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EP68 – COVID and Wartime: Comparison of economic impacts

Economics Explored episode 68 COVID and Wartime features 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.

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EP67 – Regulating Big Tech

It’s been a challenging year 2020, but one positive development is that regulators in the US and Australia have started challenging the Big Tech companies Google and Facebook over alleged misuses of market power. The US Department of Justice is taking on Google over its search dominance and the Federal Trade Commission is taking on Facebook over allegedly restricting competition by buying up potential competitors such as Instagram and WhatsApp. In Australia, the Media Bargaining Code designed to assist traditional media companies negotiate for a share of ad revenue with Big Tech is currently being considered by a Senate committee. In my latest Economics Explored podcast episode Regulating Big Tech, I provide an update on moves by governments and regulators, and I discuss the relevant economic concepts and policy issues.

Links relevant to the conversation include:

Joseph Stiglitz on Regulating Big Tech

Don’t Be Evil: The case against big tech by Rana Foroohar

Australian Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020

Economics Explored EP58: Tech Giants challenged by the Media and Governments

Economics Explored EP22: Antitrust with Danielle Wood from the Grattan Institute

Economics Explored EP21: Surveillance Capitalism with Darren Brady Nelson

Economics Explored EP16: Big Economic issues for the 2020s

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Podcast episode

EP66 – Money and Cryptocurrency

When I recorded the latest episode of my Economics Explored podcast last Friday afternoon, the price of one Bitcoin was a bit above US$18,000 after having failed to get beyond US$20,000 in the previous weeks. In my chat with my friend Tim Hughes, I said who knew what it would end up at when the episode was finally released. Well, it turns out that the price of one Bitcoin has finally gone beyond US$20,000 (check out this Coindesk report).

The US$20,000 Bitcoin price is the latest illustration of the Greater Fool Theory. If you’re buying Bitcoin at this price you’re speculating/gambling you’ll find a greater fool who’ll buy it at a higher price. Coindesk suggests there could be a lot of greater fools out there:

Breaking above $20,000, which represented a significant hurdle in the mindset of most traders, is entirely new ground for bitcoin and opens the doors for a climb to $100,000 over the course of 2021, according to some.

As I discussed with Tim, and in my Queensland Economy Watch post from Saturday, Huge swings in Bitcoin value make it hard to believe it will ever replace traditional currencies, I’m very sceptical about the value of Bitcoin. But, hey, it’s 2020, and Bitcoin’s insane valuation is just another marker of this extraordinary year.

Please feel free to comment below. Alternatively, please send and comments, suggestions, or questions to contact@economicsexplored.com

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Podcast episode

EP65 – Behavioural Finance with Dr Tracey West

The latest episode of my Economics Explored podcast considers the emerging field of behavioural finance, which is basically the application of behavioural economics to finance. It considers lessons from this field for households, investors, and governments. The episode features an interview I conducted earlier this week with Dr Tracey West of the Griffith Business School.

Tracey teaches behavioural finance to undergraduates and postgraduates at Griffith’s Gold Coast (Queensland, Australia) campus. She’s also an active commentator on economic policy issues. For instance, last year, Tracey wrote an excellent Conversation article on 3 lessons from behavioural economics Bill Shorten’s Labor Party forgot about, three lessons which Tracey and I consider in our conversation. Those lessons are:

1. People are loss averse

2. Limited decision-making

3. Now is worth more than later (and much more so than economists would typically assume using typical discount rates).

Tracey and I had a great discussion about behavioural finance theory and practice, including the need for regulation of financial markets and investments. The Storm Financial collapse, which wrecked the finances of many North Queenslanders, was given as an example illustrating the need for regulation of financial investments. I hope you enjoy our conversation. A transcript is available via my business website.

Links relevant to the conversation include:

Tracey’s LinkedIn profile

Tracey’s academic publications via Google Scholar

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Podcast episode

EP64 – Adam Smith & Margaret Thatcher with Dr Eamonn Butler

First, I should say that Gillian Anderson nailed Margaret Thatcher’s voice and mannerisms in season 4 of the Crown, but she had to work with some pretty dreadful scripts at times. Thatcher was cast as the villain responsible for high unemployment and social dislocation in 1980s Britain, but we weren’t reminded of crisis-ridden 1970s Britain which Thatcher inherited and needed to repair. There was the 1976 IMF Crisis and the 1978-79 Winter of Discontent, among other debacles. During the latter, with council workers on strike, Leicester square in London’s West End was turned into a temporary garbage tip. The country was literally a mess, and the heavy state intervention, which Thatcher partly wound back in the 1980s, was to blame. Certainly, the Iron Lady had her flaws, but she deserved a much fairer portrayal than was given her in the Crown.

I recently spoke about Margaret Thatcher, and Adam Smith, too, with Dr Eamonn Butler, Director of the Adam Smith Institute, and our recorded conversation is now available as Episode 64 of my Economics Explored podcast. We spoke about the lessons of Adam Smith, why Thatcher’s economic measures were necessary, why the Adam Smith Institute is unashamedly neoliberal, and finally about the deleterious consequences of wage and price controls which have been observed since Babylonian and Roman times. I hope you enjoy our conversation.