Subjective Political Economy

With Darcy Allen. Published in New Perspectives in Political Economy (2017), Vol 13, no. 1-2, pp. 19-40.

Abstract: We extend the Institutional Possibility Frontier (IPF) – a theoretical framework depicting the institutional trade-offs between the dual costs of dictatorship and disorder – by incorporating the notion of subjective costs. The costs of institutional choice are not objectively determined or chosen by a society; rather, they are subjective to the political actor that perceives them. Our methodologically individualist approach provides a new, highly adaptable extension of the IPF enabling examination of the political bargaining process between dispersed actors, the bounds and evolution of institutional innovation and discovery, and follower-leader dynamics in long-run institutional changes. Our new Subjective Institutional Possibility Frontier (SIPF) helps to integrate ideas into the economics of political systems, creating the foundations for a more subjective political economy.

Available in PDF here.

What Diplomacy in the Ancient Near East Can Tell Us About Blockchain Technology

Published in Ledger (2017), vol. 2, pp. 55-64.

Abstract: A blockchain is an institutional technology—a protocol—that allows for economic coordination between agents separated by boundaries of possible mistrust. Blockchains are not the only technology in history to have these characteristics. The paper looks at the role of the diplomatic protocol at the very beginning of human civilisation in the ancient near east. These two protocols—diplomatic and blockchain—have significant similarities. They were created to address to similar economic problems using similar mechanisms: a permanent record of past dealings, public and ritualistic verification of transactions, and game-theoretic mechanisms of reciprocity. The development of the diplomatic protocol allowed for the creation of the first international community and facilitated patterns of peaceful trade and exchange. Some questions about a generalised ‘protocol economics’ are drawn.

Available at Ledger

Nudging, calculation, and utopia

With Sinclair Davidson. Published in the Journal of Behavioral Economics for Policy (2017), Vol. 1, special issue, pp. 50-52.

Abstract: In this paper we provide a critique of behavioural economics or nudging as a basis for practical policy making purposes. While behavioural economics operates as a plausible critique of standard neoclassical economics, it suffers from the same methodological errors inherent within that tradition. Just as socialist planners lacked the information (and incentives) to allocate resources across an entire economy and economists lack the information to optimally correct externalities, so too libertarian paternalists lack the information to second guess consumer preferences and opportunity costs.

Available at the Society for the Advancement of Behavioral Economics.

Is science the answer?

With Michael Keane. Published in BJA: British Journal of Anaesthesia, aex334, 4 October 2017

Abstract: Nearly ten years ago, Tobin described the irony that evidence-based medicine (EBM) lacks a sound scientific basis. A sentinel paper concluded that most results of medical research were false, and now the same author, a well-lauded EBM proponent, argues that even if true, most clinical research is not useful and now concedes that EBM has been ‘hijacked’ by ‘vested interests’ including industry and researchers.4 The community expends vast resources on research, yet it has been estimated that there is an 85% ‘waste in the production and reporting of research evidence’ … Should we continue with the same paradigm and expect better results? In this counterpoint, we argue ‘no’.

Available at Oxford Academic

“Stop This Greed”: The Tax-Avoidance Political Campaign in the OECD and Australia

With Sinclair Davidson. Published in Econ Journal Watch (2017) vol. 14, no. 1, pp. 77-102.

Abstract: Corporate tax avoidance has come to be a major political and popular issue. This paper considers the evolution of the corporate tax debate; it scrutinizes the empirical claims and the calls for crackdowns on corporate tax avoidance. It focuses on two jurisdictions, the OECD and Australia, to show how international claims were reproduced in domestic political rhetoric. The paper then considers the economic function of tax competition, and examines the evidence underlying the OECD’s claim that the corporate tax base is being “eroded” by “profit shifting” to lower tax jurisdictions.

Available at Econ Journal Watch

Section 18C, Human Rights, and Media Reform: An Institutional Analysis of the 2011–13 Australian Free Speech Debate

With Sinclair Davidson. Published in Agenda (2016) vol. 23, no. 1, pp. 5-30.

Abstract: The paper examines two Australian freedom-of-speech controversies between 2011 and 2013 – the debate over section 18C of the Racial Discrimination Act, and the debate over the Gillard Government’s print media laws. These controversies featured rhetorical and ideological debate about the limits of free speech and the nature of human rights. The paper applies a ‘subjective political economy’ framework to these debates in order to trace the effect of increased perceived ‘disorder costs’ and ‘dictatorship costs’ of freedom of speech restrictions. The paper concludes that policy change is driven by exogenous changes in perceived institutional costs. In the case of the Gillard Government’s media laws, those costs were borne by the Gillard Government, and one would not expect print media laws to be a major political issue in the absence of a further exogenous shock. In the case of section 18C the revealed dictatorship costs of legislation, which includes the words ‘offend’ and ‘insult’, suggest the section 18C controversy will endure

Available at Agenda

Evidence-based medicine: A predictably flawed paradigm

With Michael Keane. Published in Trends in Anaesthesia and Critical Care (2016) 9, September, pp. 49-52.

Abstract: Is evidence based medicine the most appropriate paradigm for advancing clinical knowledge? There is increasing discussion of how evidence and science guides clinical medicine and the accumulating awareness that individualized medicine inevitably falls within a clinical gray-zone. Here we argue that the basic proposition that an analysis of historical data from controlled trials can objectively and efficiently decipher what treatments are uniformly superior is fundamentally flawed. We also argue in particular that in such a complex system as acute medicine it is predictable that randomised control trials will frequently lack the fidelity to give definitive or even useful answers, especially around the margin of progress.

Available at ScienceDirect or Academia (accepted manuscript)

The Campbell Committee and the origins of ‘deregulation’ in Australia

Published in Australian Journal of Political Science (2016) vol. 51, no. 4, pp. 711-726.

Abstract: The 1981 Australian Financial System Inquiry, known as the Campbell Committee, is widely seen as the start of the reform movement of the 1980s and 1990s. Accounts of its origins have been dominated by a debate about which policy actor can take credit. This paper utilises cabinet and Reserve Bank archives to reassess the origins of the Campbell Committee. The inquiry had its origins in an earlier attempt by the Whitlam government to take federal control of the regulation for non-bank financial institutions and the building society crisis of the mid-1970s. In its response to these political and economic challenges we can identify the moment in which the Fraser cabinet turned towards market-based reform. The political decisions made in the context of crisis set the path for regulatory change in subsequent decades, particularly in the area of prudential regulation, where we have seen regulatory consolidation and expansion rather than ‘deregulation’.

Available at Taylor & Francis Online or Academia (accepted manuscript)

The Curtin–Chifley Origins of the Australian Bank Deposit Guarantee

Published in Agenda (2015) vol. 22, no. 1, pp. 21-43

Abstract: In 2008, the Australian government introduced a guarantee of bank deposits. However, in 1945 the Curtin–Chifley government had already introduced what it believed was an explicit bank deposit guarantee. Using archival material, this paper shows how it was understood to be a guarantee by the cabinet, Labor parliamentarians, and the Commonwealth Bank. The guarantee was an important yet almost entirely forgotten part of the Curtin–Chifley government’s social reform program. This paper uncovers the origins of the perception of a deposit guarantee in this forgotten 1945 debate, the attempts by policymakers and the Commonwealth Bank to roll back those perceptions in subsequent decades, and the Rudd government’s reversion to an explicit guarantee scheme in 2008.

Available at Agenda

Classical Liberalism in Australian Economics

Published in Econ Journal Watch (2015) vol. 12, no. 2, pp. 192-220.

Abstract: Classical liberalism, the tradition of free markets and individual liberty, has an outsider status in the Australian economics profession. This paper surveys the origin of Australian classical liberal economics in the nineteenth century, its sharp decline in the first half of the twentieth century, and its revival and growth in recent decades. Despite a period of successful market-oriented economic reform in the 1980s and 1990s, surveys suggest that classical liberalism is a minority viewpoint among Australian economists. The classical liberal tradition is sustained only by a small number of institutions and individuals. To the extent that it is influential, it is influential thanks to a political culture that prioritises public engagement. Classical liberal economists have a high degree of participation in political and economic debate outside the academy.

Available at Econ Journal Watch.