Today’s column in the Fin. 

There are three arms of macroeconomic policy. There are the two in the economics textbooks – monetary and fiscal. And there’s a third, Australian, arm of macroeconomic policy, or there could be with a bit of lateral thinking – of which more in a moment.

The Reserve will be announcing further monetary policy easing today – again taking its axe to the interest rates on your mortgage. And the Government has just fired over ten billion dollars from the fiscal cannon without (yet) breaking into red ink.

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For decades SNOOTS have been hunting down whiches and replacing them with thats. Whenever a SNOOT discovers the relative pronoun which introducing a restrictive clause, the writer responsible will drop several notches in her esteem. Read more »

The financial crisis has been the making of Gordon Browne we’re told. While Hank Paulson was holding masterclasses in crony capitalism Gordon Browne’s rescue package showed how it was done. His recapitalising the banks by buying equity in them was right out of the textbook, maximising state upside and minimising moral hazard. Read more »

I wish I had more time to look at all this stuff, which is very suggestive of interesting things.  I have a proposal for you, micro-economic reform has been basically right in trying to make markets more competitive, but it’s done some serious damage along the way, and one way of making the point is that as information flows and risk sharing become more important, as they have been becoming, things like intrinsic motivation, the minimisation of invidious arrangements which can undermine basic notions of doing the right thing come at a huge cost. Read more »

From Rory’s newsletter

I was in Canberra yesterday, presenting at the Federal Treasury and the Parliamentary Library. Over the past year, I’ve often been the most pessimistic person in the room. My second presentation yesterday, however, followed one by Dr Steve Keen (google, if you are keen), whose high-profile forecast of a 40% drop in Australian home prices has put the wind up many homebuyers and potential home-buyers, not to mention some offshore investors.

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There are currently three schools of thought on how best to address the current global crisis.

One takes the view that it is all due to “more expensive financing”- not due to decreased demand. Peter Auer, Raphael Auer and Simon Wehrmuller want to rely exclusively on reducing the high cost of obtaining external funds, which accounts for most of the decline in employment in US industry since August 2007. Read more »

This is a letter written by the ATO. Someone sent it to me.  The letter is not addressed to me.  I’m not joking or making it up

Cancelling your Australian business number For your information and action

We wish to advise you that your Australian business number (ABN) xxxxxxxxx may be cancelled.

Recently we conducted a review of the Australian Business Register to identify persons who may no longer be entitled to an ABN. Your registration was selected in that process.

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Peter Boettke has written a piece to introduce the main elements of Austrian economics in ten points.

The Science of Economics

Proposition 1: Only individuals choose.

Proposition 2: The study of the market order is fundamentally about exchange behavior and the institutions within which exchanges take place.

Proposition 3: The “facts” of the social sciences are what people believe and think.

Microeconomics

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A special question was inserted in the latest Newspoll. It found that 56% of voters would be “concerned if the federal budget were to go into deficit, as a result of further government spending in the new year”. Women (64%) were the most skeptical about deficits, while men (50% for deficits versus 47% against) were less skeptical.

It’s all in the wording of the special question about Newspoll’s finding. Read more »

One day last week I came into the office to find an email from my boss time-stamped 2:46am (and no, he wasn’t in another time-zone) asking ‘what, technically, is a depression’. What follows is a slightly expanded version of my answer. Read more »

Peter Klein at Organizations and Markets has pointed out that the US has a thriving auto industry that does not need to be bailed out. Read more »

As Krugman points out, the situation in the US is a pretty sad sight, with the lamest of lame duck presidents fiddling while the economy burns. This is a pretty ridiculous situation. Why not do what they do with buildings and start using them before they are officially opened? Read more »

I’ve been reading an interesting - and much too long - paper by Paul David on the historical origins of ‘open science (pdf).  It is fascinating and deserves a more serious post than this - but I don’t have the time.  What’s prompted this rush into cyberprint is finding a skerrick of corroborating evidence - of which more in a minute. Read more »

Set out by yours truly on BNET here.

From today’s Fin:

As had been the case a month earlier, the papers sent out to members of the Reserve Bank Board the Friday before their most recent meeting on Melbourne Cup Day contained a recommendation that the cash rate be lowered by 50 basis points.

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Peter Boettke makes a point about the role of tariff protection in the US leading the transition from the Great Crash to the Great Depression. Read more »

My posting of a request for people interested in providing research assistance was the most successful bit of job advertising I’ve ever done.* So why not a little more? Peach Home Loans needs constant media relations work, and its hard to find people who are good at it.  Accordingly if any Troppodillians out there fancy themselves as knowing the media game - or having the chutzpah to learn - please drop me an email. Read more »

I wrote about the Paul Woolley centre for capital market dysfunction a while back. It may not surprise you that Wolley is continuing to get attention, not least in Prospect Magazine.  Well worth a read.

The Bishop of Harare, Rt Rev Dr Sebastian Bakare, will be in Australia from 20 November to 5 December with a circuit in NSW including Sydney, Nowra, Goulburn, Wagga Wagga, , Dubbo, Tamworth, Coffs Harbour, and
Gosford.

These matters are not on my normal beat but it seems that Bakare is in dispute with another Bishop who backed Mugage. Read more »

These are difficult times for liberals. The mood around the world is turning against them. Politicians find it easier to blame crazy economists and greedy managers for financial turmoil than to understand and fix their own mistakes. Free-marketers still have the evidence of economic history on their side, but they will have to make their case more forcefully from now on. They face a constant battle of ideas that can never be decisively won.

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Our 28-year conservative opportunity to fix the moral and practical boundaries of government is gone–gone with the bear market and the Bear Stearns and the bear that’s headed off to do you-know-what in the woods on our philosophy.

I’ve been a fan of O’Rourke’s for some time. To me his best work was in Parliament of Whores — he was young enough to still get angry, but old enough to have wisdom to go with it. Read more »

With intended irony, I christen Paul Krugman the maestro of the column. Here’s his latest one. I’ve only read the first two paragraphs but they illustrate his virtuosity of the form.  I’ll post the rest of the column below the fold.  Read more »

Why Obama Should Copy Bush (Really!) 

By Jonathon Cohn

You hear lots of talk about which former president Barack Obama should use as a model. Bill Clinton comes up regularly. Franklin Roosevelt, too. But what about the guy in the White House now? Read more »

Having read Ken Henry’s recent speech, I wanted to do something for Crikey! on it, and proposed something for Friday, but they wanted it today - which gave me 45 minutes. The result is below. If I would have liked to have put some things better, I got my main messages across. Read more »

The Washington Post hosts a blog called Security Fix. Not long ago they identified a data centre operator called McColo, apparently up to its eyeballs in bad behaviour:

For the past four months, Security Fix has been gathering data from the security industry about McColo Corp., a San Jose, Calif., based Web hosting service whose client list experts say includes some of the most disreputable cyber-criminal gangs in business today.

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It’s a common refrain that “we’re all Keynsians now”, as government after government turns to fiscal levers to try and avert recession.

Yet just a year ago inflation was zooming up the list as a potential threat. And, in actual fact, it still is. Read more »

For more detail click here.

I mentioned an art exhibition by a ’second generation Dunera Boy’ in an earlier post and I went along on Sunday. I found it very affecting and bought a painting - they’re very cheap! Read more »

"People who talk about a bubble are blowing smoke,” said real estate economist Michael Carney. It was February 2005 and Carney was confident that house prices in California wouldn’t fall. But by the end of the year the market turned. And between August 2007 and August 2008, California house prices fell by more than 40%.

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Paul Krugman was always critical of Obama for not being more partisan.  We’ll see what happens.  In my ignorance I’m expecting Obama to be like Clinton - a pro when it comes to policy who hires the best advice he can get unlike Republicans who haven’t done that since - well perhaps someone can remind me. But I don’t expect him to be particularly bold.  But who knows. The thing that always struck me as ridiculous about Krugman’s critique is that being all post-partisan was a good way to build a coalatition and get into power. Read more »

As Fred Argy reports, the Government is still toying with the disastrous policy of going with the Hollowmen’s fiscal strategy in a recession - which is to obfuscate about whether or not you’ll run a deficit until you can’t obfuscate any more at which time you go (shamefacedly) into deficit and then reassure the public that you’re doing everything you can to fight the slowdown, that you’ve had a ’stimulus package’ or two to that end, but that they’re not very big and you’re trying to minimise the deficit as well. Read more »

I find it incredible that Bletchley Park, the birthplace of modern computing, the place that won the Battle of the Atlantic without which the Allies may not have won World War II is finding the going tough to survive and thrive as a museum. Read more »

Here’s a graph of the swing to and against Democrats and Republicans.  Arizona stands out - McCain’s home state.  But the real source of amazement for me is Loisiana - including from the looks of it New Orleans. Read more »

From xkcd.

In an earlier column I outlined the problems of the cognitively challenged ‘Tania’. Tania is not cognitively challenged because she’s stupid. She is cognitively challenged because impossible demands are made on her cognitive faculties. That’s what I argued with regard to the requirement that she choose where to put her super - not the kind of choice she’s comfortable with. Read more »

Here is today’s column in the Fin - in which I try to outline some ideas for a ‘post financial crisis’ economy not just for their own sake, but also as illustrations of the kinds of principles that should lead us as we craft the contours of the mixed economy. Read more »

A man carrying a musket rushed at him. Another threw a brick, knocking him off his feet. George Kyle picked himself up and ran. He never did cast his vote. Nor did his brother, who died of his wounds. The Democratic candidate for Congress, William Harrison, lost to the American Party’s Henry Winter Davis. Three months later, when the House of Representatives convened hearings into the election, whose result Harrison contested, Davis’s victory was upheld on the ground that any “man of ordinary courage” could have made his way to the polls.

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So some Chinese site called BlogPeople decided to crawl the entire back catalog for Club Troppo, which is a fair whack. And it decided to do it several hundred pages at a time. And it wasn’t very smart about how it generated links.

So here’s a fun discovery. The web server I use is fast and lightweight, but it turns out that while it can dish out buckets of static files under insane loads, if it gets gummed up once on talking to PHP it stops working properly. It starts responding to everything with a ‘500 server error’ code and doesn’t reset. Read more »

Jacques Barzun is arguably the leading commentator on education and cultural studies in the 20th century but he has a low profile since his kind of deep but ideologically disinterested scholarship went out of fashion. Born in 1907, he turns 101 in November. His reputation achieved a remarkable boost a few years ago when his massive and scholarly book Dawn to Decadence appeared in the year 2000 and quickly became a surprising best-seller. Read more »

Comedian laureate of our bullshit drenched age, John Clarke is on LNL tonight. I love John Clarke and, on consulting others in charge of this website - including Dr Troppo - it has been decreed that tuning in is compulsory. Those who are unable to pass a comprehension test (to be administered by a bot when you next comment on the site) will be banned from the site forthwith.

The original policy, as announced on 13 October, stated unambiguously that “to ensure that taxpayers are not disadvantaged by this guarantee, the Australian Government will charge financial institutions for providing the guarantee. The charge will be similar to an insurance premium”.

That particular clause, i.e. “charging the protected deposit institutions for the guarantee”, has still to be formally announced. Read more »

A few weeks ago, on the 30th of Sept to be precise, I gave a speech to ’science leaders’ in CSIRO. Science leaders are early mid career scientists from around the world whom CSIRO have recruited. As the speech explains, Jim Peacock, the Chief Scientist whom I met when on the Innovation Review asked me to speak. I sent this to Don Arthur, who enjoyed it, so I thought I’d post it for those who might like to read it on Troppo.

I must confess to some trepidation as I stand before you. Read more »

A recent report by Paul Krugman warned that “we are about to witness the mother of all currency crises in emerging markets”. http://economistsview.typepad.com/economistsview/2008/10/is-a-currency-c.html

He says emerging markets are “being swept under by a currency crisis that is not of their own making”. Moreover, most of the world needs to be aware that this “could transform the deep recession —-into a great depression”. He hopes that “the IMF will have an announcement in time to make a difference”. It could prove a make or break week”. Read more »

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Every night while we sleep, the Wealth Fairy flits from home to home stuffing riches into the magical savings accounts Australians call ‘housing equity’. In the morning, newly renovated kitchens buzz with activity as mums and dads get the kids off to school. Coffee mugs clink on granite bench tops and Mel and Kochie chat about hot investment opportunities in nearby suburbs. Read more »

The new report on “income inequality and rising poverty in most OECD countries” is just out. http://www.oecd.org/document/25/0,3343,en_2649_201185_41530009_1_1_1_1,00.html

This is the conclusion.

“Social mobility is lower in countries with high inequality, such as Italy, the UK and USA, and higher in the Nordic countries where income is distributed more evenly” Read more »

by Edward L. Glaeser, Matthew G. Resseger, Kristina Tobio - #14419 (PE)

Abstract: Read more »

Last week I was privileged enough to go to the PM’s Science Awards in Parliament House. Kevin was, as usual enjoying his place in the centre of the stage, and gave a good speech which impressed his audience. Read more »

The Myer Foundation’s ‘Cranlana’ Program is named after Sidney Myer’s magnificent Toorak home where the program holds a range of functions. I attended one of these when I was working at the BCA. I remember doing the reading for it before hand and thinking it was going to be awful. The reading was snippets of Aristotle, Plato, Thucydides, Confucius, Machiavelli, John Locke and Isaiah Berlin to name a few. Read more »

Despite having a reputation for producing poor software, Microsoft have for decades published some of the leading authors on software engineering practice and know-how. They have vast resources and thorough processes for developing software along the lines of 1980s best-practice. By and large, with caveats and shortcomings, they made it work. For the period up to the late 90s, “How Does Microsoft Do It?” was a reasonable question for project managers to ask. Read more »

When debating this issue, John Quiggin (September 27, 2008) made the claim that neo-liberalism had “failed” (relative to social democracy). Paul Frijters (recent Club Troppo piece), on the other hand, dismisses the topic as largely irrelevant.

One reason for this disagreement is that one is defining economic libertarianism and the other is defining economic liberalism. Let me explain.

When Quiggin attacked neo-liberalism, he defined its core on three criteria. Read more »

The Australian Skeptics Prize for Critical Thinking has been won this year by Peter Ellerton, a Queensland teacher who established a network promoting critical thinking in schools. The prize is worth $10,000. For a decade up to 2006 it was awarded as a part of the Australian Museum Eureka Prizes.

Peter is the Head of Curriculum (Senior School) at Calamvale Community College in Brisbane. He has established the Australian Philosophy Teachers’ Network which brings together practitioners and other experts from around the country. Read more »

I was sufficiently taken with this piece in the Fin that I asked it’s author Peter Cebon of the Melbourne Uni Business School if I could republish it here. Read more »

It has been a busy time for academic economists in the past few weeks. Every lunch break has been dominated by talk about all the goings on in the markets and the government plans that are coming thick and thin. We are trying desperately to remain more knowledgeable about the crisis than the next journalist calling the school for a ‘considered opinion’. Read more »

My take on Krugman’s Nobel - from today’s Crikey! Read more »

Courtesy of a friend Paul, here is an email I received of neologisms from the neologism competition in the Washington Post.

Once again, The Washington Post has published the winning submissions to its yearly neologism contest, in which readers are asked to supply alternate meanings for common words.

Neologisms

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It’s long seemed obvious to me that without large injections of fresh capital, all the other efforts to deal with the ever unfolding financial crisis would prove inadequate. Or even counterproductive. The official debate has finally swung in this direction but the question of how best this might be achieved remains a tricky one. Read more »

Regular readers of this blog may remember Neil, the guy who runs a great taxi ‘ring’ - a group of drivers who cooperate in providing a superior service to the crap you have to put up with from the branded networks of taxis. I really hate their policy of not offering you any idea of when the taxi will turn up. When you say ‘I know you can’t promise, but how busy are you?’ they say ‘We can’t give time assurances sir’ - which wasn’t what I asked for. I was just after a bit of information. Read more »

I was reading this post by a favourite lefty last night and getting pretty depressed at the US’s massively greater propensity for hysteria than our own political culture - maybe it goes back to the witch trials in Salem, or perhaps the madness the South pre and post Civil War (up to around the 1960s). Read more »

Someone who used to do some ’spot’ research assistance for Lateral Economics has got a new job which means he can no longer do it.  Anyone interested in doing occasional research assistasnce should drop me an email at ngruen AT lateraleconomics DOT com and after that add a DOT au. Work is occasional and of course you are never expected to be available and hanging around for us to call - if you can’t do something we ask, so long as you haven’t previously agreed to do it, that’s fine.  Read more »

A companion site to the 200 years of Australian technology, “Bright Sparcs“, hosted by the University of Melbourne.

A register of people involved in the development of science, technology, engineering and medicine in Australia, including references to their archival materials and bibliographic resources.

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Fortunately executives of ‘rescued’ outfits realise how important it is for them to reassure the rest of us by showing us that life goes on and we should continue to lead it (as best we can in our newly straightened circumstances) as usual.

Thus for instance the Washington Post reports. Read more »

Here’s today’s AFR column.

“No pain no gain”. We’re all familiar with the cliché. Meet its twisted sister. Courting the pundits’ respect for taking tough decisions, our politicians simply make the economy worse. Call it “all pain, no gain”.

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