Open Thread

I’m flying to the UK today, and may not be posting for a few days. So consider this an open thread, to discuss any issues of economics, politics or pop culture that take your fancy.

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13 Responses to Open Thread

  1. larry says:

    Does anyone think that Howard will call the election this week at all?

  2. Kevin Cox says:

    The telecommunications professionals of Australia are offering a prize for the best idea on how to use broadband to help achieve sustainability. http://www.tsa.org.au/Other/eckermann_tja_prize.html

    I have just put in an entry using the idea of thinking of economic systems as information systems and using broadband as the enabling technology to make changes in the economic information system to drive sustainability rather than driving consumption. The basic idea is to put more information onto our money to include sustainability value as well as consumption value. I would be very interested in hearing about other systems that extend the information content of money.

  3. Andrew Leigh says:

    Invig – I deleted a comment of yours in this thread. If you’d like to repost a more substantial comment, setting out why you don’t like Kevin’s idea, please do so.

  4. invig says:

    My apologies.

    I think its a stupid idea because how do you put such nebulous concepts into a medium of exchange? Do you call a dollar a ‘thousand leaves’? Because then people will just burn down all the forests to reduce supply and so increase the value of their money.

    Or thats what Douglas Adams reckoned anyway.

  5. Andrew Leigh says:

    Invig, I thought Kevin’s idea related back to his various Rewards models, not making changes to the currency.

  6. invig says:

    And you expect me to read all that?!? Can’t he summarise it or something?

    But from what I can gather, its all very complicated.

    Taking example 1, he goes through a big process of rewarding people who save water then says:

    Measure the results and see if the objectives set are being achieved. If they are not then increase the cost of excess water, increase the rewards, and open up the market to better ways to spend rewards.

    Why not just increase the cost of excess water in the first place? Wouldn’t that achieve the objective and save all the mucking around?

  7. Kevin Cox says:

    invig,

    Increasing the cost of water has not solved the problem. If it had then we would not be in pickle we are now in. The top price of water in the ACT is well above the marginal cost of “new water” even of expensive water from recycling.

    Public goods systems do not work as one would expect from traditional economic theory. There are many reasons but for water the chief reasons appear to be that in terms of economic return to the government authority controlling water it is best to invest little in water, increase the price, solve the lack of water problem with restrictions, and when the political pressure becomes too great the water authority gets someone else (the public or the Federal government) to give them money to pay for new infrastructure which they own and make us pay again for the water obtained from it. It is a very profitable business – but does not meet the community goals of no water restrictions and is certainly not economically efficient.

    I believe we can solve the problem by creating a market place for investment dollars that are spent on ways to save water or to create new supplies. The present system uses a “command and control” approach as the way to spend money on water infrastructure and that seems to be an inefficient way to solve the problem – witness the desalination proposals for Melbourne and Sydney and recycling for Canberra.

    With respect to “why not just increase the price of water” the system at the moment does not allow that without a lot of effort and it normally happens once every 5 years.

    We have the same basic problem with greenhouse gas reduction. Emissions trading will increase the cost of all energy with immense profits being generated and the best way to keep the profits high will be to increase emissions. The system is built to increase money wealth and while that is the only goal things like emissions trading will be pushing up hill to work as the theory predicts. We have to build other goals into the system because economic systems with the sole goal of an increase in wealth measured in money terms will win everytime against such things as “aspirational targets”.

    If you are worried about proposals for water wait until you see what we have in mind for “affordable housing”, fat kids, and the health system:)

    One way of solving these problems may be to increase the information content of the currency we use for investment to include information about our other goals as well as money wealth creation – and that is one way of viewing what we are proposing.

  8. invig says:

    Kevin,

    I’ll look forward to reading more when your proposal is ready. In the meantime, however, I remain unconvinced that your plan is not merely papering over deficiencies in political rather than economic systems. Nevertheless I may be that we are actually in agreement and I am simply unaccustomed to your way of describing the same things.

  9. Verdurous says:

    Kevin,

    A very big sustainability concern can be addressed through the use of high quality videoconferencing as a substitute for the obscene amount of business air travel in Australia. I’m not up to the task of writing a submission but it would be great if someone would run with that.

  10. Kevin Cox says:

    invig

    we are attempting to include political and social goals in the equations and that is the point. Real life systems have other goals than maximizing value as defined by a currency. Somehow we need to include these other goals into our value functions. One way – in the case of greenhouse emissions is to put a price on carbon. Another way – is to include other measures (information) of our objectives into the the way we measure – namely into the currency. That is what this is all about.

  11. Kevin Cox says:

    Verdurous,

    More use of video conferencing will show a reduction of greenhouse gases for a given meeting – and it would show a lower cost as well – so why is it still relatively unusual? The issues are to do with habits, social conventions, ways we interact as humans. A submission on video conferencing would need to address those non economic issues which would be very challenging but it would be interesting reading. Perhaps fostering the use of YouTube by your senior executives is the way to address it?

  12. Wayne says:

    Larry,
    Out west of Sydney near Mt Druitt, Liberal party workers are already putting up signs and banners, so an election can’t be far away!

  13. Patrick says:

    Cisco has a new system called ‘telepresence’ which seems to be working very well. Basically a whole wall of the room is a screen, and the sound is very carefully calibrated.

    That said, videoconferencing of any sort cannot replace actual presence – unlike academics discussing relatively objectively assessable theoretical merits, businesspeople deal primarily in trust and judgement, which come from relationships, which come much more from lunches, coffees, hallways, chance meetings, etc, than from the the occasional aside or intro chat in a meeting.

    But the basic point is correct – you can save a lot of carbon, if you care.

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