After the kerfuffle about Emma Alberici’s piece on company tax, I’m highly attuned to signs of bias at the ABC. And, sure enough, I just found one. Its an article on coffee consumption that quotes just one authority, Laure Bajurny of the Alcohol and Drug Foundation, where her Linkedin profile describes her as a content developer.
A Crooked Timbercomment on my last post, about Chapter 2 of my book-in-progress, Economics in Two Lessons, convinced me that I needed to include something about bounded rationality. I shouldn’t have needed convincing, since this is my main area of theoretical research, but I hadn’t been able to work out where to work this into the book. I’m still not sure, but at least I’ve written something I’m reasonably happy with. Comments, praise and criticism welcome as usual.
Thanks to everyone who commented on Chapter 1 my book, Economics in Two Lessons. I’ve benefited a lot from the comments and implemented quite a few changes.
The book so far is available
Table of Contents
Introduction.
Chapter 1
Feel free to make further comments on these chapters if you wish.
Moving along, here’s the draft of Chapter 2. Again, I welcome comments, criticism and encouragement.
According to Chris Mitchell at the Oz (paywalled, I think), I’m the mastermind (or at least a mastermind) behind the original version of Emma Alberici’s now-rewritten analysis of company tax cuts. Here’s Mitchell
In Alberici’s case a lot of weight was given to left-wing academic John Quiggin and economist Saul Eslake, a prominent commentator whose position on the central question — do corporate tax cuts eventually trickle down as increased wages? — seems to have changed over the years.
It’s nice to be so influential, but there’s just one problem. In Alberici’s original article (here), I don’t get a mention.
But maybe Alberici is presenting my ideas second-hand. Sadly, the arguments I’ve put forward on the topic don’t get a run either. Here’s the summary of my piece in Crikey (also paywalled, I fear)
Optimistic tax models put the average Australian at being 0.1% better off under the proposed company tax cuts. And the good news is they’ll only have to wait 25 years for that tiny benefit to appear!
Alberici doesn’t mention this.
So how did I get top billing? The villain, as usual, is social media. Twitter user (tweep?) Matt K asked me whether there were any mistakes in the Alberici piece and I said no. Apart from a couple of replies to further questions, that was my entire contribution, as you can see from the thread of the conversation. But, as they say nowadays, it went viral, at least insofar as a comment on tax policy can go viral.
Before I knew it, I was being attacked from all directions. Helen Razer said I was a bogus “leftist”, while Aaron Patrick at the Fin hit me from the right because I mentioned Marx and Engels in the draft introduction to my book. To be fair, Razer wrote to explain her position. By contrast, Patrick’s whole technique is verballing and out-of-context gotchas’, so I don’t expect that to change.
I do get a passing mention in the revised column, but since my name is mis-spelt, I think it’s safe to assume that I’m not a primary source. Obviously, Mitchell didn’t get around to reading the original (maybe the research skillz of Newscorp aren’t up to locating it) and assumed that I was quoted there.
While I’m on the subject, Mitchell had an amazing piece a while back (not worth linking, since Paul Kelly and Mark Latham have already trodden this ground many times) about the end of freedom of speech in Australia. The burden of it is that decent, ordinary Australians like Mitchell and Andrew Bolt, limited as they are to major national newspapers and broadcast media, can’t say what they think about Muslims, lefties and so on any more without people on Twitter saying what they think about Mitchell and Bolt. As Tim Dunlop says in a similar context, any less self-reflection and they’d be vampires.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
The combination of budget cuts and market ideology has been a disaster for vocational education in Australia. That’s the shorter version of a piece for Inside story based on my submission to the SA TAFE Senate inquiry.
Update: On the same day this article appeared, Labor has come out with a call for a major inquiry encompassing both unis and TAFEs. Whether or not my past advocacy had anything to do with this, it’s a welcome outcome.
I have a piece in Crikey (possibly paywalled) looking at the gyrations of our political leaders on climate policy in general and Adani in particular. I suppose what matters is that you end up facing the right way: on this test, Shorten does reasonably, Turnbull fails miserably and Abbott is laughable.
At the suggestion of reader Newtownian, I’m posting a draft Table of Contents for Economics in Two Lessons<em. It's over the fold, with a better formatted version here
Read more…
Thanks to everyone who commented on the draft introduction to my book, Economics in Two Lessons. The revised introduction is here. Feel free to make further comments on it if you wish.
Moving along, here’s the draft of Chapter 1. Again, I welcome comments, criticism and encouragement.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I’ve finally committed to delivering a manuscript of my long-overdue book Economics in Two Lessons. As part of the process, I’m going to post the chapters, one at a time, and ask for comments, criticism, encouragement and so on. To begin at the beginning, here’s the Introduction.
A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I have a piece in the New York Times looking at the implications for the bitcoin bubble for economic theory and, in particular, for the (Strong) Efficient (Financial) Markets Hypothesis (EMH) which states that prices determined in financial markets reflect all the available information about the value of any asset. If that’s true then governments can’t improve on a policy of allocating investment to those assets with the highest market return, which can be achieved by letting private capital markets determine all investment decisions.
Bitcoins have no inherent usefulness, being a record of pointless calculations. They are useless as a currency (their putative purpose) and are now being promoted as a store of value on the basis of scarcity alone. This leaves supporters of the EMH with a dilemma.
If Bitcoins are indeed worthless, then financial markets should price them at zero. But the introduction of futures trading actually boosted the price in the short run. Even after recent declines, there’s no sign that prices will reach zero any time soon.
On the other hand, if Bitcoins are valuable simply because people value them, then asset prices are entirely arbitrary. The same argument can be applied to any financial asset.
Dean Baker at CEPR has a nice followup, making the obvious but crucial point that, since financial services are an intermediate input to production, we want the financial sector to be as small as possible, consistent with doing its essential tasks. As the experience of the mid-20th century shows, a market economy can function perfectly well with a financial sector much smaller than the one we have today. As Bitcoin shows, the massive expansion since then is nothing but wasteful speculation. The financial sector should be cut down to (a small fraction of its present) size.
It’s just been announced that Aurizon is not pursuing its application to the Northern Australia Infrastructure Facility to build a rail line to the Galilee Basin, essentially because the company hasn’t been able to secure any commitments from putative customers (most obviously Adani and GVK Hancock but also Clive Palmer and others). This is great news. It’s now highly unlikely that coal mining in the Galilee Basin will go ahead any time soon.
Opening the Galilee Basin would have been a huge disaster, so it made attention to focus attention on Adani, as the leading proponent, and secondarily on Aurizon and GVK Hancock. But, with this threat apparently staved off, a more comprehensive policy is needed.
Fortunately, we already have one. The Australia Institute has, for some time, been proposing a moratorium on new coal mines. That allows for a gradual winding down of the industry and gives more protection to existing jobs than there would be if new, competing, mines were allowed to open.
Politically, there’s a precedent, with Labor’s “three mines” policy on uranium. That was a fudge, of course, but it was clearly within the export power of the Commonwealth and it didn’t create any big problems with sovereign risk.
Suppose that the Constitution had made judges subject to the same eligibility requirements as MPs. How would the High Court have ruled in the cases that came before it?
I can remember when the @NationalFarmers Federation was an intellectual force to be reckoned with. Now, its response to a detailed critique of the Murray Darling Basin Plan is lame abuse. It reminds me of this classic Monty Python skit
… there’s no more time to waste.
That’s the headline for a piece in The Conversation I’ve signed along with a dozen or so prominent scientists and economists who have worked for many years on the problems of the Murray Darling Basin. It’s been released along with a Declaration, reproduced over the fold.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
The Greens have announced a policy of renationalising the electricity grid, starting with transmission. Since that’s exactly what I proposed last year, it’s no surprise that I agree.
The crucial aspect of the policy is that it should begin with a reduction in the allowable rate of return to a level comparable with the long-term government bond rate. This ensures that the assets can be reacquired at their true value rather than paying the premium invariably associated with regulated rates of return based on spurious market comparators.
On a more snarky note, I can’t resist the observation that these assets were never fully privatised in the literal sense of the term. Rather, in many cases, they were sold to foreign governments operating through sovereign wealth funds.
I’ve appeared (or rather, been heard by teleconference) at two Senate inquiries this week, one on the Northern Australia Infrastructure Facility and one on the problems of the TAFE system. In addition, i completed a submission to the inquiry into the Future of Work and Workers, which is now available on the inquiry website.
The Future of Work submission was about the way in which technology and labor market institutions have interacted to generate the “gig” economy of insecure employment, continuously threatened by technological disruption. The key point is that decades of anti-union and anti-worker legislation and state action have created a situation where technological change is likely to harm rather than help workers. A summary is over the fold
Read more…
My latest Guardian article is headlined https://www.theguardian.com/commentisfree/2018/jan/29/privatisation-is-deeply-unpopular-with-voters-heres-how-to-end-it. The core of the argument is that, to make a success of renationalisation, we need to do more than buy back privatised enterprises, and run them as publicly owned corporations. We need a different model. A starting point would be the statutory authority model used in Australia with great success, before the Hawke-Keating government adopted the corporatised model as a step towards privatisation.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
… whatever issue on which I want to avoid justifying my firmly held, but indefensible, position.
One of the rhetorical tricks I’ve noticed becoming increasingly common (though I may just have been sensitized to it) is opposition to some proposal, based on the claim that “there are more important issues to discuss”. Here’s a typical example from right wing culture warrior, Kevin Donnelly, campaigning against equal marriage in the leadup to the recent postal survey. Before commencing a lengthy diatribe against gay activism, Safe Schools, alcoholic and abusive parents, surrogacy and so on that barely mentions the topic of marriage, Donnelly says
about 98 per cent of Australians identify as heterosexual and according to the 2011 census figures only 1 per cent of Australian couples are same-sex, with surveys suggesting only a minority want same-sex marriage. There are more important issues to worry about.
If Donnelly believes the issue is unimportant, why is he writing about it? Why not just leave it up to the good sense of the majority of Australians, as the rhetoric of the plebiscite suggested? Why not focus his attention on problems like protecting children from the effects of alcoholism and domestic violence.
The answer is, of course, that Donnelly has no case, or none he is able to make publicly, but nonetheless is very concerned to stop equal marriage. In the absence of a case, he must resort to diversions. So, rather than explain why gay people should be denied the right to marry, he starts off by saying the issue is too unimportant to bother with.
Of course, there are plenty of questions that are too trivial to bother with, and the sensible response is not to bother with them. If pressed, one could reasonably respond “this issue isn’t worth my time, I’ll just go with whatever the majority decides”, but this is hardly ever done.
The only case where this trope is at least possibly justified is as an admonition to political allies not to be diverted into big efforts on trivial issues, when there are more important problems to deal with. Again, though, this only makes sense for someone who is themselves indifferent regarding whether and how these issues are resolved.
That’s the title of my latest piece in Inside Story. Nothing that will surprise anyone who’s been paying attention to what I’ve written on this, so I’ll just cite the conclusion
Since bitcoins are not useful as a medium of exchange, or desirable in themselves, their true value is zero. The highest price at which bitcoins have traded is around $20,000. At the time of writing, the market price is halfway between that level and zero. Pay your money (or not) and take your chances.
A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
I’m a sucker for taxonomies, and Ross Douthat has quite a good one in the New York Times
Like any strange and quarrelsome sect, the church of anti-Trump conservatism has divided and subdivided since Donald Trump’s election. Some members have apostatized and joined the ranks of Trumpists; others have marched leftward, with anti-Trumpism as a gateway drug to wokeness. There is a faction that is notionally skeptical of Trump but functionally anti-anti-Trump, a faction that insists it’s just calling “balls and strikes” and a faction screaming that the president rigged the game and needs to be thrown out.
What’s interesting is that, from my observation, he has the factions about right in order of size. The group who have gone left is probably smaller than its ranking suggests, but contains most of what was left of serious thought on the conservative/libertarian side of politics. The smallest group, and the one treated most dismissively, consists of those who have remained politicaly conservative while being unremittingly hostile to Trump. Its members are either out of active politics already (like the Bushes) or are kicking Trump on the way out (like Corker and Flake). By 2020, it will probably be an empty set. That obviously raises the question of what will remain of the conservative movement when and if Trump is defeated.
A point of purely sporting interest is to classify Douthat himself. I’d say, some mixture of “anti-anti-Trump” and “balls and strikes”. The main part of his column, arguing that Trump is more of a joke than a menace, is consistent with this, I think.
I mentioned a while ago that I was making a submission to a Senate inquiry into Vocational Education and Training in South Australia. My submission has now been published on the Committee website with the title “The failure of vocational education and training policy in Australia”
I was a bit surprised to be told it was Submission Number 1, but it turns out they’ve only published two so far. The other one, from Dr Gavin Moodie makes most of the same points as mine.
As I mentioned the inquiry appears to have been called as a stunt to embarrass the SA Labor government, but it has provided an opportunity to bring the Senate’s attention to the continuing bipartisan failure of vocational education policy. To restate my key points, they were
* The impact of decades of cuts in public support for vocational training
* The disastrous effects of subsidising for-profit providers
* The goal of universal participation in post-school education and training
* Integration of technical/vocational and university education
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
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