The good, the bad and the ugly of the Murray inquiry

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The Murray inquiry's observations on financial advice, household debt and super are commendable, but its boneheaded proposal for the government to underwrite RMBS is a concern.

A gov­ern­ment report is always a Parson’s Egg, and I’ll start with the parts of this one that were excel­lent. These were its wari­ness about and obser­va­tions on super­an­nu­a­tion, finan­cial advice and house­hold debt.

A Royal Commission into the Commonwealth Bank

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The Com­mon­wealth Bank’s response to the Sen­ate inves­ti­ga­tion of ASIC blames incom­pe­tence and indi­vid­u­als for the scan­dals at Com­mon­wealth Finan­cial Plan­ning Lim­ited. Chief exec­u­tive Ian Narev: “Poor advice pro­vided by some of our advis­ers between 2003 to 2012 caused finan­cial loss and dis­tress and I am truly sorry for that.”

This is the pre­dictable ‘rot­ten apple’ defence to alle­ga­tions of impro­pri­ety. And it is sim­ply absurd to describe some of the alleged actions of those advis­ers noted by the Sen­ate Report – such as “forgery and dis­hon­est con­ceal­ment of mate­r­ial facts” (Sen­ate Inquiry Exec­u­tive Sum­mary, p. xviii) — as merely “poor advice”. If the bank can describe that as “poor advice”, then a bank rob­ber would be enti­tled to describe his pro­fes­sion as “mak­ing withdrawals”.

Abbott shoots his own supporters in the foot

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The Abbott gov­ern­ment has reacted with pre­dictable dis­dain to attacks over its poli­cies on refugees, home­less, uni­ver­sity stu­dents, unem­ployed, and wel­fare recip­i­ents. And why shouldn’t it? These are com­plaints from peo­ple who nor­mally wouldn’t vote for them any­way, while the poli­cies them­selves appeal not only to “bolted on” Lib­eral vot­ers, but also to dis­af­fected Labor vot­ers. It’s good pol­i­tics, even if the bad press means a tem­po­rary hit in the opin­ion polls.

An open letter to Brussels

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The Euro­pean Sta­bil­ity and Growth Pact is based on the prin­ci­ple that sta­bil­ity and growth are enhanced when gov­ern­ment deficits are either min­imised or elim­i­nated. I want you to dis­pas­sion­ately con­sider an argu­ment that reaches a dif­fer­ent con­clu­sion. It may sound like some­thing you have heard before from oth­ers and already dis­missed. But bear with me.

Why Europe’s austerity experiment is doomed to fail

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I’ve spent the past two weeks in Europe, with speak­ing engage­ments in Italy, Greece and Aus­tria. This was my first visit to Greece, and my first chance to get an admit­tedly super­fi­cial tourist’s view of what a coun­try with Great Depres­sion lev­els of unem­ploy­ment looks like.

It didn’t look like any­thing in par­tic­u­lar until the drive from Athens, Greece’s cap­i­tal and largest city, to Thes­sa­loniki, its sec­ond largest. Then it struck me: the roads were near empty — as the toll booth shown in Fig­ure 1 illus­trates. My host Nikos reck­ons he has done a mil­lion kilo­me­ters over the years on this 500km drive, and he con­firmed that roads which were now vir­tu­ally empty were once full of cars, and espe­cially trucks — that mobile sign of a thriv­ing economy.

The dodgy dynamics of economics (1)

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This is the talk I gave at the Finance, Math­e­mat­ics and Phi­los­o­phy sem­i­nar orga­nized by the Depart­ment of Phi­los­o­phy and the Depart­ment of Physics at Sapienza Uni­ver­sita de Roma. It was an extremely good con­fer­ence, with the spe­cial bonus that I got to meet one of my heroes in non­lin­ear dynam­ics, Ping Chen.

PS Video below init­lally linked only to the adver­tise­ment before my video. That is fixed now, and I only hope my bags also get found after going astray in Rome airport.

I’ll fol­low up with my paper shortly, once I have time to com­plete it.

3 heterodox-friendly positions at Kingston University

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Kingston Uni­ver­sity has adver­tised three fixed-term lec­turer posi­tions with a very tight dead­lline of June 22nd, with inter­views to be held on July 1st. Appli­ca­tions from econ­o­mists with a research area in het­ero­dox eco­nom­ics are welcome.

For queries please con­tact Julian Wells (J.Wells AT, who is the Direc­tor of Studies.

The for­mal details of the posi­tions are below.

Ref­er­ence Num­ber: 1264

Salary: £35770-£38869

Fac­ulty / Depart­ment: Fac­ulty of Arts & Social Sciences

School / Sec­tion: School of Eco­nom­ics, His­tory and Politics

Loca­tion: Pen­rhyn Road Map & Directions

Permanent/Fixed Term: Fixed Term (FTC)

Full Time/Part Time: Full Time

Genius versus bricks-and-mortar in the head

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Aus­tralia could have been the world leader in lap­top com­put­ers — if we didn’t have a brain-dead finan­cial sector.

Han­nah Fran­cis’ arti­cle last week about the Vix­tel Unity – a new Australian-designed multi-function Tablet/Laptop/Phone (The three-in-one Aussie device that could kill the PC) — seri­ously stopped me in my tracks when I saw that its devel­oper was Terry Crews. For that rea­son alone, I popped over to the Indiegogo site where Vix­tel is run­ning a crowd-funding cam­paign and chipped in $645 towards its $100,000 goal — for which I’ll receive one of the first pro­duc­tion run tablets that will be avail­able in July (about 4 to 6 weeks from now).

Why industrial strength is born from diversity

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Diver­sity — not spe­cial­i­sa­tion — is the advantage.

When I was invited to speak at a con­fer­ence in Bonn some years ago, my host insisted that I stay with him, rather than in the con­fer­ence accom­mo­da­tion. I expected to find myself in a sub­urb of Bonn, but instead we drove to a tiny vil­lage with just 5,000 inhab­i­tants 130km away.

The bonus was that this was July 4, on which date each year a local Phil­har­monic group put on an open-air con­cert on the banks of an nearby extinct volcano’s caldera lake. The whole town was there for the event, and my host intro­duced me to a lovely old cou­ple sit­ting on a park bench.