Mankiw on Pigovian taxes

January 14, 2012

I just found a nice piece by Greg Mankiw on Pigovian taxes: Smart Taxes: An Open Invitation to Join the Pigou Club. I think I’m a member.

The abstract is:

Many economists favor higher taxes on energy-related products such as gasoline, while the general public is more skeptical. This essay discusses various aspects of this policy debate. It focuses, in particular, on the use of these taxes to correct for various externalities—an idea advocated long ago by British economist Arthur Pigou.

Downloaded the paper here.

Very interesting article on the bubble and its bursting

December 21, 2008

Club Troppo, one of the most interesting Australian blogs around, has published a link to a very interesting story in The Atlantic with the following introduction:

Henry Blodget was a Merrill Lynch tech analyst during the tech bubble. A bubble he rode to fame and then to a Spitzer investigation and oblivion. In this piece in the Atlantic he gives a great analysis of what he thinks caused the current housing and debt bubble and draws the conclusion that the problem is systemic and largely unavoidable in the long run in free-market capitalism.

The Atlantic article starts with:

The magnitude of the current bust seems almost unfathomable—and it was unfathomable, to even the most sophisticated financial professionals, until the moment the bubble popped. How could this happen? And what’s to stop it from happening again? A former Wall Street insider explains how the financial industry got it so badly wrong, why it always will—and why all of us are to blame.

The article is very interesting as giving a potentially plausible rationale for the bubble’s inflating and bursting.

Australia ratifying Kyoto: that wasn’t so difficult, was it?

December 5, 2007

It’s been a while since I wrote a post. I’ve been so busy recently I’ve hardly had a spare moment (which is something I couldn’t have imagined six months ago!).

While it’s two days late now, I have to say about Australia ratifying the Kyoto protocol: there, that wasn’t so difficult, was it?

New career direction

October 24, 2007

Yes, a week and a half ago I started a new job at a different organisation – the Australian Energy Market Commission (, a government body that writes the Rules for the National Electricity Market and conducts reviews on national energy policies. It’s interesting material for you all economic reformers – the electricity and gas networks are key elements of modern life (imagine the consequences of either drastically failing) and the associated markets are very interesting.

For all those interested in its work, I recommend downloading and reading the documents on its website. I’ve been reading and learning an enormous amount since I started the job and am already working in a project.

Water metering for Qld tenants

October 15, 2007

An interesting development in Qld – according to the Courier Mail:

LANDLORDS will be able to charge tenants for their water use under legislation to be introduced to Queensland parliament this week, Premier Anna Bligh says.

Cabinet today approved a number of legislative changes dealing with water that will be introduced to parliament this week, and be passed by the end of the year.

Among the changes are new measures aimed at making renters more accountable for their water use, and the banning of any council charges being applied to water from residential rainwater tanks.

The laws will allow landlords who have installed water saving devices – such as dual flush toilets and low-flow shower heads – in their rental properties to have individual meters installed to monitor their tenants’ water use. 

This will hopefully make price signals for water more transparent for tenants – folding water charges into a tenant’s rent makes price signals for water very opaque, which could be problematic when water is so scarce in Brisbane. I have always rented and I fully support direct charging of tenants for their water use and individual water metering. It’s not immediately clear to me how you put the incentives in to encourage landlords to put water-saving devices into units, but perhaps this is what is happening in the last para I quoted from the story.

Credit crunch

August 16, 2007

The bbc has a timeline of the events leading up to the credit crunch at

Saving 10c by buying supermarket-branded chips

July 31, 2007

Tonight, I participated in one small commercial experiment in amongst the multitudes of commercial experiments being conducted the world over. In the chip aisle of a major supermarket (I love chilli chips) I saw, prominently displayed, two competing brands of deep-fried chips (yum). Read the rest of this entry »

Strong reciprocity from “The Origin of Wealth”, by Eric D. Beinhocker

May 5, 2007

I’m reading a number of books on economics & finance at the moment including The Origin of Wealth by Eric D. Beinhocker, the subtitle of which Evolution, Complexity and the radical remaking of Economics describes its focus.

In this book, Beinhocker describes developments in the field of complexity economics in the last 15-odd years, which, in my understanding, seems to be about conceptualising economics arising from interacting agents each possessing incomplete information and processing capabilities.

The novel is very interesting – here is an excerpt on the fundamentals of political ideologies (the Left/Right divide) from pages 418-421. Read the rest of this entry »

The US trade deficit and currency revaluations

February 20, 2007

From this weeks Economist:

America’s trade deficit in goods reached $836 billion in 2006. Congressional Democrats seized on the figures to lambast the Bush administration and called for “actions to stand up for America” by ending the “unfair trade practices” of the countries and regions that account for most of the deficit: China ($233 billion), the European Union ($117 billion) and Japan ($88 billion).

I wonder if these “unfair trade practices” include more efficiently produced and/or more attractive goods from China, the EU and Japan, as well as the current valuations of the respective currencies (witness the recent pressure from the US for China to revalue its currency, and the repegging of the yuan to appreciate against the US dollar) ?

Now I don’t know if the currencies are “reasonably” valued (however this may be assessed), but it does seem odd (although understandable in terms of US domestic politics) for the US to appear to attempt to protect its industries by increasing the costs of imports through revalued currencies. But maybe there are unfair trade practices. I don’t know.

Maybe any currency revaluations will constitute a form of protectionism. If the US dollar continues its general downwards trend, it may discourage US consumers buying imports and reduce the trade deficit, which seems  a strategy of some US politicians. It’ll be interesting to watch US trade politics given that there is a stronger current of protectionism in Congress and the weakened President’s trade negotiating authority runs out in July this year.

The Bulletin’s story on the expensive Sealink ferry to Kangaroo Island

January 22, 2007

On January 5th I wrote this post about how extraordinarily expensive the sealink ferry to Kangaroo Island is. On January 9th The Bulletin published this story on the same topic which included the following gems: Read the rest of this entry »