One of the little cuts in the budget was to means test the solar panel rebate. For households that earn over $100,000, the $8,000 rebate will no longer be available. Not surprisingly, this threatens that industry. Why? Because solar hot water systems, for example, cost between $13,000 and $22,000 and even with the rebate are out of the reach of households earning less than $100,000. Read more »
The Budget was boring. It is the kind of boredom that comes from having expectations met. Over the fold is my write-up that will appear tomorrow morning on ABC Online.
In today’s Age, Nicholas Gruen does the seemingly impossible and writes about the mortgage industry without mentioning any mergers … Read more »
If you want to buy a car and pay more than $57,000 for it, the government’s luxury car tax is set to rise next week from 25 to 30%. Malcolm Turnbull says that this will raise the price of all cars. I don’t think so. When it comes down to it, most luxury cars are imported. Indeed, because of the exchange rate rise, there surely is a ton of pressure downward on the prices of those cars. Read more »
A great bit of dialogue from a recent episode of House. Read more »
Think you have a better punchline for a comic, on Dilbert you can just add it. Although today’s comic is a classic and it is hard to see how it can be improved.
By the way, I did this for another comic a little while back.
Next week (Wednesday 14th May) I am presenting in the lunchtime seminar series of the Economic Society of Australia (NSW Branch). The talk is on “Choosing Birthdays” and goes through my research with Andrew Leigh. It is at 12:30pm at the RBA. (Registration is $20 for non-members, click here for the form if you are interested in attending).
Yesterday I argued that when it comes to parental support what people seem to want is a frictionless ability to transition between work and home lives. Specifically, the ability to give birth to a child, take care of that child away from work for a period of time and then to return to work with the same prospects and opportunities as the day they left. Read more »
Australian Broker has a couple of pieces related to AussieMac. This one looks at the overall proposal and also includes a discussion of the housing lifeline policy. Of interest are the comments at the end of the article from industry participants.
The second piece reports on our rebuttal of S&P’s arguments against government sponsored enterprises in this market.
Vodafone Australia has actually announced it will release the iPhone in Australia. No confirmation as to whether it will be the only one. This time it looks like more than the usual rumour.
Reported in the news today, former senior public servant, Julia Perry, is arguing to the Productivity Commission that Australia adopt a paid parental leave scheme that allows for 28 weeks paid maternity leave, 4 weeks paid paternity leave and 4 weeks pay to employers for replacement employees. It looks like it is for full pay. So how will it be funded? Read more »
Lots of blog activity today worth highlighting: Read more »
On Thursday (8th May), I am part of a panel discussing “Priorities and Directions in Innovation Policy in Australia.” Also on the panel are Nicholas Gruen and Patrick Coleman (of the BCA). It is an Economic Society of Australia event and it will take place from 5:30pm at the Productivity Commission, Rattigan Room, 35 Collins St. Read more »
I had vowed to not say another word on the baby bonus but the renewed speculation that something might be done has drawn me out. The talk now is of means testing it. As Andrew Leigh notes, this would have to be done with plenty of care but nonetheless would be a good step forward.
So let me recount how this might be done. Read more »
The Information Technology and Innovation Foundation has released a report on “Explaining International Broadband Leadership.” It, of course, contains a broadband ranking based on a weighted sum of subscriber penetration, average speed, and a new one, lowest cost per Mbps (or the marginal price of speed). Australia ranks 12th on their calculations, a little ahead of the US but we are far from the top tier. Read more »
Jonathan Rosenberg is a Senior Vice President at Google (in other words, loaded) but also happens to be the son of one of the great figures in the economics of innovation, Nathan Rosenberg (someone who taught me at Stanford University). At the beginning of this video he pays tribute to his father’s wisdom. Read more »
The US Court of Appeals in Colorado recently heard an anti-trust case involving a grocery chain selling below-cost petrol as part of a deal. The appeal court held that this did not constitute illegal bundling. In its judgment, it wrote:
Indeed, the plaintiffs’ reading would apparently render unlawful in the State of Colorado a promotional gimmick so common that it features in an episode from Seinfeld:
JERRY: “Atomic Sub”? Why are you eating there? Read more »
A question: what radio show set a record for the number of times it mentioned ‘p-value’ in a single half hour? Read more »
John Quiggin has been trying to reduce travel costs (mostly environmental) by agreeing to video seminars. He has one at ANU today. Somewhat extraordinarily, if you want to watch that seminar you need to get yourself to ANU! Well, think of the environmental costs still associated with that. If John is on a video, why isn’t he on a video link over the Internet that anyone can, at least, watch?
My co-author, Andrew Leigh, who is a reliable character has been forced ‘off the equilibrium path’ to deal with an errant co-author, Bruce Chapman. In a behavioural move that would make Thomas Schelling proud, Bruce asked Andrew to impose on him some public humiliation that would ensue should he not complete their long-standing paper by the end of the week.
Impose on me a strict deadline in the very short run to do the revision, and somehow manage to publicly humiliate me if I don’t make it. Read more »
Apparently, experts aren’t too sure. No one seemed to ask: why would we want a company to measure innovation? If you find out that one company is more ‘innovative’ than another, what then? I guess my view is that looking for innovation is like looking for a forest when you care about individual trees. Read more »
Megan McArdle asks whether merchandise bought at charity auctions should be tax deductible? She seems to imply that they should not be because you are paying ‘fair market value.’ Here is the story that motivated the question. Read more »
So in attempting to take some time off after the 2020 Summit, I forgot to write about my one big idea that came to me during the Summit but, of course, was never aired as I was in the wrong group for it. It was this: the way to sell the public on high petrol prices as a way of reducing emissions would not be to impose a tax on it but to fix the price of petrol at, say, $2.50 per litre, for the next 3 years and raise it by some fixed amount thereafter. Read more »
Following up on my piece yesterday about income-contingent loans, here is a cartoon that represents precisely why they require government provision. [HT: The Big Picture]
So what ideas came of the 2020 Summit? I might comment on my own Productivity stream a little later but, contrary to what some might have thought, I think that there were some potentially interesting ideas to emerge elsewhere. There were, of course, some that seemed a bit strange. Let me run through the highlights here. Read more »
News today that the Reserve Bank is actively intervening to support liquidity in the mortgage-backed security market.
THE total freeze in the securitised home loan market and the consequent dangers to ordinary Australian home loan borrowers have been recognised in an unusual Reserve Bank action to buy mortgagebacked securities. Read more »
We are still in the midst in 2020 and I have no idea where we are going to end up. But this post from the ABC pretty much sums up the first day from our Productivity stream.
So Peter Garrett failed to get the States to agree on what to do about plastic bags. In the media, it is apparently some sort of disaster. But when you look at what is going to happen, there may be some excellent outcomes from this. Read more »
So with all this talk about Fuel Watch and what benefit it might bring to consumers, in the background is an issue relating to whether airport parking is over-priced or not. I don’t know about that but if you take a look at the Melbourne Airport website you can calculate your various parking options — and compare them to the competitor (a taxi) — before leaving home. That kind of information is not the hallmark of those with monopoly power.
Over the fold is a piece I had published in Crikey today. I can now confirm that Informed Sources is unable to provide the same data the ACCC had access to, to third parties such as academics.
Where is the petrol price data?
Joshua Gans, Crikey, 17th April, 2008 Read more »
John Quiggin and I have revived and updated earlier work for a new submission to the Garnaut Climate Change Review, this time on emissions trading. You can read it here. Bottom line: the practicalities matter and we should start by targeting energy and automotive where our emissions are highest before rolling out an emissions trading scheme to the rest of the economy.
According to Opposition Leader, Brendan Nelson, apparently so. He is against government moves to make the prices of petrol stations more observable to consumers on the grounds that it will reduce the perceived discount that those who currently engage in a costly search for bargains are able to get. Read more »
So I dutifully kept to the 100 words for my 2020 homework. However, turns out that I am pretty much alone there. In particular, on the Summit website participants went for more ideas. Today, I followed suit and thought I’d share them here [over the fold]. Regular readers will recognise many.
Perhaps the biggest question I get in relation to AussieMac and the evaporation of the 25 year innovation that was the trade in mortgage backed securities in Australia is: how did it just disappear? We don’t have a subprime issue and what is more, the risk profiles of these securities can be readily analysed. But yet the market has dried up. Read more »
This talk from TED is amazing. It demonstrates how cheap technology can become literally over-night. Read more »
In the final of a raft of submissions I have made to government inquiries of late, here is my submission to the National Innovation Review. I say lots of things I have said before — particularly about the case for government intervention to support Australian science and innovation. Read more »
Want to suffer for half an hour or more? Read more »
The Victorian government has moved to break-up the poker machine duopoly held by TabCorp and Tatts. As I understand it, what this means is that poker machine licenses will now reside with venue owners. Competition issues aside, this makes sense as poker machines are an instrument by which venues compete for customers. Moreover, the proposed caps on the number of machines per venue effectively mean that licenses cannot be accumulated by a few venues to raise entry barriers for others. Read more »
So we know that CEO pay can be incredibly high and that most of this is due to the variable component of pay related to stock prices, options etc. In light of that, Scott Adams wonders whether we should auction off the CEO job.
It seems to me the best way to pick a CEO would be by soliciting bids from applicants. That way you get the cheapest one that is fully qualified. And you should repeat the process every two years whether the CEO is doing a good job or not. Read more »
Christopher Joye and I have a long opinion piece in The Age today [reproduced over the fold]. It discusses the notion that a minimal level of liquidity in some financial markets (such as home lending) has public good qualities rationalising government attention. This is the basis upon which we argue for institutions like AussieMac. (more…)
For those interested, Chris Joye and I have updated our AussieMac report; the biggest change being the incorporation of a FAQ at the end of the report. The update is available here.
Today I submitted a paper to the Garnaut Climate Change Review responding to their issues paper on research and development. My paper says several things including: Read more »
I have to thank Andrew Norton for reading the instructions to 2020 participants carefully. Buried in them was a bit of homework that was very easy to miss. Now that I have a better idea of what the “Productivity Stream” is doing, here are the answers I sent through to the 2020 people today.
1. “If you could do one thing in your stream area, what would it be? What is it that you think would make the most difference?” Read more »
… this has to be the funniest discussion of the structure of academic articles in economics and sociology I have ever read. And it is all true.
A taste would do the post an injustice but still … Read more »
Thanks to David Pogue, I recently tried SugarSync a way of syncing all of your files whether it be on a Mac or PC. Basically, it is a synchronisation arrangement that works. You can install a client on your computer, choose folders to synchronise, those are uploaded to the web (using Amazon’s cloud) where they stay. This can be used then to synchronise any or all of the files on any computer you own. Read more »
In today’s AFR, Simon Molloy (an economic consultant) has some sensible words on broadband. He says: Read more »
Justin Wolfers — who can’t avoid quantification (no matter how spurious) — has been calculating Stiglitz numbers: that is, how many co-author links between Person A and Nobel Laureate Joe Stiglitz. His Stiglitz number is 3 as is mine and one is through the same Andrew Leigh to Tony Atkinson to Stiglitz route. So how did Andrew get a Stiglitz number of 2 when I was Stiglitz’s research assistant for a whole year? Read more »
OK so a couple of days ago I thought I proved that time travel was not economically viable. Go trust Google to prove me wrong. What is more, the innovation occurred right here in Australia in its Sydney R&D centre. (No one could have predicted that.)
Click here to try Google gDay. It is only in beta but it works exactly as expected.
As previously noted on this blog, there are fewer babies born on February 29th and April 1st. However, it seems that this year turned out to be different for one of those days. From today’s Daily Age:
“It’s raining girls”
Daily Age, 1st April 2008. Read more »
In today’s industry rag, Communications Day, an article about my thoughts on what the 2020 Summit might mean for telecommunications [reproduced over the fold]. Bottom line: I don’t expect to be talking about fibre to the node but do expect to be talking about regulation and privacy. (more…)
I guess it was inevitable. As an editor, it is tough finding reviewers for papers and I get a little sad every time someone really suitable declines. Of course, I can only be so upset when I get a polite decline like this:
Dear Editor,
I will be happy to review a paper for your journal, but this paper is my own.
sincerely, Read more »
I notice that my previous post on the 2020 Summit was picked up by Crikey today. Read more »
Want to play (literally) on a prediction market? Try the Freakonomics Prediction Center.
Various media reports on Aussie Mac today. The paper is available here. Our press release is over the fold. Read more »
So it appears that I was one of the first tranche of invitees to the 2020 Summit. Read more »
For so long, the big issue with emissions trading was how permits would be allocated. This was an issue not because it would matter for efficiency but it would determine how the costs of dealing with climate change would be shared. This distributional issue looms large in most economic reform efforts. Read more »
One budget change that I haven’t commented on yet is the move from a lump-sum to a fortnightly payment (to be $385) for the baby bonus. This is going to make the increase in the baby bonus from 1st July a markedly different affair. Sure it will rise substantially but it will also, in large part, by deferred. Impatient but not economically rational parents may choose to get in early rather than wait. Read more »
I have just submitted my report on parental leave to the Productivity Commission. There is not much new to readers of this blog; it is more coherent, scholarly and includes a model. You can download the report from here.
In the Australian Financial Review, three views of an AussieMac style institution. First, Members Equity CEO, Anthony Wamsteker
said the bank supported calls for the government to set up an institution which would issue government bonds backed by high-quality, mortgage-backed securities. The Australian Securitisation Forum has previously said such a move would substantially lower mortgage rates by boosting competition and lowering funding costs.
Then, NAB CEO John Stewart Read more »
So currently, if you earn more than $50,000 you get charged an extra levy if you don’t take out private health insurance. That income threshold is set to double next week. Suffice it to say, that will reduce the incentive for many households to take out private health insurance. It is like a tax cut except that some households will also be deciding to save themselves insurance premiums while the government will have to deal with some extra costs from them. Read more »
To recap, the goal of parental support policies is the ability to move between work and home life frictionlessly. However, in evaluating whether the market is failing in this area points to possible problems to do with the indivisibility of work life, externalities associated with child development, discrimination and liquidity constraints. Read more »
Apparently, when it comes to science, luck. Malcolm Gladwell looks at where the big ideas come from and demonstrates that they are a function of time and place as they are of a unique mind; precisely because unique minds aren’t hard to find. His description of how brainstorming sessions for ideas might work makes me wonder what the 2020 Summit could really have achieved had we been more ambitious. Read more »
The new ACCC petrol commissioner is claiming that Coles Express Petrol Stations have higher petrol prices than others and is blaming shopper dockets.
The ACCC said buyers in the habit of using shopper dockets may not realise that other outlets are much cheaper - even after using their discount voucher. Read more »
Scott Adams makes the case for a political party based solely on sound economics. I can’t argue with that although getting agreement on the policies will be another matter. And as to electability …
So I have made a couple of posts on the issue of parental support (here and here) and I have been asked for more. Indeed, I would like to make a submission to the Productivity Commission inquiry into all of this (they are due 2nd June) but I find that my own views still remain up in the air. What is more, the debate is frustrating. On the one hand, pretty much every proposal put forward looks bad economically — in the sense, of distorting incentives or creating inequities. Read more »
My partner tries every year to see if she can surprise me with my birthday present. Usually, the kids spill the beans. This time, it was this conversation, taking place in the car on my mobile speaker …
CALLER: Professor Gans? This is the bank calling about an abnormal Star Wars transaction on your credit card.
ME: Abnormal Star Wars purchase? I have no idea …
PARTNER: … yes, yes, yes, it is OK. It’s legitimate.
ME: Oh you mean my birthday coming up … Read more »
Lots of blog activity today worth highlighting: Read more »
I feel like we are in an episode of Lost (click here to see what I mean). From ABC Insiders:
And so speculation mounts that the baby bonus will be means tested.
And to that, Brendan Nelson says this:
BRENDAN NELSON, LEADER OF THE OPPOSITION: Every mother loves her baby, every baby is valued and Mr Rudd should value all babies equally. Read more »
In today’s Australian, a long article by Alan Wood about policy reform towards the mortgage securisation industry. He does a good job of describing what an AussieMac might do but questions the need for a government-sponsored enterprise. (By the way, the latest version of that report is here). Read more »
While I may lament the lack of long-term government backed institutions to maintain financial stability, there are some areas where we are ahead of the game. Ian Ayres and Barry Nalebuff writing in Forbes propose two ‘innovations’ that could help matters in mortgage markets there. First, they propose adjustable interest rate mortgages that vary the term of the loan rather than repayment rates when interest rates change. Second, they advocate shared equity mortgages. Read more »
[HT: Tim Harford] This new website allows you to send email into the future; well at least as far as 2030. I just sent the kids happy birthday emails 22 years hence. If this works, we will laugh about it then.
Although it no longer gets really discussed these days, one argument against rushing to a full-blown emissions trading system was that we should wait and see about the effects of greenhouse gas emissions and then work out what to do. While that argument has long passed us by, there is another side to that coin: what if it is much much easier to substitute away from fossil fuels than we thought? Read more »
… the United States who are contemplating a temporary pause in petrol taxes. And wait there is more: to make up for lost revenues, they are proposing to tax oil companies! And even more disturbing, this is a plan that Senators McCain and Clinton appear to agree but that Senator Obama and most likely the Whitehouse oppose. Is there no neat political divide when it comes to petrol?
Since switching back to the Mac, I have found that there are several programs that I can’t live without and have bought subscription licenses to. Read more »
The Reserve Bank has released its initial report on reviewing the credit and debit card payment systems in Australia. It canvasses several options from doing nothing to a stricter regime to a hands-off or light-handed approach. The latter involves less regulation in return for more transparency in interchange fee setting. It looks like it may adopt the light-handed approach. This could be the right way to go, but it is hard to tell. Read more »
Comments are offline today and probably for the rest of the weekend. Not sure why.
I am in favour of an increased use of prizes to motivate innovation. From Slate, some fairly convincing arguments that some prizes may not be up to scratch. In this case, it is a $1m prize for substitute chicken meat: Read more »
Tax reform emerged out of the 2020 Summit but one guesses its seeds were planted well before. In today’s Age, Tim Colebatch asked 2020 participants what type of reforms the government might consider. I mentioned income-contingent loans and the idea of making the filing of an actual return optional. Then I said this: Read more »
I have an opinion piece in today’s Age about the use of income-contingent loans to fund various programs. They sadly cut my call from a government-wide inquiry into areas where these can be deployed.
Who pays for summit schemes?
Joshua Gans, The Age, 22nd April, 2008
Funding the proposals raised as many questions as answers at the 2020 Summit. Read more »
Well the 2020 Summit is over. It was a torrent of activity and upon reflection really hard work. But what was it all about? In what is probably going to take a few posts, I am going to reflect upon the past few days and also some of the ideas that came out of the Summit. I’m doing this mostly to try and make sense of it all because, at first blush, and not surprisingly, there were few surprises. Read more »
Well I have just survived day one of the 2020 Summit. I have a few seconds and so thought I’d just mentioned that. One thing is for sure — all the well thought out ideas had been heard before and were not too exciting even if sensible and the others were very “under-cooked” but are getting better. Read more »
Please stop the rumours already!
Of course, it is fake. It will say, “Australia, say g’day to the iPhone”
[From Engadget]
Today, the Bank of Queensland came out in favour of an AussieMac style institution for Australia [over the fold]:
SYDNEY (Dow Jones)–Bank of Queensland Ltd. (BOQ.AU) Chief Executive David Liddy said Thursday he strongly supports the idea of the Australian government creating an agency that would guarantee residential mortgage-backed securities. Read more »
If not, they soon may be. IBM launches pilot program for migrating to Macs.
So do you want some real democracy? Here is my brother’s 2020 idea. Read more »