Friday, October 14, 2011

Green barreling and the MFP

Henry Ergas has launched a tirade against the Government's climate change policy. He is reasonably concerned about the prospect of "painting the pork barrell green" through the $10B in subsidies available from the Green Energy Finance Corporation.

My problem is that I don't see much better on the other side where EVERYTHING is by "direct action."

I don't accept the generic conclusion that;

. Rather, analyses consistently conclude that each dollar spent on this type of government venture simply crowds out one dollar of private investment elsewhere in the economy. But that government dollar both achieves less than the dollar it displaces and costs more, because distorting taxes are needed to raise it. It therefore ends up costing two or more dollars in lost income.

Targeted investment in creating comparative advantage can work in the long run. But the focus has to be on identifying places where investment in capability can generate returns. Australian Governments have invested successfully for years in agriculture research to create comparative advantage in agriculture markets.

He also completely loses me by asserting "the Hawke Govt Multi-Function Polis sought to get us into electronics?" Blowed if I know where that came from.

The MFP was a proposal from Japan's MITI for a city based on adapting all the latest in technology. It was made in the late eighties. The proposal looked more like a plan to build a giant Japanese retirement village on the North coast of Queensland. By 1990 one report described it as;

a model city for 21st century conditions, arising out of the new possibilities for urban living associated with telecommunications, internationalisation and an information intense environment.

The Government tried to engage with the plan hiring Clem Doherty of McKinsey (now on the NBN Board). The implementation of it swung from being a network of MFPs in each state (to avoid having to decide) before uniquly settling on a swamp near Adelaide. Having now not met any of the Japanese objectives interest from there wained and the proposal slowly died.

I'm also struggling to understand how the world "slumped" in electronics after the late eighties? Maybe the established economies did, but that's a very large part of China and Korea's industrial output.

Note 1: I have somewhere (or had) a copy of the original MITI proposal. If I find it I'll put it up on a website somewhere.

Note 2: There is a wealth of information available on the MFP. Below is a short bibliography from Trove.

The multifunction polis / David Kennedy
Multifunction Polis Conference, 8-10th November 1989, Bond University, Gold Coast, Australia : conference papers
The multifunction polis : an evolving process / Thomas Mandeville
Multifunction polis : social issues study : a report / prepared for the Department of Industry, Technology and Commerce by David Yencken
Queensland multifunction polis : the natural choice for Australia's future
Serendipity city : Australia, Japan and the multifunction polis / Walter Hamilton
The clever city : Japan, Australia, and the multifunction polis / Ian Inkster
Evaluation of Commonwealth support for the multifunction polis / Bureau of Industry Economics

Novae Meridianae Demetae Dexter delenda est

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