For some reason, I’ve been asked to do an interview with a Korean radio station about the Regional Comprehensive Economic Partnership, frequently described as “the world’s largest trade deal”, on the basis that the countries involved have a combined population of 2.2 billion, more than any previous deal.

The most interesting thing about the deal is what’s not in it (also, who’s not in it, notably India and the United States). Early drafts followed the classic pattern, with strong Intellectual Property and Investor State Dispute Settlement, while excluding environmental and labour protections (which never had a chance in this deal) . In the final agreement, the IP content, which previously included things like a binding commitment to Plant Variety Rights has been watered down to

(Another extract from the climate chapter of my book-in-progress, Economic Consequences of the Pandemic)

The Covid-19 pandemic has accelerated a variety of social and economic trends, some beneficial and some harmful, that were already underway before 2020.

An important example of a beneficial effect has been an acceleration of the decline of carbon-based fuels. Lockdowns early in the pandemic produced a substantial reduction in demand for both electricity and transport. As well as providing a brief glimpse of a world with greatly reduced atmospheric pollution, the lockdown accelerated shifts in the energy mix that were already underway.

Since solar PV and wind plants cost nothing to operate, the reduction in electricity demand fell most severely on carbon-based fuels,

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Even as the future of US democracy remains in the balance, and as the pandemic still rages, I’m still working on my book The Economic Consequences of the Pandemic. At this stage, it’s hard to get a clear idea of how things will look when and if the pandemic is brought under control. One thing that is certain is that the problem of climate change/global heating will not have gone away. Over the fold, the intro for the chapter I’m writing on this topic. Comments, criticism and compliments all gratefully accepted.

The pandemic disaster has absorbed all of our attention. But the longer-running, and ultimately more dangerous disaster of global heating has continued to wreak its ever-increasing havoc.

The hottest temperature ever reliably recorded (130 F or 54 C) was observed on

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That’s the self-explanatory title of my latest piece in The Conversation. It’s wonkish, but important. As I’ve explained here and here, an economy with zero real interest rates works very differently from the kind we are used to.
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That’s the key point of my article in The Guardian this week. The intro focused on aged care and the headline picked that up, but the main points are general

There’s nothing inherently desirable about competition. If the alternative is collusion against the public interest, competition is a necessary evil. Far better, when it can be achieved, is cooperation to be the best we can at what we do. That’s the core value of the service professions, professions derided by market reformers as “producer interests”.

Much the same is true of choice. As far as flavours of ice cream are concerned, some people will like butterscotch, some will go for mango and some might even prefer Neapolitan. The more choices the better. But for the human services that matter most to us, it’s not a

102 years ago today, the guns fell silent, marking the end of what was then (optimistically as it turned out) called The Great War or (even more optimistically) The War to End War. I’ve written many times about this disaster, but only once about the influenza pandemic that began in the last year of the war and ended up killing millions more people than died on the battlefields. It’s hard to think about anything else today, even as the existential threats of climate change, nuclear war and the collapse of democracy loom large in the shadow of the pandemic.

As on the day of the original armistice, we can hope that better days may lie ahead, but can only hope and do our best to bring them about.
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Post your thoughts on recent and coming elections here. Civil discussion and no coarse language.

I may have something to say a bit later.
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My latest piece in Independent Australia, motivated by today’s election in Queensland is about the relationship between Labor and the Greens and, in particular, the increasingly common case when Labor must rely on Green support to form a government. The headline, ‘Why a coalition between Queensland Labor and the Greens would work’, isn’t exactly what I would have chosen, but I neglected to supply my own, so I can’t complain. Key paras (including some material from this blog)

both parties need to realise that they are part of the same centre-Left movement. For Labor, that means giving up the idea that the Greens are a temporary irritant that will go the way of the Democratic Labour Party (DLP) if they are ignored long enough or abused as “inner-city elites”.For the Greens, it

… is Australia Post a commercial operation or a public service?

That’s the headline for a piece I wrote for The Guardian (my first there in quite a while). A key point is that the deal that allegedly justified the expensive gifts was, in essence, the continuation of an arrangement established a hundred years ago between what was then the Post Office and the publicly owned Commonwealth Bank. Whoever put that arrangement together deserves commendation, but I doubt that they were rewarded by anything more than a promotion adding a few shillings a week to their salary.

The conclusion:

The Australian public has long since seen through the claims made for privatisation, even if the financial and corporate sectors (the real “inner city elites”) continue to push the ideas of

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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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

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

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

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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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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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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Back again with another Monday Message Board.

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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

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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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

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)

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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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

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