In this episode of "Uncomfortable Collisions with Reality," Gene Tunny and I explore the implications of President Trump's tariffs on international trade. We discuss the micro and macroeconomic aspects of tariffs, and how these policies could reshape the U.S. and global economies. We discuss the ways in which foreigners can be induced to pay some of the tariff, even if not as much as Donald Trump says they will, while also addressing the\ impacts on industries and employment. We emphasise how abstract the economists' models are and how poorly they account for supply chain disruptions. The broader implications for U.S. foreign relations, and the rule of law are also touched upon. Why would anyone trust the US when, under this president, it breaks previous agreements whenever it fancies? If you'd like to see the YouTube recording of our conversation, it's here.
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1:03:56
Rent seeking or competitive oligarchy? The coming global battle
Greg Smith has a well thought out, deeply compelling and scary take on the world we suddenly find ourselves in. I thought you should hear from him and so have just recorded this conversation. I strongly recommend you check it out. If you prefer to watch the video, it is here.
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1:11:16
Neoliberalism: what is it good for?
This discussion emerged from an email from my colleague Gene Tunny wondering whatever happened to Australian exceptionalism — that period during which he cut his teeth in the Treasury when Australian policy makers worked tirelessly to reshape the Australian economy to make it more productive and government politicians regarded this as one of their core tasks.
We talked about how past leaders made big changes, like reducing tariffs and improving education. I painted a picture from my own — unusual — point of view which is that my father was an important figure in helping 'sell' economic reform to governments in the 1960s and then became part of early neoliberalism as an academic advisor to the Department of Prime Minister and Cabinet beginning shortly after the election of the Whitlam Government to around mid-1976.*
I argue that early neoliberalism was highly successful. It picked plenty of low hanging fruit and saw itself as problem solving. As it became a dominant way of thinking, it became formularised — and understood as a summary aesthetic that 'market based' solutions were better. This idea was way too vague and vibey to be of practical use, but it operated to systematically bias the way people thought about things and set them up to make mistakes that were so large that there’s a fair case to be made that late reform did more harm than good. As I wrote in this op ed in 2014:
"Australia was a standard-bearer in areas like trade and agricultural protection, the two airline policy and shopping hours. There, with the stroke of a pen, we swept away the detritus of a century’s ad hoc political favouritism. And unlike our peers in the Anglosphere, we also expanded funding for the safety net – bolstering equity.
But beyond that, as we’ve learned (or have we?), considering policy alternatives against a criterion as crude as how ‘free market’ they are doesn’t work so well. In infrastructure, utility and financial reform, where monopoly and asymmetric information problems abound, regulation remains inevitable and new rent seeking political pathologies lie in wait for those unpicking the old ones. Here our reform efforts brought forth excessively priced mortgages, toll-ways, desalination plants and airports with the political and official insiders championing the changes parachuting into lucrative careers with the corporate beneficiaries of their reforms to lobby their successors. We’ve seen massive over-investment in electricity transmission and under-investment in other infrastructure."
Gene and I discuss a range of policy questions, but Gene is interested in my experience in reforming car manufacturing in Australia and we spend a fair bit of time on that. We also discuss the Higher Education Charge (HECs) and the outsourcing of the Commonwealth Employment Services to illustrate some of the good and the bad of the new approach. And we also talk about the disasters like public-private partnerships for infrastructure, particularly toll roads. We also swapped some ideas about how New Zealand has done so much worse than Australia since the '70s. I don't know about Gene, but my speculations on that subject should be taken as just that — speculations and pretty uninformed.
* In case you're interested, the new PM, Malcolm Fraser did not get rid of him. Instead Dad had always felt bad about giving the ANU only half of his time so he withdrew from the arrangement with PM&C when there seemed to be less interest in his services.
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1:02:40
On unaccountability: Political, Corporate, and Intellectual
The very terrific Dan Davies and I discuss his new book, and how Stafford Beer’s management cybernetics can help us make sense of what’s going wrong, and do something about it. Hint: we’ve fallen for the idea that massive systems can be effectively self-governing. But they can’t be.
00:00 - Highlights
01:52 - Introducing Dan Davies and The Unaccountability Machine
03:05 - The book in a nutshell.
06:08 - Marx
08:04 - Critical thinking, the professions and academic disciplines
11:35 - Economists and in particular Friedrich Hayek
19:14 - Ideologies
24:01 - Why humour is so often one of the best forms of insight and critique
25:52 - The purpose of a system is what it does
29:20 - The idiocy of mission statement
34:57 - Systems and governance
38:36 - Dan's marvellous metaphor of two ways to solve Rubik’s cube
41:46 - Management and managerialism
49:12 - Governments during covid: the failure to think critically
52:39 - Brand managers
56:32 - Thames water
59:42 - Debt as the driver of 'hollowing out'
1:02:57 - The CAMO response to an intellectual impasse.
1:05:45 - Back to humour as our conclusion
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1:06:50
How Australia Post is pulling a magic trick on us and how to stop them
Competition policy created jobs and economic growth but sometimes it harmed smaller communities as rural services were rationalised. So Australia Post thinks it's on a PR winner when it argues that other logistics firms should be denied access to the 'last mile' of their rural network (from rural post office to home address) to deliver parcels to rural customers.
But whereas the letter monopoly is legislated specifically to fund a cross-subsidy from the city to the bush, Australia Post's monopoly on its last mile of delivery to the bush is a 'natural monopoly'. It only exists because it's uneconomic for anyone else to invest in that infrastructure — because it's not heavily utilised.
In fact Australia Post can't take advantage of the monopoly without charging the bush a monopoly price — which it does. This podcast explains why the government should require Australia Post to grant access to its facilities and how that would be great for rural post offices, generate around two thousand new jobs with half of them being in the bush.
In this podcast, Nicholas Gruen discusses the issues of today in a unique way. The three questions we've always got an eye to are
1) What's missing in the way people normally talk about these issues?
2) Where do they fit in the bigger picture, whether that's
* the long history of our species or
* the deeper aspects of the way we're thinking about it and
3) Do these ways of thinking help us improve the world we live in? (Which we often focus on in our shorter 'Policy Provocations' podcasts.)
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