Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

It's economically unjustifiable to extend Canberra's light rail network

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Trams are old-fashioned. Electric buses are cheaper and more flexible. 

The IMF recently advised Australian governments to slow down infrastructure spending to curb inflation.

The alternative is to leave the heavy lifting to home owners with mortgages. The latest interest rate increase by the Reserve Bank delivers a potent message to light rail pundits: can Canberra afford to push on?

 





Albo gives EV drivers a free ride

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EVs relaxing at Chernobyl

It is no secret that federal fuel excise revenues have been in decline for years, and something needs to be done about it. In fact, along with prominent transport industry experts, we wrote a book about it some five years ago. But the High Court, in a 4/3 split decision, has landed the problem in the Albanese government’s lap. What they do about it will impact us for decades to come.

Here is my latest article in The Spectator Australia's Flat White, Albo gives EV drivers a free ride.

Bank of Korea: What can Australia Learn?

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Historical Monetary Policy Board Meeting Room [Michael de Percy CC BY-ND 4.0]

It's interesting what one can learn from technical site visits (such as Korean Air Cargo Terminal), but also surprising how attending small-scale specialist museums stimulates one's thinking. I will return to this later but for now, here are some links relating to Korea's Money Museum.

Link to paper on the history of Korean monetary policy.

Money Museum website.

Money Museum flyer.


Higher Taxes: That Old Chestnut?

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Them old chestnuts? (CC0)

The article below appeared on The Spectator's Flat White on 4th September 2022 at https://www.spectator.com.au/2022/09/higher-taxes-that-old-chestnut/.
Why was I not surprised when Ross Garnaut started touting higher taxes for the mining industry to solve our current cost of living crisis? Labor's economic playbook is as outdated as its corporatist model is lacking critical mass in union membership.

What I am surprised about is that while the Australian Financial Review and The Australian have reported on it, ABC News and The Guardian seem to have missed that old chestnut completely.

Corporatism, as practised by the Hawke government beginning in 1983, represented the three major players in the economy: government, business, and labour. But back then, union membership was more than half of the workforce so a much larger portion of workers were represented in Hawke's tripartite consensus arrangements.

The Prices and Incomes Accords between the ACTU and the government and big business' representation via the Business Council of Australia on the Economic Planning Advisory Council provided the respective forums for consensus-building.

This power-sharing arrangement provided a relatively stable economy as Australia embarked on the privatisation of major government business enterprises like the Commonwealth Bank and Qantas while floating the dollar, reducing barriers to international competition, and introducing competitive markets and enterprise bargaining.

Enterprise bargaining meant that large companies negotiated with their own workers, rather than being subjected to pattern bargaining that gave the unions a stranglehold on the labour market. 

When combined with closed shops, the earlier union-dominated model meant that as a 15-year-old earning $30 per week, I had to pay upfront union fees of $90. I never saw my first three pay packets. I never saw a union rep, either. Apparently, I was to be grateful for the $3.68 per hour my $90 provided me. (The wage after union fees worked out to $3.45 per hour.)

So the Albanese government's first attempt to address the upward spiral of living costs is to set up a union-dominated talk-fest that wheels out Garnaut to tout the old higher taxes for mining companies chestnut. I am not impressed.

How about increasing the rate of the GST and broadening its base? How about looking to market-based solutions to address the upgrade of the electricity network rather than bringing back the tired old cost recovery model for the "Rewiring the Nation" program? (It didn't work for the NBN and it won't work this time, either.) 

If anything, taking on the miners might see the wheels fall off this Labor government as it did Labor governments past. 

Following the Global Financial Crisis, Kevin Rudd triumphantly declared that "the great neoliberal experiment of the last 30 years has failed". Unsurprisingly, the mining industry brought Australia back from the edge of that insanity.

In the meantime, the cost of living is rising and Labor has nothing but the solutions to problems faced by the Hawke Government in 1983. This can't end well for Labor once the post-election honeymoon period is over.

Policies based on classical liberal ideas transformed the global economy and brought about three decades of prosperity for Australians under both Labor and Coalition governments. 

What we need right now are new policy ideas, not the Labor Left's old chestnuts.

Road Pricing and Electric Vehicles: Where to from here?

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A road use charge on EVs is not a disincentive [Source: Mariordo, CC BY-SA 2.0]

Details for this event are available here: https://ciltinternational.org/events/road-pricing-and-electric-vehicles-where-to-from-here/.

Please note I will be updating this article over the next few days to provide more of the detail behind our presentation at CILTA in Canberra entitled "Road Pricing and Electric Vehicles: Where to from here" on 12th October 2021 with John Poljak, the founder of www.keynumbers.com.

The slides from our presentation are available below:

Background reading

Dossor, R. (2015). Revenue from road use. Parliamentary Library Briefing Book - 45th Parliament. Canberra: Parliamentary Library. https://www.aph.gov.au/About_Parliament/Parliamentary_Departmen ts/Parliamentary_Library/pubs/BriefingBook45p/FundingRoads. 

Model of Critical Junctures

See my paper with Stephen Darlington from the AusPSA Conference 2021 here: https://www.politicalscience.com.au/2021/09/apsa-2021-conference-paper.html.

EV Road Use Charge: What's happening now?

Victoria: Road use charges of 2.5c/km (Victoria) on zero and low-emissions vehicles (ZLEVs) from 1 July 2021 (equivalent to fuel exercise charges). Note that conventional hybrids are not considered to be ZLEVs. Source: https://www.vicroads.vic.gov.au/registration/registration-fees/zlev-road-user-charge.

NSW: 2.5 cents per km (indexed) for electric vehicles and 2 cents per km (i.e. 80% of EV charge, indexed) for plug-in hybrid vehicles, by 1 July 2027 or when EVs reach 30% (whichever comes first). Source: https://www.nsw.gov.au/initiative/nsw-governments-electric-vehicle-strategy/road-user-charge 

SA: $3,000 subsidy with 2 cents per km (indexed) for plug-in hybrid vehicles, and 2.5 cents per km (indexed) for any other electric vehicles, by 1 July 2027 or 30% (as per NSW)

Timing

Infrastructure Partnerships Australia (2019) Road User Charging for Electric Vehicles. URL: https://infrastructure.org.au/wp-content/uploads/2019/11/Road-User-Charging-for-Electric-vehicles-1.pdf.

Introducing a road user charge for electric vehicles is a home run reform. It represents a win-win for infrastructure users and taxpayers. But there is a catch – reform must be delivered soon.

keynumbers

  • Headline versus reality: Keynumbers https://keynumbers.com
  • Signal versus noise: EV road use charge 2.5c/km versus ICE Fuel excise at $0.427/litre
  • Australia as a laggard? See Canada (which manufactures EVs) (comparative data)
  • London congestion charging does not reduce congestion in the same way a distance-based charge, so not a panacea for congestion management
  • NSW toll roads – M4
  • Rome – surge pricing fast lanes

Incentives

KPMG Canada (2021):

“For those already inclined to buy an EV, they were motivated by environmental concerns, lower operating costs, tax incentives, and the prospect of reduced insurance premiums. For them, tax incentives were much less of an incentive than the environment or lower operating costs”.

Other incentives:

  • Investment in charging infrastructure
  • Reductions in registration fees
  • Reductions in stamp duty and other purchasing-related subsidies
  • ‘Soft’ loans 

Disincentives


KPMG Canada (2021) (replicated findings of Electric Vehicle Council 2020):

“The main reasons cited by those planning to buy a vehicle but not an EV are the high cost (60 per cent); limited driving range [range anxiety] (51 per cent); lack of charging infrastructure (50 per cent); dubious battery lifespan (30 per cent), limited model options (24 per cent); and recharging time (24 per cent).
  • 83 per cent of Canadians believe the auto makers should be required to invest in a national charging infrastructure.
  • 89 per cent want EV charging stations installed at "every gas station" as well as shopping malls and grocery stores.
  • 61 per cent say the pandemic made them realize that they need a vehicle. They said they would rather drive than take public transport.”

See: Electric Vehicle Council in partnership with carsales (2021). Consumer Attitudes Survey 2021. URL: https://electricvehiclecouncil.com.au/wp-content/uploads/2021/10/2021-EVC-carsales-Consumer-attitudes-survey-web.pdf.

Particulate emissions

OECD. https://www.oecd.org/environment/measures-needed-to-curb-particulate-matter-emitted-by-wear-of-car-parts-and-road-surfaces.htm.

Advocacy since 2015

  • Based on understanding of technological inventions as critical junctures
  • "Road Users Must Pay, Sooner Rather Than Later", The Conversation, 16 June 2015.
  • "Toll war revs up: Sydney drivers face congestion tax or road user-pay system", The Sunday Telegraph, 12 July 2015.
  • Getting serious on roads reform is one way our political leaders can get back on track, The Conversation, 25 August.
  • De Percy, M.A. and Wanna, J. (Eds.) (2018). Road Pricing and Provision: Changed Traffic Conditions Ahead. Canberra: ANU Press. DOI: http://doi.org/10.22459/RPP.07.2018.
  • Road user fee a step to reform: Those who drive petrol-fuelled cars are subsidising drivers of electric vehicles. The Australian, 25 November 2020. 
  • Pearls and Irritations https://johnmenadue.com/road-pricing-must-start-with-electric-vehicles/ 


Road Pricing and Provision: Solving public policy challenges

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Photo © Depositphotos.com/toxawww 

Today I delivered a presentation to the ACT Economic Society of Australia at the Griffin Centre in Canberra. The slides from my presentation are available below:




The Politics of Road Reform: The challenges ahead for road pricing and provision

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Our book, De Percy, M. and Wanna, J. (2018). Road Pricing and Provision: Changed Traffic Conditions Ahead. Canberra: ANU Press, was officially launched by Chartered Institute of Logistics and Transport Australia (CILTA) Fellow and Director-General of Transport Canberra and City Services Emma Thomas at a CILTA event held in Canberra today.

At the launch, I gave a presentation on the politics of road reform, looking at the challenges ahead for a road pricing regime that will hopefully replace the existing motor vehicle registration charges and fuel excise. Such changes are viewed as inevitable in the developed world, where fuel efficiency and the advent of electric and autonomous vehicles are impacting upon road-related revenues and where traditional approaches to road use and provision are unsustainable.

My view is that a road pricing system in Australia will need to be introduced in conjunction with GST reform to replace the existing state-based revenue streams. This is necessary from a variety of perspectives, including broad revenue reform, to reduce congestion, and to reflect more accurately motorists' use of the road network.

An objective look at the facts and figures will lead the independent observer to the view that a 'do-nothing' approach will impact upon productivity and ultimately the standard of living. An integrated transport pricing system will remove the existing cross-subsidisation and create a more transparent, market-based system. But leadership from the federal government will be a major factor in any reform initiative.

It is not about if, but when we should act. While commuter attitudes are one hurdle, anyone who has driven in peak hour traffic in Sydney or Melbourne will know that the present system is unsustainable. But the broader issue of GST reform will be challenging. Any system change will require bipartisanship and a broad federal-state mandate for action.

Who will act first? Any road reform initiative will provide numerous opportunities for political scare campaigns. But can we afford another 'GST birthday cake'? It is worth reflecting upon this the next time you are stuck in traffic.

The University of Canberra's press release on the event is available here.


Photo by Alex Proimos from Sydney, Australia (Sydney City Traffic) [CC BY 2.0] via Wikimedia.


Book Launch and Presentation: Road Pricing and Provision: Changed Traffic Conditions Ahead: Tuesday 4th September 2018

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Road Pricing and Provision [ANU Press] CC By-NC-ND 4.0 


On Tuesday 4th September 2018, our book will be launched and I will be giving a presentation entitled: Road Pricing and provision: Where are we now and how did we get here?

To register for the event, please visit the registration page.

The electronic version of the book is available for free download at ANU Press.


Road Pricing and Provision: Book Published Today

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CC By-NC-ND 4.0 [ANU Press]


Today my ANZSOG book (edited with Professor John Wanna) was published by ANU Press.

The book can be downloaded for free here: https://press.anu.edu.au/publications/series/australia-and-new-zealand-school-government-anzsog/road-pricing-and-provision.

Abstract

Road pricing is not a new concept—toll roads have existed in Australia since Governor Macquarie established one from Sydney to Parramatta in 1811—and distance-based charging schemes have been trialled and implemented with varying success overseas.

But how would full market reform of roads look in a federation like Australia? In its responses to the 2016 Australian Infrastructure Plan and the 2015 Competition Policy Review, the Australian Government explicitly supported investigating cost-reflective road pricing as a long-term reform option, and has committed to establishing a study chaired by an eminent Australian to look into the potential impacts of road pricing reform on road users. The challenges we face in this space are manifold and complex, and we still have a long road ahead of us. However, with advocacy for reform coming from interest groups as diverse as governments, private transport companies, peak industry bodies, policy think tanks and state motoring clubs, there is now more support than ever before for changing the way we provide for and fund our roads.

This book seeks to advance the road reform agenda by presenting some of the latest thinking on road pricing and provision from a variety of disciplinary approaches—researchers, economists and public sector leaders. It stresses the need for reform to ensure Australians can enjoy the benefits of efficient and sustainable transport infrastructure as our population and major metropolitan cities continue to grow. Traffic congestion is avoidable, but we must act soon. The works presented here all point to the need for change—the expertise and the technology are available, and the various reform options have been mapped out in some detail. It is time for the policy debate to shift to how, rather than if, road reform should progress.


Revenue Reform: Fuel Excise and Road Pricing: Guest Lecture at ANZSOG

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©Depositphotos.com/@alexandragl
Day two back at work after long service leave and today I was back in the saddle.

The edited book on road pricing is now in its final stages and I am working on an academic paper on the impact of the 1954 Privy Council decision to remove the protection of state-owned railways.

Always enthusiastic students and the discussions could go on forever if we could only rid ourselves of timetables!


Bank bashing popular, but taxpayers lose, too

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Photo: Queensland Newspapers Pty Ltd [Public domain], via Wikimedia Commons

I am imagining the populist sentiment: "About time those banks got some of their own back!" 

But this won't make much difference to the banks, that will simply pass on the costs to shareholders and consumers. This is effectively a tax increase on anybody who has a bank account and anybody who has a superannuation fund - in effect, almost everybody of working age. 

The Treasurer, Scott Morrison, saying "Cry me a river" sounds funny, but the populists should be crying in their soup, even though they won't because, despite paying more, they will do so without knowing. As a political scientist, this is the part that fascinates me.

Extracting more revenue from successful Australian industries is now de rigueur. Australia's penchant for tall poppy syndrome lends popular support for governments to go after any part of the economy that dares to do well. 

Sometimes there is good reason to rein in the cost of externalities like pollution, but doing so using a populist approach to attack the mining industry ended in disaster for everyone. Australians missed the opportunity to capture the benefits of the mining boom and then forgot to implement a proper emissions trading scheme.

If the targeting of industries for revenue extraction was based on the prevalence of high-wealth individuals in the Forbes list, then the packaging and media industries should get a guernsey, too. Note there are no bankers on the list!

It will be interesting to see how the banks react. The carbon tax potentially impacted mining industry profits (it is difficult to pass on costs to customers in commodity export industries). And the Association of Mining and Exploration Companies' advertisements worked.



The big question is whether the banks will do the same. They may simply pass on the costs to consumers and quietly simmer away. But I daresay the backlash has already started.

What I find interesting is the basis of the claims and counter-claims about industry profitability and the value of particular industries to the nation. Given that almost all Australian workers have super funds that invest in Australian shares, which more than likely include the big miners and the big banks, one might think that targeting successful industries was counter-productive.

By way of example, BHP's performance since the global financial crisis (GFC) of 2008 is shown below. Notice how, due to global market factors and the change in value of the Australian dollar, BHP shares have not recovered their pre-GFC value.
ASX: BHP via Google , 9 May 2017
The Commonwealth Bank, however, has been travelling quite well. What happens to the share value of the major banks remains to be seen, but it can't be good for investors.
ASX:CBA via Google, 9 May 2017
If the major banks choose to pass on the increased costs to shareholders and consumers, the impact upon households may be significant. If the Australian Bankers' Association launches a counter-offensive, then the budget will be ineffective as in past years.

How did this happen? I suspect that the lumbering, inefficient nature of liberal democracy is largely to blame. Citizens do not want to pay more tax, consumers do not want to pay higher prices, but somebody has to pay.

If only it could be as simple as saying this is what everything costs, and this is how much tax will be charged. But it is never so simple. The political process is inevitable. The only way to overcome politics is to allow tyranny. Most people don't want this, so the system evolves as it has.

But a cold, dispassionate view of the tax on the banks is that it is effectively a tax increase for everyone. That governments have to use smoke and mirrors to increase taxes is a consequence of the political process.

Harold Lasswell's famous definition holds true: "Politics is who gets what, when, how". The key to good politics today is to hide how the getting gets done, and I think populism helps this cause immensely.

PS: Ironically, the ABC's Budget Winners and Losers list shows taxpayers and banks side by side!

From Brad Baranowski, Aeon: How Robert Nozick put a purple prose bomb under analytical philosophy

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Photo: Suzy Dubot CC0 (Public Domain)
Libertarians are a quarrelsome lot. Debates about who is the better von, Hayek or Mises, rivalries between the Austrian and the Chicago schools of economics, and fights among Ayn Rand’s objectivists and Murray Rothbard’s Circle Bastiat – schisms that would make a Leftist blush – have rent libertarianism. So heads turned when one of their fold decided to throw in the towel on arguing.

Robert Nozick (1938-2002) was not averse to controversy. Five years after arriving at Harvard, he published Anarchy, State, and Utopia (1974). A response to John Rawls, who had just published the monumental A Theory of Justice (1971), Nozick outlined the libertarian case for limited government. While plenty found A Theory of Justice unconvincing, critics found Anarchy, State, and Utopia to be unsavoury. One reviewer equated Nozick to ‘the average owner of a filling station’ whose only joy in life comes from ‘grousing about paying taxes’.

Such criticisms stung. ‘Is not the minimal state,’ Nozik’s book had asked, ‘an inspiring vision?’ A state stripped down to providing protection and enforcing contracts was simple and elegant. It was an art form, enchanting and efficient. Why didn’t others see this beauty? A sickness, answered Nozick, had descended upon Anglo-American thought. This illness had transformed intellectual life into a fit of assertion and counter-assertion. Nowhere was this impulse more malignant than in his own discipline, philosophy.

Postwar American philosophy departments were not famous for providing insights about living the good life. Dominated by philosophical analysis – a movement preoccupied with logic – professional philosophers neglected or even condescended to issues of broader interest such as ethics. In The Rise of Scientific Philosophy (1951), Hans Reichenbach, a prominent defender of analysis, asserted: ‘Those philosophers who are willing to derive moral directives from their philosophies can only offer you a sham proof.’ Proof, in this rigorous, new philosophy, was everything.

Nozick had studied philosophy as a graduate student at Princeton University during the early 1960s, writing his dissertation about logical notation and decision theory. Few other topics were appropriate. Analytical philosophers made up the bulk of the faculty, and they sniffed at ethics and aesthetics. ‘There was a purity about the air,’ recalled one graduate student. Professors believed that there ‘were philosophical wars to be fought, with good guys and bad guys’. The latter, those who talked about the good and the bad, were easy targets. As W V O Quine, the philosopher whose work launched many dissertations, declared in 1953, ‘philosophy of science is philosophy enough’. All other approaches should be purged.

By the 1980s, Nozick had had enough of this mode of philosophical enquiry. ‘The language of analytic philosophy,’ he complained, ‘“forces” the reader to a conclusion through a knock-down argument.’ Discussion thus became a zero-sum game. If the loser of an argument did not accept his opponent’s conclusion ‘he dies’, a victim of his own mental weaknesses. Among the collateral damages of this aggression was an appreciation of intellectual diversity. Nozick aspired to pacify philosophy.

He was not alone. At nearly the same time, three highly regarded analytical philosophers began an intellectual guerrilla war within the discipline, breaking down the conceptual barricades against the value-talk that the previous generation had erected.

In 1979, Douglas Hofstadter battled the widely held perception that formal logic was impenetrable, showing in Gödel, Escher, Bach how cognition ran around a ‘strange loop’ of self-reference. The same year, Richard Rorty staged a coup against academic epistemology, calling it a ‘self-deceptive effort’ in Philosophy and the Mirror of Nature. Following these engagements, Alasdair MacIntyre launched a frontal assault on contemporary meta-ethics in After Virtue (1981), decrying how the ahistorical assumptions of contemporary moral thought had created a new dark age.
‘I want to speak of the purity and dignity of an apple, the explosive joy and sexuality of a strawberry’
In Philosophical Explanations (1981), Nozick opened a new line of attack. Philosophers, he posited, would be better off if they stopped trying to prove things like scientists, an impulse he believed led thinkers to overlook how philosophy might stimulate the ‘mind’s excitement and sensuality’. Rather, they ought to limit themselves to explaining how a system of thought is possible. This would allow a ‘basketful’ of approaches to exist within philosophy, transforming it into an art form, one that sculpted ‘ideas, value, and meaning into new constellations, reverberative with mythic power’. Such an attitude would also recognise philosophers for what they were: ‘valuable and precious’, free to mould and express their lives as artists do theirs.

This big change in conceptualising philosophy liberated Nozick. He now discussed topics ranging from explorations of modern poetry and Hindu theology, to considerations of parenthood, emotions, and personal enlightenment. Gone, too, were the formal equations of his dissertation, replaced with the considerably looser prose in his next book, The Examined Life (1989), a series of informal reflections on life, death, and fruit. ‘I want to speak of the purity and dignity of an apple,’ he waxed in a representative passage, ‘the explosive joy and sexuality of a strawberry.’ Remarking on the shift in style himself, he admitted that he would have found this second line ‘ridiculously overblown once’. Some of his readers still did. As the British philosopher Bernard Williams observed, reading Nozick’s later work was like watching ‘a commercial for breakfast food’.

Purple prose aside, Nozick largely won praise from his colleagues. He had appeared, as one reviewer wrote, like a ‘knight in shining armour’, rescuing his peers from doing obscurantist philosophy. Thanks to his willingness to quit arguing and start explaining, philosophy had rediscovered its obligation to provide the public with lessons about living the good life. The Canadian philosopher Ian Hacking thought it nothing less than the ‘rebirth of philosophy’. Lost in this ballyhoo was the irony that a man who, in the previous decade, had argued for the moral benefits of privatisation, now spearheaded philosophy’s concern with the intellectual commons.

Of course, it had become easy to overlook such political incongruities. Nozick certainly did. If his libertarianism had gained a joie de vivre, it had done so by diluting its original raison d’être. Students should read Max Weber or Karl Marx, he contended in Philosophical Explanations, not because these authors provided insights into how society functioned. On the contrary, these political theorists were notable because their books are part of the ‘long list of human accomplishment, striving, and excellence’. Capital (1867-94) was a model of what hard work could achieve, not a book about how hard work is.

The same standard applied to Nozick’s own work. ‘The libertarian position I once propounded now seems to me seriously inadequate,’ he announced in The Examined Life. From here on out, he would apply his libertarianism inwardly, focusing on the cultivation of his self rather than the destruction of the state. While this admission shocked admirers of Anarchy, State, and Utopia, it was a logical outgrowth of the author’s intellectual development. After all, this was the man who had declared that attempting to convince others of your views – the modus operandi of politics – was a ‘philosophically pointless task’. For Nozick, libertarianism had ceased to be an ideology. It had become a lifestyle, one that was not better or worse than any other – at least, not arguably so.Aeon counter – do not remove

Brad Baranowski

This article was originally published at Aeon and has been republished under Creative Commons CC-BY-ND 4.0.

Planning and Trend-Setting: Are we being conned into higher density living?

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Credit fireballk2558/Flickr Creative Commons
I am sitting in a forum listening to some research on changing work practices, particularly the changes resulting from technology and telecommuting, but a big issue is missing from the approach. Institutions. 

In their broadest sense, institutions are the formal and informal rules, routines, and procedures used to order society. Put simply, institutions are the "rules of the game".

There are some theoretical debates about whether institutions influence behaviour or whether institutions are a result of desired behaviours that are then reflected in society and so on. Nevertheless, it is clear that institutions can limit behaviour, and the presence or absence of institutions can lead to certain behaviours becoming normalised.

Take private cars, for instance. As I drove into work today, there was a line-up of cars waiting to enter the campus. The line extended all the way back to the entrance. Except for mine, every car had one person in it. This is a common story.

But why do people insist on driving their cars to work, paying for fuel, parking and maintenance, not to mention the frustration of driving through ever-increasing traffic? The reason seems simple: There is no alternative.

But sometimes it is just out of habit (a form of institution). This applies to other areas, too.

Some recent feedback from my "flipped classroom" teaching was surprising. For this approach, I produce video lectures and have longer, more focused tutorials available in a variety of flexible formats. This means that students can choose not to drive to the campus - they can even study fully online.

Yet a small sample of the feedback suggested that students should get a discount because they were not attending a "proper lecture". The rationale was that video lectures were somehow easier for me and therefore required less effort than face-to-face lectures. In fact, the opposite is true!

While most appreciated the flexibility, I was surprised that providing people with a "telecommuting" choice meant that it was somehow "cheaper". Never mind that there was no need to drive through traffic, park one's car, carry books and laptops for almost a kilometre during a heatwave and then sit through a lecture for two hours! But this attitude tends to reflect broader trends in planning, and brings me to my major point.

There is a major shift in planning that somehow higher density living is a good thing. The idea is that the closer to work you live, the easier it is to commute by walking, cycling or light rail services. Many urban renewal projects in Sydney and Canberra reflect this growing trend.

What concerns me is that telecommuting, despite the endless promises of the NBN (now nbn), is barely happening - at least formally. In the meantime, higher density living is winning the battle over "changing work practices". Higher density living changes the mode of commuting, maybe changes the way employees dress (at least to and from work), but it relies on the traditional measure of performance - attendance. 

An employee's physical presence at work is clearly an institution. If you are not physically at a formal workplace, you are not working. Sure, for many careers the physical presence of the employee is a necessity that is unlikely to change for the foreseeable future. But it is an institution nonetheless.

Which brings me to planning. Higher density means higher prices for smaller parcels of land. It also means greater value capture for governments relying on land taxes (like the ACT Government). It also means more people in smaller spaces. The three bedroom house with the 1/4 acre block is fast disappearing. Some think this is a good thing, but is it?

The now mostly-out-of-reach Australian dream of the house on a 1/4 acre is often blamed for increasing greenhouse emissions, suburban sprawl, pockets of poverty and drug abuse and so on. Too often, the lack of infrastructure is to blame for such situations and the reliance on cars as the major means of travel in Australia is somewhat a cause and a consequence of all the bad things about the Australian dream. 

However, there are many small towns around the major metropolitan centres that still offer the opportunity to own the Australian dream at an affordable price. The problem, of course, is commuting. If you live out of town, then you have to drive. 

What strikes me most is that in a country with so much space we don't know what to do with it, we would be conned into living in higher density housing in the middle of already bursting-at-the-seams cities. Yet these areas are becoming trendy, expensive and gentrified. And these areas are getting most of the investment in transport infrastructure. This is the part that doesn't make much sense. Unless the idea is to force more and more people into cities to improve the return on investment in infrastructure and the value capture through land tax. Yet flock to high density housing they do. Another institution.

In the meantime, the NBN (nbn), the largest investment in infrastructure in Australia's history, is being underutilised for telecommuting. Instead of enabling a decentralised Australia to flourish, the NBN is barley catching up on the shortfall from previous years of neglect. Further, our reliance on the car as the primary means of transport restricts one's ability to live outside of major centres, much to the detriment of smaller communities. Unless of course investment in high speed rail and other alternatives happens soon. And it should. Only Australia and parts of the United States seem hell-bent on relying on private cars as the major transport strategy. Another institution no doubt.

It would seem that higher density housing is one big con job. Governments, developers and real estate agents are having a field day. In the meantime, affording a house with enough land to grow a decent vege patch is fading into mythology. So much for telecommuting. Maybe it just isn't trendy enough. Or maybe "workplace presence" is the institution that no longer orders society appropriately.

Either way, there is a strong correlation between high density housing and workplace presence that no longer makes sense in the digital age. Unfortunately, we often focus on solutions to the very problems that we created, rather than looking at the "rules of the game" and how these determine the score.

Book Notes: "Adam Smith" by D.D. Raphael

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Adam SmithAdam Smith by D.D. Raphael

My rating: 3 of 5 stars


A brief but useful overview of Smith's major works. The book refutes some earlier comparisons of the idea of "sympathy" in Moral Sentiments versus Wealth of Nations and adds some of its own. If you were time poor and had to choose between this book and Smith's two main tomes, this book would be adequate but it assumes some prior knowledge of the eccentric "Father of Capitalism".



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Location: Palmerston ACT 2913, Australia

Book Notes: "The Worldly Philosophers" by Robert L. Heilbroner

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The Worldly PhilosophersThe Worldly Philosophers by Robert L. Heilbroner

My rating: 5 of 5 stars


What I particularly like about this book is how Heilbroner begins with the term “political economy”, then relegates it to “economics” (as happened in history), only to revive the term at the end where he tells us that Schumpeter is the last worldly philosopher as we have – more or less – learnt all we can through a scientific approach based significantly on grand assumptions about the behaviour of homo economicus, and it is time to reintroduce politics. That Heilbroner ends with Schumpeter is interesting. I am not sure if his eschewing of Hayek (who gets a few mentions in the book) is ideological. Nonetheless, it is an interesting approach to understanding the economy although a newer edition (the seventh was released in 1999) might be useful to mention the impact of the return to free trade and back again with the recent Global Financial Crisis. Regardless, this should be the first port of call for novice economists or political scientists alike. As a second reading, I found the suggested reading list at the end of the book to be most helpful to guide a revisit to the many classics which are now readily available for free on the Net. Indeed, it was well-worth revisiting Heilbroner and I may do so yet again.



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Location: Palmerston ACT 2913, Australia

Internationally, it's an Online Shopping Bonanza: So why are we paying so much locally?

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Australia Post's "Technology: Then and Now" Issue 2011
IT software and hardware prices in Australia are so inflated (compared with other advanced economies) that the House of Representatives Standing Committee on Infrastructure and Communications initiated the Inquiry into IT Pricing. Yet IT pricing is only one of many issues in Australia's digital economy that keep prices up and online shopping, generally, is no exception.

NBN propaganda asked us to think about "what you could do with super-fast broadband" (see video below). But what good is super-fast broadband if the Australian retail market keeps online shopping prices inflated? Will the NBN simply help people to buy more, cheaper goods from overseas? Let's look at the situation as it now stands.


A pet store item from an online Australian supplier costs $129.00 with shipping for $6.99. The same item from an online UK supplier costs $74.46 with shipping of $8.99. A paperback Hemingway novel from the UK sells at $8.70 with free shipping; the cheapest Australian price for the same item from an online supplier was $15.80 with free shipping, or $14.99 with $5 shipping. Is this over-inflation of prices sustainable?

Gerry Harvey's (of Harvey Norman fame) views are that buying cheaper goods overseas means that Australians lose their jobs, and he is so upset about it he publicly dobbed in his wife and daughter for shopping online "because it's a lot cheaper". But why wouldn't you?

One of the biggest upsets for online shoppers in Australia is the cost of shipping goods bought online. I recently looked into purchasing a specialty item online where the cost of shipping from New York was USD$12.50 whereas shipping from Sydney to Canberra cost AUD$25, not to mention that the item from the US was AUD$100 cheaper. Surely something is not right with the Australian freight system?

But Australia's postal system is open to competition, except for letters under 250 grams (reserved services), so there is no tangible impact of Australia Post's statutory monopoly on the cost of parcel deliveries. The service is usually pretty good too, and, from my own experience of online shopping, Australia Post's parcel tracking system is second-to-none.

Further, the cost of shipping goods bought online is not regulated by the ACCC and delivery charges do not form part of the total item cost for advertising purposes, therefore, delivery charges are determined purely by market demand. But it still doesn't explain why the price is so high.

It certainly isn't that Australians are any less likely to buy products online when compared with a similar country such as Canada (see figure below). Indeed, Australia's Internet economy contributes more to GDP than Canada's, and Internet sales in Australia make up a larger portion of all retail sales. Why, then, does it still cost so much more to buy products online from overseas than it does locally?

Source: Boston Consulting Group (2012)

There are a number of plausible reasons. First, the Australian dollar is performing very well internationally, so overseas purchasing power is significantly better than five years ago. Nonetheless, currency fluctuations do not explain price differences of 50% and more from overseas suppliers.

Second, Australian suppliers, simply because of the tyranny of distance, are less likely to have access to larger markets overseas, whereas it is much easier for a European  or Asian seller to add Australia to its global reach. But this doesn't explain why Australians simply don't buy more overseas, forcing local prices down.

Third, there are security concerns about buying from overseas. Buyers tend to be wary of online scammers and there is a great deal of fear-mongering about Net scams, particularly from overseas websites, despite the existence of various security measures for online purchases. Nonetheless, payment services such as Paypal and Escrow or paying with a credit card can provide significant protection if used intelligently and in combination with some simple online research.

Fourth, there are moral concerns about buying cheaper goods from overseas. For example, Gerry Harvey is against buying goods cheaper off the Net because it may impact upon Australian jobs. But this seems to be covering old ground, reviving an old myth that has apparently been "debunked" (DFAT 2010):
Trade, both exports and imports, accounts for one in five Australian jobs. This equates to over 2 million jobs in today's workforce...
Trade's share of the economy has grown as barriers to trade have been liberalised. A 2009 study by the Centre for International Economics (CIE) showed that total trade — both exports and imports — supports jobs...
The myth that lower tariffs destroy jobs has been debunked. Trade liberalisation has made the economy more flexible. The number of people employed in Australia in export-related activity in services such as finance, property and business services is increasing.
It would appear that the combination of factors outlined above contributes to the inflated online prices and delivery charges in Australia. As confidence in online shopping grows, it is unlikely that Australian suppliers will be able to continue to charge inflated prices for goods that are simply cheaper overseas. But how a delivery charge from Sydney to Canberra can cost twice as much for the same item to be shipped from New York to Canberra beggars belief.

Put simply, the Australian market, with its "Iron Man" economy, can simply bear higher prices, and enough consumers are willing to pay over-inflated prices. No doubt it is just a little while before Net-savvy consumers force the inevitable market correction.





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