John Barrdear

15 February 200810 November 2008

Why is the US Fed lowering interest rates?

Continuing on from my previous wondering about how panic-driven and effective current US (monetary) policy is, I notice these two posts from Paul Krugman …

Ben Bernanke has cut interest rates a lot since last summer. But can he make a difference? Or is he just, as the old line has it, pushing on a string?

Here’s the Fed funds target rate (red line) — which is what the Fed actually controls — versus the interest rate on Baa corporate bonds (blue line), which is probably a better guide to what matters for actual business spending.

It’s pretty grim. Basically, deteriorating credit conditions have offset everything the Fed has done. Doubleplus ungood.

… and Brad DeLong …

Further cuts in the federal funds rate are on the way. Ben Bernanke is talking about how we are in a slow-moving financial crisis of DeLong Type II: one in which large financial institutions are insolvent–“pressure on bank balance sheets”–and in which lower short-term interest rates and a steeper yield curve are a way of providing institutions with the life jackets they need to paddle to shore.

Larry Meyers has pointed out that the BBB yield is no lower than it was in July–that all the easing has had no effect on the cost of capital that the financial markets feed to the “real economy,” and hence that Fed policy today is no more stimulative than it was last summer.

I’m more inclined to agree with Brad’s assessment than Paul’s implicit prediction of gloom, although it depends on what you think the Fed should be looking at. Paul is clearly hoping for a decrease in long-term rates so-as to stimulate the real economy, while Brad is simply noting that steeper yield curves, manifested here through a drop in base rates and no movement in longer-term paper, are pumping up banks’ profit flows, which will help them deal with the hideous losses from the sub-prime mess, the monoline insurer implosion and all the other nasties out there.

This seems like pretty clear “Bernanke put” behaviour to me. The banks need the short-term increase in profit flows in order to stay solvent in the medium-term. Whether Mr Bernanke is pushing down the base rate because the banks can’t lift the yields on long-term debt or because he doesn’t want them to (since that would hit the real economy) is a moot point.

This doesn’t change the fact that Bernanke is slopping out the good times to save the industry from its own mistakes. It’s probably safe to say that there’ll be no more knuckles rapped (except maybe those of the ratings agencies), so the real question is whether they’ll be allowed to make the same mistakes again …

13 February 2008

Oh please, oh please, oh please

Mr. Rudd, call Andrew Leigh. Call him now. Speaking on Indigenous policy, he writes:

School attendance rates are appalling, and as Woody Allen says “90% of life is just showing up”. So pay Indigenous children to attend school.

Literacy and numeracy gaps are large, and part of the difference may be teacher quality. So the federal government should promise bonuses of up to $50,000 to teachers who can get large improvements in performance in Indigenous schools. Teaching disadvantaged kids is the most important job in Australia – so why does no-one doing it earn a six-figure salary?

Indigenous people are overrepresented in Australia’s jails, which do little more than warehousing. Since many are now private, why not rewrite the contracts, making payment conditional on post-release recidivism and earnings? Let’s create incentives for those who run jails to do more education, and less clock-watching.

A major impediment to children attending school is drunkenness in communities. But a ban is a drastic measure. Let’s allow communities to set their own tax rates on alcohol, and keep the revenue (remember, a ban is effectively a tax rate equivalent to the cost of petrol to the nearest no-ban town).

As many Indigenous policies as possible (including those above) should be subjected to rigorous randomised trials. Those that fail should be discarded without sentiment, and those that succeed should be expanded. We know from the headline indicators that many Indigenous policies haven’t worked; it’s time to start sorting out the wheat from the chaff.

Amen.

13 February 2008

The endless, cacophonic debates of pure democracy

Believing in something and being willing to act on it are two different things. It is terribly difficult to confront authority. Confrontation itself is hard. It’s awkward; uncomfortable. Your face may flush, you might sweat, or stammer. Worse, you can find your mind slipping. Your memory may fail you, the speed or rigour of your thought may lessen and the strength of your argument weaken as a result.

When the confrontation is with authority the difficulty is even worse. Many people have an instinctive acquiescence towards figures of power or authority. It can feel wrong in the gut to openly disagree with them. If you fear that the confrontation may result in bridges being burned, or if you feel that you owe the figure of authority in some way, it can be impossible.

Understand that I am not referring to the discussion of something that you feel ought to change with people you consider your peers. That is easy and even serves as a sort of release-valve for tension on the topic by letting you know that you’re not alone in your beliefs. A simple suggestion to a figure of seniority can often be comfortably managed by most. I am speaking of a push for change; seeking actively to change the actions, if not the very mindset, of an authority figure who may be reticent to the idea.

This is one of the reasons, if not the ultimate justification, for anonymous ballots. The safety of anonymity can free people of their inhibitions and allow them to speak as they truly feel. But what of organisations that do not have a democratic structure? What of the hierarchical power structures of firms and government agencies, of schools and universities and charities?

Hierarchies allow for genuine decision making over the endless, cacophonic debates of pure democracy, but they come at the cost of hampering information flow (at an extreme, it becomes unidirectional) and making people at the bottom feel ineffective or inconsequential.

As a society, we seem to have settled on the idea of power being locally hierarchical, but globally competitive between those separate hierarchies. This concept works best when those hierarchies compete not just in the ideas that they represent, but also for the individuals that they are made up from. The competition for individuals should mean that there is a countervailing force to the negative aspects of hierarchies: in order to attract and keep the best people, the hierarchy must work to involve those people in its thinking.

I am fine with this concept – I do not support radical decentralisation – but we need to recognise that people are not free to costlessly move between hierarchies. This means that the incentive to involve them in the hierarchies’ thinking processes is lessened. It seems reasonable to assume that as the cost of moving to another hierarchy as a fraction of individual benefit gained goes down, the more involved a person will be invited to be. In equilibrium, we would therefore expect the degree of involvement to decrease monotonically as you move down any given hierarchy.

While I do not wish for a pure democracy in everything, I think that the optimum would involve deliberate mechanisms for allowing ideas and information to pass upwards through a hierarchy. Perhaps an open market for ideas on each level, with those “voted best” being passed up to the level above?

13 February 2008

Are we at the tipping point?

Just after the Maine primary, I wondered whether Obama may have been in front all along on the basis that he has been ahead all the way in pledged delegates and the super delegates will probably flock to the leader among pledged delegates in order to build the appearance of unanimity and avoid a floor fight at the convention.

We’ve just had the primaries in Virginia, Maryland and the District of Columbia and as expected, Barack Obama appears to have won all three by strong margins. Here are the updated table and graph, although the data for the 12th of February are still very much estimates:

Date	Barack Obama: running total	Barack Obama: share of pledged delegates	Hillary Clinton: running total	Hillary Clinton: share of pledged delegates
3 Jan (IA)	16	51.6%	15	48.4%
8 Jan (NH)	25	51.0%	24	49.0%
19 Jan (NV)	38	51.4%	36	48.6%
26 Jan (SC)	63	56.8%	48	43.2%
5 Feb (Super Tuesday)	903	50.1%	898	49.9%
9 Feb (LA, NE, WA, Virgin Is.)	998	51.4%	944	48.6%
10 Feb (ME)	1013	51.5%	953	48.5%
12 Feb (DC, MD, VA)	1111	52.5%	1006	47.5%

And just as I predicted (well, Chris Bowers predicted and I agreed), we are starting to see twitchy movement in the super delegates. On the one hand, we have people calling for them to vote according to the will of their constituents. Ryan Avent is typical:

[I]t seems that Obama has an excellent chance at winning the District primary tomorrow. Should that be the case, it would be incredibly unfortunate if the District’s superdelegates essentially undid the wishes of the voting public … It is especially galling that D.C. Councilmembers, so familiar with the frustration of disenfranchisement, would contribute to the further erosion of the District’s electoral clout.

… and the super delegates are listening. Nancy Pelosi, Speaker of the House of Representatives and one of the most influential of currently-neutral super delegates, is “leaning” towards Obama:

A senior adviser to Nancy Pelosi, the Speaker of the House of Representatives, has suggested that she – along with other “party elders” – will step into the ring to end this extraordinary contest if it threatens Democratic hopes of winning back the White House or maintaining control over Congress. Ms Pelosi says that she is “torn” and that “the people will speak – that’s the beauty of a democracy,” before adding: “My focus is on re-electing a Democratic majority in the House of Representatives.”

Her voice would carry great authority among uncommitted super-delegates on Capitol Hill – and she is said to be “leaning” towards Mr Obama. “The party Establishment is not going to turn its back on a candidate who is generating this tremendous excitement and bringing all these new voters into the political process,” said a source close to her. Mr Obama’s team are pressing the same message, especially to members of Congress in districts where he has already won and who may not wish to alienate their core vote in an election year.

12 February 2008

Tyranny and the ethical removal of children

I promise this’ll be my last post on the whole apology business for a while. 🙂 In response to my entry, “An apology for what?“, Cam Riley posted this comment:

Tyranny is tyranny – and removing children from their parents due to their skin colour is a tyrannous act. The goal of republican government is to remove all tyranny from the system. Consequently, past tyrannous acts need to be recognized as such.

I responded pretty quickly with:

I’m not denying that it was an act of tyranny (in the sense of oppression, not in the sense of a single ruler), only that the word “tyranny” is one with massive emotional and judgemental baggage in the same way as “genocide”. Its use may be justified in a literal sense, but it will rarely serve to improve the situation in a world of real politik. In any event, I accept the pragmatic necessity of an apology even if I do not fully accept the moral obligation to apologise today for something that was honestly believed to be just at the time.

I was thinking about this over dinner and it seems to me that there are three largely distinct issues at point here:

The disenfranchisement of a people, meaning that any act of government concerning them was an act of tyranny
The ethical question of when it is acceptable to remove a child from its family
The question of whether the policy of forced removal “worked” in the sense of improving the livelihoods of those children

As I previously mentioned, I do not deny that the stolen generations represented an act of tyranny. That is a definitional consequence of Aboriginal disenfranchisement. But a tyrant may make a good decision that benefits people, just as a democracy may make a bad decision that harms them. There is no disputing the injustice of Aboriginal disenfranchisement in and of itself, but it was parallel to and, at worst, an enabler of the tragedy of the stolen generations, not the cause of it and therefore not the source of the moral wrong.

On the second point, society today still accepts that it is sometimes warranted to forcibly remove a child from its family. This is a terribly difficult decision, but as a society, we judge that it is ethical when that child is held to be in considerable danger. In the UK, for example,

A court can only make a care order if it is sure that:

the child is suffering, or is likely to suffer, significant harm

the harm is caused by the child’s parents

the harm would be caused because of insufficient care being given to the child by the parents in the future

the child is likely to suffer harm because they are beyond parental control

I accept as fact that the Australian government’s policy of removal was based, for the most part, on the ethnicity of the children taken and not their individual safety. That on its own was immoral and warrants reparation to balance the damage done. The problem is that, while the act was wrong, it was performed under the honest (but false) belief that it was the best thing to do. At the time, I have no doubt, it would have been widely believed that although the removal of children was regrettable, the ends justified the means.

Which brings us to the third point. I seriously wonder whether the stolen generation would be as much of an issue today if the policy had been a roaring success. What if the democracy, acting tyrannically over the disenfranchised, made a bad decision that nevertheless turned out to be beneficial to all involved, with Aboriginals today enjoying educational, health and income outcomes equal to non-indigenous Australians? It ought to still be as much of an issue, but I suspect that it wouldn’t be.

The difficulty in passing judgement on the drafters of the Aboriginal Protection Act (1869) is that while we have the benefit of perfect hindsight, they did not enjoy the benefit of perfect foresight. Does anyone seriously claim that they still would have gone ahead with it if they had they known – and comprehended – what the full consequences of their actions would be?

All of which means that I find myself (a) supporting calls for reparation and (b) opposing the apology on moral grounds, but supporting the necessity of it on pragmatic grounds.

12 February 2008

On the necessity of an apology

Earlier this morning I asked:

Should we hold the actions of the past against the moral standard of today, especially if those actions were held to be just at the time?

I asked because it’s not at all clear to me that we ought to. In response by email, a good friend of mine argued that whatever the answer to my question, it simply isn’t relevant to the practicality of moving forward, because both the perpetrator (the government, not the necessarily the individuals that operated it at the time) and the victims are still around to face each other.

To quote the SMH in quoting Susan Butler, editor of the Macquarie Dictionary:

It is “something that every child knows”, says Susan Butler, editor of the Macquarie Dictionary and Australia’s unofficial keeper of the national vernacular.

“When you say you are sorry, life can go on. Your brother, sister, friend will drop the dispute, whatever it was, and enter into normal relations again. To withhold that ‘sorry’ utterance is to continue the war.”

Like “Good morning” and “How are you?”, she says, it is what linguists call a phatic expression; its meaning lies in its utterance, not necessarily in the content of its words.

In other words, when you have wronged someone, and refuse to say sorry, you are responsible for perpetuating the dispute. You all know that – how many times has each of you fumed over the absence of an apology rather than the original act?

…

The apology is about choosing not to act like dicks, something on which we’ve failed spectacularly so far.

It’s a really strong argument and I take his point. He missed a bit further down in the article, though:

A document handed by the Stolen Generations Alliance to Macklin last week, on behalf of victims and their families, said they overwhelmingly desired money to make the reparations process meaningful.

And Butler realises this, too. The nature of the gesture – its wording and what comes after – remains important.

Examining the seemingly simple five-letter word in a recent edition of the Walkley Magazine, she ended by saying that not saying sorry is as damaging as an insincere sorry.

“Phatic expressions may be about emotion rather than meaning but that is not to say they are not complex and powerful utterances. How you say, or don’t say, ‘Good Morning’ can encapsulate your attitude to life and reveal the state of your personal account in the bank of social capital.”

An insincere apology, given grudgingly and against the wishes of the person saying it, rarely achieves much and sometimes only serves to poison the future relationship. If the apology is needed to move forward, as my friend powerfully argues, it needs to be a real one. It can be embarrassed and awkward, but it needs conviction.

It also needs to be accepted. The government will easily be able to drum up a few indigenous Australians to forgive them on national television, but unless the vast majority of Australian Aboriginals do the same – and I’m not sure they will unless it comes with financial reparations – it won’t solve a thing.

Update: Post #3 in this mini-series: “Tyranny and the ethical removal of children“

12 February 2008

An apology for what?

For any non-Australians in the audience, the new Australian government is doing what the previous lot refused to do: apologise on behalf of the parliament and government of Australia to the indigenous people of Australia for the forced removal of children from their families for approximately 100 years until 1969.

I want (as should be little surprise to anyone who knows me) to abstract away from the specifics of this a little. When is an apology for some past injustice warranted?

Should we hold the actions of the past against the moral standard of today, especially if those actions were held to be just at the time? If the answer is ‘yes’, how far back in history is it acceptable to apply our outrage? We don’t judge the Romans for having sex with children or the Aztecs for their human sacrifices – we simply view them as having taken place in an environment of ignorance.

The Aztecs were not only a long time ago, but also from a different cultural heritage to us. The Romans were a long time ago and also our cultural ancestors, so we can’t simply say that we only judge our own.

So where (and why) do we draw a line in the sand?

If someone can explain that to me, then I can happily endorse the apology (I already accept it). People who argue that since we didn’t do it (after all – we weren’t around then) we shouldn’t apologise are missing an important point: The government and the parliament of Australia were around then and did play an active role. The difference between the (wo)man and the office is important here. The office of the government of Australia did the Bad Thing. If it is right to judge the past against the moral measures of the present, then it is also right for the office of the government of Australia to apologise. The particulars of who is occupying that office now is of little consequence.

The only way out, from my point of view, is if there were a significant change of constitution in the intervening period, so that it might be legitimately said that the government of today is not in any way the government that existed at the time. Is that why we let the Romans off the hook? We would judge them, only they don’t exist any more?

Back to the particulars: I don’t really mind whether we call it tyranny (although I think that choice of words is inflammatory) or whether Labor supporters want to poke fun at the Coalition (although I think that at least some of the Coalition’s concerns are legitimate). I think that the apology is a symbolic gesture that, on its own, will help not at all. I think that the Aboriginals of Australia have complaints (most but not all of them legitimate) far deeper and wider than the stolen generations and that the stolen generation issue simply became an emblematic focal point.

The apology is no skin off my nose and if it makes people feel better for a while, go nuts. But don’t try telling me that it’ll do a damned thing to improve the lives of Aboriginals in Oz. For that we need real policies of support from the government and real acknowledgement of the realities of the world from the Aboriginal community.

Update: I got an excellent response from a good friend of mine.

11 February 2008

Barack Obama: winning since day 1?

Via Matthew Ylesias, I came across this piece by Chris Bowers: “Now Is Not The Time To Count Super Delegates”

Right now, with the exception of NBC news, most news outlets are counting super delegates in their running delegate total for the Democratic nomination … From 1984 to 2004, the overwhelming majority of super delegates have cast their convention votes for the candidate who won more votes during the primary and caucus season. This was just as true for Mondale in 1984 as it was for Kerry in 2004. On every single occasion, large numbers of super delegates switched their early, public support for a candidate in favor of the candidate who had the most popular support from voters in Democratic primaries and participants in Democratic caucuses.

This is important stuff. For the 2008 nomination, the Democratic Party will have 3,253 pledged delegates at their August convention and 796 unpledged (or “super”) delegates. If the super-delegates break 90-10 for the winner among pledged delegates, a 1,627 vs. 1,626 split in the pledged delegates would end up as a 2,343 vs. 1,706 vote at the convention and so look like a blow-out for the winner.

Why do they do it? Because they want the public to see the Democratic Party lining up behind a clear candidate. A bitter, narrow fight on the convention floor looks like a divided party that cannot come together and lead, whereas a large win looks like momentum and inevitability. It’s also important to note that, by and large, the super-delegates are up for re-election themselves. From Wikipedia: “In 2008, the superdelegates include 221 members of the U.S. House of Representatives, 48 senators, including the District of Columbia’s two shadow senators, 31 state and territorial governors, 397 members of the Democratic National Committee, 23 distinguished party leaders, and 76 others.” Nobody wants to be running for re-election as the guy or girl who voted against their own presidential candidate.

Given all that, I thought I’d have a look at how Mr. Obama and Mrs. Clinton have being going in just the pledged delegates. The data below comes mostly from CNN. Some of the counts are still just estimates. Note that I am ignoring the delegates awarded to John Edwards.

Date	Barack Obama: running total	Barack Obama: fraction of pledged delegates	Hillary Clinton: running total	Hillary Clinton: fraction of pledged delegates
3 Jan	16	51.6%	15	48.4%
8 Jan	25	51.0%	24	49.0%
19 Jan	38	51.4%	36	48.6%
26 Jan	63	56.8%	48	43.2%
5 Feb	901	50.1%	899	49.9%
9 Feb	987	51.1%	944	48.9%
10 Feb	1002	51.3%	953	48.7%

In the lead up to super (dooper) Tuesday on the 5th of February, Hillary Clinton had to temporarily stump up US$5 million of her own money. Following the Maine caucus on the 10th of February, she changed her campaign manager. On the 12th of February, the states of Maryland and Virginia and the District of Columbia will vote in their primaries and the Democrats Abroad will finish taking its votes (they started on the 5th of Feb). The polls have Obama clearly in front in Maryland (by 21 points on average) and Virginia (by 17 points on average). The betting markets estimate his chances of winning in Maryland and Virginia at 97.7% and 96.0% respectively. On the 19th of February, Hawaii (where Obama was born) will have its caucus and Wisconsin will have its primary.

It’s not until Texas, Rhode Island, Vermont and Ohio on the 4th of March that pundits are predicting the next win for Hillary, but there’s no guarantee that she’ll win enough to get in front.

Perhaps the “coming from behind” story is wrong. Perhaps Barack Obama has been in front every step of the way in 2008.

8 February 2008

A request for help: wordpress stats

In case any of my viewers knows anything about wordpress … I just posted this support request over at wordpress.org:

I am using v1.1.1 of the WordPress.com stats plugin. Since I installed it (on the 30th of January), the statistics I see on wordpress.com have been odd, to say the least.

I realise that what I see on wordpress.com stats does not include my own page views, so those stats ought to be lower than the total views.

Here are the stats thus-far for February via wordpress.com: http://john.barrdear.com/stuff/wordpress_stats.jpg

Here are the stats for the same period from my host: http://john.barrdear.com/stuff/site_stats.jpg

For example, wordpress.com thinks that my “Beaten to the punch” post has seen 13 hits, but my host reports 3 views (1 entry, 1 exit).

What appears (to me) to be happening is that wordpress.com is recording hits to several posts against just one post.

As another example, my site gets aggregated here: http://ozpolitics.info/feeds. When someone clicks on the link on that page, they come through to the post-specific page on my site. WordPress.com stats are recognising ozpolitics.info/feeds as the referrer, but not the post-specific page as a hit.

Here is a specific example: http://john.barrdear.com/stuff/stat_inconsistency.jpg

Notice that yesterday I got two referrals from ozpolitics.info/feeds. I only had two articles listed on the ozpolitics feed yesterday: “Idle Curiosity” and “Sweating the small stuff”, neither of which is listed as getting a hit in yesterday’s posts.

If anyone out there has any clue what might be happening, please let me know, either here or on the wordpress.org site. Thanks.

8 February 2008

The Archbishop of Canterbury: mischaracterised, but still off the rails

The Archbishop of Canterbury, Dr Rowan Williams, has drawn a storm of criticism ( BBC, Times, Guardian, Independent, Telegraph) by calling for a “plural jurisdiction” that allows for Islamic law to be recognised in Britain.

It seems unavoidable and, as a matter of fact, certain conditions of sharia are already recognised in our society and under our law, so it is not as if we are bringing in an alien and rival system. We already have in this country a number of situations in which the internal law of religious communities is recognised by the law of the land as justifying conscientious objections in certain circumstances.

There is a place for finding what would be a constructive accommodation with some aspects of Muslim law as we already do with aspects of other kinds of religious law.

That principle that there is only one law for everybody is an important pillar of our social identity as a Western democracy. But I think it is a misunderstanding to suppose that people don’t have other affiliations, other loyalties which shape and dictate how they behave in society and that the law needs to take some account of that.

As I understand it, under English (and, I’m guessing, Australian) law, there is already the following arrangement:

In the event of a civil dispute, if both parties independently agree to it, that dispute can be heard in arbitration by somebody (or a group of people) separate from the courts and the decision of that arbitration will be binding under the law. There are nevertheless legal limits as to what the arbitration may declare.

As a first example, this practice is widely used in investment law, both domestic and international.

As a second example, it would be available if a tenant is complaining that their landlord hasn’t fixed the heating.

At present, there is a Jewish version of this set up in Britain. There is nothing to stop a Muslim equivalent being set up, if it hasn’t already.

The key point is that the arbitration can not proceed unless both parties agree beforehand to take part and abide by the ruling. If either one does not, then it goes before the regular courts.

Where the archbishop has gone off the rails, in my opinion, is that he seems to be calling for an entirely extra-judicial set-up; a competing system of justice that is parallel to (not a component of) the general law of the state. That is simply wrong.