There’s been a lot of debate lately about whether tightening of anti-trust legislation might be a useful response to inflation. Underlying this question is that of the relationship between monopoly and inflation more generally. The dominant view among mainstream/neoclassical economists seems to be that there is no such relationship. That view is stated by one of the most prominent mainstream theorist, Larry Summers as follows

There is no basis in economics for expecting increases in demand to systematically larger price increases for monopolies or oligopolies than competitive industries.

Summers goes on to describe the opposite view as ‘anti-science’.

Readers of this blog will be devastated to learn that Summers is dead wrong. It’s quite straightforward to show, in a simple neoclassical model, that imperfect competition amplifies the inflationary effects of demand shocks. Here’s a paper I’ve just written with my colleague Flavio Menezes https://t.co/9FIactnJo7 which makes this point using the concept of the strategic industry supply curve. The same result can be presented, less elegantly in our view, using the standard tools of comparative statics to be found in any intermediate microeconomics test.

We also show that, contrary to a suggestion by Elizabeth Warren, imperfect competition is likely to dampen the impact of cost shocks. There isn’t, however, any equivalence here. Warren’s background is in law, and she isn’t making a claim just observing that monopoly power might be a problem. The distinction between cost shocks and demand shocks is unlikely to have been relevant to her, whereas it should have occurred immediately to a leading theorist like Summers.

I’m not sure about the lessons from all this. For me, it’s to think carefully before making dogmatic statements from authority. If all experts agree on something, we should say so, but be careful to make sure we are right.

If you want to mark the end of hope for US democracy, last weekend was as good a date as any. Both Trump and the Republican National Committee made unequivocal commitments to supporting the insurrection.

The response, on the Republican side, was much the same as in every previous step along the road to dictatorship. The usual handful of serving politicians, like Romney and Hogan (MD governor) objected, as did sometimes-Trumper Mitch McConnell, but none (not even Cheney and Kinzinger, the targets of the censure) even hinted at changing parties. A rather larger group of retired Repubs signed a statement, again failing to urge rejection of their party. Most current Repubs dodged the issue, claiming not to have read the news for a while. And, a couple of days later, it’s just about forgotten.

The result is that the overthrow of democracy has become, as far as the political culture is concerned, a routine issue of disagreement between the parties. In these circumstances, the par outcome is that the opposition party will do well in the midterm elections, and all the evidence suggests that 2022 won’t be an exception. So, unless effective legislation to prevent election subversion is passed this year, it never will be. It seems highly unlikely that reforms to the Electoral Count Act, if they pass, will be enough.

To look a little on the bright side, assuming Trump returns as president in 2024 (with or without a legitimate majority in the Electoral College) what’s the best chance of a more or less free election in 2028? Looking at the end of similar regimes, I’d say it’s a succession crisis.

Trump will be term limited in 2028. I expect, as is usual in such cases, he will either try to get around the limit or nominate a family member (probably Don Jr or Ivanka) to take his place. For ambitious Republicans, this will be the last chance to grab the presidency for themselves. The resulting struggle might lead some to see a return to democracy as their best chance.

Alternatively, Trump might die or become incapacitated. He’ll be 82 in 2028. A lot would depend on the circumstances, but if he died in office, his vice-president would become president and would then have to fight it out with the junior Trumps and other contenders. Again, anything might happen.

I should know, I tried to imagine it.

Every few days, there’s another article pointing out the likelihood that a Democratic win[1] in the 2024 US election will be overturned, and suggesting various ways it might be prevented, none of which seem very likely to work. The best hope would seem to be a crushing Democratic victory in the 2022 midterms, which doesn’t look likely right now[2]

What I haven’t seen is anyone discussing what the US would be like after a successful Trumpist (or other Republican) coup. The closest approaches I’ve seen are “looking backwards” pieces, written from an imagined distant future when democracy or something like it have been restored.

I decided to attempt the task myself and found it very hard going. The resulting piece is over the fold. I tried a few outlets for it, and no one was interested in publishing it. So, I’m putting it out here, with all its faults.

Suggested improvements are welcome, as is serious criticism. Snarks and trolls will be deleted and permanently banned [3].

The anniversary of the insurrection of Jan 6, 2021, and the realisation that it was almost successful has brought increasing number of Americans to the realisation that the end of democracy in the US is, if not inevitable, at least highly likely. The New York Times, the leading representative of mainstream liberalism, has said as much. But it’s easier to understand this point intellectually than to imagine what life will be like after democracy.

It is now clear that Republicans are both willing and able to overturn electoral results that don’t go their way. Officials who protected the electoral process in 2020 have been removed and replaced by partisans who assert that the election was stolen. The handful of elected representatives who have unequivocally condemned Trump’s assaults on democracy are being forced out, or have chosen to resign. It therefore seems highly likely that the Republican candidate will be declared victorious in 2024, whatever the voters might say. Given that assurance, it is even more probable that this candidate will be Donald Trump.

One possibility, which seemed very real until 2021, was that a large group of decent Republicans would recoil from attempts to overthrow democracy, and defect either to a third party or to support for Democrats. If even a quarter of Republicans had moved in this way, Trump and Trumpism would be finished. In reality, though, the number of elected Republicans who have made such moves, at either national or state level, can comfortably be counted on two hands.


The same is true of Republican voters. A substantial majority endorse the baseless claim that the 2020 election was stolen, and can be expected to endorse any measures, up to and including a second insurrection, to ensure victory in 2024. Of the minority who accept the obvious non-existence of cheating, some small group may shift sides. But even assuming a resurgence in the popularity of Biden’s presidency, there is little that enough will shift to produce the overwhelming Democratic victory that would be needed to forestall a successful attempt to overturn the results.

In these circumstances, it seems virtually certain that a Democratic victory in the 2024 presidential election, will be overturned. In the event of a legitimate Republican victory (under existing electoral college rules, and allowing for legal voter suppression), the chances of a fair election in 2028 will be reduced even further.


This isn’t a novel conclusion. Nearly every serious student of failing democracies regards the US as being in grave danger. Resistance relies mainly on an argument from incredulity: the end of American democracy is unthinkable and therefore impossible. To break down this incredulity, it might be helpful to think about what a post-democratic America would be like.

Initially, at least, the changes would not be obvious, and would undoubtedly be dismissed by many. A rigged election outcome would not automatically do away with electoral politics. Modern autocracies like Putin’s Russia maintain the façade of elections and multi-party competition, even though the winner is generally known in advance. And there have been enough surprise results in such countries that the Democrats will be likely to persist with business as usual in the hope of eventual success. But there is no reason to think such efforts will be more successful in the US than in other backsliding democracies.

An example closer to home is experience of the US South, where the attempt to create a genuine democracy in the Reconstruction era was decisively defeated by the ‘Redeemers’ who instituted the Jim Crow system: one party rule, cemented by a combination of voter suppression, vote rigging and violent intimidation, both by police and by rightwing thugs, with significant overlap between the two. https://www.opb.org/article/2021/10/15/dozens-of-oregon-law-enforcement-officers-joined-far-right-oath-keepers-militia/

In considering possible resistance to the Civil Rights movement in the 1950s and 1960s. The Trump restoration is in large measure, the latest stage of the backlash against Civil Rights that began with Nixon’s Southern Strategy, and most recently represented by the attack on ‘critical race theory’.

It makes sense, therefore, to assume that these struggles will dominate the political scene in the future, most obviously through the Black Lives Matter movement. Against this will be range the anti-BLM repression movement epitomised, in its legal form by slogans like Blue Lives Matter, and in the form of extra-legal violence, epitomised by Kyle Rittenhouse, and even more by the adulation he has received from the mainstream right.

The big difference between the coming struggle and that of the Civil Rights era is the role of the national government. Civil rights activists sought the involvement of the national government and the Supreme court to override racism at the state and local level, epitomized by the campaigns in cities like Montgomery and Selma

In the coming years, those roles will be reversed. The residents of cities and metro areas more generally will be overwhelmingly opposed to the national and state governments, which will rely on the support of exurban and rural voters

In 2020, the largest metro areas made the difference for Democrats

The Supreme Court will almost certainly act to back Republicans at every level. In these circumstances the odds will be stacked against the defenders of democracy. But the defenders of Jim Crow, facing similar pressures, put up a determined resistance for decades in support of a cause even they knew was morally indefensible. There’s no reason the same resistance can’t be sustained in the cause of democracy.

Class conflict is also likely to take place under conditions stacked in favor of capital. Among the few policy achievements of the Trump Administration was a massive tax cut, weighted towards corporations and high income earners. Conversely, worker militancy has been increasing ever since the 2008 Global Financial Crisis brought an end to the illusory prosperity of the early 21st century. Successful campaigns for a $15 minimum wage are among the outcomes

Despite this, the success of Trumpism owes a great deal to the Republican capture of the ‘white working class’, typically defined in US political parlance as those without a college education. White men without a college degree voted overwhelmingly for Trump.

The equation of ‘no college’ with ‘working class’ is problematic. The ‘no college’ group includes many farmers and small business owners, and is skewed towards older age cohorts, for whom college education was less common. And it includes lots of retirees, who have no direct interest in the outcomes of labor struggles, whatever their pre-retirement class position.


There are important countervailing trends. In electoral terms, the relationship between income and political alignment hasn’t changed. High income households are predominantly Republican (and also more likely to vote). Union households still vote predominantly for Democrats, though the long decline in union density has made this group much smaller than it was. And once we shift the focus from whites to the entire population, it’s clear that the majority of voters of working age supported the Democrats.


Despite all of these qualifications it seems likely that most whites who work for wages voted for the Republicans in 2020 and that most will be unlikely to join unions or support political campaigns in support of labor rights.

A crucial question here is the stance taken place by big business. There are obvious reasons for business to back a Republican seizure of power, and call on the state to suppress worker resistance. On the other hand, global corporations rely on a professional workforce that is ethnically diverse and mostly college educated as well as being more likely to be unionised. Furthermore business has to reckon with the fact that a Trumpist government will be inherently unstable and prone to collapse from within. Enlightened self-interest would prescribe sustained support for democracy. But the short-term benefits of collaboration with the Republicans are likely to prove more persuasive.

At a day-to-day level the struggle will mostly be over the culture wars that are at the heart of Trumpism and Republican politics more generally. Here we can expect to see the politics of resentment become even more poisonous. The key driver of Republican resentment has been the fact that, even where they hold political and economic power, the Republican base (old, white, Christian, rural or suburban, and less educated, but often well-off economically) has found itself culturally marginalised. From their perspective, the history of the decades since the Reagan Presidency has been one of continuous defeat.

The change is most obvious in relation to religious belief. When the current older cohort of white Americans was growing up, they were surrounded by people like themselves. It could safely be assumed that nearly everyone was, or least professed to be a Christian. Not only that, but the great majority of Christians were Protestants. And, in large parts of the country most Protestants were evangelical. Non-believers were non-existent, or at least invisible.

As recently as 2007, 78 per cent of the US population was Christian, compared to only 16 per cent ‘Nones’ who described themselves as atheist, agnostic or ‘nothing in particular’. White Christians, at around 55 per cent, constituted a clear majority. Barely a decade later … White Christians account for only 43 per cent of the population, compared to nearly 30 per cents Nones. On current trends, Nones will outnumber White Christians by the end of the 2020s.

The shift away from religious belief is most evident among those with college education or more, rising to near unanimity among the eminent natural scientists who are members of bodies like the National Academy of Sciences. Resentment against these ‘elites’ reflects a perception that they look down on ‘real Americans’, that is, white Christians without college education


That won’t change, even with unchallenged Republican dominance of national and state politics. Rather, the reverse is more likely. In the early stages of the Trump era, there was, among mainstream liberals, an earnest desire to understand why so many American with little to gain from rightwing economic policies would support someone like Trump. It was, in large measure, this desire that propelled JD Vance’s Hillbilly Elegy to the top of the bestseller list.

Vance’s own moral collapse, in the words of Tom Nichols, from ‘truth-teller in his own community, contemptible and cringe-inducing clown’ https://www.theatlantic.com/ideas/archive/2021/07/moral-collapse-jd-vance/619428/ is a symbol both for the actual moral decline of the Republican base and for the shift from sympathy to contempt in the view of that base held by the supporters of democracy. It’s reflected in heavy-handed, but effective, satires like Don’t Look Up.

It is important to recognise that cultural dominance can be misleading. Although the youth culture of the 1960s was overwhelmingly radical, it wasn’t representative of the age cohort as a whole. The older Baby Boomers who make up the ‘Vietnam generation’ have voted roughly in line with the US electorate as a whole over their lives, sometimes slightly favoring Democrats and at other times Republicans.

In the current context, it’s important to distinguish the impact of demography from that of age per se. Young rural whites without a college education are still strongly Republican, but they are a much smaller population of younger age groups. Conversely, larger proportions of young people are non-white, urban and college-educated than in previous generations. But these qualifications are ultimately unimportant, given the steepness of the age gradient in voting.

So, the post-democratic USA will be one which the great majority of educated urban dwellers, and the majority of employed workers, will be alienated from a government of crony capitalists like Trump, kept in power by ignorant and bigoted voters, stereotypically old and rural.

This is a recipe for disaster. It is hard to predict precisely what form this disaster will take. Still, it is time to think about the possibilities rather than waiting for the catastrophe to happen.

fn1. There’s also the possibility that the Republicans win legitimately (that is, under the existing Electoral College and voting rules). But the same problem would then arise in 2028 under even less favorable conditions for democracy.

fn2. Please, no discussion of whether a coup will happen or how it might be prevented. I want to focus on the aftermath.

fn3. This includes jibes to the effect that US democracy has always been a sham. Tell it to the ghost of Ernst Thalmann.

The Guardian has been running some articles on the long-delayed Inland Rail project, proposed to carry freight between Melbourne and Brisbane (or possibly, if Barnaby Joyce has his way) Melbourne and Gladstone. Apart from the usual megaproject problems of delays, cost overruns, mid-project redesigns and so on, there appears to be a fundamental and unfixable conflict in the thinking behind the project.

To have any prospect of economic success, the rail line has to get a large share of the market from Melbourne to Brisbane (or at least some destination in Queensland). At a minimum that means beating the existing rail route via Sydney. The article suggests that shippers like Woolworths want a transit time less than 24 hours.

But to deliver any of the proposed benefits to towns along the way, trains have to stop at lots of different places, which means travelling more slowly between them. I’m not a railway man, but putting slow vehicles with frequent stops into any transport system slows everyone down.

I’m not expecting much from an Albanese government, except getting rid of the current gang. But I hope Albo expresses his well known love of trains by putting Inland Rail in the deep freeze, and using our scarce resources to upgrade the main Melbourne-Sydney-Brisbane.

The era of zero real interest rates (for savers) makes all sorts of calculations simpler. I started looking at the choice between electric vehicles (EVs) and comparable cars with internal combustion engines (ICE) and ran into a bunch of issues about depreciation, time horizons, resale values and so on.

But there’s one way of making the comparison very simple. Consider someone who buys a car for cash and drives it until its value reaches zero and it is scrapped. (For the moment, don’t worry about the fact that not many people do this.) Further, assume that the best alternative is to save the money, at zero real interest, for example by buying long term bonds.

The final simplification is to assume that both cars travel the same distance in their lifetimes before being scrapped. That seems reasonable. Most estimates suggest that the battery in an EV can last for at least 150000km, and an ICE car that has been driven that far is worth a few thousand dollars at the most (I should know!). At a stretch, we could say 200000km for both.

In this case, we can simply compare the difference in purchase price with the lifetime savings in running costs. A standard estimate is that the fuel and maintenance costs of an EV are about 15c/km less than those of a comparable ICE (10c/km for fuel and 5c/km for maintenance). So, the lifetime savings come to between $22500 and $30000 for the EV. That seems comparable to price differences observed in the market.

Read More »

As usual, 26 January has been marked by protests, denunciations of those protests, and further iterations. Even apart from the fact that it marks an invasion, the foundation of a colony that later became one of Australia’s states isn’t much of a basis for a national day.

A logical choice would be the day our Federation came into force. Unfortunately for this idea, our Founders chose 1 Jan 1901. The first day of the 20th century[1] must have seemed like an auspicious choice for a new country, but it ruled out the anniversary as a national day.

The ideal thing would be to fix the problems of our current system with a republican constitution including a treaty with the original owners of our land. That would provide a date really worthy of celebration.

In the meantime, I suggest 3 March, the anniversary of the day in 1986 when the Australia Act came into force, finally establishing beyond any doubt that Australia is an independent country, entirely separate from the UK[2]. We had by 1986 a constitution and public policy that was at least formally non-racist, thanks to the 1967 referendum and the end of the White Australia policy. Many of the symbolic problems with the current date would be avoided, though the real injustices would remain to be addressed.

It’s true that the Australia Act doesn’t have a lot of resonance. But any date with a lot of resonance is bound to resonate badly for a large proportion of the population. At least this would be a choice nearly all of us could celebrate without worrying too much about its precise significance.

fn1. At least if you start the count from 1CE. I think it would be more sensible to cross-label 1BCE as 0 CE, making 1900 the start of C20. I had always assumed that Dionysius Exiguus, who invented the AD calendar was unaware of the concept of zero, but Wikipedia accords him a prominent role in its history.

fn2. Whether, when and to what extent, we had become an independent country before 1986 remains a mystery, but there’s no doubt after that.