Neoclassical economics III: a machine to destroy the world

[Published at Pearls & Irritations 23 Sept.]

The false nostrums of the pseudo-science of neoclassical economics have been used to create a system that promotes endlessly increasing consumption of resources and endless elaboration of technology. This system already operates far beyond the needs of people. Our survival requires that we rein in the machine and return to proven and durable, social and moral forms of organisation.

Growth has a fundamental place in the biological world, of which we humans are a part. Unchecked growth has no place, outside of the microbial world. Unchecked growth is called a plague, an epidemic or a cancer.

Growth, among mainstream economists, has become a reflexive, mindless goal, specifically growth of the Gross Domestic Product. Growth of the GDP is the dominant global criterion for allegedly successful management of an economy. GDP is an indiscriminate measure of what we spend money on: some things good, some useless, some bad and, increasingly, some attempting to repair damage from previous spending. GDP is not a useful measure of our quality of life, whose improvement should be the real goal, but it does correlate with resource use and resource waste, also known as pollution.

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Neoclassical economics II: pseudo-scholarship

[Published at Pearls & Irritations, 22 Sept.]

Neoclassical economics is without scholarly integrity. It does not belong in universities. It certainly should not be the dominant source of policy advice to governments.

Most scholarly disciplines, be they history, physics or ecology, have a conception of appropriate standards by which the evidential basis of an argument is presented and the reasoning leading to conclusions is explained. The goal is to shed light on the workings of the world, and a criterion for a successful study is that observations or records are consistent with the study’s conclusions.

Neoclassical economics, the strand of economics that has dominated world policies for several decades, fails these criteria. Its conclusions are regularly contradicted by developments in the real world. A dominant criterion for a successful study is that its logic is internally consistent; it thus confuses mathematics with the science it claims to be. It is variously claimed that assumptions on which a theory is based don’t matter, or that the better the theory the more unrealistic the assumptions, or that all theories are wrong. It imagines its theories are useful approximations to reality, and fails to appreciate that more reasonable assumptions can lead to radically different conclusions, so its theories may be deeply misleading.

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Neoclassical economics I: farcical global warming analyses

William Nordhaus in Stockholm

[Published 21 Sept at Pearls and Irritations.]

Analyses of the economic effects of global warming by prominent economists are based on patently invalid arguments, profound ignorance of the global response to solar energy and basic misrepresentation of scientific sources. Their conclusion that the effects are minor is egregiously in error and use of their analyses to advise governments has placed the world in peril.

Economist Steve Keen has published a critique (and summary) of analyses by William Nordhaus and others of the effects of global warming on the global economy. Those analyses, incorporated into official IPCC reports, suggest the effects of global warming are minor. Keen’s critique reveals the analyses to be absurdly deficient, reflecting not only profound ignorance but patently invalid arguments and a lack of scholarly integrity.

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Dear Labor

[Just out at Pearls & Irritations. Lately I’ve been avoiding politics, it’s bad for my health. Especially after the Eden-Monaro by-election, in which almost everyone retreated to their usual tribal habits. Never mind drought, six megafires, floods, virus … Hard to fathom.]

Andrew Fisher, three times PM

Dear Labor. Has anyone among your parliamentary cohort noticed that neoliberalism is a failure? Has it occurred to anyone that promoting selfishness and making people insecure is a recipe for people to turn on each other and shred the social fabric? Does anyone think it might be time to stop being Liberal-lite? Time to champion the battlers and stop pandering to the fat cats? Time for a Labor party to remember why it was founded?

The current lesson is stark. Private aged care facilities that are under-staffed, under-resourced and disgustingly incompetent at care. Insecure, untrained ‘security’ guards fail to maintain hotel quarantine, and become virus spreaders instead. That is where outsourcing and privatising has got us.

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A chance in Eden-Monaro to reject third-rate governance

[Published at Independent Australia 14, June, but with the headline seriously neutered. See note at end*. May be the end of the line with IA, sad to say.]

The political class keeps acting as though the Government deserves to be taken seriously, but the Government is grossly incompetent, corrupt, deluded and, by any reasonable standard of truth, illegitimate. That the Opposition can’t beat them constitutes its own calamitous failure. Voters in the coming Eden-Monaro by-election have the choice of people who could actually represent, and govern.

There are some things the federal Government could be doing in response to the rapid-fire series of disasters still unfolding in Australia.

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Eden-Monaro can vote to bring us together

[Written for a certain ACT newspaper, but no response so far.]

Citizens in the Eden-Monaro electorate, which surrounds the ACT, have a chance in the coming by-election to vote for a new path in Australian politics. We can turn away from scandal, corruption, in-fighting and incompetence and towards a fair-go, full-employment Australia with a clean and healthy future.

We can turn away from the divisiveness that is having such tragic consequences in the United States. We can work together, as we have through the fires and the virus emergency.

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If you want a better deal, change your vote

[A by-election will be held in my electorate of Eden-Monaro 4 July. This and some likely subsequent posts are in this context, intended for local media—but relevant more widely. Published 17 June at District Bulletin.]

Karen Porter

If you vote the same you’ll get the same. Don’t expect much to change if the old parties stay in power. The Coalition is good at promising but not so good at delivering. That’s because they don’t really believe in government services, they think you should fend for yourself. Labor, with its usual daring, is being Liberal Lite.

So don’t expect much help with bushfire recovery. Don’t expect much to be done to avert more catastrophes. Don’t even expect much help if the virus killed your livelihood, if you vote for the same-old.

In this by-election there are some real choices, choices that can move us towards a better, fairer Australia – more like we used to be, actually. So now I’m going to suggest you step away from your old tribe and have a look at some new talent. Do you really have much to lose?

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High cost of immigration: GDP gets the sign wrong

Much of the alleged economic benefit of high immigration is actually a very large cost. GDP is not accounting, and its misuse as a measure of welfare distorts our priorities, in this case egregiously.

[Can’t seem to interest anyone in this argument. Looks like it can’t be right I suppose.]

Kristina Keneally, Labor’s immigration spokesperson, recently set the dogs barking again by arguing that the rate of immigration after covid-19 should be lower than the previous very high rate. She argued that we should look to get Australians back to work before importing more people (though her choice of phrasing could have been better).

The sudden dramatic drop in immigration is evidently of great concern to some, judging by a spate of opinion pieces at the ABC (e.g. here and here) and elsewhere reiterating the usual claim that a high immigration rate is good for the economy, or even essential to the economy.

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Immigration imposes a large net cost, and should be reduced

[I’ve posted on this before, but the issue keeps coming up.]

Jane O’Sullivan https://theconversation.com/profiles/jane-osullivan-1809

The dramatic drop in immigration because of the Covid-19 closure of our borders is causing concern among advocates of a high immigration rate, who claim it is essential to the economy. But there is a widely-overlooked and very large cost.

Discussing immigration in Australia is fraught, with any questioning of policy likely to generate outrage and to be labelled racist, populist, nationalist and an assault on Australia’s economy. All of that has followed Labor spokesperson Kristina Keneally’s rather mild suggestion that total numbers of immigrants ought to be lowered after the coronavirus shutdown, especially of temporary immigrants.

The rather hysterical response is partly just over-reaction, partly confected by those who support massive immigration, and partly reflecting common economic furphies.

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After the virus, after neoliberalism: manage for quality of life, not quantity of stuff

[Published in New Economy Journal, 6 May.]

As Menzies foresaw, we have had economic anarchy, and both security and progress have disappeared.

A spirited contest of ideas has already started regarding how we emerge from the coronavirus shutdown. The Prime Minister is talking about ‘snapping back’ to what we were before. Some would like to use the crisis to jump to essentially an authoritarian corporate hegemony. Others would like to see a more sharing society with a more active government and embedded in a healthy natural world.

We are highly unlikely to just snap back, but if we want a more caring, equitable and durable society then we need to get clear about what needs to be done. Some are allowing that neoliberalism is dead, but few seem to be clear about what might replace it. Going back to something like our postwar system might be a good start, but we can do better.

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