Month: August 2008

Information and energy

John Quiggin51 Comments

Via Felix Salmon, I found this interesting piece by Tim Wu, comparing monopolies in broadband and energy, and looking at ways to make better use of currently idle spectrum. Wu’s starting point is that “Like energy, bandwidth is an essential economic input”. In fact, as he implies, information is more essential than energy to a modern economy. It’s massive amounts of information, rather than massive amounts of energy, that distinguishes our economy from that of 50 or 100 years ago.

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Everything old is new again

John Quiggin26 Comments

After trying out three alternatives, the WA Liberals are back to Colin Barnett as leader, and, amazingly, he still hasn’t given up on the idea of a canal from the Kimberley to Perth.

Longtime readers will remember that we had loads of fun with this and similar crazy ideas last time around.

According to my quick calculations, broadly consistent with a study commissioned after the election, it could well be cheaper to supply Perth with water by towing icebergs from Antarctica.

I blush to admit it, but according to his Wikipedia article, Barnett is a fellow economist. (It gets worse – Buswell also has a BEc).

The great risk shift, yet again

John Quiggin10 Comments

The Wall Street Journal has a fascinating article about how corporations like Intel are loading up their general pension funds with obligations to pay massive “supplemental” benefits to senior executives. It’s partly a tax dodge, and partly an example of what Jacob Hacker has called the great risk shift. The extra liabilities increase the risk that the fund will fail, but the top brass can be protected against this eventuality with a trust fund, while the rank and file get to take their chances.

Update To clarify, in response to comments here and at Crooked Timber, the pension entitlements of ordinary workers are supposed to be protected by the government through Pension Benefit Guaranty Corporation, and to the extent that this works as expected, risk is shifted to the PBGC rather than to workers. But as both the WSJ story and the discussion at CT make clear, things don’t always work as planned. Some benefits paid to ordinary workers turn out to be classed as supplemental and therefore lost when the scheme fails.

Suppressed viewpoints on climate change

John Quiggin56 Comments

There’s a lot of complaints about how some viewpoints in the climate change debate are being suppressed. As Tim Dunlop notes, most of them come from a group which gets lots of press attention (in fact, far more than its support among the public, let alone among climate scientists, would justify). But there is one viewpoint that seems almost completely suppressed. Like other Australians, the vast majority of supporters of the Coalition parties accept the scientific evidence and support action to mitigate climate change but I can’t think of a single member of the rightwing commentariat who does so with any enthusiasm. (The closest in the print media is John Hewson, who has a fortnightly column in the Fin. He’s good on climate change, but I wouldn’t regard him as a full-time member fo the commentariat). Among rightwing bloggers, the orthodoxy is similarly monolithic. The only exceptions of whom I’m aware are Harry Clarke and Opinion Dominion.

(Note: I’ve changed some terminology in response to comments)/

A new payments and savings system?

John Quiggin19 Comments

With US banks, and even brokerage firms like Bear Stearns, being bailed out on a massive scale, and the rating agencies largely discredited, it’s unsurprising that the question of whether governments could do a better job of some of the tasks now assigned to financial markets is being raised again, after a long period when any such suggestion was taboo. Nicholas Gruen had an interesting piece in the Fin, reproduced at Club Troppo, on the possibility of governments mobilising bonds as a liquid asset and using them as a basis for a payments and saving system to compete with private banks. I haven’t had time to think through the details, but the proposal is certainly worth a hard look. Certainly, the kind of knee-jerk anti-government reaction that used to come from the finance sector and its supporters is no longer tenable since their sudden conversion to soci@lism (at least when it comes to rescuing banks).