The Wind’s Twelve Quarters by Ursula Le Guin. I really like this kind of SF, but it’s drowned in sea of sword, sorcery and space opera these days. If anyone knows of anyone recent who’s comparable to Le Guin, please let me know.

Scott Wickstein comes back for another round on natural monopoly in telecommunications, saying :

“So why was it that phone prices fell with the introduction of competition? I know I’m not an economist, however, I do know something about phone bills. ”

Something, but not enough. For example, Scott is apparently unaware that:
(i) on average, the real cost of phone calls has fallen by about 5 per cent per year, for the last fifty years at least, under both monopoly and ‘competition’
(ii) Telstra’s prices are determined not by market forces but by a regulatory price cap requiring the same average rate of price reduction that prevailed under the Telecom Australia monopoly
(iii) In most years, Telstra has met the price cap exactly. That is, it has reduced average real prices by the minimum amount required by law.

Jason Soon also has some comments. He says, correctly, that economists have disagreed about whether telecommunications is a natural monopoly. However, this is an issue on which market outcomes speak louder than econometric studies. For example, Business Week, scarcely a leftwing source, observesIt’s “Merge, Buy, or Die” in Telecomand predicts a US industry dominated by two or three regional monopolies.

Jason also makes some hasty assumptions about my position (and Ken Davidson’s) on these issues.

I analysed the issues and policy options at length in an Agenda article entitled The premature burial of natural monopoly: Telecommunications reform in Australia My conclusion was that
“Much of the potential benefit to be derived from reform of the telecommunications industry has been dissipated in wasteful and technically unnecessary investment in duplicate networks. This is the natural result of policies based on a naive enthusiasm for competition and wishful thinking about the death of natural monopoly.”
I expanded on this point in a rejoinder to comments by Rod Maddock
But this does not, as I observe, rule out options like an access pricing regime or even a breakup of Telstra, something which I have advocated as a route to renationalisation of the core network..

Scott Wickstein is unhappy with me for saying that telecommunications is a natural monopoly industry. Scott disliked the old Telecom and prefers competition. The problem is that ‘natural monopoly’ is a technological fact, not a statement about preferences. An industry is a natural monopoly if its services can be delivered most cheaply by a single firm.
To be fair to Scott, who regularly reminds us that he is not an economist, the same mistake has been made by people who ought to know better. The idea that competition can be wished into existence has been the source of most of the silly policies that we have seen in the last decade, policies that are now sending telecoms broke on a daily basis.

Paul Krugman had a piece a while ago saying that a colleague had asked him to write something positive about George Bush, in the interests of fairness, but he couldn’t think of anything. The colleague suggested Bush’s support for free trade, but shortly after that Bush slapped tariffs on imported steel, so Krugman wrote about that.

Always eager to emulate Paul Krugman, I thought about the challenge. It struck me that there was something positive about Bush – he seemed to be genuinely non-racist, and had not gone after racist votes. The contrast with Australian and European rightwing politicians (and many alleged leftwingers) was, I thought, striking.

All this was in my piece in Thursday’s Financial Review. Unfortunately, you need a subscription to read it on the AFR site, but it will be on my site soon.

Ken Davidson is spot-on regarding Telstra. Bob McMullan makes some interesting points, but fails to recognise that the era of competition in telecommunications is basically over. Any sensible policy must take account of the natural monopoly characteristics of the industry. Meanwhile, the Oz continues mindless cheerleading for privatisation.

This piece from the Guardian beat me to the punch. The idea that America is “the worlds only economic and military superpower”, and can therefore do what it likes, belongs with the rest of the rhetoric of the bubble era. Like all societies, the US has finite resources.

Kevin Phillips (‘of ‘Emerging Republican Majority’ fame) has an interesting piece onThe Cycles of Financial Scandal

A long thread in f**kedcompany deals with the Resurgence of begging in the US. As usual with this site, you have to wade through a lot of foulmouthed drivel, but most posters agree that beggars have returned to US streets in large numbers. In a country with no real welfare system, this is a sensitive economic indicator. When I lived in the US, during the 1990 recession, there were beggars almost on every corner in DC, but on subsequent visits, the numbers declined steadily, and by the late 90s, only a few, clearly mentally ill, remained.

Mandates
The notion of a ‘mandate’ has played an important role in recent debates about the role of the Senate in Australia. However, the discussion of this topic has been, to put it mildly, confused. One important source of difficulty arises from the fact that the term ‘mandate’ can be derived from two, very different, sources.
The first, deriving from English debates about the role of the House of Lords, arises when a popularly elected government faces resistance from an unelected, or unrepresentative, Upper House. In the English constitutional arrangements of the 19th century, there was no way of resolving such a deadlock. Even if the Parliament was dissolved, and the government re-elected with a clear majority of the votes, the House of Lords retained its veto power, and used it to defeat bills for Irish Home rule and social-democratic reforms.
The only solution was the use of the Royal Power to create large numbers of new lords who would pass the necessary legislation. This solution was justified by the notion of the ‘mandate’, that is, the idea that the House of Lords was acting in defiance of the clearly expressed will of the people.
The second notion of mandate arose in a very different context, that of Imperial China. As in other autocracies, Chinese political theorists faced a conflict between a theoretical structure that demanded absolute obedience to the Emperor and the empirical fact that emperors were regularly overthrown. The solution was found in the notion of the ‘Mandate of Heaven’. The idea was that the requirement of obedience was conditional on the Emperor’s possession of the mandate of heaven. Once this was lost, rebellion was justified.
In practice, the success or failure of rebellions determined whether the mandate of heaven had or had not been lost. The same reasoning is reflected in the English aphorism ‘Treason never prospers: whats the reason. If it prosper, none dare call it treason’.
In most recent Australian debates, it is the Chinese version of mandate theory that has been at issue. No government in the last two decades has received a majority of the popular vote, rendering the popular mandate theory moot at best. In many cases, such as the proposed privatisation of Telstra, parties opposed to the policy have received a majority of votes, so that popular mandate theory justifies Senate resistance.
The basic claim of Chinese-Australian mandate theory is that, having secured executive power in the form of a majority in the House of Representatives, a government is entitled to unconditional obedience from the Parliament and the courts. This theory has been advanced with equal assurance whether or not the government in question received a majority of the ‘two-party preferred vote’, further emphasising the irrelevance of popular mandate theories.
The obvious problem with Chinese mandate theory is that it has no answer to successful defiance. If some provincial warlord or democratic republic ignores the Emperor and repels his armies, the Mandate of Heaven ceases to apply. Similarly, if the Senate rejects government legislation year after year, and is re-elected in much the same form, what does it matter whether there is a mandate or not. Since the theory has no ethical foundations, it is little more than a decorative adornment. If the government fails to get its legislation passed, mandate theory is useless, and if the government succeeds, it is superflous.

The Hauser Report picks up Mickey Kaus on the same point as me, regarding his dodgy comparisons of US and German unemployment (the figures are distorted by the former East Germany), and adds some new ones.