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Archive for February, 2018

Economics in Two Lessons: Chapter 2

February 28th, 2018 11 comments

Thanks to everyone who commented on Chapter 1 my book, Economics in Two Lessons. I’ve benefited a lot from the comments and implemented quite a few changes.

The book so far is available
Table of Contents
Introduction.
Chapter 1
Feel free to make further comments on these chapters if you wish.

Moving along, here’s the draft of Chapter 2. Again, I welcome comments, criticism and encouragement.

Categories: Economics in Two Lessons Tags:

Tweet trouble

February 26th, 2018 29 comments

According to Chris Mitchell at the Oz (paywalled, I think), I’m the mastermind (or at least a mastermind) behind the original version of Emma Alberici’s now-rewritten analysis of company tax cuts. Here’s Mitchell

In Alberici’s case a lot of weight was given to left-wing academic John Quiggin and economist Saul Eslake, a prominent commentator whose position on the central question — do corporate tax cuts eventually trickle down as increased wages? — seems to have changed over the years.

It’s nice to be so influential, but there’s just one problem. In Alberici’s original article (here), I don’t get a mention.

But maybe Alberici is presenting my ideas second-hand. Sadly, the arguments I’ve put forward on the topic don’t get a run either. Here’s the summary of my piece in Crikey (also paywalled, I fear)

Optimistic tax models put the average Australian at being 0.1% better off under the proposed company tax cuts. And the good news is they’ll only have to wait 25 years for that tiny benefit to appear!

Alberici doesn’t mention this.

So how did I get top billing? The villain, as usual, is social media. Twitter user (tweep?) Matt K asked me whether there were any mistakes in the Alberici piece and I said no. Apart from a couple of replies to further questions, that was my entire contribution, as you can see from the thread of the conversation. But, as they say nowadays, it went viral, at least insofar as a comment on tax policy can go viral.

Before I knew it, I was being attacked from all directions. Helen Razer said I was a bogus “leftist”, while Aaron Patrick at the Fin hit me from the right because I mentioned Marx and Engels in the draft introduction to my book. To be fair, Razer wrote to explain her position. By contrast, Patrick’s whole technique is verballing and out-of-context gotchas’, so I don’t expect that to change.

I do get a passing mention in the revised column, but since my name is mis-spelt, I think it’s safe to assume that I’m not a primary source. Obviously, Mitchell didn’t get around to reading the original (maybe the research skillz of Newscorp aren’t up to locating it) and assumed that I was quoted there.

While I’m on the subject, Mitchell had an amazing piece a while back (not worth linking, since Paul Kelly and Mark Latham have already trodden this ground many times) about the end of freedom of speech in Australia. The burden of it is that decent, ordinary Australians like Mitchell and Andrew Bolt, limited as they are to major national newspapers and broadcast media, can’t say what they think about Muslims, lefties and so on any more without people on Twitter saying what they think about Mitchell and Bolt. As Tim Dunlop says in a similar context, any less self-reflection and they’d be vampires.

Monday Message Board

February 26th, 2018 8 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:

The vocational education disaster

February 23rd, 2018 6 comments

The combination of budget cuts and market ideology has been a disaster for vocational education in Australia. That’s the shorter version of a piece for Inside story based on my submission to the SA TAFE Senate inquiry.

Update: On the same day this article appeared, Labor has come out with a call for a major inquiry encompassing both unis and TAFEs. Whether or not my past advocacy had anything to do with this, it’s a welcome outcome.

Weathervanes

February 21st, 2018 14 comments

I have a piece in Crikey (possibly paywalled) looking at the gyrations of our political leaders on climate policy in general and Adani in particular. I suppose what matters is that you end up facing the right way: on this test, Shorten does reasonably, Turnbull fails miserably and Abbott is laughable.

Categories: Oz Politics Tags:

Economics in Two Lessons: Draft TOC

February 20th, 2018 11 comments

At the suggestion of reader Newtownian, I’m posting a draft Table of Contents for Economics in Two Lessons<em. It's over the fold, with a better formatted version here
Read more…

Categories: Economics in Two Lessons Tags:

Economics in Two Lessons: Chapter 1

February 19th, 2018 5 comments

Thanks to everyone who commented on the draft introduction to my book, Economics in Two Lessons. The revised introduction is here. Feel free to make further comments on it if you wish.

Moving along, here’s the draft of Chapter 1. Again, I welcome comments, criticism and encouragement.

Categories: Economics in Two Lessons Tags:

Monday Message Board

February 19th, 2018 24 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:

Economics in Two Lessons

February 16th, 2018 18 comments

I’ve finally committed to delivering a manuscript of my long-overdue book Economics in Two Lessons. As part of the process, I’m going to post the chapters, one at a time, and ask for comments, criticism, encouragement and so on. To begin at the beginning, here’s the Introduction.



Sandpit

February 12th, 2018 9 comments

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

Categories: Regular Features Tags:

Monday Message Board

February 12th, 2018 27 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:

Bitcoin kills the efficient market hypothesis (now with full article)

February 9th, 2018 34 comments

I have a piece in the New York Times looking at the implications for the bitcoin bubble for economic theory and, in particular, for the (Strong) Efficient (Financial) Markets Hypothesis (EMH) which states that prices determined in financial markets reflect all the available information about the value of any asset. If that’s true then governments can’t improve on a policy of allocating investment to those assets with the highest market return, which can be achieved by letting private capital markets determine all investment decisions.

Bitcoins have no inherent usefulness, being a record of pointless calculations. They are useless as a currency (their putative purpose) and are now being promoted as a store of value on the basis of scarcity alone. This leaves supporters of the EMH with a dilemma.

If Bitcoins are indeed worthless, then financial markets should price them at zero. But the introduction of futures trading actually boosted the price in the short run. Even after recent declines, there’s no sign that prices will reach zero any time soon.

On the other hand, if Bitcoins are valuable simply because people value them, then asset prices are entirely arbitrary. The same argument can be applied to any financial asset.

Dean Baker at CEPR has a nice followup, making the obvious but crucial point that, since financial services are an intermediate input to production, we want the financial sector to be as small as possible, consistent with doing its essential tasks. As the experience of the mid-20th century shows, a market economy can function perfectly well with a financial sector much smaller than the one we have today. As Bitcoin shows, the massive expansion since then is nothing but wasteful speculation. The financial sector should be cut down to (a small fraction of its present) size.

Read more…

Categories: Economic policy Tags:

No new coal mines

February 9th, 2018 15 comments

It’s just been announced that Aurizon is not pursuing its application to the Northern Australia Infrastructure Facility to build a rail line to the Galilee Basin, essentially because the company hasn’t been able to secure any commitments from putative customers (most obviously Adani and GVK Hancock but also Clive Palmer and others). This is great news. It’s now highly unlikely that coal mining in the Galilee Basin will go ahead any time soon.

Opening the Galilee Basin would have been a huge disaster, so it made attention to focus attention on Adani, as the leading proponent, and secondarily on Aurizon and GVK Hancock. But, with this threat apparently staved off, a more comprehensive policy is needed.

Fortunately, we already have one. The Australia Institute has, for some time, been proposing a moratorium on new coal mines. That allows for a gradual winding down of the industry and gives more protection to existing jobs than there would be if new, competing, mines were allowed to open.

Politically, there’s a precedent, with Labor’s “three mines” policy on uranium. That was a fudge, of course, but it was clearly within the export power of the Commonwealth and it didn’t create any big problems with sovereign risk.

Categories: Economics - General, Environment Tags:

A thought experiment

February 7th, 2018 43 comments

Suppose that the Constitution had made judges subject to the same eligibility requirements as MPs. How would the High Court have ruled in the cases that came before it?

Categories: Oz Politics Tags:

The NFF doesn’t understand the difference between argument and abuse

February 6th, 2018 15 comments

I can remember when the @NationalFarmers Federation was an intellectual force to be reckoned with. Now, its response to a detailed critique of the Murray Darling Basin Plan is lame abuse. It reminds me of this classic Monty Python skit

The Murray Darling Basin Plan is not delivering …

February 5th, 2018 17 comments

there’s no more time to waste.

That’s the headline for a piece in The Conversation I’ve signed along with a dozen or so prominent scientists and economists who have worked for many years on the problems of the Murray Darling Basin. It’s been released along with a Declaration, reproduced over the fold.

Read more…

Categories: Economic policy, Environment Tags:

Monday Message Board

February 5th, 2018 29 comments

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

Categories: Regular Features Tags:

Greens back renationalisation

February 3rd, 2018 12 comments

The Greens have announced a policy of renationalising the electricity grid, starting with transmission. Since that’s exactly what I proposed last year, it’s no surprise that I agree.

The crucial aspect of the policy is that it should begin with a reduction in the allowable rate of return to a level comparable with the long-term government bond rate. This ensures that the assets can be reacquired at their true value rather than paying the premium invariably associated with regulated rates of return based on spurious market comparators.

On a more snarky note, I can’t resist the observation that these assets were never fully privatised in the literal sense of the term. Rather, in many cases, they were sold to foreign governments operating through sovereign wealth funds.

Categories: Economic policy Tags:

Three gigs at the Senate

February 2nd, 2018 5 comments

I’ve appeared (or rather, been heard by teleconference) at two Senate inquiries this week, one on the Northern Australia Infrastructure Facility and one on the problems of the TAFE system. In addition, i completed a submission to the inquiry into the Future of Work and Workers, which is now available on the inquiry website.

The Future of Work submission was about the way in which technology and labor market institutions have interacted to generate the “gig” economy of insecure employment, continuously threatened by technological disruption. The key point is that decades of anti-union and anti-worker legislation and state action have created a situation where technological change is likely to harm rather than help workers. A summary is over the fold
Read more…

Categories: Economic policy Tags: