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John Quiggin

John Quiggin

He is an Australian economist, a Professor and an Australian Research Council Laureate Fellow at the University of Queensland, and a former member of the Board of the Climate Change Authority of the Australian Government.

Articles by John Quiggin

Sandpit

1 day ago

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.
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Monday Message Board

1 day ago

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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Hank Jongen, the general manager who isn’t

4 days ago

When a PR man presents himself as the boss of the organization he spruiks for, you are well advised to disbelieve anything he says. Hank Jongen “general manager” of Services Australia and its predecessors (such as Centrelink) has been doing this for years, most recently here . In reality, Jongen is the agency spokesperson.

The trick is that “General Manager, Function X” is a title given to lots of middle-ranking public servants. By contrast, Jongen’s statements never qualify the term, sugggesting that he is general manager of the entire organization. In fact, it’s unclear what his actual job title is. According to this org chart, Jongen works for the General Manager, Communications, a position currently held by Susie Smith.

But Jongen and Services Australia are happy to give

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UBI: For individuals or households?

6 days ago

This post is about a point which has come up here and there in the discussion about Universal Basic Income, but which I’ve never worked through properly.  

A preliminary observation is that it’s necessary to consider tax and welfare together as an integrated system. What matters most is the effective marginal tax rates (the sum of marginal income tax and benefit reduction rates). 

Then, starting with the current Australian tax-welfare system, and considering possible paths towards UBI, the key problem is that the tax system is organised (mostly) on an individual basis while the welfare system is organised (almost entirely) on a household or family basis. 

The Negative Income Tax version of UBI is one way of implementing a universal payment if you work exclusively on an

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Transmission too

7 days ago

In my article arguing that electricity from solar PV (and wind) could soon be too cheap to meter, I didn’t mention transmission networks. That was for space reasons.

The case for public investment is actually stronger for transmission than for generation. Electricity transmission lines have the same cost structure as renewables (low operational cost and long lives), if anything more so, meaning that the cost of transmission depends primarily on the need to secure a return to the capital invested.

More than this, the electricity grid as a whole is a complex network in which valuing the services of any individual component is just about impossible. That in turn means that relying on markets to make optimal investment decisions is untenable.

For these reasons, the

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Too cheap to meter

8 days ago

That’s the headline for my latest piece in Inside Story, looking at the implications of zero interest rates for renewable energy sources like solar and wind. Key para

Once a solar module has been installed, a zero rate of interest means that the electricity it generates is virtually free. Spread over the lifetime of the module, the cost is around 2c/kWh (assuming $1/watt cost, 2000 operating hours per year and a twenty-five-year lifetime). That cost would be indexed to the rate of inflation, but would probably never exceed 3c/kWh.

The prospect of electricity this cheap might seem counterintuitive to anyone whose model of investment analysis is based on concepts like “present value” and payback periods. But in the world of zero real interest rates that now appears to be upon

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Monday Message Board

8 days ago

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 arithmetic of retirement income: the case of zero interest rates

14 days ago

Back in 2009, I looked at the implications of the GFC for retirement income, working on the assumption that retirees could safely aim for a 2 per cent real rate of return. The bottom line was that current workers need

double contributions, to 20 per cent of income and shift the work-retirement balance, so that you work from 25 to 65 to finance an expected 20 years of retirement income.

Since then, the real rate of return on safe investments like government bonds has fallen to zero (maybe below). That means that you can treat your net worth at retirement as being equal to the amount you have to live on for the rest of your life. In particular, if you work from 25 to 65 and want finance 20 years of retirement income holding your consumption constant, you need to save one-third

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Sandpit

15 days ago

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.
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Monday Message Board

15 days ago

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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Some facts, and claims, about the 21st Century Economy

16 days ago

In the process of working on my book-in-progress, The Economic Consequences of the Pandemic, I’ve been trying to integrate a number of facts about the economy of which I’ve been more or less aware for a while, along with claims I want to make, and put them together into a coherent account of the economic system prevailing (in advanced/developed economies( in the 21st century and how it differs from the industrial goods economy of the 20th century.

As a step towards this, I’ve put together a list of factual claims which I think can be established reasonably firmly, along with claims I want to make that will be more contentious. My plan is to put this together into a coherent analysis, including supporting evidence. So, I’m keen to get good supporting links for any of these points

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Budget reax

18 days ago

I have a couple of articles responding to the most momentous budget in Australian history. For those who’ve forgotten, it was introduced on Tuesday.

Here’s one in The Conversation on environment and energy policy (heavily edited and done in a hurry, so there are a few points I would have written differently).

And here’s one in Independent Australia, headlined Budget like its 2019, on the government’s failure to learn from the catastrophes of the last year.
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Inequality and the Pandemic, Part IV: Possibilities

19 days ago

Another in my series of extracts from my book-in-progress, Economic Consequences of the Pandemic. So far I’ve looked at luck the limited relationship between returns and social value and the fact that risk-taking is mostly done (involuntarily) by the poor, not the rich. Now I’m going to consider possibilities for reform

The biggest lesson of the pandemic, and indeed of the decade since the Global Financial Crisis is that (just about) anything is possible. The decades in which the ‘Washington Consensus’ held sway narrowed the range of thinkable policy options to the marginal differences between hard (think Newt Gingrich and Margaret Thatcher) and soft (Bill Clinton and Tony Blair) versions of neoliberalism.

Economic policies that had prevailed during the decades of widely

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What’s left of microeconomic reform?

22 days ago

I happened to mention on Twitter that I now use the word “reform” without scare quotes, even when I think the reform in question is a bad one. In fact, that’s my default assumption when I see the word, at least in the context of economic policy. That led me to think about how much fof the 1980s and 1990s microeconomic reform program still stands up. Here’s the result from Threadreader (via @ScooterBodgie)

Having privatised telecomms and (most electricity), government is now building/commissioning broadband network and electricity generation and storage. Competition and choice in human services comprehensively disastrous with for-profit providers (aged care, VET)

PPP model broken ever since GFC (based on UK PFI, which Conservative government tweaked, then dumped altogether)

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Sandpit

22 days ago

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.
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Monday Message Board

22 days ago

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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Inequality and the pandemic, Part 3: Risk and reward

23 days ago

So, far I’ve argued that the inequality of incomes in our society is largely a matter of luck rather than inherent personal ability, and that it is only distantly related to the social value of the contributions people make through their work. These conclusions undercut the idea that taxing those on high incomes will harm society by reducing incentives to work for the most able and social valuable workers. Although the evidence was already strong, the pandemic has brought these points into even brighter relief.

Now I want to consider the claim that we need inequality in order to encourage people to take risks. The simplest response is to point to the empirical fact that high income earners take (or, more accurately, are subject to) less risk than average not more[1].

Hardy and

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Inequality and the Pandemic Part 2: Merit

26 days ago

Unequal incomes are regularly justified by claiming that high incomes reflect a larger contribution to society. This has never been true as a general proposition.

Some high incomes, like those of skilled surgeons, reflect a contribution well above the norm. Others, like those of entertainers and sports stars, reflect services that are highly valued by our society whether or not they make it a better place.

Others on high incomes make only marginal contributions to society or cause active harm. The massive growth in the number and incomes of lawyers and finance professionals over the past forty years has not been matched by any obvious improvement in justice, financial security or the rational investment of capital.

The majority of people in these professions are, at

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Outsourcing: what we pay for is what we get

27 days ago

Ross Gittins makes some obvious, but important, points about what is lsot when vital public services are contracted out. As he says, economists have known this since the work of Oliver Hart, last century, but it’s only now penetrating the policy establishment. In the UK, which led the charge for outsourcing under Thatcher, insourcing is the New Big Thing.

Unlike Hart, I’m not in the running for the Economics Nobel, but I’ve spent much of the last thirty years supplying empirical support for his theoretical analysis.
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Inequality and the Pandemic, Part 1: Luck

27 days ago

Here’s an extract from my contingent* book-in-progress, Economic Consequences of the Pandemic commissioned by Yale University Press. Comments and compliments appreciated, as always.

The Covid-19 pandemic has taught us several things about inequality, or rather, it has dramatically reinforced lessons we, as a society, have failed to learn. The first is the importance of luck in determining unequal outcomes.

Some of us will get Covid-19 and die or suffer lifelong health consequences. Others will lose their jobs and businesses. Many, however, will be unaffected or will even find themselves better off. Some of these differences may be traced to individual choices that are sensible or otherwise, such as deciding whether to wear a mask in public places. But mostly they are a matter

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Financial market equilibrium with bounded awareness

29 days ago

For decision theory and finance fans, my latest working paper with Ani Guerdjikova https://ideas.repec.org/p/gbl/wpaper/2020-10.html Some difficult math, but there are fundamental implications for financial markets, which will be spelt out later.
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No Planet B

29 days ago

Five planets visible in the sky at the moment. Mercury in the West just after sunset, Jupiter and Saturn near the moon, Venus and Mars in the morning. Earth is the one we really need.
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Monday Message Board

29 days ago

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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Renationalise the electricity grid

September 26, 2020

Despite yet another round of policy announcements from the Morrison government, energy policy in Australia is still stuck in the morass created by a combination of climate denialism and the failed reforms of the 1990s, of which privatisation was a critical element.

I’ve argued for some time that the grid should be renationalised, and the case is even more urgent now.

The case for renationalisation has been massively strengthened by the fact that real interest rates on government debt have fallen below zero, and seem likely to remain there indefinitely. That makes renationalisation of monopoly infrastructure assets a bargain at any plausible price. Let’s look at the numbers

It’s estimated that we will need $100 billion of new investment in the grid to make the

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Sandpit

September 20, 2020

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

To be clear, the sandpit is for regular commenters to pursue points that distract from regular discussion, including conspiracy-theoretic takes on the issues at hand. It’s not meant as a forum for visiting conspiracy theorists, or trolls posing as such.
Like this:Like Loading…

Read More »

Monday Message Board

September 20, 2020

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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Sitting next to Nelly*

September 20, 2020

One of the big questions about the shift to working remotely has been “what about new staff?”. To spell this out, the idea is that, while experienced workers can do everything they need to online, new employees will need personal contact to pick up tacit knowledge and firm culture. It’s inherent in the argument that these terms are difficult to define with any precision – if not, they could be formalised and taught.

This is part of a debate that’s been going on for a couple of centuries, between proposals for formal education in work-related skills and learning on the job, sometimes through apprenticeships and sometimes through “sitting next to Nelly”, that is, picking up the relevant skills by working with people who have already acquired them.

Before 1800, and with the

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To get the economy going, we’ll need more than hard hats

September 17, 2020

That’s the headline for my latest article in Independent Australia. Opening paras

WITH THE economy in recession as a result of the COVID-19 pandemic and depressed conditions likely to continue for a year or more to come, attention has turned to strategies to promote recovery.Unsurprisingly, most participants in the policy process have turned to the kinds of strategies they have always favoured.High on the list for many is increased investment in physical infrastructure projects and particularly transport infrastructure. Such projects, always announced with an impressive-sounding number of associated jobs, lend themselves to images of legions of workers toiling with picks and shovels (the term “shovel-ready” is commonly used for projects ready to be implemented rapidly). And the

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Firm-specific skills and working from home

September 17, 2020

One of the central features of the debate about working from home is that it leads to the loss of random, but productive, encounters with colleagues. I’ve responded with the observation that some of my best research ideas have come from largely unplanned encounters on the Internet.

It’s just struck me that there is a conflict here between the interests of workers and those of firms and managers.

A lot of universities (or, more precisely university managers), think of themselves as developing and promoting a corporate brand. In this context, research collaboration within the university (particularly if it is trans-disciplinary) is viewed very positively, while collaboration with other universities is less well-regarded. But for individual academics, the big rewards come from

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