Yesterday, I pointed out that the first instalment of the rescue package could be financed by cancelling the Stage 3 income tax cuts legislated for 2024-25. Today, the same suggestion is on the front page of the SMH. Morrison is apparently resisting the idea, but that can’t last long.

Trying to keep one day ahead, I’ve turned my mind to how the Reserve Bank should operate during and after the crisis. The first step is to abandon inflation targeting once and for all. The policy of using small interest rate adjustments to keep inflation in a range of 2-3 per cent made sense in the policy context of the (spurious) Great Moderation, when the target appeared consistent with maintaining unemployment at a stable level of 5 per cent or so, assumed to be the lowest the economy could

I got a message from a student asking about examples of renationalisation in Australia. Here’s my response

There hasn’t been much explicit renationalisation of business enterprises in Australia. What we have seen is

(a) Public private partnerships (PPPs) being wound up and returned to the public sector. As well as Port Macquarie, some others are mentioned herehttps://grattan.edu.au/news/public-private-hospital-partnerships-are-risky-business/and here on private prisonshttps://www.theguardian.com/australia-news/2019/mar/26/queensland-to-end-private-jails-experiment-after-scathing-reportand social housinghttp://www.newleafcommunities.com.au/

(b) The government has also re-entered areas of business it had previously privatised. The most important example is the NBN, but there

I was asked by a journalist about the long-term fiscal effects of the government response to the crisis. Here’s what I said

 In simple accounting terms the cost of the intervention so far can mostly be offset simply by cancelling the Stage 3 tax cuts legislated in advance for 2024-25 (this also happened when the Keating Labor government legislated for future tax cuts in the 1990s). These are projected to cost $95 billion over the five years to 2029-30so the saving would easily offset the crisis intervention over 10 years.

That’s assuming that the crisis ends quickly and everything returns to the way it was before. I think we will end up with a substantially larger role for government, and therefore a permanent increase in the public sector share of national income, which means

Another recent piece, this time in Inside Story. Opening paras

Supporters of ethnonationalist and anti-immigrant sentiment have been quick to seize on the Covid-19 pandemic as evidence against what they call “open borders,” by which they mean any relaxation of the stringent controls that prohibit international migration by anyone who falls outside a tightly defined set of categories, each subject to numerical limits. The underlying idea is that foreigners who don’t look or think like us are all potential carriers of infection, and that we can keep ourselves safe by excluding them.

The reality is quite different. The vast majority of Australia Covid-19 cases acquired overseas had a recent history of travel to Europe or the Americas, or arrived on cruise ships such as the Ruby

I forgot to link to this piece in The Conversation when it came out a week ago. Unlike much of what I’ve written lately, it hasn’t been overtaken by events.
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The New Daily asked me to write a bit on the question “What should/will the post-coronavirus economy look like?

Here’s what I sent

The Covid crisis has demonstrated the inadequacy of crucial aspects of our social and economic system, particularly relating to employment and unemployment.  Before the resurgence of neoliberalism in the 1970s, Australian governments accepted responsibility for maintaining full employment, and provided support for all those unable to engage in paid work, whether through age, disability or unemployment on an equal basis.  The full employment goal was not always achieved, but it remained central to public policy.  

Over the period since the 1970s, government has passed the responsibility for economic management to the Reserve Bank and required a

Back again with 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. If you would like to receive my (hopefully) regular email news, please sign up using the following link

http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page
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It seems quite likely that we will soon see the introduction of a wage subsidy along the lines of that announced by Boris Johnson (himself now testing positive!) in the UK. That is, a payment to employers equal to 70 or 80 per cent of workers’ pre-crisis wages, in return for keeping them on for some period. That would be better than doing nothing beyond what has already been announced, but I have two big problems with it.

First, it is paid to companies rather than workers. The ACTU is touting this as benefit, on the grounds of administrative simplicity, but I suspect that there is lots of potential for abuse through complex corporate structures. Second, it creates essentially arbitrary distinctions between workers. If you happened to work for a company that closes and stays

The ABC has an article quoting University of Melbourne epidemiologist Tony Blakely as saying (approvingly) that the object of the current “flattening the curve strategy is to smooth the path to herd immunity. Key quotes

You don’t go in too hard because you actually want the infection rate to pick up a bit and then hold,” he said.

“What they’re not saying is [that] ‘flatten the curve’ likely means [that] by the time this is over, 60 per cent of us will have been infected, to develop herd immunity,” he said.

The arithmetic here is pretty horrifying. 60 per cent of the population is 15 million so with a 1 per cent fatality rate, that would be 150 000 deaths. The number surviving but with long-term lung damage could easily be over 1 million.

It gets even worse. If herd

We won’t be travelling anywhere much  by air for some time to come, so this is a good time to reconsider our whole approach. I thought I’d start by digging out this post from 2007.

A lot of discussion of climate change is based on the implicit or explicit premise that, since we use energy in everything we do, and most energy is derived from carbon-based fuels, large reductions in CO2 emissions will require radical changes in the way we live. Some people welcome this prospect, but most do not.
Having looked at this problem in various different ways, I’m convinced that this premise is wrong, and that quite modest changes, many of which would follow more or less directly from the imposition of a suitable cost on CO2 emissions, could achieve large reductions in emissions. I’ve argued

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.
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Back again with 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. If you would like to receive my (hopefully) regular email news, please sign up using the following link

http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page
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The coronavirus crisis is very different, at least in its origins, from the Global Financial Crisis. Both differ in crucial respects from other crises in living memory, notably including the Great Depression and World War II, as well a string of severe but not catastrophic crises that have affected the global economy and society. But thinking about them all together brings home the point that major economic crises are quite common events. The crisis of the past took each took between five and ten years to resolve. Even if the current crisis is shorter, we can draw the conclusion that crisis of one kind or another is not an aberration, but a regular occurrence in a complex modern society.

What they have in common is that the result in a need for urgent government action. The

Last year I published a book chapter arguing that the first step way to get to a Universal Basic Income was to expand the existing benefit system, increasing payments and removing conditionality (relevant extract over the fold).

This is often called a Guaranteed Minimum Income (GMI). I counterposed the GMI approach to the alternative of making a small payment to everyone in the community, and then trying to increase it over time. I suggested three initial steps

Assuming a ‘basic first’ approach is preferred, how might it be implemented? Three initial measures might be considered:

(i) increase unemployment benefits, at least to the poverty line;

(ii) replace the job search test for unemployment benefits with a ‘participation’ test;

(iii) fully integrate the tax and

I had an inquiry about this and am posting my response

Some relatively good news on this. The volume of over-the-counter derivatives, including Credit Default Swaps, has generally been declining since the Global Financial Crisis. It’s still large and a potential source of danger.  The place to go for detailed information is the Bank of International Settlements. Here’s a press release from late 2017 with a graph for the declinehttps://www.bis.org/publ/otc_hy1711.htmI’ve attached detailed statistical data.

I suspect, though, that the real problem this time will be in more standard forms of corporate debt. The long period of low rates has allowed corporations to load up on debt. This story from Forbes is

Thanks to Big Data, it would be easier to stop the toilet paper panic in its tracks.

Step 1: Announce that anyone holding more than, say, 50 rolls (per person in a household) must hand in the excess to a charity, and notify the government that they have done so.

Step 2: A week later, order supermarkets to hand over the data they collect on purchases, and raid people with large stocks that have not been surrendered. Confiscate the lot, and leave them with an ample supply of newspaper.

Is this a serious option, in view of the associated invasion of privacy? Given the kinds of restrictions on anti-social behavior that are going to be needed, I think it would be the right kind of signal to send. And, if we are scared about the potential misuse of this kind of data, this

I just gave my first UQ departmental seminar using Zoom. As in most places, our usual practice is to have visiting speakers present their work and meet colleagues in the same field. When large numbers of Chinese students were prevented from returning to Australia in the first round of the coronavirus epidemic, the cost to the university’s budget was such that nearly all travel, including paying for visitors’ travel was cancelled. As it’s turned out, a good thing to. This left big gaps in the seminar program, so I volunteered to present a paper in one of the vacant slots.

By the time the seminar was scheduled to happen, budget cuts were the least of our worries. Lectures were stopped for a week while we switch to all-online teaching, and (nearly all) meetings were cancelled. So, I

Like most of us, I’m not expert on epidemiology. But I have spent most of my life studying risk management. In the current crisis, one of the most relevant issue,s and the one that policymakers seem to be ignoring is that of option value. To see what’s involved, consider a policy choice like shutting down bars and cinemas, as opposed to waiting two weeks to see what happens. If, in two weeks time, it turns out the virus has been contained, the ban can be reversed and the loss is that of the two week shutdown,. On the other hand, if the virus spreads through contact in these venues, there is no way of limiting the damage to two weeks.

Nearly all the time, this reasoning favors aggressive early action. The exceptions are actions like cancelling events scheduled some months in the

I didn’t get a lot of responses to this invitation back in 2008, but I’m hoping for more now. I can offer video presentations on a wide range of topics (climate change, water, infrastructure, digital economy & culture, employment and macro policy in general, among others).
As regards technology, it seems that Zoom is state of the art now. I’m hoping to have that set up so I can do it from home, which will allow more flexibility about time.
Repost from 2008
With the release of the Garnaut report, it’s time for me to look again at ways to reduce my carbon footprint. I’ve been trying to reduce air travel, turning down invitations and offering to do videoconferences instead. That’s had some success, but mostly people aren’t set up to handle video, and, by the time invitations are made,

Back again with 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. If you would like to receive my (hopefully) regular email news, please sign up using the following link

http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page
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The Guardian has a number of short pieces from economists on the likely economic effects of the coronavirus, and what should be done about it. Here’s mine

The government has finally recognised the correctness of the Rudd government’s response to the GFC

The Australian economy was slowing even before the bushfire catastrophe and the arrival of coronavirus. The economic costs of the bushfires, including damage to property and infrastructure, long-term health effects of smoke exposure and ecosystem destruction were massive, but the main effects on GDP will be felt by the tourism sector. The damage to Australia’s international image from widespread vision of the fires, accompanied by critical commentary to the effect that, as a climate laggard, we have brought this on ourselves,

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.
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Back again with 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. If you would like to receive my (hopefully) regular email news, please sign up using the following link

http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page   and at my Economics in Two Lessons page
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As I’ve said a few times before, I’m not a big fan of scandals. With much of the country burned over the last season (not even last summer, it started in June) and coronavirus in the way, our supposed leaders could do better than argue about handouts for boatsheds. But the corruption is obvious, and someone has to pay. So, here’s my suggestion.

Morrison’s chief of staff, John Kunkel admits that he ran the entire show (given that he was in charge of Morrison’s office, this is highly plausible) and that Morrison knew nothing about it (doubtful, but impossible to disprove). Phil Gaetjens ( Kunkel’s predecessor, now Secretary of PM & C admits he screwed up the investigation. Both of them resign, and everyone goes about their business.

Result: the Opposition get their scalps, and

Next week, as I’ve mentioned, I’ll take part in a debate/dialogue with Stephen Hicks, a North American philosopher, who has criticised postmodernism from a right/libertarian perspective. He’s on a tour of Australia, and was invited to Brisbane by Murray Hancock who’s setting up The Brisbane Dialogue which has the ambitious objective of promoting civil discussion across political divides. I ended up being dobbed in (is this an Australianism?) to present the other side, and chose the topic “Postmodernism is a rightwing philosophy”. Longterm readers of my blogging won’t be surprised: I was making this claim as far back as 2003. Thanks to Kellyanne Conway and “alternative facts”, I’ll have plenty of material to work with.I plan to argue that in the absence of any objective

I’ve got quite a few events coming up in the next ten days. I’ll be in Adelaide for the Writers Week (program here), appearing at the Pioneer Women’s Memorial Garden, King William Road on Wednesday 4 March at 2pm in conversation with Jane Goodall, on the theme the Common Good. I’ll be signing copies of Economics in Two Lessons.

I’ve fitted in two earlier events on Tuesday 3 March. At 12 noon, I’ll be talking about the economic cost of the bushfire disaster, at the University of Adelaide (Level 6, Faculty of the Professions Building, Pulteney Street). Then at 5:30, I’ll be talking about Economics in Two Lessons to the Economics Society of Australia, Marjoribanks 126 SANTOS Lecture Theatre, Level 1, Nexus Building 10 Pulteney Street, Adelaide, SA 5000

On Monday 9 March, I’ll

The news of deaths from bird flu in Indonesia is pretty scary. Although, as I’ve mentioned recently Indonesia has made a lot of progress in many respects, the handling of this threat so far seems to show the worst of both worlds: all the ill ffects of authoritian habits combined with the timidity of weak politicians. There have been a lot of coverups, and an unwillingness to tackle the necessary but unpopular task of slaughtering affected flocks of birds. Things seem to be improving now, but there’s a long way to go.

It seems very likely that, sooner or later, bird flu will make the jump that permits human-human transmission, and quite likely that a major flu pandemic will result. The world, including Australia, is very poorly prepared for this. One thing we could do to prepare

I’m one of 10 000 Australian academics who signed an open letter to Unisuper (our industry superannuation fund) calling for a policy of divestment from carbon-based fuels. The first step in such a policy has to be divestment from thermal coal. Purely on fiduciary grounds, getting out of thermal coal is now a matter of cashing out before the assets are completely unsaleable. Just in the last week, here’s a list of investors, ranging from small institutions to financial giants that have made announcements along these lines

JP MorganMoody’s (saying that insurance companies should divest to reduce climate litigation risk)The Royal College of PsychiatristsThe Jesuit Order in the UK Creighton University (Jesuit University in the US)Bristol University (UK)Danish pension fund APG

If Labor plans to keep its promise of emission reductions by 2050, serious action must be taken as time is running out,

My latest piece for Independent Australia argues that if the 2050 target is taken seriously, Labor must have policies for 2030 similar to those taken to the 2019 election.
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… Australia’s tourist numbers may take years to recover. That’s the headline for my latest piece in The Conversation. It’s part of a larger project on the economic impact of the bushfire catastrophe. It’s going to be hard to disentangle this from coronavirus – I’m still thinking about this issue.
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