Lesser Known Economic Miracles

Two lesser-known economic good news stories provide a revealing perspective on the mainstream economic paradigm, and on Australia’s current state.

The first economic miracle is Mauritius, brought to our notice by Joseph Stiglitz in the Guardian.  Mauritius gained independence from Britain in 1968, and with few natural resources in its Indian-Ocean archipelago its economic prospects were rated as pretty dismal.  Bucking the usual prescriptions of economists (sell your soul and your land to overseas investors and tourists), and despite per capita income of less than $400, Mauritius decided to invest in its one major asset – its people.

Slow Growth

[The following was published as a Letter to the Editor in the Canberra Times, 19th March.  It has generated a bit of comment, so I thought I'd post it here too.]

[Update 24 March:  I will add relevant Letters to Ed to the Comments here as they appear in the paper.]

Canberrans will be worse off if Canberra grows rapidly, as the growth boosters want.  Much of the amenity we enjoy will be lost to crowding, congestion and outdated infrastructure.  Much of the amenity we had has already been lost.  Civic is already lost, transformed from people-friendly plazas to glass boxes with managed artificial environments.

Sick Labor

Prime Minister Julia Gillard has at last begun the effort to explain her carbon price policy, but all agree she has a lot of ground to regain after scoring yet another spectacular own goal for Labor, this time by announcing a price on carbon without having any clear policy on compensating households.  This while facing a Leader of the Opposition who will say and do anything for a populist scare campaign, his biggest bogey of all being “a great big new tax”.  It is not so hard to think of how to present the issue to the public, as a journalist and a blogger demonstrate.  Why can’t Labor?

Labor has form, as former PM Kevin Rudd also scored a spectacular own goal last year by walking away from the greatest moral challenge of our time, global warming.  Then there were the running sagas of home insulation, green loans and so on, which could and should have been explained, fixed and continued but which became such a political liability they too were abandoned.  Labor has displayed staggering ineptitude.

Gillard’s Hollow American Dream

Prime Minister Julia Gillard’s recent speech to the US Congress was so sycophantic it was more sad than embarrassing.

We who think good ole Oz can be something other than a fiefdom of powerful foreigners are used to cringing when ever an Aussie politician visits the land of the free and the home of the brave.  Ironically it is the Labor politicians who are the most servile, because they think they have to prove they’re not lefties.  That will be one of the reasons for Gillard’s grotesque performance.

The Value of Simple Models, with Examples of Economic Dynamics

[This is posted in the new Category Economics, Technical]

[Published 14 March at Real World Economics Review Blog.  Also posted 12 March at Steve Keen's Debtwatch]

Many people, including many heterodox economists, understand that the neoclassical equilibrium approach to understanding economies is futile and misleading [1], because modern economies are far from equilibrium.  The neoclassical prediction of equilibrium or near equilibrium requires a string of patently absurd assumptions.  However the development of better theories seems to be significantly hindered by a feeling that any superseding theory has to be thoroughly quantified before it can be useful, and a feeling that the neoclassical theory has set a benchmark for sophisticated mathematics that must be matched before another theory can be respectable.  Less fundamentally there seems to be a common perception that empirical insights can only be gained through elaborate statistical treatments of observations.

Here I offer some discussion from my experience as a natural scientist, and some examples regarding the Global Financial Crisis, to counter these hindrances. 

Steady State – A Book Review

I just reviewed a small book by Geoff Mosley, Steady State:  Alternative to Endless Economic Growth.  Envirobook, Canterbury, NSW. RRP $21.95, 136pp, paperback.  The review is for the newsletter of Nature and Society Forum, based in Canberra.

Scarcely a day goes by without news of some loss or degradation:  a new invasive species, a habitat lost to fire or a shopping mall, a disintegrating ice shelf, a corner shop closing, rising obesity, on and on it goes.  Behind much of this bad news is the relentless growth of our economies and populations.  The casualties are in both the natural world and in our  societies, affecting our health, relationships and communities, as I don’t have to remind this audience. Geoff Mosley argues that we must come to grips with economic growth if we are ever to stop the losses.