COVID won’t kill populism

Populist politicians around the world have struggled to cope with the COVID crisis, due in part to their disdain for traditional institutions.

STEM: Part culture war, part cargo cult

How can we get the teaching of science, technology, engineering and maths (STEM) right in Australian schools and universities? Nicholas Gruen says it is about more than just funding.

A BERD in the hand

On 5 May 2011 The Australian Business Foundation released The BERD in the hand: Supporting Business Investment in Research and Development which I authored.

Both Narelle Kennedy of the Australian Business Foundation and myself were members of the Cutler Review which proposed changing the existing R&D tax concession. The paper argues that the government’s proposed scheme is a big improvement on the status quo. It is likely to boost R&D undertaken by small businesses and it gives Australia more value for money from its R&D spend.

You can download the full report from the Australian Business Foundation here.

Gains from trade: vouchsafing the public good of liquidity in financial markets

You may not know it but around 20% of the home loan market has just collapsed – the securitisation market. The banks are moving into the space and, as a result, rationing credit elsewhere. Below the fold is an op ed in the Age about it.  It introduces a theme you'll probably be seeing a little more of from me.

In a paper I published in 1997 (I think it was) I argued that while competitive neutrality was a good thing, it was possible to have too much of it – at least where it stopped us making the best possible use of the specific qualities of the public sector.  But an alternative and in many cases ultimately more compelling principle is the desirability of making gains through trade. There are some things the public sector does better than the private sector, and it should be able to do them – prudently and within appropriate institutional frameworks.  This column outlines one.  I will outline some others if and when I get the time.

The Gruen Transfer

Those with an unusual surname have to get used to spelling it.  No it’s not Gluner.  Not Glueball or Grewbie it’s Gruen "G-R-U-E-N".  The compensation is,  your name identifies you or a family member pretty clearly.

But odd things happen to Gruens.  In the 1990s I believe some activists were unable to register "The Australian Green Party" because it was similar to the Greens.  So for over a decade, Gruens marking their ballot papers wondered just who the Australian Gruen Party were, and why they hadn’t been in touch.

And now I’m getting daily e-mails asking if my finance company is really becoming the Gruen Bank, the first commercial outfit to advertise on the ABC.  And what was Andrew Denton doing holding up Gruen Beer at the Logies?

You can find out tomorrow night when The Gruen Transfer premiers on ABC TV.

A national information policy?

Sometimes a little leadership is all it takes to nudge market forces along. 

150 years after Adam Smith first expounded the miraculous way the market's ‘invisible hand' transforms private self interest into social prosperity, some economists argued that we could achieve the same result with sufficiently sophisticated government planning.

Enter the Austrian émigré Friedrich Hayek . . . who showed that markets achieve their efficiency by utilising information which is distributed throughout the economy and so often unavailable to government. 

Traders and entrepreneurs become aware of new information constantly.  In seeking only his own advantage a trader who is hoarding grain as a result of some impending local crop failure, contributes to the common good because his hoarding drives up grain prices and this broadcasts the increasing scarcity of grain to all in the market.

Market participants need not know why grain has become scarcer, only that it now costs more, to build that information into their own decisions.  Hayek showed how deeply dysfunctional an economy robbed of this intelligence would be, an insight ultimately vindicated by the fall of the Berlin Wall.