Working Papers

2011 02

Is It Any Wonder Kevin Rudd Loves the G20?

The G20, solving the world’s problems one complicated but meaningless sentence at a time:

Negotiators from the world’s leading economies haggled all night over seemingly technical details regarding how to measure global economic imbalances. They eventually produced a 53-word sentence intended to appease all sides—and open to interpretation by all sides…

All 20 countries must agree on any technical detail for there to be a deal. If one country walks away, no deal.

The key agreement they came up with on Saturday—one sentence in the four-page “communiqué”—essentially says that exchange rates and fiscal and monetary policies will be taken into consideration when determining whether a country’s policies lead to imbalances.

To draft that sentence, officials from the U.S., Canada, France, Germany, China, Russia, Indonesia, Brazil and India were just some of the members who weighed in—at times with much different views—according to several people present. The sentence had one colon, one semi-colon, three commas, and the word “and” appeared six times…

“The way it’s written, the French can say it’s an indicator and the Chinese can say it’s not really,” said one G-20 official after the meetings.

posted on 20 February 2011 by skirchner in Economics, Financial Markets

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Offshore Perceptions of Australia: Hostage to ‘Ultranationlist Mavericks’

The FT’s Kevin Brown on the proposed ASX-SGX merger:

a handful of ultranationalist mavericks holds the balance of power in Australia’s divided parliament…

The tricky element in this strategy is finding a way to get the government and the opposition to move together, so that neither is able to outflank the other by suddenly adopting the nationalist agenda.

posted on 16 February 2011 by skirchner in Economics, Foreign Investment

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How (Some) Academic Economist Bloggers Are Made

Bryan Caplan on GMU faculty:

None of us discovered economics in a mainstream econ class, found it fascinating, then decided to try to ascend the academic hierarchy.  Instead, our inspiration came from libertarian books, libertarian friends, and libertarian intellectuals, plus our broader reading in philosophy, history, and the history of economic thought.  Once we fell in love with ideas, we asked, “How can I make a career out of this?”  We would have preferred to be instantly anointed as public intellectuals.  But the best realistic path, we learned, was “Become a professor of economics.”

Throw in a couple of diversions via politics and financial markets and you have my career in a nutshell.

posted on 16 February 2011 by skirchner in Classical Liberalism, Economics

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Sealand, HavenCo, and the Rule of Law


The story itself is fascinating enough: it includes pirate radio, shotguns and .50-caliber machine guns, rampant copyright infringement, a Red Bull skateboarding special, perpetual motion machines, and the Montevideo Convention on the Rights and Duties of State. But its implications for the rule of law are even more remarkable.

posted on 15 February 2011 by skirchner in Classical Liberalism, Economics, Rule of Law

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An Independent Commission of Budget Integrity

The Business Council of Australia has included a report by Stephen Bartos making the case for an independent Commission of Budget Integrity in its pre-Budget submission to the government. Bartos references a similar proposal by Robert Carling and I on the subject, as well as earlier work by Nic Gruen, which drew on a 1996 proposal by Larry Ball when Larry was visiting the RBNZ.

The report does something we did not do, which is to cost the proposal. Bartos puts a 30-40 member commission with two executives and a board at $10m a year. To put this in perspective, it is less than the extra $15m the ABS wants to increase the frequency of the CPI from a quarterly to monthly release.

posted on 15 February 2011 by skirchner in Economics, Fiscal Policy

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Atlas Shrugged Movie Trailer

Atlas Shrugged Part 1 (I’m guessing they weren’t brave enough to run with the tag line ‘Non-Contradiction’). I agree with what Tyler has to say. It needs a deco rendering. For a novel that has the cinematography and direction more or less written into it, there’s not much excuse.

posted on 13 February 2011 by skirchner in Rand

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Speaking Truth to Bill Shorten

An investment banker speaking to Bill Shorten gets a less than cogent response:

IT WAS mid January and Bill Shorten, the Assistant Treasurer, was in Hong Kong attending an Australian Chamber of Commerce function.

In an address to a relaxed gathering of ‘‘Australians in finance’‘, Shorten told the audience of the importance of financial services, and if anyone had fresh ideas they should approach him in the informal setting.

David Webb, a former director of the Hong Kong Stock Exchange, elected on a corporate governance ticket by institutional investors, took up the offer. A well-known activist and retired investment banker, he now devotes much of his time to dealing with corporate governance in Hong Kong.

When Webb’s turn came for a chat, the Englishman told the minister that Australia should consider scrapping the Foreign Investment Review Board as it was an impediment to attracting foreign capital. Other regulators could consider contentious investments, he said.

According to Webb, Shorten said the board was necessary, turning the topic to a looming decision on the takeover of the Australian Securities Exchange by its Singapore counterpart…

But what Shorten said next surprised Webb.

‘‘His attitude about this was … that foreign ownership or a perceived foreign takeover would result in Australian investors being screwed. He didn’t make very cogent arguments to me.’‘

posted on 12 February 2011 by skirchner in Economics, Financial Markets, Foreign Investment, Rule of Law

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The Central Bank of Eve Online

An inflation hawk tackles virtual commodity price inflation. The virtual world would seem to be a good place to test the macroeconomic implications of alternative monetary regimes.

posted on 11 February 2011 by skirchner in Economics, Financial Markets, Monetary Policy

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What’s So Special About the ASX?

Deutsche Börse AG looks set to acquire the New York Stock Exchange, while the LSE Group is also set to merge with the Toronto exchange in the latest cross-border tie-ups between securities exchanges. The local market has correctly interpreted these deals as increasing the likelihood that Australia’s Treasurer will approve the proposed merger of SGX and ASX (it has already cleared ACCC scrutiny). If an icon of US capitalism such as the NYSE can be acquired by Deutsche Börse, it becomes very difficult for Australia’s FDI protectionists to argue that the ASX should be immune from foreign acquisition. Oddly enough, opposition to the Deutsche-NYSE deal is more likely to come from European than US regulators.

We should still not underestimate the potential for the ASX-SGX deal to fall over, either because Treasurer Swan deliberately spikes the approval with so much conditionality as to make it unacceptable to the parties or because of parliamentary disallowance of the necessary regulatory changes. The deal remains a key test of Australia’s international openness, one that some combination of the federal government, the cross-benches and the opposition might still fail.

posted on 10 February 2011 by skirchner in Economics, Foreign Investment, Rule of Law

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Mises Supported Fractional Reserve Banking

The bits of Mises Huerta de Soto forgot.

posted on 03 February 2011 by skirchner in Austrian School, Classical Liberalism, Economics, Monetary Policy

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Site Changes

The various glitches you may have noticed in recent weeks follow an upgrade to the backend of the site and a server migration that did not go as smoothly as usual, but have since been bedded down. A few cosmetic changes have also been made, including the introduction of “share” icons (thanks to Brendan Underwood for implementing these).

I’m increasingly using Twitter as a more efficient way of linking to things of interest that do not require any additional comment or elaboration from me. You can follow me on Twitter and be confident there will be no tweets about what I had for breakfast, just the good stuff.

Let me know if you encounter any problems with the site. Self-registration for comments is permanently closed for security reasons, but you can email me and I will register you for comments.

posted on 02 February 2011 by skirchner in Misc

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