Economics Explored

Why do firms do some activities “in house” and contract out others? British-American economist Ronald Coase gave a cogent explanation in a classic 1937 paper on the nature of the firm. Show host Gene Tunny explains to his colleague Tim Hughes how Coase’s insights (e.g. the concept of transaction costs) can be applied to understand the actions of an Australian construction firm Hutchinson’s deciding to employ people to do concrete formwork rather than relying on subcontractors. Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP181Episode topic: What determines what activities a business does in house? [0:06]What is formwork and why does it matter? [3:29]Hutchinson’s moves to bring formwork in house [8:54]When is it important to have an in-house workforce in your firm [14:42]Why you don’t always contract out [20:00]What’s done in house and what’s outsourced? [25:03]Gig economy platforms (e.g. UpWork) [33:02]A closer look at The nature of the firm by Ronald Coase [40:56]Links relevant to the conversationCourier-Mail article on Hutchinson’s decision to do its own formwork:https://www.couriermail.com.au/business/citybeat/hard-labour-hutchies-plan-to-survive-building-crisis/news-story/e3b8acc34728e49cc04d0c4b88bafc8dRonald Coase’s classic article on the nature of the firm:https://onlinelibrary.wiley.com/doi/full/10.1111/j.1468-0335.1937.tb00002.xAmerican Express article on pros and cons of hiring versus outsourcing:https://www.americanexpress.com/en-us/business/trends-and-insights/articles/pros-cons-hiring-house-vs-outsourcing/CreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

The Australian Government has been having trouble getting its proposed Housing Australia Future Fund (HAFF) passed by the Senate. The policy looks odd. With some justification, the Australian Greens have commented: “In its current form the Housing Australia Future Fund (HAFF) legislation will see the housing crisis get worse. We can't fix the housing crisis by gambling money on the stock market and not guaranteeing a single cent will be spent on housing.” In their dissenting report on the bill, the Greens’ cited the views of this episode’s guest, Dr Cameron Murray. Cameron is a Post-Doctoral Researcher at the Henry Halloran Trust at the University of Sydney. Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. About Dr Cameron MurrayDr Cameron Murray is Post-Doctoral Researcher at Henry Halloran Trust, The University of Sydney. He is an economist specialising in property and urban development, environmental economics, rent-seeking and corruption.Book: Rigged: How networks of powerful mates rip off everyday AustraliansWebsite: https://fresheconomicthinking.substack.com/  Twitter: @drcameronmurray What’s covered in this bonus episodeCameron’s submission to the Senate Inquiry into the Housing Australia Future Fund Bill [2:39]What’s going on with the Housing Australia Future Fund [5:02]The only reason you can make a premium is if you take risk [8:57]Why you need to separate the funding and the spending [10:36]Why doesn’t the Future Fund just directly invest in new houses? [14:21]How governments are increasingly doing financially tricky things that don’t make sense [19:23]Cameron’s thoughts on the impact of the bill on the level of investment in housing [23:14]What’s going on behind the scenes at Parliament House [26:18]Links relevant to the conversationCameron’s submission to the inquiry into the Housing Australia Future Fund:https://fresheconomicthinking.substack.com/p/australias-housing-future-fund-myDirect link to Senate Committee inquiry report:https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/HousingPackageofBills/ReportHAFF inquiry home page:https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/HousingPackageofBillsCreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

How can democracies reinvigorate themselves to triumph over authoritarianism? Does the West need to decouple from China? These and other questions are considered in Economics Explored episode 180. Foreign affairs expert Charles Dunst talks about his new book Defeating the Dictators with show host Gene Tunny. Among other things, Charles and Gene talk about the potential benefits of Public Private Partnerships (PPPs), such as Operation Warp Speed, the Trump administration’s COVID-19 vaccine plan. Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. About Charles DunstCharles Dunst is deputy director of research & analytics at The Asia Group, an adjunct fellow at the Center for Strategic and International Studies, and a contributing editor of American Purpose. He is the author of Defeating the Dictators: How Democracy Can Prevail in the Age of the Strongman (Hodder & Stoughton, February 2023). For further information about Charles, check out https://www.charlesdunst.com/. What’s covered in EP180What is the Asia Group and what does it do? [1:35]Is democracy no longer seen as the path to prosperity in developing economies? [5:28]What are the most important organizing principles for a democratic system? [11:38]Accountability and the lack of trust in government [16:34]Best practices for running a democratic country in the 21st century [21:36]Too much money in politics in the US [25:41]Does the West need to decouple from China? [27:37]The role of public private partnerships (PPPs) such as Operation Warp Speed [32:27]How will dictators be defeated if we govern ourselves better? [34:59]The importance of engaging in the conversation through social media and local governance [38:32]Inequality and the Dream Hoarders [39:00]Links relevant to the conversationDefeating the Dictators (Please buy the book via this link to support the show):https://amzn.to/3liQrjxMatthew Engel’s FT article “The foreign states that own Britain’s railways”:https://www.ft.com/content/e57c5fd0-bf54-11e9-9381-78bab8a70848Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About Ithttps://amzn.to/3LvCOrLTrack Nancy Pelosi’s stock portfolio:https://www.capitoltrades.com/politicians/P000197https://twitter.com/PelosiTracker_

Silicon Valley Bank (SVB) has collapsed and now Credit Suisse is in trouble. Should we be worried about Global Financial Crisis 2.0? Have the policy responses been sensible? Economics Explored host Gene Tunny provides his initial thoughts.Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Links relevant to the episode:Chris Joye's article on SVB:https://www.livewiremarkets.com/wires/why-silicon-valley-bank-died-updated-2NPR Indicator episode:https://www.npr.org/2023/03/13/1163157993/silicon-valley-banks-three-fatal-flaws Sebastian Merkel's paper on narrow banking:https://scholar.princeton.edu/sites/default/files/merkel/files/narrow_banking.pdfWorld Bank paper on Bank Runs and Moral Hazard:https://documents1.worldbank.org/curated/en/548031537377082747/pdf/WPS8589.pdf Bloomberg article on policy response:https://www.bloomberg.com/news/articles/2023-03-12/us-moves-to-help-depositors-offer-bank-backstop-in-wake-of-svb?leadSource=uverify%20wall Breaking Points video SECRET Fed BAILOUT Pumps BILLIONS Into Bankshttps://youtu.be/Lj5BE951aP8 

In his recent Spectator Australia article, Darren Brady Nelson argues for a radical, not a reserved review of Australia’s central bank, the Reserve Bank of Australia (RBA), which he describes as reckless. In Economics Explored episode 179, Darren provides an Austrian economics perspective on central banks, fiat money, and inflation. Show host Gene Tunny wraps up the episode with a discussion of the historical evidence on different monetary systems and inflation, evidence which confirms economies with fiat money are much more inflation prone. Gene then discusses whether a return to the gold standard would be desirable.Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP179Darren’s thoughts on the current review of the Reserve Bank of Australia [1:46]How the RBA interprets the stability of the currency objective [6:54]What is the Austrian School? [10:19]Would the Austrians recommend abolishing the central bank? [21:08]The Bank of England’s report on modern banking [25:54]The need for a broader review of the Reserve Bank of Australia [30:35]Fiat money systems are much more prone to inflation than commodity money systems [34:20]Links relevant to the conversationDarren’s bio on the Economics Explored website:https://economicsexplored.com/regular-guests/Darren’s opinion piece on the Spectator Australia website:The RBA (reckless bank of Australia) needs a radical, not reserved, reviewBank of England paper on money creation:Money creation in the modern economy | Bank of England  Minneapolis Fed paper on fiat money, commodity money, and inflation:Money, Inflation, and Output Under Fiat and Commodity Standards | Federal Reserve Bank of MinneapolisUS Gold Commission ReportMinority report of the Gold Commission, co-authored by Ron Paul:The Case for Gold: Minority Report of the US Gold Commission 1982  Alan Greenspan’s autobiography discusses his advice to President Reagan regarding gold:The Age of Turbulence* Another great book on Greenspan which discusses Friedman’s views too:The Man who Knew: The LIfe & Times of Alan Greenspan* *You can help support the show by buying a copy of either book via the links above. CreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Dave Belvedere is a software engineer who searches for opportunities to make the crypto market more efficient and to make money at the same time - e.g. by exploiting arbitrage opportunities. Dave gives show host Gene Tunny and his colleague Tim Hughes an overview of cryptocurrency and also talks about NFTs and decentralized applications (dApps), such as Wizards & Dragons.Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP178What is Dave’s role in the crypto market? [1:10]What is a chain and how does it work? [3:39]How long does it take to make a transaction? [9:26]What does a crypto exchange (e.g. FTX) do? [15:30]What do we know about miners? [20:20]What’s the future of crypto currencies? [25:44]What is Ethereum and how does it work? [45:57]What are the pros and cons of crypto? [52:07]What are dApps? [57:01]What are the use cases? What would motivate you to have crypto? [1:06:33]Links relevant to the conversationBitcoin creator:https://en.wikipedia.org/wiki/Satoshi_NakamotoWizards & Dragons game:https://dappradar.com/ethereum/games/wizards-dragons-gameCreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Can we get people to work harder and perform better if we make their pay performance-related - e.g. with performance bonuses or commissions? Does this work? Are individual or group incentives better? What does the evidence say? We know that people respond to incentives, but, as Gene Tunny and Tim Hughes discuss this episode, getting those incentives right can be tricky. Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP177What is performance-related pay? [0:41]The types of jobs in which performance-based pay works and doesn’t - e.g. fast food vs real estate [8:09]The importance of getting incentives right and having transparency [23:16]Performance-related pay is a difficult thing to put into practice [28:24]Group-based incentive schemes - evidence from a recent European study of the Hydrema manufacturing business [52:54]Links relevant to the conversationIZA World of Labor - Performance-related pay and productivityHow group-based incentives increase worker performance | CEPRDoes Group-Based Incentive Pay Lead To Higher Productivity? Evidence from a Complex and Interdependent Industrial Production ProcessThe Use of Reward and Incentive Systems: A Case Study of McDonald's - ToughNickelMcDonald's Restaurants puts motivation and reward at heart of business strategy - Employee BenefitsGive and Take – Adam GrantPerformance-related pay | The Economist   Real Estate Agent Commissions: How Does it Work and How Much Should You Be PayingLearn the Truth About Real Estate Commissions | PropertyNowCreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Warren Hatch, CEO of Good Judgment, discusses superforecasting techniques. Topics include characteristics of superforecasters, pattern recognition, bias elimination, Bayes' Theorem, group size for success, and tips for becoming a superforecaster.

Australian Treasurer Jim Chalmers argues for values-based capitalism and against neoliberalism in a January 2023 essay in the Australian Monthly magazine. In this episode, show host Gene Tunny discusses the Treasurer’s essay with Dr John Humphreys. John is the Australian Taxpayers’ Alliance (ATA) Chief Economist and the founder of the Australian Liberal Democrats. Gene and John discuss just how literally we should take the Treasurer, the risks of the so-called co-investment approach, and whether the Treasurer is arguing for socialism (or a different -ism).      This episode features audio from an ATA Econ Chat livestream broadcast on 31 January 23. You can watch the whole thing here:https://www.facebook.com/AusTaxpayers/videos/509950911277607You can follow the ATA on various platforms including Facebook and YouTube.You can follow John Humphreys on Twitter.Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP175Jim Chalmers’ idea of co-investing with the private sector [4:21]Regarding superannuation funds increasingly having social goals that they aim to meet as well as financial goals [9:12]The Australian stage 3 tax cuts and values-based capitalism: are they compatible?  [12:37]ESG, stakeholder capitalism, and socialism [15:24]How does the Treasurer intend to direct investment? [23:28]How a poor government policy can lead to another poor government policy [27:31]The social impact investment bank expected in the 2023 Australian budget [32:34]Links relevant to the conversationJim Chalmers’ essay Capitalism after the CrisesClean Energy Finance Corporation Financial Outcomes 2021-22Australian Government principles for social impact investing | Treasury.gov.auImpact Investing Won’t Save Capitalism  CreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Please consider signing up to receive our email updates and to access our e-book Top Ten Insights from Economics at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

The world’s population keeps growing and passed 8 billion in late 2022, but China’s population is now falling. There are concerns over what that means for its economy and the wider global economy. Is Paul Krugman right that a falling population means a weak Chinese economy? Show host Gene Tunny and his colleague Tim Hughes discuss the possible implications of a shrinking China, as well as global population projections out to 2100. The conversation touches on the environmental impact of a growing population and how well-placed we are to manage environmental challenges.    Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. What’s covered in EP174The world’s population is on the rise and passed 8 billion in November 2022 [4:24]Why post-war population growth was so strong [7:43]What does a declining Chinese population mean for the Chinese and global economies? [14:09]The importance of immigration in Australia population growth [19:27]How the world’s population will eventually level out  toward the end of the century [23:35]Can governments solve environmental challenges? Discussion of the hole in the ozone layer and the Montreal Protocol [30:09]Paul Krugman vs Dean Baker on the future of China [42:07]Tim asks how do you maintain a growth mindset in a declining population? How do you make it work? [47:25] Will demographics and a weaker economy bring down the Chinese administration? [53:06] Links relevant to the conversationUN World Population Prospects 2022 datahttps://population.un.org/wpp/Paul Krugman’s article “The problem(s) with China’s population drop”https://themarketherald.com.au/the-problems-with-chinas-population-drop-2023-01-19/  Dean Baker’s article “Paul Krugman, China’s Demographic Crisis, and the Which Way Is Up Problem in Economics”https://cepr.net/paul-krugman-chinas-demographic-crisis-and-the-which-way-is-up-problem-in-economics/China’s old-age dependency ratiohttps://population.un.org/wpp/Graphs/Probabilistic/Ratios/OADR/65plus/15-64/156Stanford Business School article “Baby Bust: Could Population Decline Spell the End of Economic Growth?” discussing Charles I Jones views on the link between population, innovation, and economic growthhttps://www.gsb.stanford.edu/insights/baby-bust-could-population-decline-spell-end-economic-growthCreditsThanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Please consider signing up to receive our email updates and to access our e-book Top Ten Insights from Economics at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.