The new record

Update: Now 621 comments.

Harvard University economist Alberto Alesina and his co-authors have systematically studied every major episode of fiscal adjustment across the Organisation for Economic Co-operation and Development countries since 1980. They find that fiscal consolidations driven by reductions in government spending are as likely to be associated with high economic growth as fiscal expansions.
These findings are consistent with the estimates of economists such as Robert Barro and others that the multiplier effect from discretionary fiscal stimulus is small. These effects are symmetrical, implying that a fiscal consolidation need not have negative implications for economic growth.

That op-ed has generated a strange post from John Quiggin.

But Alesina’s work is probably the most-refuted piece of economic analysis put out (though never published in a peer-reviewed journal) in recent decades. It’s been demolished not only by the usual suspects like Krugman and DeLong (and me), but by the Economist, the IMF and even by one of Alesina’s own co-authors, Roberto Perotti.

So the paper in dispute is Large changes in fiscal policy: taxes versus spending (ungated earlier version here). Quiggin claims this paper was “never published in a peer-reviewed journal”. That is a strange claim to make. Alesina lists it on his “Recently Published Papers” web-page, while the NBER claims it was published in in “Tax Policy and the Economy, Volume 24 (2010), The University of Chicago Press”. Perhaps this (excellent) publication isn’t peer reviewed? So I had a look at the Jstor page for the journal.

Tax Policy and the Economy publishes current academic research findings on taxation and government spending that have both immediate bearing on policy debates and longer-term interest.

Edited by Jeffrey R. Brown and James M. Poterba.

That might be out of date – James Poterba no longer edits the journal. But you get the idea. It also lists the NBER Board of Directors – but what about peer-review? I found this under the instructions for authors before the paper is sent to the publishers (emphasis added).

Before a manuscript is transmitted to UCP, all negotiations between the journal office, peer reviewers, and authors with regard to its content, organization, etc. must have been resolved.

That would seem to suggest that there is a peer-review process.

I also downloaded a copy of the paper from the University Library system (for my own records anyway) and to ensure that both the Alesina and NBER were actually telling the truth. All up, as far as I can tell, the paper exists, the paper was published, and appears to have been peer-reviewed.

Then is it the most refuted piece of economic analysis in recent decades? Hard to tell – I google scholared the paper. Wow – 140 cites already; doing well for an unpublished, non-peer reviewed work. They can’t all be negative – the first is by Barro. Then what about being slagged by The Economist and

could they not have spent 30 seconds with Google before hitting “Send”? A search on Alesina+austerity reveals a torrent of criticism, none of which they mention.

Well I followed Quiggin’s advice and googled “Alesina+austerity”. The very first post is by Veronique de Rugy – likely to support the Alesina view.

Alesina himself responds to The Economist here.

The only fig-leaf that Quiggin has is

the work on which they relied was, at best, highly controversial.

Fancy that – cutting edge research into a highly politicised aspect of public policy is “controversial”. Does Quiggin think AFR readers are so dumb they wouldn’t realise that? Really?

So what are we to make of this?

It is hard to know which is worse – the possibility that Kirchner and Carling, presented by the CIS as expert economists, were ignorant of all this, or the alternative hypothesis that they knew it and decided not to mention it. Either way, it’s an appalling breach of elementary standards of research.

I’m pretty sure the facts have been brought to the attention of Kirchner and Carling. The honest thing to do would be to write to the Fin pointing out that the work on which they relied was, at best, highly controversial. If Kirchner, Carling and the CIS are unwilling to do this, we can draw the conclusion that they cannot be trusted in anything they write.

This is not an open invitation for people to launch into John Quiggin – excessively rude or OT comments will be culled.

Hulls held the seat by 6.9% at the last election — a margin any popular Premier with even a modest record of achievement might have seen his candidate make up.

(emphasis added)
Heh.

Well, yes.

There is a very broad provision in the Australian Consumer Law that prohibits conduct by a corporation that is misleading or deceptive, or would be likely to mislead or deceive you.

It makes no difference whether the business intended to mislead or deceive you—it is how the conduct of the business affected your thoughts and beliefs that matters.

If the overall impression left by an advertisement, promotion, quotation, statement or other representation made by a business creates a misleading impression in your mind—such as to the price, value or the quality of any goods and services—then the conduct is likely to breach the law.

Here is the Age describing the outcome of an Audit Office investigation into the government’s climate change policy promotions.

The department established a fact-checking matrix purporting to allow it to reference each of the 142 claims made in the radio, television, print and mailout campaign but, when checked by the Audit Office, 52 of the references were found to fall short.

Of those 32 were in the What a Carbon Price Means for You document mailed to every household in Australia. That is 32 false claims in a 19 page document.

No doubt the government has exempted its own public communication from ACCC scrutiny.

Julia Gillard and Wayne Swan can huff and puff as much as they like about the Coalition’s economic plans being vague, they, however, are in government and actually have to perform. The pressure in 2012 is on them.

The Federal Court has ruled Optus is not breaching copyright by allowing customers to watch sporting matches shown on free-to-air TV on a short delay through its mobile TV Now service.

What Optus have done is effectively sell remote access to your video recorder. People have the right to record shows for later consumption and can now do over their smart phone. So what’s the problem?

[NRL chief executive David] Gallop says the sporting bodies have an urgent need for the Government to introduce new laws.

“A relatively simple amendment to the Copyright Act will fix it,” he told ABC News 24′s Grandstand program.

“We are talking about something that could seriously devalue our rights.

“You have effectively got an asset of the sports, which is the copyright in our content – something we consider to be valuable in our balance sheet, and it has ended up in the somebody else’s balance sheet in Optus.”

The ruling could seriously reduce the NRL’s next television deal as the code prepares to renegotiate its broadcasting rights.

That ‘something that could seriously devalue our rights’ is called creative destruction. They still own their asset but it is not as valuable as it was before. Copyright laws do not exist to guarantee revenue. Now if the sporting bodies were to sell the rights to their asset to pay TV then the case would have had a different outcome. The only people who can record pay TV for later consumption are pay TV subscribers – anybody can record free-to-air. If anything the sporting codes should be lobbying government to abandon the anti-siphoning laws.

Update: If my good friends Alan Moran and Steve Kates are consistent with their views on book copyright and parallel importation they would agree with the sporting codes that the case represents a violation of their property rights. I haven’t spoken to them about this case but no doubt will do so soon.

Unfortunately, unlike universities in many countries, Australian higher education has become a homogenised product where diversity appears to be actively discouraged by government policies. This is bad for the universities, the academics and the students.

So what does Marchett say?

But building a business school that leads in its chosen market requires the same skills it takes to create a great and enduring brand in any other industry.
And tell me what sector of the private economy does not get sick of the state sticking its bib in.
Blaming the bureaucrats does not cut it.

Some good points on both sides. There is too much government intervention in the higher education sector but senior management shouldn’t be blaming bureaucrats. Maintaining and improving quality is senior management’s job – that is what they get paid for.

Round two has began. Stephen King replies.

Australian universities are tied up in government rules and regulations that prevent innovation. The most obvious one relates to revenue at the undergraduate level. An Australian university gets paid the same per-student fee for an undergraduate course regardless of quality. This results in mediocrity.

He then goes to give an example of how that works. He then argues for fee liberalisation and competition between universities to improve quality. I’m happy to accept all that. But I’m not convinced by the initial premise.

It is true that the Australian government pays a fixed fee for Australian students to attend Australian universities. But Business (or Commerce) faculties also accept large numbers of international students and charge fees. The revenue from those students is (often) substantially more than the revenue earned from Australian students. Consequently while there isn’t open slather competition, nonetheless the argument that mediocrity should or could be expected is weak. (At least weak in those areas of universities where a large number of fee paying students are present).

It is possible that the convergence of business education is a function of competition. The Hotelling theorem suggests exactly that.

The Federal Government, through the ACCC, is making the carbon tax the ‘Voldemort’ of taxes. It’s the tax whose name you dare not speak for fear of prosecution.
…
It’s common sense if you slap a big new tax on the economy, especially on electricity, it will increase prices. The Government does not want business to be able to tell their customers the reason why.

Julia Gillard, February 8, 2012

The CEO of the company has made it absolutely clear that this is not about carbon pricing, but about other pressures on the business, including the high Australian dollar.
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I think it is disgusting that the opposition takes the approach of using the potential job losses of hard-working Australians as grist to its mill for its fear campaign.

Update: Alan Cransberg, February 8, 2012

Obviously post July 1 that will make life more difficult for us.
…
Post July 1 we have obviously got another challenge to overcome and we’re very keen on doing that.

[Right-to-work] laws aren’t right because they entitle a worker to all the benefits of a union-negotiated contract without paying any dues. In other words, they grant a free ride, aimed at undermining the desire of anyone to pay their fair share. Regardless of how you feel about unions, the unfairness of this legislation should offend you.

That very argument can be used to justify military conscription. As Klain suggests we should be very offended. Industrial slavery is just as offensive as military slavery and should be treated with precisely the same contempt.

“It’s slightly absurd that in the English-speaking world on 15,000 separate occasions each year a lecture is given parroting the basics of capitalism,” he said.

Well it might be, it could be, I doubt it. But what evidence is there that a lecture on the basics of capitalism is given at 15,000 universities ever, let alone each year?