Talking about sustainable economy tonight: Kenmore

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Live in the Kenmore area? Think we could use a more sustainable economy and want to take action locally?   Join us this Thursday Oct 10th, 6:30 for 7pm, at the Kenmore Library when Transition Town Kenmore hosts UQ’s John Quiggin. He’ll give us his big picture take on where things are heading with a  talk on “Economic Possibilities for our Grandchildren: Why Keynes was wrong in 1930, but might be right today.” Free and open to all.

The third lesson?

John Quiggin10 Comments

Another review of Economics in Two Lessons has come out. It’s by David Henderson and appears in Regulation, published by the Cato Institute (link to PDF). There’s a blog post with extracts here.

Unsurprisingly, given the source, it’s mainly critical of the analysis, but still has some kind words about the book. This para gives the flavour

Quiggin is a good writer who lays out much of the economics well. His analysis of rent control and price controls in general is a thing of beauty. Along the way, though, he makes small and big mistakes. He also shows by omission that the book, to be complete, badly needs a third lesson, on why government works so badly even when it intervenes in cases where markets work badly.

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The big yellow grader, yet again

John Quiggin9 Comments

I swore off big yellow grader posts a while back, but I can’t resist. Adani’s head of communications, Kate Campbell, has a piece in the Mackay Mercury (paywalled, but I found it on PressReader) getting stuck into the Institute for Energy Economics and Financial Analysis (IEEFA).

The article is full of attacks on IEEFAs ties to the Rockefeller Family Foundation and similar lefty groups. But what struck me was the photo, which was supposed to show that Adani had indeed started work.

Readers with long memories will recall that this same picture was posted back in January.

Rather than bagging out IEEFA, perhaps Ms Campbell could organize some new publicity shots, showing how Adani Australia is spending the $2 billion it has supposedly received from its parent company.

In related news, Axis Capital has withdrawn a bid to insure the Carmichael rail line. That’s interesting as another step towards decarbonizing finance, but even more so because Adani has been insisting since last year that it has insurance in place.

With the price of thermal coal falling steadily, this project makes less economic sense than ever (it’s always been an environmental disaster). It remains to be seen whether Adani will go ahead on his own, or whether one of the governments his cronies control will tip in more public money

Why partisans look at the same planet and see wildly different curvature

John Quiggin18 Comments

At Five Thirty Eight, Maggie Koerth-Baker has yet another article bemoaning the way partisanship biases our views. Apparently, one side, based on eyeballing, thinks the earth is flat, while the other, relying on the views of so-called scientists, or the experience of international air travel, regards it as spherical, or nearly so.

In the past, before the rise of partisanship, we would have agreed on a sensible compromise, such as flat on Sundays, spherical on weekdays, and undetermined on Saturdays. Moreover, there was a mix of views, with plenty of Democratic flat-earthers, and Republican sphericalists.

Of course, there is no way to resolve questions of this kind, but apparently, ““warm contact” between political leaders” will enable us to agree to differ, which would be a big improvement, at least until we decided whether to risk sailing over the edge of the world.

MMT and the impossible trinity

John Quiggin28 Comments

There’s generally not a lot of common ground between fans of Robert Mundell (the intellectually respectable face of supply side economics) and those of Modern Monetary Theory. Yet in one very important respect, their ideas are two sides of the same coin.

Mundell got his Nobel Memorial Prize, in large measure, for what’s been called the ‘impossible trinity’, namely that a country can’t have all three of a fixed exchange rate, an independent monetary policy and free capital movement.

Turn that round and it says that, if you are willing to give up one of the three, you can have the other two. If we ignore the idea of controlling capital movements completely (limited controls don’t do the job) the trinity becomes a simple two-way choice: fixed exchange rate or independent monetary policy.

If you are on the gold standard, or part of a monetary union, then you are stuck with a fixed exchange rate, and Mundell’s point is that you can’t have an independent monetary policy. Conversely, if you are a sovereign nation, issuing your own fiat money, and you choose not to defend a fixed exchange rate, you can choose your own monetary policy.

That observation is what gives Modern Monetary Theory its name. Under modern (post-gold standard) conditions, any country with its own currency can choose its own monetary policy.