Economics Explored

A conversation on whether COVID can be compared to wartime, which considers the different scales and scopes of the shocks, and what it all means for prospects for economic recovery. Economics Explored host Gene Tunny, an Australian professional economist and former Treasury official, speaks with businessman Tim Hughes, also based in Brisbane, Australia.

Gene and Tim conclude that a comparison of COVID to wartime isn’t valid. One reason is that World War II required a complete reorganisation of the economy to maximise production for the war effort, while COVID has involved restrictions that have reduced economic activity.

Links relevant to the conversation include:

Comparing COVID-19 to past world war efforts is premature — and presumptuous

US Council on Foreign Relations Backgrounder on The National Debt Dilemma

Brookings on What’s the Fed doing in response to the COVID-19 crisis? What more could it do?

Australia’s Boldest Experiment (excellent book on Australia’s wartime economy)

Robert Gordon’s The Rise and Fall of American Growth (outstanding book by a leading US economist containing a great discussion of America’s wartime economy)

Aussies over-confident after being over-compensated by Gov’t for COVID-recession

Mint security lapse amazes judge (story about theft from the Australian Mint in early-to-mid 2000s)

Finally, the word Gene got stuck on at 6:55, irredentist, means, “a person advocating the restoration to their country of any territory formerly belonging to it”, according to Oxford Languages.

If you'd like to ask a question for Gene to answer in a future episode or if you'd like to make a comment or suggestion, please get in touch via the website. Thanks for listening.

Darren Brady Nelson joins Gene Tunny to discuss the evolution of competition policy in Australia over the past few decades. Darren draws on his experience as an economist in the NSW Treasury and the Queensland Competition Authority. Gene and Darren reflect on the successes of the original National Competition Policy reforms and assess the more limited scope of the subsequent competition policy review. Darren analyzes CPI data to understand rising living costs and argues for reducing government interventions. The conversation also covers unintended policy consequences (e.g. fraud in disability services provision), the US Founding Fathers’ vision for limited government, and debates around the appropriate roles and sizes of government in Australia and the US.

If you have any questions, comments, or suggestions, please email us at [email protected] or send a voice message via https://www.speakpipe.com/economicsexplored.

What’s covered in EP244

• Australian competition policy history and reforms. (0:00)
• Free market competition and its impact on living standards. (7:56)
• Economic policy and its impact on individuals, including a tragic story from Karen Chester illustrating the costs of high tariffs. (12:31)
• Economic policy reforms in Australia during the 1980s and 1990s, including the Hilmar report and National Competition Policy (16:08)
• The benefits and costs of National Competition Policy in Australia. (23:36)
• Sequels and the original, with examples from movies and economics. (31:51)
• Competition policy and its benefits, challenges, and potential reforms in Australia. (35:27)
• Cost of living and government interventions. (40:12)
• Government intervention in various sectors, including energy, childcare, and alcohol/tobacco. (44:42)
• Government policies and their unintended consequences, including fraud in disability support programs. (49:23)
• The size and role of government in Australia and the US, focusing on the founding fathers' intentions. (53:43)
• Competition policy in Australia and the US, focusing on regulation and deregulation. (1:00:10)
• Economics, regulation, and antitrust law with a focus on Australia and the US. (1:06:07)

Takeaways

1. National Competition Policy (NCP) significantly improved economic efficiency and consumer benefits in Australia.
2. Reforms under NCP included corporatization and privatization of government-owned businesses, and opening up markets such as telecommunications and airlines to competition, leading to lower prices and better services in many cases.
3. Despite being from a traditionally left-wing political party, the Hawke-Keating Government was crucial in initiating market-friendly reforms.
4. Future competition policy reforms face challenges due to political and lobbying pressures, especially in regulated sectors like pharmacies.
5. Transparent and rational community service obligations were key to ensuring fair distribution of competition policy benefits.

Links relevant to the conversation

Where you can find Darren’s submission to the Productivity Commission’s National Competition Policy analysis inquiry:

https://www.pc.gov.au/inquiries/current/competition-analysis/submissions

AFR article “PC's Karen Chester's love of economics born of despair” (pay-walled):

https://www.afr.com/politics/pcs-karen-chesters-love-of-economics-born-of-despair-20161206-gt4poh

Whitlam Era book featuring Gene’s article on Whitlam and the Economy:

https://www.connorcourtpublishing.com.au/THE-WHITLAM-ERA-A-REAPPRAISAL-OF-GOVERNMENT-POLITICS-AND-POLICY_p_511.html

Productivity Commission’s 2005 NCP review:

https://www.pc.gov.au/inquiries/completed/national-competition-policy/report/ncp.pdf

Episode featuring John Nantz, Free Markets & Limited Government: Lessons from the Founding Fathers for Today – EP218:

https://economicsexplored.com/2023/12/14/free-markets-limited-government-lessons-from-the-founding-fathers-for-today-ep218/

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Professor John Cochrane of the Hoover Institution discusses the importance of free markets for economic growth and highlights stagnating growth as the biggest economic issue of our time. John talks about what may be his next book, "Free to Grow," which aims to update Milton and Rose Friedman's "Free to Choose" for today's world. After John speaks, show host Gene Tunny interviews him about his views on growth and his controversial Fiscal Theory of the Price Level. This is a recording of a live event at the Centre for Independent Studies in Sydney on 26 September 2023.

Please get in touch with any questions, comments and suggestions by emailing us at [email protected] or sending a voice message via https://www.speakpipe.com/economicsexplored.

About Professor John Cochrane

John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution. He is also a research associate of the National Bureau of Economic Research and an adjunct scholar of the CATO Institute.

Before joining Hoover, Cochrane was a Professor of Finance at the University of Chicago’s Booth School of Business, and earlier at its Economics Department. Cochrane earned a bachelor’s degree in physics at MIT and his PhD in economics at the University of California at Berkeley. He was a junior staff economist on the Council of Economic Advisers (1982–83).

For more on John, check out his bio here:

https://www.hoover.org/profiles/john-h-cochrane

What’s covered in EP214

• 00:03:36 Importance of economic growth.
• 00:16:06 Incentives drive productivity and growth.
• 00:17:12 Regulation hinders economic growth.
• 00:22:59 Fixing problems requires better solutions.
• 00:28:53 Fixing social programs by embracing free markets.
• 00:39:28 Regulatory state causing innovation slowdown.
• 00:46:24 Free market healthcare benefits the poor in John’s view.
• 00:48:47 Fiscal Theory of the Price Level: Inflation caused by government debt.
• 00:53:56 Avoid old left-right division.
• 01:05:21 Government debt may lead to a sovereign debt crisis.

Links relevant to the conversation

Video of the Free to Grow event on YouTube:

https://youtu.be/tmZh43Fc6Zo?si=wwWRfBW3zsbYmCRV

CIS web post about the Free to Grow event:

https://www.cis.org.au/event/free-to-grow-unlocking-economic-prosperity/