Working Papers

2011 10

Ehrlich versus The Doomslayer

Stanford University misanthrope Paul Ehrlich will be giving a lecture at UNSW on Monday. You can read about Ehrlich’s humiliation at the hands of Julian Simon here and here.

posted on 29 October 2011 by skirchner in Commodity Prices, Economics

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Auctioning Permanent Migration Rights: Friedman Agreed

My recent proposal to auction the right to permanently migrate to Australia was not new. I was treading a path already worn by Gary Becker and Julian Simon in the US, and Mark Harrison, John Logan and Wolfgang Kasper in Australia.

My proposal provoked predictable outrage from those unwilling to think about the idea for more than five seconds. The outrage is partly due to the failure to understand that an auction scheme is designed to facilitate migration, not prevent it. Wolfgang Kasper emailed me this recollection of his experience trying to sell the idea at a conference of economists in San Francisco:

It was a gathering of like-minded friends and some very prominent economists. We had been told that Milton and Rose [Freidman], who lived in their apartment nearby, would come to a morning session, when Milton (now 89) was fresh….Before long, Milton was in the midst of the debate, debunking some idea or elaborating and extending someone else’s. He was in fine form! At morning tea, we expected to say goodbye, but they said they had come for the day! “Rose and I are not a monument,” he said. “This is exciting work, it’s an elixir for Milton to mix with you people,” said Rose…

At one stage of the conference, when I spoke about the idea of selecting immigrants by worldwide auction, I was attacked by R. Rubin, a former Clinton Minister of Labor. He disagreed with me violently… “You just want to sell passports!” I had of course worked on this question in a consultancy report for New Zealand and stood my ground. Our argument became, in my opinion, a distraction to the main topic of our session. Friedman intervened: “I am sure that everyone here has understood Dr. Kasper’s rationale, and I agree with him. Robert, why don’t you think it over overnight. Give me a ring in the morning if you still disagree and I’ll buy you and Wolfgang the best breakfast in town, so we can argue it out some more!” This was vintage Friedman. Alas, Rubin never came back with his counterarguments, and I never was bought breakfast by Friedman.

posted on 27 October 2011 by skirchner in Economics, Population & Migration

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Steve Jobs versus Bill Gates: The Entrepreneur as Hero and Villain

My appreciation of Steve Jobs, from this week’s Ideas@theCentre:

The passing of Steve Jobs saw a remarkable outpouring of appreciation for the man and the company he founded, and its many innovative products. The quality and user-friendliness of the products, combined with outstanding brand management and marketing, explain Apple’s loyal, even sectarian, following.

It is unusual for an entrepreneur to be appreciated this way. The obvious comparison is with Bill Gates. Gates and the company he founded have also had a profound impact on our everyday lives. Yet if Gates were to die tomorrow, it is hard to imagine people lighting candles outside computer stores. Gates is still seen as the grasping robber-baron of computing, even though his business strategies have been no more anti-competitive than Apple’s iTunes store. Gates’ success earned him prosecution by the US Justice Department and EU competition authorities for supposedly harming consumers.

Microsoft has bestowed benefits on the world rivalling those of Apple, but to the extent that Gates earns plaudits, it is mainly for his philanthropic efforts. Gates’ philanthropy is likely motivated, at least in part, by the desire to win the respect and appreciation he never found as an entrepreneur. Gates is a member of a group of billionaires who have signed up to the notion that they must give away the majority of their wealth. In Australia, Dick Smith threatens to ‘out’ the wealthy who fail to give, treading a fine line between moral suasion and public intimidation. Yet Gates has done more for humanity as an entrepreneur than he is ever likely to achieve as a philanthropist. It is only the entrepreneurship that made the philanthropy possible.

This is something Jobs understood very well. He showed little interest in philanthropy, not because he was uncharitable but because he recognised that it was not his comparative advantage. Jobs was consequently ‘named and shamed’ by the US philanthropic sector. This did not dent his reputation, perhaps because the public also recognised they were better served by his relentless focus on Apple’s product.

Adam Smith famously observed that ‘it is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.’ In 1985, Jobs told Playboy magazine ‘we think the Mac will sell zillions, but we didn’t build the Mac for anybody else. We built it for ourselves.’ Like Gates, Jobs was a self-interested and self-serving businessman and yet we are all much richer for their efforts.

posted on 14 October 2011 by skirchner in Economics

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Roubini Global Economics ‘Not Yet Profitable’, May Be for Sale

Nouriel Roubini’s RGE is ‘not yet profitable’ and may be up for sale according to Institutional Investor. This made me laugh:

For RGE’s senior analysts, getting it right requires gaining a deep understanding of Roubini’s distinctive approach to macroeconomic research.

Good luck with that!

posted on 13 October 2011 by skirchner in Economics, Financial Markets

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Was there Anything Ian Macfarlane Couldn’t Do?

A strange line from Paul Kelly’s The March of the Patriots:

Macfarlane’s skill at smoothing the growth curve helped to transform Sydney’s skyline…

Move over Harry Seidler! Then there is this:

Bank independence was Costello’s triumph over Hewson.

In this op-ed, I argue that it was Hewson’s triumph over the Bank.

posted on 09 October 2011 by skirchner in Economics, Monetary Policy

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