Another High Court disaster

The High Court has done a great job in messing up Australian democracy with its absurdly literalistic reading of the Constitutional provisions on dual citizenship. It’s now added another layer of disaster with its refusal to hear Labor’s attempt to have Liberal MP David Gillespie disqualified on the basis that he rented space to an Australia Post outlet.

Of course, this case is utterly lacking in merit. Had the High Court heard it, and thrown it out without retiring for consideration, I’d be cheering them on.

In fact, however, they refused to hear the case because Labor couldn’t get the Parliament to refer the case, relying instead on a “common informer”.

So, we are now in the position where a Parliamentary majority can move to disqualify anyone on the opposing side, and the High Court will assess whether they have breached any of the byzantine rules they have constructed, rules that might potentially disqualify anyone who has ever taken money from the government, or had foreign born parents, or is Jewish, or can’t document every aspect of their ancestry back to the Paelolithic era. But if there is no such majority, it seems that there is no recourse.

What’s worse is my total confidence that there will be lots of comments explaining how the High Court has protected us from the risk that someone might serve in Parliament despite getting their paperwork wrong.

Government report cheers for wage cuts

There’s been a lot of discussion recently about stagnation in real wages and the decline of the labour share of national income. In a recent Senate Submission, I made the point that there is nothing surprising about this

For the last 40 years, changes in labour market regulation have been almost uniformly anti-union and anti-worker, while public policy has been premised on the desirability of reducing wages.

I saw an interesting (and, I suspect, largely unconscious) illustration of this in a recent report from the grandly-titled Office of the Chief Economists. Among the many benefits of economic reform, the report cited the following

How does this relate to the wage share? When real wages are growing faster than GDP per person (and assuming a constant employment/population ratio, which is reasonably accurate), the wage share of GDP is rising. When real wages are growing more slowly than GDP per person, as they have done for the past 25 years or so, the wage share is falling. Looking at the beginning and end points we can see that wage growth has been slower than GDP growth over the period as a whole So, we can restate the conclusion as

Under the labour market institutions that prevailed between 1951 and 1981, the labour share of income increased. Since then, thanks to the adoption of market based approaches, workers have lost all the ground that they gained in the postwar decades, and then some.

Economics in Two Lessons, Chapter 6

Thanks to everyone who the first five chapters of my book, Economics in Two Lessons. Now here’s the draft of Chapter 6: The opportunity cost of destruction This is the last part of the book devoted to Lesson 1 Market prices reflect and determine opportunity costs faced by consumers and producers. and the one where I agree mostly with Henry Hazlitt’s Economics in One Lesson. It seems particularly apposite 15 years after the beginning of the Iraq War.

As usual, I welcome comments, criticism and encouragement. I’d appreciate any comments on/ alternative suggestions for the opening quote – it’s not a perfect fit, but the best I could come up with.

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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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