not being prevented from doing so.

Subsequently I present Mr Goyder’s wisdom on a few other topics.

Dr Goyder, sports scientist:

I’m urging the coach to resist putting the fullback’s leg in a cast. We should promote players that can adapt to football and don’t rely on having unbroken legs, which can have unintended consequences.

Richard Goyder, anti poverty expert:

I’m urging DoCS to resist removing the lock from the poor’s kitchen cupboard. We should target a population that can adapt and is not reliant on eating the food they have available, which can have unintended consequences.

Herr Doktor Goyder, Zeppelinist.

I’m urging other Zeppelinists not to release any sandbags or tethers. We should target Zeppelins that can adapt and are not reliant on being allowed to float freely, which can have unintended consequences.

 

If only these disciplines had been endowed with the hard headed realism that dominates board rooms before. Hrumph!

 

[fn1] A special class of employees largely unanswerable to their nominal employers, with considerable power to set their own wages and responsibility. Also known as “executives” and, somewhat inexplicably, “businesspeople”.

Election Interloper 2013

The Lowy Interpreter is running a series where their experts explain, in (theoretically) 100 words or less, what they regard as the most important international policy issue of this campaign. I’m intrigued enough to think that the thoughts of a interested, but non-member, of the IR community would be enlightening, and narcissistic enough to think it can be me.

In a globalised world, or the Asian Century, all issues are both domestic and international.
I believe Australia has done the most good in the world, and can continue to do so, simply by managing itself well, providing an example to learn from. This can range from demonstrating the general virtues of democracy and multiculturalism, to specific policy, like HECS, Australian ballots or water trading.
Foreign policy means nothing except how it improves lives, and summits and speeches have always done less than practicing mundane good management. Australian democracy should continue to lead in Asia by focusing on the latter.

Department of brain farts: Transferable postal addresses

Here’s a simple problem.
Due to tradition, law and custom about the way we deal with debt and contracts and the like, a great deal of human activity requires the transport of pieces of paper from person to person. The information on this paper does not carry the same force if delivered electronically.
We call this the postal system. It’s considered so essential to the operation of a society that we force operators to serve everyone at equal cost, regardless of location, and then create a statuary monopoly to compensate them.
The system works by getting parties to stipulate a physical point that they want the paper to get to. 
This system is a pain. When you move from one place to another, there is an endless number of organisations you deal with who you need to tell. This is tedious and costly and a real, if relatively small, impediment to the movement of labour around the economy.
 Moreover, most of these organisations need not know where you physically are, and in many cases why would we want them to know? You can avoid this with a P.O box, by paying extra, but you still have the tedium of updating addresses if you move more than a short distance.
So, if we are going to persist with the tradition, law and custom, can we make this work a little better?
Why doesn’t Australia Post create transferable addresses that you take with you, like your email, or mobile phone number?
You can apply for a postal, say, number, and provide that to all the businesses you deal with. AP’s mail sorting machines read this number, print the address you have left with them on the envelope, and shoot it off to what is now your local post office for physical delivery.
When you move, you simply update your address with AP, and thus all your dealings get sent to your new addresses. Simultaneously, you’ve drastically reduced the number of people who can potentially abuse their knowledge of your physical location.

Cool story bro.

Before you ask “what does it mean?”, ask “does it mean anything?”

This year, and the last, the lovely Lowy Institute Poll has produced a headline grabbing finding that Australians, and particularly young Australians, are ambivalent about democracy. The search for meaning was on. This year it was attributed, in part, to a generation who have known only the long summer of liberty, and, inevitably, to the Internet [1]. Last year, the nation’s greatest practitioners of post-modernity at The Australian blamed relativism in schools.

All this dicussion bypasses the first, and most important step in any inferences. The first thing you should always ask is “does it mean anything, at all?”.

Lets look at the actual question. The respondents were asked if they agreed that “democracy is preferable to any other kind of government“.

How did respondents interpret this question? We don’t know.

What did they think democracy meant? Maybe the Lowy staff sometimes forget that non politics graduates don’t have concrete definitions of political systems stamped into their brains. I interpret it as “rule by repesentatives elected by full adult suffrage”. It seems reasonable to assume most Australians would do likewise, rather than the definition used by Communist parties - “rule by Communist parties as representatives of the people”. Elsewhere in the poll a majority is shown to believe that the Indonesian political system, governed by representatives from full adult suffrage, is not a democracy. Given this the respondents may even be interpreting the question as “Rule by representatives elected by white people” – which was a definition happily used in many English speaking countries until well into the 20th century. We don’t know.

We shouldn’t assume when we can ask. Most political polls try to briefly describe a policy before asking about it, and this question could easily have read “Democracy, that is rule by representatives elected by full adult suffrage….” or something similar. That would have led us a little closer to a meaningful question.

If we don’t know how respondents understood “democracy”, we don’t know what they comparing it to either. Again, “democracy is preferable to any other kind of government“. Any other kind of government. That is pretty broad. That most include rule by omniscient computers. Rule by the true messiah. Rule by perfect, uncorruptable guardians. Direct rule by people who vote every day on their smart phones. No rule because no leviathan is necessary to keep the peace because people are just nice.

None of these are plausible alternatives, but they clearly fall within the literal scope of the question. Were respondents considering these? We don’t know.

The writers of the question were probably much more interested in actually existing alternatives. If so, why not ask? “Is electoral democracy preferable to any other system currently practiced in the world?”. Even that seems too broad for me, especially if respondents are rightfully aware that they don’t know the government of every country. Why not make it concrete by asking multiple questions like “Is democracy, as practiced in Australia, preferable to….” and ask about “Party rule in Mainland China”; “The monarchy of Saudi Arabia”?….

Continue reading

Reform as a macro policy lever.

Mark Crosby hrumphs about “Abenomics”.

I put “Abenomics” in quotation marks because it’s not really about the current policy direction in Japan —especially since it doesn’t the monetary policy aspects which are both the most interesting, novel and experimental part that warrants the new label. I could probably have put “Mark Crosby” in quotation marks, to the extent that the opinions are the expression of a global hrumphing id and is largely unrelated to the vessel through which it speaks.
The discussion about Japan’s economic doldrums highlights two great problems in macroeconomic discourse. The first is a lack of proper inference even when it is easy, and the latter is the weakness of discussing “reform” in macroeconomic circumstances.
Let’s consider how we can infer stuff about Japan’s economy. The population is aging, and there is a great deal in law and firm structure and culture that we would consider far from ideal. It’s natural to believe then, that combined these would puts constraints on economic growth.
But is this a binding constraint now? Unless you’re implying some kind of structural demand deficiency (which I suspect no-one is apart from MMTers), then the constraints that both demography and regulation/culture are imposing are supply side —Japan cannot produce more.  If this was so, and Japan is chasing the small pile of goods they can produce with too much money from huge deficits and low interest rates, what would we see?
High inflation. Of course.
What do we see?
The exact opposite.

Continue reading

Ideas that may or may not matter: Population, the home market effect and manufacturing

This is sort of in the vein of the intermittent series (1, 2), its adopted sibling and an older post on “hollowing out”. But it’s also much less thought out.

Earlier today, following the announcement that Ford would shut its Geelong plant,  Scott Steel tweeted

Although the following conversation indicated he may have been concerned largely with products designed for Australian consumers rather than domestic production and certainly not exports, it did remind me of something very interesting, but possibly unimportant – the home markets effect, a product (partly) of the equally fascinating and possibly unimportant New Trade Theory and New Economic Geography.

In short, companies that produce for a market in their own country have an advantage when exporting. If we have increasing returns to scale, that is it keeps getting cheaper to produce more once you’re already producing, then the efficient, cheap producers are those who are already producing. This might simply be because the factories are already built, the workers trained, the know how known etc so there are no start up costs.

If so, then when it comes to trade, the countries who were producing widgets for their own market are those that provide it cheapest to everyone else. The home market has become part of the country’s comparative advantage.

The trivial example might be in your cupboard. If you have a tin of tomatoes, unless it is SPC, its almost certainly from Italy. The most expensive part of a tin of tomatoes is the canning. Italian plants already produces heaps of tins for Italians, so they can provide them for just 79 cents to us. Continue reading