Woodside Revisited
Ian Harper on yet another outbreak of capital xenophobia:
As in the case of the Shell/Woodside deal, the Treasurer receives no guidance from the law as to what he should consider when weighing the national interest. The Foreign Investment Review Board will offer advice based on its interpretation of the act but the Treasurer is free to decide for himself what constitutes the national interest and whether XStrata’s ownership of WMC would compromise it.
Harper explores the contradictory logic employed in both episodes. But the real issue here is not the merits or demerits of foreign ownership in a given case. It is that the ownership and control of equity capital in Australia is subject to sweeping ministerial discretion, not to mention the bureaucratic discretion exercised by the ACCC. The rule of law is almost entirely absent, which encourages rent-seeking behaviour and the misallocation of equity capital.
UPDATE: The Treasurer is being praised for making the ‘right’ decision by not blocking the XStrata bid. Steve Lewis says it is ‘a decision that will enhance Australia’s reputation as a haven for foreign investment,’ and that ‘…the Howard Government has sent another powerful signal that Australia is open for business.’
In fact, the decision sends a signal that any attempt to upset the status quo in relation to the ownership and control of Australian equity capital will have to run the gauntlet of the political process, allowing special interests to seek outcomes they could not otherwise secure in the marketplace. Rather than praising the outcome, we should be damning the process, which has Australia running the fifth most restrictive FDI regime in the OECD.
posted on 11 February 2005 by skirchner in Economics
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Affiliate News
Affiliate relationships are an important source of support for Institutional Economics, so we will occasionally highlight special offers from affiliate sites. Elliott Wave International is currently offering some of its services for free for a limited time.
To anticipate the inevitable criticism of technical analysis, I think the efficient markets hypothesis and technical analysis can be reconciled, once we allow for bounded rationality and transaction and information costs. In this context, the existence of historical dependencies in financial market prices and other market anomalies become readily explicable. Far from being an illustration of the ‘irrationality’ of markets, such dependencies are an illustration of the essential role markets play as discovery processes in a world that is far from frictionless.
posted on 11 February 2005 by skirchner in Economics/Financial Markets
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The New Institutional Economics
The new site is up and running. Please email if you experience any difficulties using the address shown on the Contact page, or in comments.
As mentioned previously, comments are only open to registered members (click on ‘Register’ at the top right), but once registered, you need never login in again and you can use your registration to obtain email notification of other comments (email notification of posts in general will unfortunately have to await the next iteration). New members will need to be approved. I will not generally approve unidentifiable persons, especially those with free email accounts. You are welcome to use a screen name to conceal your identity when commenting and can suppress your email address.
Posts from the old site have been turned into pdf files and posted below and in the archives. This was the quickest way to bring across the old content. There is still some content to be brought across.
Those who want to read the site via an aggregator can now do so with the various feeds provided at the bottom of the left-hand sidebar. Note that it may take a while for some sites and search engines to index the new site configuration. Again, if you experience any problems, let me know.
As readers will be aware, there has been enormous growth in economics-related blogging in the last year or so. The days when you could count all the economics blogs on one hand have gone and keeping up with all these sites would be a major undertaking. Fortunately, Professor Bill Parke has taken on the task of aggregating economics blogs at his Economics Roundtable. Since Bill has done all the work, I have linked to his site, rather than attempting to maintain a comprehensive blog roll of related sites.
I have also put up my Technorati Link Cosmos, which is my rather cheap way of returning the favour if you have taken the trouble to link to me. Readers should go visit these sites, since they are obviously run by people of taste and discernment! I have linked to a few other sites of interest, but otherwise intend on maintaining a parsimonious set of links. My failure to link to your site is not necessarily a comment on its worthiness, just a reflection of the burden blog roll maintenance.
posted on 08 February 2005 by skirchner in Misc
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Changes at Institutional Economics
The web site is undergoing a few changes, which should come on-line in the next week or so. This also involves a host migration, so there may be some minor discontinuity in service. The new site will add a number of features readers have been asking for, including permalinks, RSS syndication and comments, among others.
Readers will be familiar with the problems associated with open comments facilities. As with all problems associated with the public sphere, the solution is to turn public space into private space (privatisation is the solution to everything!) Those wanting to post comments will need to register as members of the site via a double opt-in email procedure. While I appreciate that yet another registration is the last thing you all need, it has some advantages, including allowing you to set your own user preferences for things such as email notification of posts. Members are welcome to use screen names to preserve their anonymity when commenting and can hide their email address, but I will need to be convinced that you are legit before approving your registration. Since I know many of you personally (or at least know of you), this should hopefully not be a major problem. If your attempt at registration gets bounced, just send me a note introducing yourself. Rest assured your email address will not be made available to third parties.
I will make a further announcement when the new site is on-line.
posted on 03 February 2005 by skirchner in Misc
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Capitalist Internationale?
The WSJ’s Bret Stevens reports from the WEF meeting in Davos:
At an Internet café late Thursday night, I am set upon by two Swiss undergrads who earlier in the day had participated in an antiglobalization rally. How, they would like to know, do I justify my presence at this malign gathering of the Capitalist Internationale? O that it were the Capitalist Internationale, I reply. I explain that this year’s Davos is purpose-built to satisfy all of their grievances. They think the Forum’s concern for the poor and the environment is a meaningless gesture at best and probably a devious trick. I think: “The capitalists will sell the rope from which they will hang.”
(Thanks to John Rogers for the pointer).
posted on 02 February 2005 by skirchner in Economics
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Australia Day, 2005
After 217 years, this outpost of the Anglosphere is probably in better shape than it has ever been. The economy has been growing at one of the fastest average rates in the OECD over the last decade, the unemployment rate is at near 30 year lows, real investment as a share of GDP is at the highest levels in nearly half a century and net Commonwealth public sector debt has been all but eliminated. Consumption growth and a widening current account deficit, far from being a sign of weakness, indicate confidence in Australia’s future growth prospects. Perhaps less widely known is the fact that Australia has become a net exporter of direct investment capital in recent years. At least some of Australia’s current account deficit is thus funding the globalisation of Australian business.
Against this backdrop, the Prime Minister’s approval rating is at its highest levels ever. This is not unrelated to the fact that the federal opposition Labor Party is in disarray following its crushing election defeat last year. The abandonment of foreign and defence policy bipartisanship under former Labor leaders Crean and Latham is at least partly responsible for this outcome.
Having said all that, Australia still has much unrealised potential. With the anti-globalisation bloc in the Senate having been marginalised following the last federal election, there is little excuse for not completing the task of modernisation and integration with the global economy begun in the early 1980s. 2005 is likely to go down in history as the year in which this historic opportunity to finally bury isolationism, protectionism and paternalism was either seized or squandered.
posted on 26 January 2005 by skirchner in Economics
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Archive June 2004 to January 2005
ArchiveJune-Dec2004.PDF
posted on 25 January 2005 by skirchner in
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Archive May 2004
ArchiveMay2004.PDF
posted on 03 May 2004 by skirchner in Misc
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Archive April 2004
ArchiveApr2004.PDF
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Archive April 2004
ArchiveApr2004.PDF
posted on 03 March 2004 by skirchner in Misc
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Archive March 2004
ArchiveMar2004.PDF
posted on 03 March 2004 by skirchner in Misc
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Archive February 2004
ArchiveFeb2004.PDF
posted on 03 February 2004 by skirchner in Misc
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Archive January 2004
ArchiveJan2004.PDF
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Archive December 2003
ArchiveDec2003.PDF
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Archive November 2003
ArchiveNov2003.PDF
posted on 03 November 2003 by skirchner in Misc
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