Cancun, climate, and weather

Fokke & Sukke are proud weathermen The outcome of the climate negotiations … can now be predicted months in advance.

The 16th Conference of the Parties to the United Nations Framework Convention on Climate Change and the 6th Meeting of the Parties to its Kyoto Protocol has started today in Cancun. It will last for two weeks. Unlike last year’s conference/meeting in Copenhagen, expectations are low this time. Again, results will be minimal.

The economic crises, the results of the mid-term elections in the USA, climategate, and the deception of Copenhagen are often listed as reasons why Cancun is unlikely to lead to a breakthrough. I would add that the international climate negotiations repeat the same moves over and over again. If something did not work the last 10 times, why would you try it again? I’ve argued elsewhere that the international framework for climate policy is complete, and that we should now focus on reducing national emissions at minimum cost.

There is another similarity between Copenhagen and Cancun. It’s winter. There are slow oscillations in the climate. Experts reckon that cold winters may be with us for another decade or so. After that, trend and cycle will conspire to rapid warming.

Model T politics

It appears that we can elect any kind of government we want, so long as it is black.

As Jacques Chirac might say, il a manqué une bonne occasion de se taire.

Beware of journalists bearing history lessons

Today’s Irish Times contains this gem from Stephen Collins:

Another issue that did not get serious traction in the talks was the simplistic call to “burn the bondholders” for which German chancellor Angela Merkel has to take a lot of responsibility.

The European Central Bank was adamantly opposed to the notion as any such move would threaten the financial stability of Europe. It is ironic that the zealots of the US Tea Party movement and many of those on the left in Ireland share a common belief in “burning bondholders” and damn the consequences.

The lesson of the Great Depression of the 1930s was that taking that kind of approach leads to widespread bank failures and national economic collapse which, in turn, threatens the democratic foundations on which our society is built.

Give me a break.

The bank failures of the 1930s were due to bank runs caused by excessively conservative monetary policies, and in particular by the determination of elites to stick with the gold standard well past its sell-by date. Burning bondholders had nothing to do with it.

Insofar as the 1930s involved debt restructuring (in Latin America, for example), this was part of the solution, not part of the problem — cf. the work by Eichengreen and Portes.

The lesson of the 1930s is that slavish adherence to economic orthodoxy can lead to disaster, and that sometimes you need a radical break with past policy mistakes in order to turn around expectations and prepare the way for recovery. FDR’s abandoning the gold standard was one such radical break; there were other radical breaks with the past that were much less benign, and that were directly caused by previous hyper-orthodoxy.

Finally abandoning the socialization of private losses would not just have made the Irish state more solvent, but would have clearly signalled a new beginning in Irish political and economic life. As things stand, it is hard to disagree with Mohamed El-Erian that the present deal is not the game-changer that Ireland needs.

Forfas: Review of Labour Cost Competitiveness

This report is available here.

Summary:

This report examines the scale of the competitiveness challenge facing Irish firms and considers the reasons and implications for the deterioration in Ireland’s cost base over recent years. It looks at recent labour market developments in terms of employment and earnings trends including setting earnings trends against the international context and wage movements in key competitor locations. The report also provides an overview of the key drivers of labour costs and the impact of a range of factors on Irish wage levels is assessed. Drawing all of this analysis together, the report identifies a set of actions designed to improve the efficiency of the labour market, facilitating employment creation and protecting real incomes.

European Commission’s Autumn Forecast

The details of the 2011 and 2012 forecast for Ireland are here.

The full release is here.