From Pearls and Irritations

The culmination of Donald Trump’s state visit to the UK was a press conference at which both American and British leaders waved pieces of paper, containing an agreement that US firms would invest billions of dollars in Britain.

The symbolism was appropriate, since a central element of the proposed investment bonanza was the construction of large numbers of nuclear reactors, of a kind which can appropriately be described as “paper reactors”.

The term was coined by US Admiral Hyman Rickover, who directed the original development of nuclear powered submarines.

Hyman described their characteristics as follows:

1. It is simple.

2. It is small.

3. It is cheap.

4. It is light.

5. It can be built very quickly.

6. It is very flexible in purpose (“omnibus reactor”)

7. Very little development is required. It will use mostly “off-the-shelf” components.

8. The reactor is in the study phase. It is not being built now.

But these characteristics were needed by Starmer and Trump, whose goal was precisely to have a piece of paper to wave at their meeting.

The actual experience of nuclear power in the US and UK has been an extreme illustration of the difficulties Rickover described with “practical” reactors. These are plants distinguished by the following characteristics:

1. It is being built now.

2. It is behind schedule

3. It requires an immense amount of development on apparently trivial items. Corrosion, in particular, is a problem.

4. It is very expensive.

5. It takes a long time to build because of the engineering development problems.

6. It is large.

7. It is heavy.

8. It is complicated.

The most recent examples of nuclear plants in the US and UK are the Vogtle plant in the US (completed in 2024, seven years behind schedule and way over budget) and the Hinkley C in the UK (still under construction, years after consumers were promised that that they would be using its power to roast their Christmas turkeys in 2017). Before that, the VC Summer project in North Carolina was abandoned, writing off billions of dollars in wasted investment.

The disastrous cost overruns and delays of the Hinkley C project have meant that practical reactor designs have lost their appeal. Future plans for large-scale nuclear in the UK are confined to the proposed Sizewell B project, two 1600 MW reactors that will require massive subsidies if anyone can be found to invest in them at all. In the US, despite bipartisan support for nuclear, no serious proposals for large-scale nuclear plants are currently active. Even suggestions to resume work on the half-finished VC Summer plant have gone nowhere.

Hope has therefore turned to Small Modular Reactors. Despite a proliferation of announcements and proposals, this term is poorly understood.

The first point to observe is that SMRs don’t actually exist. Strictly speaking, the description applies to designs like that of NuScale, a company that proposes to build small reactors with an output less than 100 MW (the modules) in a factory, and ship them to a site where they can be installed in whatever number desired. The hope is that the savings from factory construction and flexibility will offset the loss of size economies inherent in a smaller boiler (all power reactors, like thermal power stations, are essentially heat sources to boil water). Nuscale’s plans to build six such reactors in the US state of Utah were abandoned due to cost overruns, but the company is still pursuing deals in Europe.

Most of the designs being sold as SMRs are not like this at all. Rather, they are cut-down versions of existing reactor designs, typically reduced from 1000MW to 300 MW. They are modular only in the sense that all modern reactors (including traditional large reactors) seek to produce components off-site. It is these components, rather than the reactors, that are modular. For clarity, I’ll call these smallish semi-modular reactors (SSMRs). Because of the loss of size economies, SMRs are inevitably more expensive per MW of power than the large designs on which they are based.

Over the last couple of years, the UK Department of Energy has run a competition to select a design for funding. The short-list consisted of four SSMR designs, three from US firms, and one from Rolls-Royce offering a 470MW output. A couple of months before Trump’s visit, Rolls-Royce was announced as the winner. This leaves the US bidders out in the cold.

So, where will the big US investments in SMRs for the UK come from? There have been a “raft” of announcements promising that US firms will build SMRs on a variety of sites without any requirement for subsidy. The most ambitious is from Amazon-owned X-energy, which is suggesting up to a dozen “pebble bed” reactors. The “pebbles” are mixtures of graphite (which moderates the nuclear reaction) and TRISO particles (uranium-235 coated in silicon carbon), and the reactor is cooled by a gas such as nitrogen.

Pebble-bed reactor designs have a long and discouraging history dating back to the 1940s. The first demonstration reactor was built in Germany in the 1960s and ran for 21 years, but German engineering skills weren’t enough to produce a commercially viable design. South Africa started a project in 1994 and persevered until 2010, when the idea was abandoned..Some of the employees went on to join the fledgling X-energy, founded in 2009. As of 2025, the company is seeking regulatory approval for a couple of demonstrator projects in the US.

Meanwhile, China completed a 10MW prototype in 2003 and a 250MW demonstration reactor, called HTR-PM in 2021. Although HTR-PM100 is connected to the grid, it has been an operational failure with availability rates below 25%. A 600MW version has been announced, but construction has apparently not started.

When this development process started in the early 20th century, China’s solar power industry was non-existent. China now has more than 1000 Gigawatts of solar power installed. New installations are running at about 300 GW a year, with an equal volume being produced for export. In this context, the HTR-PM is a mere curiosity.

This contrast deepens the irony of the pieces of paper waved by Trump and Starmer. Like the supposed special relationship between the US and UK, the paper reactors that have supposedly been agreed on are a relic of the past. In the unlikely event that they are built, they will remain a sideshow in an electricity system dominated by wind, solar and battery storage.

My latest in The Guardian

The Optus triple zero disaster was a classic failure of neoliberal reform. In place of the single emergency call system that worked in the period before privatisation and liberalisation, we now have multiple networks, which are supposed to connect their calls to Telstra. Optus lobbying earlier this year successfully delayed a proposal(introduced in response to an earlier outage in 2023) for real-time information sharing on such outages.

Instead, calls reporting the most recent failure were directed to offshore call centres, where the operators failed to “escalate” them properly. The days-long delays in working out the extent of the problem reflect a corporate culture where triple zero calls are seen as an inconvenient cost burden rather than a vital community service. It’s the same culture that has seen Optus fined heavily for misleading consumers.

But until the recent spate of failures, telecommunications was seen as one of the increasingly rare sectors where privatisation and competition had produced improved outcomes for consumers. During the era of neoliberalism, the cost of telecommunications has plummeted, while the range of services has expanded massively. Whereas an international phone call cost more than a dollar a minute when telecoms were deregulated in the 1990s, they now cost only a cent or two per minute even on those plans that don’t include unlimited calls. As a result, telecommunications is regularly cited as an area where neoliberal reform has been successful.

A closer look at the record tells a different story. Technological progress in telecommunications produced a steady reduction in prices throughout the 20th century, taking place around the world and regardless of the organisational structure. The shift from analog to digital telecommunications accelerated the process. Telecom Australia, the statutory authority that became Telstra, recorded total factor productivity growth rates as high as 10% per year, remaining profitable while steadily reducing prices.

But for the advocates of neoliberal microeconomic reform, this wasn’t enough. They hoped, or rather assumed, that competition would produce both better outcomes for consumers and a more efficient rollout of physical infrastructure. Optus was an artificial creation of the reform process. In return for acquiring the publicly owned satellite network Aussat, Optus was given a regulatory head-start of six years, during which it was the only competitor to Telstra.

The failures emerged early. Seeking to cement their positions before the advent of open competition, Telstra and Optus spent billions rolling out fibre-optic cable networks. But rather than seeking to maximise total coverage, the two networks were virtually parallel, a result that is a standard prediction of economic theory. The rollout stopped when the market was fully opened in 1997, leaving parts of urban Australia with two redundant fibre networks and the rest of the country with none.

The next failure came with the rollout of broadband. Under public ownership, this would have been a relatively straightforward matter. But the newly privatised Telstra played hardball, demanding a system that would cement its monopoly position in fixed-line infrastructure. The end result was the need to return to public ownership with the national broadband network, while paying Telstra handsomely for access to ducts and wires that the public had owned until a few years previously.

Meanwhile the hoped-for competition in mobile telephony has failed to emerge. The near-duopoly created in 1991, with Telstra as the dominant player and Optus playing second fiddle, has endured for more than 30 years. The 2020 decision to allow a merger between the remaining serious competitors, TPG and Vodafone, was an effective admission that no more than three firms could survive. Unsurprisingly, prices have increased significantly since then.

And in crucial respects, three will soon become two. Optus and TPG now share their regional networks, a recognition of the fact that telecommunications infrastructure is a natural monopoly, and that the idea of “facilities-based competition” is an absurdity. If we are to have competition, the best model is that of the NBN. That is, a single wholesale “common carrier”, which allows retailers using its network to compete for customers.

But as we’ve learned with privatised electricity distribution businesses, privately owned monopolies are always looking for ways to increase profits at the expense of consumers. Regulation has proved ineffective, a fact that is unsurprising given the massive imbalance of resources between regulators and the companies they oversee.

The likely outcome of the triple zero disaster will be the addition of some new patches in the regulatory quilt and the ritual defenestration of some senior executives. But what we actually need is a reassessment of the whole neoliberal experiment and an acceleration of the return to public ownership of infrastructure that is already under way.

The Tasmania Plannning Commission has recommended against the proposed Hobart AFL stadium, with a relentless demolition of the economic case put forward by the proponents and their consultant KPMG. You can read their report here , or my own earlier analysis below

A couple of observations on this.

First, this would be a huge opportunity for the Tasmanian Labor party to escape from its self-inflicted wounds and achieve a good policy outcome at the same time. A vote against the stadium would create huge problems for Liberal Premier Rockliff. Potentially, it would create a path to a Labor minority government. This would require willing to dump the absurd refusal of former leader Dean Winter (and the troglodytes in the party machine) to “do deals”. It ought to be obvious by now that, Labor will never again win a majority or find Green and independent willing to give them unconditional support.

Second, a point I’ve made before. If KPMG (or PwC Deloittes or Accenture) is willing to put their name to economically illiterate rubbish like the stadium business case, why should anyone believe them about anything?

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I’m working on a first draft of a book arguing against pro-natalism (more precisely, that we shouldn’t be concerned about below-replacement fertility). That entails digging into lots of literature with which I’m not very familiar and I’ve started using OpenAI’s Deep Research as a tool.

A typical interaction starts with me asking a question like “Did theorists of the demographic transition expect an eventual equilibrium with stable population”. Deep Research produces a fairly lengthy answer (mostly “Yes” in this case) and based on past interactions, produces references in a format suitable for my bibliographic software (Bookends for Mac, my longstanding favourite, uses .ris). To guard against hallucinations, I get DOI and ISBN codes and locate the references immediately. Then I check the abstracts (for journal articles) or reviews (for books) to confirm that the summary is reasonably accurate.

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The purpose of this submission is to respond to the National Electricity Market Wholesale Market Settings Review Draft Report, released in August 2025. The purpose of this submission is to argue that the ad hoc interventions seen so far should be replaced by centralised long-term planning of investment in both generation and transmission.

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Looking at the facts, there’s no reasonable conclusion except that US democracy is done for. But rather than face facts, I’m turning to fiction. So, here’s a story about the collapse of Trumpism, crony capitalism and the AI/crypto bubble. Fiction is a relatively unfamilar mode of writing for me, so critique (on style and structure rather than plausibility) is most welcome.

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My latest in Inside Story

The most striking observation in Dean Spears and Michael Geruso’s new book, After the Spike, is summed up by the cover illustration, which shows a world population rising rapidly to its current eight billion before declining to pre-modern levels and eventually to zero. As the authors observe, this is the inevitable implication of the hypothesis that fertility levels will remain below replacement level indefinitely into the future.

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My latest in The Conversation

\A new road charge is looming for electric vehicle drivers, amid reports Treasurer Jim Chalmers is accelerating the policy as part of a broader tax-reform push.

At a forum in Sydney this week, state and federal Treasury officials are reportedly meeting with industry figures and others to progress design of the policy, ahead of next week’s economic reform summit.

Much discussion in favour of the charge assumes drivers of electric and hybrid vehicles don’t “pay their way”, because they are not subject to the fuel excise tax.

This view is based on an economic misconception: that fuel taxes are justified by the need to pay for the construction and maintenance of roads.

This is incorrect. In a properly functioning economic system, fuel taxes should be considered a charge on motorists for the harmful pollution their vehicles generate.

That leaves the problem of paying for roads. To that end, a road-user charge should be applied to all motorists – regardless of the vehicle they drive – so no-one gets a free ride.

Real science from real scientists.

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What is the fuel excise?

The fuel excise in Australia is currently about 51 cents a litre and is rolled into the cost of fuel at the bowser.

Some, such as the Australian Automobile Association claim revenue from the excisepays for roads. But it actually goes into the federal government’s general revenue.

The primary economic function of the fuel tax is that of a charge on motorists for the harmful pollution their vehicles generate.

Paying the cost of pollution

Vehicles with internal combustion engines – that is, those that run on petrol or diesel – create several types of pollution.

The first is carbon dioxide emissions, which contribute to human-caused climate change. Others include local air pollution from particulates and exhaust pollution as well as noise pollution.

In economic terms, these effects are known as “negative externalities”. They arise when one party makes another party worse off, but doesn’t pay the costs of doing so.

How big are the costs to society imposed by polluting vehicles? Estimates vary widely. But they are almost certainly as large as, or larger than, the revenue generated from fuel excise.

Let’s tease that out.

A litre of petrol weighs about 0.74 kg. But when burned, it generates 2.3 kg of CO₂. That’s because when the fuel is combusted, the carbon combines with heavier oxygen atoms.

Before the re-election of United States President Donald Trump, the nation’s Environmental Protection Agency estimated the social cost of carbon dioxideemissions at about US$190 (A$292) per metric tonne.

So in Australian terms, that means CO₂ emissions from burning petrol costs about 67 cents a litre, more than the current excise of 51 cents per litre.

Even using a more conservative estimate of US$80 a metric tonne, CO₂ emissions generate costs of around 28 cents a litre, more than half the fuel excise.

A spotlight on health impacts

Motor vehicles are a major cause of air pollution. Air pollution is causally linked to six diseases:

• coronary heart disease
• chronic obstructive pulmonary disease (COPD)
• stroke
• type 2 diabetes
• lung cancer
• lower respiratory infections.

Estimates of the deaths associated with air pollution in Australia range from 3,200 to more than 4,200 a year.

Even the lower end of that range is far more than the roughly 1,200 lives lost in car crashes annually.

University of Melbourne analysis in 2023 landed at an even higher figure. It suggested vehicle emissions alone may be responsible for more than 11,000 premature deaths in adults in Australia a year.

Putting a dollar value on life and health is difficult – but necessary for good policy making.

The usual approach is to examine the “statistical” reduction in deaths for a given policy measure. For example, a policy measure that eliminates a hazard faced by 1,000 people, reducing death risk by 1 percentage point, would save ten statistical lives.

The Australian government ascribes a value of $5.7 million per (statistical) life lost or saved. So, hypothetically, a saving of 2,000 lives a year would yield a benefit of more than $10 billion.

This is more than half the revenue collected in fuel excise each year.

The best road forward

Given the harms caused by traditional vehicles, society should welcome the decline in fuel excise revenue caused by the transition to EVs – in the same way we should welcome declining revenue from cigarette taxes.

If we assume fuel excise pays for pollution costs, then who is paying for roads?

The cost of roads goes far beyond construction and maintenance. The capital and land allocated to roads represents a huge investment, on which the public, as a whole, receives zero return.

Vehicle registration fees make only a modest contribution to road costs. That’s why all motorists should pay a road-user charge.

The payment should be based on a combination of vehicle mass and distance travelled. That’s because damage to roads is overwhelmingly caused by heavy vehicles.

Then comes the question of Australia’s emissions reduction. The switch to electric vehicles in Australia is going much too slowly. A road user charge targeting only electric and hybrid vehicles would be a grave mistake, slowing the uptake further.

I wrote this for the Cleaner Air Collective, who used it as an input to their submission to the Productivity Roundtable

Cleaner Air Submission here

Given the purpose of the exercise, the discussion is framed in terms of productivity though many of the issues are broader

Covid-19 is a serious economic problem for Australia, not only as a major cause of death, but because of serious impacts in productivity.

Although most Covid-19 deaths occur among people over 80, there were over 200 deaths from Covid among people aged 40-64. This is a mortality rate comparable to that of road trauma (377 deaths in this age group in 2022) As of 2023, excess mortality remained high at 5 per cent

With the effective abandonment of most forms of reporting, it is hard to assess the prevalence and impact of Covid-related morbidity. However, there is substantial global evidence of increased worker absenteeism associated with both acute Covid-cases and post-Covid conditions (long Covid). Evidence also suggests cumulative damage to various organs associated with repeated infection.

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… as long as they are healthy, well fed and well educated

Much of the panic about falling birth rates can be dispelled once we realise that (barring catastrophe) there will almost certainly be more people alive in 2100 than there were in 2000. But what about the distant future? Dean Spears, co-author of After the Spike has kindly provided me with projections showing that with likely declines in fertility the world population will decline by half each century after 2100, reaching one billion around 2400. Would that be too few to sustain a modern civilisation ?

We can answer this pretty easily from past experience. In the second half of 20th century, the modern economy consisted of the member countries of the Organization For Economic Co-Operation and Development (OECD). Originally including the countries of Western Europe and North America, and soon extended to include Australia and Japan, the OECD countries were responsible for the great majority of the global industrial economy, including manufacturing, modern services, and technological innovation.

Except for some purchases of raw materials from the “Global South”, produced by a relatively small part of the labour force, the OECD, taken as a whole, was self-sufficient in nearly everything required for a modern economy. So, the population of the OECD in the second half of last century provides an upper bound to the number of humans needed to sustain such an economy. That number did not reach one billion until 1980.

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