According to recent arrival James Morrow, fun has been banned in Australia. Not having noticed the nanny state at work in my daily life lately, I read on to discover that, for Morrow,”fun” consists of driving around looking at billboard ads for McDonalds and Marlboro, then settling down for an evening watching TV ads for fast cars. Well, James, I think we have to concede that, by that definition, Americans have more fun than anyone else.

This story from the New York Times describes the decline of the AOL Time Warner empire and presages its eventual fall (or at least breakup). Here’s my take on the merger which took place just as the NASDAQ was approaching its peak.
(The Telstra-Ozemail merger I mention never happened – it was killed off by Allan Fels and Ozemail remained part of the Worldcom empire).

Writing on why Why Labor has hit the rocks, John Button notes the takeover of the parliamentary party by political careerists and carpetbaggers.

“After Kim Beazley’s vigorous campaign in the 1998 election, Labor returned to parliament with a party of 96 members of vastly changed occupational backgrounds. Although one medical practitioner, one public servant and one engineer remained, no farmers or tradesmen did. There were two academics, two teachers and nine lawyers, but the social complexion had changed.

What had replaced a broad spectrum of backgrounds was a new class of political operator who had been filtered through the net of ALP machine politics. Out of the 96 members, 53 came from jobs in party or union offices. These members described themselves variously as “administrators”, “officials” and “electoral officers”. There were also 10 former members of state parliaments and nine described as political consultants, advisers and lobbyists.”

I suspect the situation is only marginal better in the Liberal Party. Worse still, for most of these careerists, public office is not the final object, but a stepping stone to bigger and more lucrative things. After 10 years or so in Parliament, it’s time to cash in on the contacts, favors and obligations you’ve built up with a job in lobbying or a cushy board set. Recent examples include Wooldridge, Fahey and Reith.

Daniel Akst in the NYT writes: Shocked by Scandals? These Are Nothing!, claiming that large-scale fraud has always gone on.
But careful reading of his examples shows:
(a) Nothing at all from the New Deal to the 1960s
(b) A penny-ante fraud from the early 1970s (Industrial Equity)
(c) Some bigger ones in the 1980s, which served mainly to lay the groundwork for today. (Akst’s claims that today’s scandals pale into insignificance by comparison is way off the mark, as he just about concedes in the end)

The explanation is simple. The financial regulations, such as the Glass-Steagall act, put in place after the 1929 crash made it very difficult to carry out the kind of frauds we’ve seen lately, where lots of people (auditors, analysts etc) are more or less conscious collaborators. Those regulations were dismantled from the 1970s onwards. The S&L scandal was the first big set of frauds that followed directly from deregulation, and a bunch of others have followed.

In Australia, by contrast, we had some really big fraud, relative to the economy, in the 1980s. That’s one reason things haven’t been so bad here this time around. But at an ideological level, things won’t change until these lessons are learned in the US.

Asset Pricing by John Cochrane. This is the book if you want to understand finance theory from an economic viewpoint.

As the first of these Economist Jokes says, economists have a reputation for disagreeing. And given that Jason Soon is a big Hayek fan, and I’m an admirer of (though not a follower of ) Gunnar Myrdal, we would be expected to disagree more than most. But, facts have a way of forcing themselves on our attention, and, given the experience of the past 100 years or so, it’s not too hard to conclude that:
(i) in general, free trade in goods is a good idea
(ii) free trade in financial capital is not such a good idea
As Jason observes, even strong free-traders like Jagdish Bhagwati agree on this. Similarly, despite writing some very effective critiques of standard trade theory, so does Paul Krugman. Since there’s no fundamental difference between international and domestic trade, I’d take the points further to say
(i) in general, free markets in goods are a good idea
(ii) in general, financial markets need regulation
Those who like plenty of cut and thrust in their blogging should not be disheartened by this sudden outbreak of consensus. There’s still plenty of room for disagreement. I see health, education, infrastructure services and labor markets as being more like the financial sector while I’m sure Jason sees them as being more like ordinary goods markets.

Happy 0-th birthday to Rosemary Morgan. Best wishes to David and Katie

I managed to avoid saying anything about the Kernot-Evans business in the hope that someone else would say it for me. For the record, I agree with Ray Cassin.

The NY Times says that America ought to be discussing Battle Plans for Iraq. The bigger question, I would have thought, is, what do they do once they’ve got rid of Saddam? Bush senior had no answer to this one, and therefore decided to leave him in place.

A question which must have occurred to most of us: Is Blogging a Fad? has been answered pretty well by Arnold Kling. My own two cents worth on the subject. The boundaries for technofads can be set on the one hand by CB radio (one of the first big fads) and email (clearly not a fad). Of the currently hot technologies, I’d say SMS is more like CB radio – an inherently limited technology, with lots of in-group jargon, but no real use that can’t be better served by boring things like voicemail. Blogging is, I think, more like email – easy to use, and with a range of possible uses that still leaves a lot of room for new ideas. The odd bits of jargon (e.g. memes) are like those 🙂 things in email -fun if you’re into it, and easy to ignore if you’re not.