Saturday, December 31, 2011

The Iron Lady - Verdict

The Iron Lady is a disappointing film, but not for all the reasons outlined in John Huxley's column today.

It wasn't merely "revisionism", and the long-term effect of Thatcher on Britain is something on which rational intelligent informed people could disagree. Far from being toned down "Thatcherism" it demonstrated how her downfall within her own party was determined by th excesses to which she took that with the poll tax.

But the film itself spends too long on an interpolated latter life Thatcher, and nowhere near enough on her formative years. For that read Wikipedia.

Interestingly at the time we observed similarities between Malcolm Fraser and Margaret Thatcher, and what they had most in common was a political philosophy derived from a rejection of totalitarianism and all forms of state control. To understand either read Hayek's The Road to Surfdom. The difference is that Fraser never lost his classic "liberalism" whereas thatcher seems to have lost hers - and the difference could be in the difference between the patrician and the grocer's girl fighting class and sexism.

Novae Meridianae Demetae Dexter delenda est

Friday, December 09, 2011

To my loyal reader(s)

As reported in CommsDay today I will be commencing a gig as Temporary Special Adviser to Senator Conroy starting Monday.

Writing a blog is inconsistent with the role. While some of my esoteric pieces on the nature of religion, the global sweep of history and heterodox economics might be legitimate independent comment, those who know me well know I would find it hard not to stray.

It does leave some current unfinished business - not least was a post I was going to write about broadband pricing built on some recent analysis by Benoit Felten on the ways to manage bandwidth hogs.

So, we now adopt radio silence.

Novae Meridianae Demetae Dexter delenda est

Wednesday, December 07, 2011

The Corporation - Part 2

Nice little piece today from Ross Gittins on suggestions for a "relational business charter".

In part it goes to the same territory as my comments on the corporation. But only in part.

The question is more how would you get firm's to pursue the objectives given the myth of "maximising returns". The answer is more that the public policy debate needs a better understanding of the role of the firm and feel comfortable regulating them to achieve the wider objective.

Novae Meridianae Demetae Dexter delenda est

Heterodoxy Unbound

I have spent the last two days at the conference of the Australian Society of Heterodox Economists.

The conference re-established a core point - the heterodox are united by what they stand against rather than what they stand for.

What they stand against is the dominant paradigm of the neo-classical core of economics. But even how much they stand against this varies.

Universally they would argue that neo-classicism fails because it is a system that assumes that the economic system is inherently stable and that analysis begins with an economy in equilibrium. You would probably get general agreement on the proposition that the neo-classical core ignores money and hence largely ignores the finance system, yet the latter accounts for 20% of US economic activity.

Going further you might actually get them to agree that the weaknesses of neo-classicism begin with the three core assumptions of Methodological individualism, methodological instrumentalism and methodological equilibriation.

I approach the heterodox economists from a telco policy stance where I am astounded how the terms "efficiency" and "competition" get chanted with no understanding of the limitations the theory of neo-classicism itself would impose on them, let alone all the other potential fallacies.

An interesting part of the conference was a session proposing a mathematically modelled macro system including finance that was attacked for not having "micro-foundations". This ignores the good conversation that the Hicks co-option of Keynes to give it "micro-foundations" was the point at which Keynes became misunderstood. It also assumes that microeconomics itself is well founded and that the issues are merely to do with macro.

Steve Keen eloquently describes the failures of micro - indeed its internal inconsistency - in his Debunking Economics.

There was so much good in the conference - but the paper by Lynne Chester that distinguished Australia from being characterised as a Liberal Market-Based Economy was a stand-out. Working backward, Australia's relatively better performance than the true LMEs (US, UK even Canada) can be attributed to its different institutional structure - the Australian approach to wage fixation, highest bank capital adequacy requirements.

To put it another way, as economies rushed to implement market mechanisms to facilitate the structural adjustments necessary to respond to the oil supply shock - seen as stagflation - Australia did so in an effective way that created just enough flexibility without overshooting.

There were interesting discussions on central bank policy - with different views of whether central banks in setting official interest rates can or cannot effect employment. The latter view was accompanied by a call for more explicit specification of a "full employment" goal.

In the end the conference had a discussion about the future of heterodox economics - and ultimately the question is whether the goal is the overthrow of the orthodoxy or not. Some, like Keen, think the orthodoxy is so dangerous it needs to be overthrown. Others regard the orthodoxy as being too ingrained to be rebelled against (and one could argue their approach to Keynes is evidence of that - on which the best paper on Keynes was given by UTS's Rod O'Donnell but the paper doesn't appear to be available anywhere).

Yet others see the real benefit in the heterodox as being its pluralism - the fact that it permits economics to be looked at from different dimensions.

My own view is that we do need a true "paradigm shift" but that the shift needs to be to a pluralism - to the kind of world like mechanics in which Newton, quantum and relativistic mechanics can co-exist because the boundary conditions are well understood. The overall title of the new paradigm will be "complexity economics" because that is the consequence of putting institutions directly into models - they create feedback loops.

Finally there is the question of the relation between heterodox and political economy. The latter was the original term for the field when the focus was on how to make wealth. It was inherently prescriptive not merely descriptive. The term is now also used to explain how the neo-classical position operates to support the entrenched power positions (the definition of efficiency says that the preference of the person with the most endowments counts more).

For me this is the piece that simply blows up the cant that economics is a "positive science". If it were only such there would be no preference for economists in policy roles.

Anyhow - short summary - great conference and we all need to pay more hede to the heterodox and spurn the orthodox.

Novae Meridianae Demetae Dexter delenda est

Weird comments

I just moderated a weird comment on a post about the University of Sydney rebranding.

The comment made reference to a supposed "secret society" called the "Integralia." Further research has thrown up a short item in Honi Soit that provides good evidence that the existence of the society is an organised hoax.

The hoax is centred on its own wikispace and seems to be actively centred on a campaign to dis-empower the (already powereless) SRC.

I guess it is just Tony Abbott in the age of the Internet.

Novae Meridianae Demetae Dexter delenda est

Thursday, December 01, 2011

Update on Canada

Thanks to Catherine Middleton for alerting me that the story on easing foreign ownership restrictions in Canada is premature.

The relevant Minister did indicate that change is underway but will not be unveiled till 2012.

He interestingly is reported to have said "the government expects cellphone companies to offer rural Canadians the same services as those living in cities." Canada faces the same kind of geographic issues as Australia - though less urbanised. Vast thinly populated areas are extremely hard to provide metro like mobile coverage to. The only way such an expectation can be fulfilled is to put "must build" criteria on licences (as indeed the original Australian GSM licences had).

Middleton has provided a neat summary of telecommunications in Canada in the TJA. In it she notes a wireless market structure much like Australia's and that "99% of the population has access to 2G or 3G service
(which covers only 20% of the country's geographic area)" The Australian comparison is something like 98% of the population and 25% of the land mass (when a car kit is included)though real data is hard to obtain. (The landmass figure was provided in the Glasson report at P.125 and may well have increased since.)

The comparison between Australia and Canada is otherwise interesting. We have a well developed infrastructure strategy, and at least an attempt at a Digital Economy strategy.

Novae Meridianae Demetae Dexter delenda est