Catallaxy Files

The speaker is Nigel Farage. He is the former leader of the UK Independence Party. The wiki describes them as being ‘conservative’ but my understanding is that they are more libertarian.

(HT: Dan Mitchell).

This is going to be interesting. I’ve often wondered about whether, say, the AFL operates as a cartel or as a monopoly.

The pro football playoffs got underway this weekend, but fans might want to know that the line of scrimmage is moving today to the domed stadium known as the U.S. Supreme Court. The Justices will hear oral arguments on whether a sports league may function as a single business, and make its licensing decisions accordingly.

Over and above arguments about the nature and role of competition in sports leagues (off the field and not on the field) this may also highlight aspects of antitrust to the general public who otherwise might take little notice of it.

The missing antitrust link here, as in most such cases, is the lack of any consumer harm. In a Harris Poll taken in 2008, football was the favorite of 30% of sports fans—as much as baseball, car racing and hockey combined. Football still dominates both attendance and TV viewership among professional sports leagues. The greater harm to consumers would be if owners can’t make decisions to maximize and share revenue, thus making the league less competitive.

Justice Anthony Kennedy, the court’s likely swing vote, has indicated concern in other cases that misguided antitrust enforcement deters behavior that is beneficial to consumers. That seems true here as well. The games belong on the field, not in court.

Tom Switzer has a fantastic piece in the WSJ.

Until Mr. Abbott’s election as opposition leader last month, the climate debate in Australia had been conducted in a heretic-hunting, anti-intellectual atmosphere. Prime Minister Kevin Rudd claimed that climate change is the “greatest moral, economic and social challenge of our time.” In clear breach of the great liberal anti-communist Sidney Hook’s rule of controversy—”Before impugning an opponent’s motives, answer his arguments”—Mr. Rudd linked “world government conspiracy theorists” and “climate-change deniers” to “vested interests.” Much of the media, business and scientific establishment deemed it blasphemy that anyone dare question his Labor Party’s grand ambitions.

There’s more where that came from.

Update: More evidence the climate is changing. Read the comments.

Terry Barnes has a very scary op-ed in The Age.

According to the Reserve Bank, for the first time Australians now owe more in household debt – on mortgages, credit cards and personal loans – than our entire economy earns in a year. That’s $1.2 trillion of debt, or about $56,000 for every Australian man, woman and child.

And why is this? He rounds up the usual suspects – consumption and a preference for McMansions. He proposes the usual solution – tax. I can never understand how giving more to the government is a good idea and certainly is not the solution to every manufactured societal problem anyone can imagine.

Despite the rosy economic undertones, the data collectively paint a worrying picture of a community of conspicuous consumers, eagerly buying lots of “stuff” on tick that we don’t need or even use, stashing it away in McMansions that gorge energy to heat and cool, and giving the families that live there the carbon footprint of a small African country.

Julie Novak has a great take-down.

The rally call against McMansions, those structures “giving the families that live there the carbon footprint of a small African country,” is a most puzzling aspect of Barnes’ piece given his undoubted appreciation of Menzies paean favouring “homes material, homes human and homes spiritual.”

Housing remains a legitimate choice of asset acquisition for many Australians, with many side-benefits in particular a safe environment to nurture family and rear children. It is also well established that home ownership can play a significant role in alleviating poverty, particularly as home owners transition into older age brackets together with retirement.

It is little wonder, then, that many people aspire to purchase homes of superior quality, and price appreciation potential, over time.

She also picks up on the ‘tax solution’ (emphasis added).

The obvious trouble with the taxing-our-way-out-of-consumption idea is that it provides more ready access to even more revenue for governments, that in turn could either be wasted on inefficient monuments (or Keynesian holes in the ground) or churned back to taxpayers in the form of subsidies – including the infamous first homeowners grant which artificially boosts housing demand thereby raising house prices.

One would’ve thought that such expenditure – typified by the wasteful Rudd stimulus – and the subsequent ratcheting up of public sector debt should have been the obvious target of criticism and not the deliberate, and often careful, spending choices of millions of Australians.

Ultimately Barnes falls into the ‘public debt good, private debt bad’ and ‘public spend good, private spend bad’ fallacy.
Update: Saul Eslake explains the nut and bolts decisions that banks make and comes to the conclusion we won’t be rooned. That’s right; what is annoying is that Barnes’ op-ed appeared on the opinion page and Eslake’s will be hidden away in the Business Day.

Charles Rowley is blogging. He has posted some comments on macroeconomics. Simply magnificent.

In 2008, however, the Keynesians returned, standing triumphant, all but alone, on a battlefield suddenly deserted by the fickle nobles of the rational choice revolution, so many of whom appear to have retreated into a ‘dark age’ belief in irrationality, coupled with a pagan worship of the forces of animal spirits and herd behavior. Surely John Maynard Keynes is reincarnate, bestriding the Anglo-Saxon economies of Great Britain, North America and Australia like a Colossus. Does this imply that the widespread rejection of his theory during the 1970s was incorrect? Have economists justly awakened to a new Keynesian dawn? By focusing on science, rather than on paganism, this column briefly suggests that such decidely is not the case.

Ultimately, any economic theory, if it is to survive, must withstand repeated attempts to falsify it, repeated exposure to the predictive test that deductive science imposes on its creations. The Keynesian model (I call it this rather than the model of Keynes since no master should ever be judged by the words of his inadequate disciples) was floored by a sequence of empirical failures: an alleged consumption multiplier that regularly under-performed; an alleged inelasticity of aggregate investment to interest rate changes that was notable by its absence; a liquidity trap that failed to manifest itself; a Phillips curve trade-off between the rate of unemployment and the rate of price inflation that proved to be explosively unstable; a flexible exchange- rate system that eliminated final macroeconomic vestiges of fiscal influence. …
…
Dear reader, the Keynesian model never worked; and never will work. It has been resuscitated by opportunistic economists, not because they believe in its merits as an agent of macroeconomic rehabilitation, but because they recognize its political value as a weapon for moving economies from laissez-faire to state capitalism, or (hopefully) beyond that to fully-fledged socialism.

Rowley is the editor of Gordon Tullocks Selected Works and co-author of Economic Contractions (I’ve recommended this before).
(HT: Peter Boettke)

News Limited has announced a very interesting reorganisation in Australia. The Australian, the national daily, will move out from under Nationwide News which contains the state based dailies. It will, says the report, “position The Australian for further growth in print and online, as well as through emerging digital platforms such as smartphones and electronic readers, at a time when the media group is looking to charge for online content.”

Reorganistations  can happen for all sorts of reasons: a slow week in the HR department, personality conflicts, a need to give a promising manager a chance to run something. With a well managed company like News though, we should give the benefit of the doubt and accept that there is a good business reason, though not necessarily the one announced.

Murdoch has been trying to thrash out an online strategy for quite a while. He (and on important issues we can assume that it is his decision) has made mistakes. MySpace looks like an expensive mistake. He has publicly canvassed whether he can or should charge for content online and seems to have changed his mind a couple of times on this. His  current position is that he will.

Many tech scribblers dismiss Murdoch and his organisation: “he just doesn’t get the internet” is a common theme. This I think is a misunderstanding of how, in the real world, companies develop strategies when technology changes the game. No-one can predict the future so trial and error is the only way to get there. Microsoft, Amazon, Google and Apple all did that.

I would not bet against Murdoch. If any old-media organisation will survive, my guess is that it will be his.

Coming back to the reorganisation, I suspect that The Australian has been chosen as the publication to survive in Australia. Classified advertising is dying and that is hurting the state papers – though not Murdoch as much as Fairfax – and the future is probably in national content and national advertising. It is a big bet, and ironic after those stories that The Australian was continued for many years to give Murdoch as bit of class in his home country.

It seems to me that The Australian has improved a lot in recent years. You might want to bleep over the leaders and some of the columns if they offend you and you are left with meatier and better news stories than you get elsewhere.

It will all be most interesting to watch.

The Canberra Times (sorry no link) has been running a story over the past couple of days about the “Leader” of the Greens in the ACT Legislative Assembly, Meredith Hunter, wanting a salary increase of $50,000 to “cover new Assembly workload”. She claimed that the increase was needed to compensate her for managing the three other Greens MLAs (the irony being that there are many people on a total salary of $50,000 who manage three or more people and the ACT assembly is just a sleepy local council).

Now we shouldn’t be too concerned about this normally – after all self-interest is a powerful motivator and she is clearly seeing an opportunity to increase her standards of living.

But, really, isn’t this a little hypocritical when the Greens have been banging on about excessive executive salaries and  corporate greed?

On the ACT Greens website, the biographical entry states

I will be working hard to better engage the electorate of Ginninderra, and all citizens of the ACT in the decisions Government makes. Throughout my life I have been a strong advocate on social justice issues and have worked in community organisations in Canberra for twenty years. I have extensive experience raising awareness and promoting issues of social justice in the public arena. I am also a skilled and experienced advocate, having served on a variety of committees and task forces.

I have worked to ensure that the interests and rights of the disadvantaged and vulnerable are taken into account. My career has given me a sound understanding of the importance of the community sector and the breadth of services delivered by small self-help groups through to larger community services. I am formerly the director of the Youth Coalition of the ACT. As a mother of three, I understand the importance of having an excellent public education system as well as the provision and upkeep of playgrounds and sporting venues. I have a deep appreciation of the unique urban/bush environment that we live in, the clean air and the bush corridors that provide important recreation places for many Canberrans.

This makes it seem that Ms Hunter is a philanthropist looking after the disadvantaged and vulnerable. But she clearly wants to be highly paid for that.

It is notable that Ms Hunter did not put out a media release saying that the efficiency dividend should not apply to MLA salaries  MLA salaries.

Come on Hunter, just admit you’re in it for yourself like the rest of us.