Uncomfortable Collisions with Reality

In this episode of "Uncomfortable Collisions with Reality," Gene Tunny and I explore the implications of President Trump's tariffs on international trade. We discuss the micro and macroeconomic aspects of tariffs, and how these policies could reshape the U.S. and global economies. We discuss the ways in which foreigners can be induced to pay some of the tariff, even if not as much as Donald Trump says they will, while also addressing the\ impacts on industries and employment. We emphasise how abstract the economists' models are and how poorly they account for supply chain disruptions. The broader implications for U.S. foreign relations, and the rule of law are also touched upon. Why would anyone trust the US when, under this president, it breaks previous agreements whenever it fancies? If you'd like to see the YouTube recording of our conversation, it's here.

Greg Smith has a well thought out, deeply compelling and scary take on the world we suddenly find ourselves in. I thought you should hear from him and so have just recorded this conversation. I strongly recommend you check it out. If you prefer to watch the video, it is here.

This discussion emerged from an email from my colleague Gene Tunny wondering whatever happened to Australian exceptionalism — that period during which he cut his teeth in the Treasury when Australian policy makers worked tirelessly to reshape the Australian economy to make it more productive and government politicians regarded this as one of their core tasks. We talked about how past leaders made big changes, like reducing tariffs and improving education. I painted a picture from my own — unusual — point of view which is that my father was an important figure in helping 'sell' economic reform to governments in the 1960s and then became part of early neoliberalism as an academic advisor to the Department of Prime Minister and Cabinet beginning shortly after the election of the Whitlam Government to around mid-1976.* I argue that early neoliberalism was highly successful. It picked plenty of low hanging fruit and saw itself as problem solving. As it became a dominant way of thinking, it became formularised — and understood as a summary aesthetic that 'market based' solutions were better. This idea was way too vague and vibey to be of practical use, but it operated to systematically bias the way people thought about things and set them up to make mistakes that were so large that there’s a fair case to be made that late reform did more harm than good. As I wrote in this op ed in 2014: "Australia was a standard-bearer in areas like trade and agricultural protection, the two airline policy and shopping hours. There, with the stroke of a pen, we swept away the detritus of a century’s ad hoc political favouritism. And unlike our peers in the Anglosphere, we also expanded funding for the safety net – bolstering equity. But beyond that, as we’ve learned (or have we?), considering policy alternatives against a criterion as crude as how ‘free market’ they are doesn’t work so well. In infrastructure, utility and financial reform, where monopoly and asymmetric information problems abound, regulation remains inevitable and new rent seeking political pathologies lie in wait for those unpicking the old ones. Here our reform efforts brought forth excessively priced mortgages, toll-ways, desalination plants and airports with the political and official insiders championing the changes parachuting into lucrative careers with the corporate beneficiaries of their reforms to lobby their successors. We’ve seen massive over-investment in electricity transmission and under-investment in other infrastructure." Gene and I discuss a range of policy questions, but Gene is interested in my experience in reforming car manufacturing in Australia and we spend a fair bit of time on that. We also discuss the Higher Education Charge (HECs) and the outsourcing of the Commonwealth Employment Services to illustrate some of the good and the bad of the new approach. And we also talk about the disasters like public-private partnerships for infrastructure, particularly toll roads. We also swapped some ideas about how New Zealand has done so much worse than Australia since the '70s. I don't know about Gene, but my speculations on that subject should be taken as just that — speculations and pretty uninformed. * In case you're interested, the new PM, Malcolm Fraser did not get rid of him. Instead Dad had always felt bad about giving the ANU only half of his time so he withdrew from the arrangement with PM&C when there seemed to be less interest in his services.

Dan Davies, author of "The Unaccountability Machine," discusses how Stafford Beer’s management cybernetics reveal the flaws in our belief that large systems can self-govern. He critiques the ineffective strategies in politics and corporations, particularly during COVID-19, highlighting the dangers of unaccountability. Davies dives into the impact of ideologies, the superficiality of corporate mission statements, and this 'hollowing out' of political systems. With a dash of humor, he emphasizes critical thinking and the need for deeper understanding in governance.

Competition policy created jobs and economic growth but sometimes it harmed smaller communities as rural services were rationalised. So Australia Post thinks it's on a PR winner when it argues that other logistics firms should be denied access to the 'last mile' of their rural network (from rural post office to home address) to deliver parcels to rural customers. But whereas the letter monopoly is legislated specifically to fund a cross-subsidy from the city to the bush, Australia Post's monopoly on its last mile of delivery to the bush is a 'natural monopoly'. It only exists because it's uneconomic for anyone else to invest in that infrastructure — because it's not heavily utilised. In fact Australia Post can't take advantage of the monopoly without charging the bush a monopoly price — which it does. This podcast explains why the government should require Australia Post to grant access to its facilities and how that would be great for rural post offices, generate around two thousand new jobs with half of them being in the bush.

Most of us have heard of the idea that, for a proposition to be scientific, it must be falsifiable — an idea associated with Karl Popper. And Thomas Kuhn's idea of 'paradigms' slid into the language following the publication of his book "The Structure of Scientific Revolutions". In this podcast, I argue that Polanyi should be as well known as Kuhn (Kuhn seems to have got his core idea of the incommensurability of paradigms from Polanyi). And Polanyi scholar Martin Turkis and I ask why that is. I think the answer is also related to another somewhat surprising phenomenon. A remarkably large number of those studying Polanyi today have a particular interest in religion. Though religion was very important to Polanyi, he only mentioned it as a parting thought at the end of his major publications. The corresponding video is here.

I talk with Seamus O'Mahony who has written a unique and marvellous book. It's about the origins of psychoanalysis, and it's the first serious history I've ever read that is written as a comedy! O'Mahony brings this off brilliantly, and it enables him to skewer the madness and quackery of the early psychoanalysts without any self-righteousness. In the background of all this is O'Mahony's experience as a (now retired) doctor, older and wiser than when he began. The hero of the book is the now obscure Wilfred Trotter, a man of prodigious natural gifts both intellectual and practical. He baled out of psychoanalysis early and went onto become the greatest English surgeon of his generation while remaining a model of modesty and self-restraint, unlike the other two protagonists of the story. In the end, he stands for the centrality and the indispensability of care in medicine. And yet, as O'Mahony laments, care receives short shrift in modern medicine. All up a marvellous conversation. If you want to dive in from the deep end, start from the 16.04 minute timestamp below. 00:00 Trailer 01:00 Unlocking the Writer's Journey: From Medicine to Literature 06:21 The Intersection of Medicine and Writing: A Personal Reflection 11:24 Critiquing Modern Medicine: The Golden Age and Beyond 16:05 The Making of a Masterpiece: Trotter, Jones, and Psychoanalysis 21:26 Behind the Book: Unearthing Letters and Lives 26:53 Psychoanalytic Pioneers: The Congress and Contrasting Views 31:14 Wilfred Trotter: The Surgeon-Thinker's Legacy 36:01 Empathy in Surgery: Trotter's Influence on Medicine 41:16 Literary Inspirations: Embracing a Comedic Lens 46:28 Reflecting on Medical Evolution: The Primacy of Patient Care If you prefer the video, you can find it here

Here's the audio from a great event in London held on the 15th of November in which I outlined my proposal for a privately funded standing citizen assembly. You can find the video at this link.

In this episode I chat with Brink Lindsey about his ideological trajectory — he began as an adherent of schlock philosopher Ayn Rand and has gradually transitioned towards the centre of the political spectrum via libertarianism and Hayek. (Rand regarded Hayek as poisonously, treasonously left wing). Sadly Hayekian libertarianism had embarrassingly little to say about the emerging problems of our time — noticeably cultural, political and environmental degradation. We built the conversation around the title of Brink's Substack, "The Permanent Problem". This was inspired by Keynes's essay "Economic Possibilities for Our Grandchildren", in which Keynes sketches out the problems he expects to emerge by around the early decades of the new century. For by then, as Keynes prophecied, we'll have solved the economic problem — and that leaves us with the permanent problem — how to live agreeably and well. Brink's 2007 book, "The Age of Abundance," was optimistic, speaking of a time when humanity underwent a revolutionary change with the advent of mass affluence. However, Brink admits, the world didn't turn out as he'd hoped. Timestamps 1:27 Introduction and getting our bearings. 8:07 The social and economic challenges we face now. 14:47 Technology's impact on social structures and behaviour. 21:27 The interplay between political and societal changes. 28:07 Widening class divisions and social cohesion. 34:47 The mental health crisis. 41:27 The changing roles of education and employment. 48:07 The rise of identity politics, and its effects on societal norms and values. 54:47 Potential solutions. 1:00:27 Final thoughts, summarizing key points and reflecting on the future outlook. If you prefer video, it's here.

In the wake of my column proposing that central banks should hold open forecasting competitions - and particularly suggesting it for Bernanke's review of the Bank of England's forecasting, Gene Tunny and I discuss the issues in more detail and some of the reactions to the column appearing in the comments section. Kenneth Grahame and Wind in the Willows comes up. And why not? I think you’ll find it pretty interesting. If you'd like to watch the video, it's here. 00:00 Trailer 00:53 Proposal for Economic Forecasting 06:19 Comments & Criticisms 10:05 Modeling & Judgements 13:47 Feedback on Gene's Article 16:12 Museum Visit and Kenneth Graham 17:13 Closing Remarks If you'd like to watch the video version, find it here.