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Alan Wood Retires

The Australian’s economics editor, Alan Wood, retires:

After more than 40 federal budgets and 50 state ones, I have decided enough is enough. The last straw was when Wayne Swan put a coloured cover on this year’s Budget Paper No1. What next, his photograph? So I am retiring, and this is my final column as The Australian’s economics editor. However, after a break I will be contributing a weekly opinion page piece. See you then.

posted on 01 July 2008 by skirchner in Economics

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Wood is sounding positively Malthusian these days!

Not a bad final piece, but his reputation will be forever tarnished by his climate change denialism, and this nonsensical idea that Australia should do nothing about climate change because we’re only 1-2% of total emissions, and because China isn’t doing anything.

Earth to Alan:  Extend that argument to every city, state and country on the planet and no-one will do anything, and the Chinese sure as hell won’t do anything if a developed nation like Australia doesn’t.

Posted by .(JavaScript must be enabled to view this email address)  on  07/01  at  11:45 PM


I think Wood’s approach to greenhouse policy is extremely sound. Why unilaterally take a costly action that *might* only yield benefits if others do it too? Why assume that China (or the US, etc) will sacrifice its own living standards just because a pipsqueak little country like Australia does? They might decide to do so but it will have bugger-all to do with us.

What I find most breathtaking is that the very same people (not necessarily including you in this David) who argued against unilaterally lowering trade barriers (which represent a pareto improvement) are now saying that we should take unilateral action that creates a deadweight loss in Australia and globally.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  06:59 AM


Three points:

- The “I won’t do it if you won’t do it” is playground politics.  Its mind bogglingly selfish, and borders on childish.
- We’ve ratified Kyoto (the U.S. will almost certainly do so as well in 2009) so now we need to deliver on our commitments.
- Australia is hardly taking “unilateral action”.  The entire developed world has ratified Kyoto (apart from the U.S) and all countries have made commitments to lower emissions.

This exact same argument is being run by denialists in the UK, in the EU, in Canada, in New Zealand, and in Japan.  Apparently each of those countries is taking “unilateral action”.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  07:09 AM


Go on David. If global warming were such a problem the Europeans would be paying us to cut our emissions.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  07:29 AM


By “unilateral” I mean actions that have not been agreed to as part of a binding global agreement. Acting on anything less is pure gesture. If other developed countries want to be martyrs then let them. We should free-ride. As for ‘selfish’, when China introduces democracy and gets North Korea to behave, South Africa gets rid of Mugabe, Iran and Saudi Arabia allow foreign investment in their oil fields, Pakistan stops supporting terrorists and the US and Europe get rid of farm subsidies, I might listen to lectures about how selfish we are…

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  07:44 AM


Scratch a libertarian and you find a climate change denialist.

That’s the only way for a libertarian to deal with this problem: deny that it even exists.  Any solution, even market-based solutions, necessitate government “interference”.

It breaks your entire philosophy and therefore must be discredited.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  07:45 AM


We don’t want “market-based solutions” - we want just markets. Political environmentalism is just another European heresy and, like fascism and communism did before, it has taken the intelligensia by storm. That’s fine, there is a market for ideas.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  08:24 AM


Yawn.  Like I said, when confronted with this problem, your only response is to discredit it.

Sinc, lets suppose, just suppose, that climate change could be proven, that it was caused by human activities, and that it would threaten civilisation.

Obviously we should do something.  The market left to its own devices won’t solve the problem because CO2 emissions are free, and coal is plentiful and cheap.

What should we do?

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  08:32 AM


Well, there you go again Rajat.  Australia shouldn’t do the right thing until every other country is perfectly behaved.  We should just “free ride”.

Hey, do you think that idea has occurred to anyone else?

Come on Rajat, you don’t think there is a problem do you?

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  08:52 AM


“Sinc, lets suppose, just suppose, that climate change could be proven, that it was caused by human activities, and that it would threaten civilisation.”

I’m happy to wait for the evidence supporting the AGW hypothesis (strictly speaking for non-AGW hypothesis to be falsified - but we all know what you and I mean), and then to see how this impacts human civilisation - not very much I reckon, especially during my life time. So in answer to your question “we” should do nothing. Follow my leadership in this matter and do nothing.

Picking up on Rajat’s point, there are no first-mover advantages in this for Australia. It costs us nothing to free-ride and it costs the world very little for us to free ride. Leadership could cost us heaps. (Think about all those wonderful oficers during WWI who showed wonderful leadership with clean uniforms and shiny buttons and shiny boots charging machine gun nests with their swagger sticks.)

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  09:10 AM


I’m happy to wait for the evidence supporting the AGW hypothesis…

Sinc, that doesn’t even remotely answer my question and you know it.  I’m asking you to accept what every western government now accepts, and what your course of action would be.

Picking up on Rajat’s point, there are no first-mover advantages in this for Australia

We’re not the “first mover”.  We’re the next-to-last mover in the developed world.

You’re right, there are unlikely to be any advantages in Australia becoming a team player and doing our bit, except perhaps some clean energy technologies we could flog later on.  But you could apply that exact same argument to free trade agreements.  Australia could maintain its tariff wall while everyone else lowers theirs, and enjoys a “free ride” i.e. tariff protection for our domestic industries, open markets for our exports.

Hey, did any of you guys play team sports?  Did you just sit on your arse and let the other players do the hard work, but still collect the trophy at the end of the year?

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  09:29 AM


Team sports?? Accept what every western government accepts?? David, buddy, we’re libertarians!!

Back OT. Alan Wood is a fine journalist and he’ll be missed. Thankfully he’ll be back every so often on the op-ed pages.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  11:24 AM


Australia could maintain its tariff wall while everyone else lowers theirs, and enjoys a “free ride” i.e. tariff protection for our domestic industries, open markets for our exports.

Erm, you do realise that this would result in a net welfare loss for Australia (not to mention an overvalued currency)? I don’t think you understand trade economics very well (quel surprise).

The fact remains that it would be irrational for Australia to move first on emissions, and you have marshalled nothing in support of your premise, apart from the dubious assumption that China would say “gee, look at Australia pledging to cut emissions!” and be so heartened it would commit the same sort of economic hara-kiri. As if!

We’re the next-to-last mover in the developed world.

This depends on how you define “mover”. Do you define it as “a country that cuts emissions”, or as “a country that pledges to cut emissions”?

OT: Speaking of resignations, does anyone know where Terry McCrann has gone? He doesn’t seem to have written anything since early May. I don’t suppose he’s replacing Alan as economics editor?

Posted by benson  on  07/02  at  12:10 PM


Erm, you do realise that this would result in a net welfare loss for Australia (not to mention an overvalued currency)?

Did you think I was suggesting this was good policy?  I was struggling, in vain it seems, to make that point that if we are to have an international agreement about free trade, carbon emissions, or anything really, if any one country opts to take a “free ride”, the entire thing falls apart.

I don’t think you understand trade economics very well (quel surprise).

FFS, what was that!?  That was totally uncalled for.  benson, is being an arrogant prick a prerequisite for being a libertarian economist, or does it just come with the general philosophy of me, me, me?

...and you have marshalled nothing in support of your premise…

I’ve marshalled the pretty fundamental point that if we’re to have an international agreement about reducing emissions, it can’t proceed if every nation says “I won’t do anything if you won’t”

This depends on how you define “mover”.

For what is it now, the fifth time, we’re not moving first.  What do you think they’ve been doing in Europe for the past decade?  You think they’re throwing billions at wind farms and nukes for fun?  Sure, it may not have been wildly successful in reducing emissions in absolute terms, but you can’t tell me they haven’t been trying.

Oh, and for all this talk about how reducing emissions is going to damage economies, Europe is looking a hell of a lot healthier than the U.S. at the moment.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  01:31 PM


Did you think I was suggesting this was good policy?

Given that you said “Australia could maintain its tariff wall while everyone else lowers theirs, and enjoys a “free ride””, then yeah.

“Free ride” means that you’re getting a benefit you’re not paying for, so that implies that you think that unilateral tariffs on Australia’s part is, well, a “free ride”.

I’ve marshalled the pretty fundamental point that if we’re to have an international agreement about reducing emissions, it can’t proceed if every nation says “I won’t do anything if you won’t”

Australia’s emissions are a rounding error by comparison, so it’s fair for Australia to insist that the large emitters go first.

In other words, your argument is fine if applied to China and the US - they can’t insist that we go first, but we can insist they go first - because they’re the big emitters and we’re not.

For what is it now, the fifth time, we’re not moving first.

That’s my point. We’re only “not moving first” if your definition of “moving first” is “pledging first to cut emissions”.

If, OTOH, you adopt the more useful definition of “actually cutting emissions first”, then no - Europe is missing its emissions targets, and therefore Europe isn’t “moving first” in that sense.

What do you think they’ve been doing in Europe for the past decade?  You think they’re throwing billions at wind farms and nukes for fun?  Sure, it may not have been wildly successful in reducing emissions in absolute terms, but you can’t tell me they haven’t been trying.

That was my point - actually cutting emissions is more important than merely pledging to do so. You seem to be giving Europe brownie points based on their failed pledges to cut emissions.

Oh, and for all this talk about how reducing emissions is going to damage economies, Europe is looking a hell of a lot healthier than the U.S. at the moment.

This is a non-sequitur - Europe isn’t actually reducing its emissions much (by Europe I suppose you mean western Europe).

Posted by benson  on  07/02  at  02:33 PM


For the record, I don’t think Australia maintaining its tariff wall while every other country removes theirs is good policy or would benefit Australia in any way.  However, it would undoubtedly be politically popular, with both local manufacturers and exporters.

Australia’s emissions are a rounding error by comparison, so it’s fair for Australia to insist that the large emitters go first.

In other words, your argument is fine if applied to China and the US - they can’t insist that we go first, but we can insist they go first - because they’re the big emitters and we’re not.

What complete and utter nonsense.

You seem to be giving Europe brownie points based on their failed pledges to cut emissions.

Not at all.  The Europeans have begun the process that will move their economies to a low-carbon future.  They may not have met their Kyoto targets (yet), but their emissions are certainly lower than they otherwise would have been.

There have been some successes and failures.  Emissions are up in the industry and transport sectors, and in some member states (Spain, Italy…) but household emissions are down, as are emissions from agriculture and waste, and electricty generation is flat.  Two of the biggest emitters, Germany and France, have actually reduced emissions from electricty generation.

Europe is certainly in a better position to cope with the oil shock, which should see transport emissions come off.  At least the Euros can hop on a train/bus/tram (provided courtesy of their pinko governments) instead of driving.  Pity the poor Yanks (and Aussies for that matter) living in their far flung McMansions with twin SUVs in the garage.  BTW Sinc, how’s the resale value on the 4WD looking?

This is a non-sequitur - Europe isn’t actually reducing its emissions much

Perhaps, but equally Europe hasn’t expanded their emissions at the rate US has over the past decade, and its the US that’s in the economic hole ATM.

But hey guys, we all know why the US is in such trouble, don’t we?  If only those cowboy mortgage brokers had been regulated (gasp!) America would be fine today.  Yeah, yeah you can tell me that lack of regulation wasn’t the problem, but no-one’s buying that.  No-one.

Posted by .(JavaScript must be enabled to view this email address)  on  07/02  at  10:51 PM


For the record, I don’t think Australia maintaining its tariff wall while every other country removes theirs is good policy or would benefit Australia in any way.  However, it would undoubtedly be politically popular, with both local manufacturers and exporters.

Maintaining or raising tariffs would actually make exporters (and consumers of course) worse off compared with a counterfactual of lower tariffs. In fact, one of the key motivations for reducing tariffs was to make exporters more competitive.

Posted by .(JavaScript must be enabled to view this email address)  on  07/03  at  12:43 AM


If only those cowboy mortgage brokers had been regulated (gasp!) America would be fine today.

Actually, no. If only they hadn’t have been regulated.
http://www.nypost.com/seven/02052008/postopinion/opedcolumnists/the_real_scandal_243911.htm?page=0

Posted by .(JavaScript must be enabled to view this email address)  on  07/03  at  03:32 AM


I see you’ve linked to a quality journal there Sinc.

Posted by .(JavaScript must be enabled to view this email address)  on  07/03  at  03:52 AM


Stan Liebowitz is highly regarded. His critique of the Boston Fed paper was published in Economic Inquiry.

Posted by .(JavaScript must be enabled to view this email address)  on  07/03  at  05:07 AM


Garnaut puts it much better than I could:

Effective international action is necessary but deeply problematic. Each country benefits from a national point of view if it does less of the mitigation itself, and others do more. If all countries act on this basis, without forethought and cooperation, there will be no resolution of the dilemma.

I’m wondering what Prof Garnaut would make of this contribution from benson?

...your argument is fine if applied to China and the US - they can’t insist that we go first, but we can insist they go first - because they’re the big emitters and we’re not…

Posted by .(JavaScript must be enabled to view this email address)  on  07/04  at  05:01 AM



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