Adani: Put up or pack up

That’s my suggestion for the way Bill Shorten can resolve his continuing problems over the Adani Carmichael mine-port-rail project. To spell it out, he should set a deadline (say June 30) for Adani to achieve financial close for the entire project, and commence construction. If the deadline isn’t met, Labor should oppose the project outright. This is only a marginal variant on the position of leading Adani supporter, Jenny Hill, who suggested a six month deadline in February. So, it gives plenty of cover for those who have supported Adani to fall into line.

The big risk is that Adani will somehow come up with the money to fund the project. As Tim Buckley has pointed out, Gautam Adani is, on paper, rich enough to pay for it out of his own personal wealth, but he shows no sign of doing so. The basic problem is that, while India may not achieve its stated goal of eliminating coal imports, the long term trend is clearly down. That’s only going to accelerate with the shift to renewables, in which Adani itself is a major player. While Mr Adani would rather keep the Carmichael project alive on life support, he’s unlikely to risk his own fortune on such a marginal project.

The end of Adani’s project will entail the end of the whole idea of developing the Galilee Basin. None of the other potential mines have any chance of starting if Adani fails. That leaves open the broader question of a moratorium on new coal mines, which Labor will need to address sooner or later. But the threat posed by the Galilee Basin coal is so great that it’s worth an inelegant compromise.

Changing places

When Malcolm Turnbull, as PM, first faced Bill Shorten, as Opposition Leader, I correctly surmised that this would be a contest between a bold and innovative leader, unafraid to put forward controversial policies if they were right for the country, and a timid pragmatist, tied down by secret deals with factional warlords, and standing for nothing. I just didn’t realise which was which.

Economics in Two Lessons, Chapter 5

Thanks to everyone who the first four chapters of my book, Economics in Two Lessons. I’m continuing with policy applications of Lesson 1: Market prices reflect and determine opportunity costs faced by consumers and producers.
That will be followed by Lesson 2: Market prices don’t reflect all the opportunity costs we face as a society.

Now here’s the draft of Chapter 5. Again, I welcome comments, criticism and encouragement.
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Where are the Greens going?

I haven’t had time to do a proper economic analysis of Labor’s proposals on dividend imputation credits. But you don’t need an economic analysis to see that making an overt appeal to conservative voters on the issue, as Richard di Natale has just done, is a very bad move if the Greens party wants to present itself as a left alternative to Labor.

Perhaps this is poor judgement in the heat of a by-election campaign, the significance of which seems to me to be greatly over-rated by all.

Alternatively, perhaps it indicates that di Natale is taking the Greens in a different direction. The obvious choices are

(i) A soft liberal centrist party in the mould of the Australian Democrats under Don Chipp
(ii) A serious push to displace Labor as the main alternative to the LNP

I don’t think there’s a real constituency for (i) and, to the extent that there is, it’s very different from the existing Greens support base.

I also don’t think (ii) has any chance of success. But, if it does, it will involve a lot of the kind of grubby compromises that are inevitably entailed in an attempt to put together an electoral majority. Labor’s shuffles on Adani and refugees are obvious examples, which have driven a lot of people to support the Greens. But now it looks as if the boot may be on the other foot.

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Economics in Two Lessons: Chapter 4

Thanks to everyone who the first three chapters of my book, Economics in Two Lessons. I’ve learned a lot from the comments and made changes in response to some of them. These chapters have been a bit abstract, but now I’m moving on to some applications, which might be more interesting for some readers. Here’s the introduction to Part II

Lesson 1, Part II: Applications

The economic analysis showing how market equilibrium prices reflect the opportunity costs facing producers and consumers is elegant and, for a certain kind of mind, convincing.

For most of us, however, it’s more useful to see how the logic of prices and opportunity costs works in particular cases, sometimes in ways that conflict with strongly held intuitions. This will also give us more insight into the ways in which prices can fail to reflect opportunity costs for society as a whole, some of which we will examine in Lesson 2.
end

Now here’s the draft of Chapter 4:Lesson 1: Applications. Again, I welcome comments, criticism and encouragement.
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The Generation Game is over (at least for me)

For more than a generation, I have been criticising the Generation Game, that is, the insistence on dividing society into groups based on birth year and imputing different characteristics to each group. Today, I’m following the classic advice for those involved in an endless war: declare victory and get out. The basis for my claim is that I’ve managed to publish my latest critique in the New York Times, under the headline ‘Millennial’ Means Nothing (paywalled*). I expect this will reach more people than anything I could do with the blog, so I will leave this topic and move on.

* It’s fairly easy to get around, I believe.