Infrastructure conference in Westminster Tuesday 24th

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A new organ­i­sa­tion called NEKS (for “New Eco­nom­ic Knowl­edge Ser­vices”, see is hold­ing its inau­gur­al con­fer­ence on the eco­nom­ics of infra­struc­ture In West­min­ster on Tues­day Jan­u­ary 24th, and you should attend.

Why NEKS, and why Infra­struc­ture? The eco­nom­ic impor­tance of infra­struc­ture is obvi­ous, but the actu­al per­for­mance of infra­struc­ture often dif­fers rad­i­cal­ly from what is pre­dict­ed when it is being planned. Three forms of delu­sion make many infra­struc­ture projects far less ben­e­fi­cial than expect­ed by their pro­po­nents: the com­plex­i­ty of exe­cu­tion is under­es­ti­mat­ed, the ben­e­fits are over­es­ti­mat­ed, and ben­e­fits are also cal­cu­lat­ed poor­ly using dodgy eco­nom­ic the­o­ry.

These are pre­cise­ly the sort of issues that NEKS was formed to address. NEKS’s objec­tive with this con­fer­ence is to pro­vide a real under­stand­ing of how com­plex­i­ty and uncertainty—including the impact of actu­al human behav­iour and institutions—affect large pub­lic infra­struc­ture projects. These issues are sim­ply not ade­quate­ly con­sid­ered by the cur­rent “cost-ben­e­fit” method of eval­u­at­ing projects, which relies heav­i­ly on main­stream eco­nom­ic con­cepts of mar­gin­al cost and mar­gin­al util­i­ty.

For exam­ple, HM Treasury’s sup­ple­ment to The Green Book (the bible for eval­u­at­ing gov­ern­ment projects) talks about the need to con­sid­er ‘non-mar­gin­al eco­nom­ic impacts’ (which is almost the whole point of infra­struc­ture invest­ment), and to take into account ‘endoge­nous pref­er­ences’ (the fact that peo­ple change their micro behav­iour when the macro world changes around them). This sup­ple­ment fol­lowed the deba­cle over HS2, when the pur­port­ed strate­gic case based on trans­form­ing north­ern economies was total­ly divorced from the eval­u­a­tion of eco­nom­ic ben­e­fits, which were based main­ly on try­ing to quan­ti­fy the increased util­i­ty expe­ri­enced by lots of peo­ple sav­ing bits of time trav­el­ling.

Both Trump and May are por­tray­ing them­selves as “infra­struc­ture lead­ers”, but they will only prove to be so if their projects work and deliv­er on time. The chances that they will instead be White Ele­phants, deliv­ered too late with inad­e­quate or even neg­a­tive returns, are high unless the real-world com­plex­i­ties of devel­op­ing and deliv­er­ing infra­struc­ture are prop­er­ly con­sid­ered.

NEKS’s con­fer­ence at the pre­mi­um Coun­ty Hall venue in West­min­ster will take a real-world look at the UK’s infra­struc­ture plans. Vince Cable, the lead min­is­ter for indus­tri­al strat­e­gy in the Coali­tion Gov­ern­ment and an advo­cate for new eco­nom­ic think­ing, will kick off the con­fer­ence. A Min­is­ter should speak about infra­struc­ture and the Government’s fresh­ly mint­ed indus­tri­al strat­e­gy Green Paper. Ann Pet­ti­for, who suc­cess­ful­ly led the Jubilee 2000 cam­paign to for­give the debts of the world’s poor­est coun­tries, will speak about the financ­ing impli­ca­tions of infra­struc­ture.  Brid­get Rosewell, a Nation­al Infra­struc­ture Com­mis­sion­er and def­i­nite­ly a new eco­nom­ic thinker, will be giv­ing a keynote.  The ever con­tro­ver­sial hedge fund man­ag­er and Hayek fan, Crispin Odey, will add con­trar­i­an spice to pro­ceed­ings (he was one of the few peo­ple who saw the Crash com­ing….. and short­ed it).

There will be an inter­est­ing com­bi­na­tion of cre­ative, strate­gic and ana­lyt­i­cal thinkers attend­ing from many areas of life to dis­cuss these issues with.

If you’ll par­don the pun, I am keen that as many of you that fol­low this blog and under­stand the need for new eco­nom­ic think­ing, are there and I’ve per­suad­ed NEKS to offer a 50% dis­count on the cost of the con­fer­ence. Go here to get more infor­ma­tion. I will def­i­nite­ly be there from 2pm onwards (teach­ing respon­si­bil­i­ties pre­vent me attend­ing for the whole day). I hope to see you there.


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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.