Shadow Minister:

Part of the problem we face today is the assumption in neo-liberal and classical liberal economic discourse that only these positions comprise true "economic science" to the exclusion of all other perspectives. And having established this as the "common sense" of the era, to label all others 'ignorant' in order to exclude further debate, and also to exclude an approach to economics based on values.

You argue there's no proof of the banks colluding; and yet both the ALP and the Liberals supported credit unions on the basis of countering just such tendencies. (specifically, price signalling by the major banks) Because it cannot be proven categorically (the banks being careful) does not mean it does not happen.

For decades after WWI the mixed economy was "common sense". It marked the policies of Menzies, Holt, Gorton, Fraser and others. Were all the conservative PMs simply 'economically ignorant'?

And you do not prove at all that a semi-corporatised public bank could not compete, while at the same time subsidising services to the poor, to regional and remote Australia - on the basis of need. You simply *assert* that such an enterprise could not compete, falling back - again - upon the assumption you have the 'upper hand' as your ideology comprises 'the common sense of the age.'

Your comments re: monopolies make sense as applied to private markets; But again I argue that natural public monopolies do not have the same incentive to abuse their market power. And product differentiation does matter when it come to the energy market; Because there is little basis to competition, and yet consumers must pay for profit margins and duplicated administration.

This can be perceived without being an 'expert'.

My god Tristan, trying to paint economics as a neo liberal conspiracy and thus can be substituted for Values, sounds a bit desperate.

The reason that Economics is called a science is that it attempts to model economic behaviour on established principles and mathematical models, and as with any other science improves as better methods help to make it more accurate. It attempts to determine that if one does X then Y will occur within certain margins of error. It has no values, morals or prejudices. It is a science. What values would you like to substitute for physics perhaps?

The "common sense of the age" is based on the difference between the primitive economics of the early 20th century compared to today. The fact that the modelling is almost always correct would tend to indicate that the models are robust. Societies basing their economies on old theories lost competitiveness and standard of living.

As for the banks, that the market share of the credit unions fell considerably would indicate that the banks offer better value for money, and are competing well.

Likewise the overwhelming litany of thriving companies that were nationalised and then needed to be propped up by the taxpayer, and those denationalised that thrived compared to the almost non existent examples of the opposite is the reason for the common "sense" you decry.

Public companies should be able to compete, unfortunately the overwhelming preponderance of evidence is that they don't.

I am getting the idea that you have no concept of the meaning of natural monopoly. Perhaps you could give a few examples and why they meet the criteria. The reality is that they are few and far between.

The energy sector is actually extremely competitive, with the producers bidding continuously for supply and buyers bidding for consumption. Some of the most successful examples of denationalised companies exist in this sector.

Shadow Minister; Do you think it's a coincidence that electricity prices are set to go up 18% in NSW after partial privatisation?

Natural monopolies involve: economies of scale, and where there is greater overall efficiency with concentrated ownerhship; and it also refers to instances where the costs of investment in a competitive context are prohibitive. We could not, for instance, reasonably have two NBNs. To pass those cost structure unnecessarily on to consumers would be unfair and unwise.

Credit unions have failed to compete basically because they haven't tried. They haven't marketed themselves as such. But the example of Rabobank - based in the Netherlands - shows the co-operativist model can work VERY well.

The Mondragon co-operatives in Spain show such a model can succeed on a broader basis as well.

Mathematical economic models meanwhile assume certain givens about human behaviour. Sometimes this might apprximate reality; but at other times individual consumers are not perfect utility maximisers with perfect access to information.

Assumptions of modern economics also often fail to factor in quality of life issues and non-market 'social goods' - eg: social capital and social relationships including the worth of domestic labour, the influence of the natural environment, free time etc. Assumptions also include the desirability of infinite growth ('more' is always better).

Even where the mathemetical models hit the mar their assumptions as to what is desirable can be questioned.

I'm not saying there's one massive 'neo-liberal' conspiracy, hidden from view. But the neo-liberal ideology has provided a cover for and legitimisation of the increased rate of exploitation, attacks upon the welfare state, attacks upon labour - that have accompanied efforts to increase profitability since the 1970s.

Phenomena such as the Oil Shocks meant changes to underlying cost structures were unavoidable. A response was necessary. But our manner of response has hurt the most vulernable, undermined our liberties and our democracy. And relying on incentives for the wealthy to invest - rather than greater emphasis on collective capital formation - has worsened monopolism and concetration of economic ownership.

http://www.theaustralian.com.au/national-affairs/green-power-forcing-prices-up/story-fn59niix-1226039384491

The above is largely responsible for the power increases, federal renewable energy targets.

If the NBN is a natural monopoly, why does it need propping up by legislation to prevent others from building parallel networks, and legislation to prevent scrutiny from the ACCC? Why is the proposed base (25GB at 12Mb/s) price in 5 or so years more than I am paying presently for a similar speed with 200GB? The reason the NBN needs to be enforced is because it fibre to households is not economically viable without enforcing participation by everyone, so no it is nowhere near natural.

Rabobank does well in a niche market, and the Mondragon cooperatives sound like the kibbutzim which is great as a voluntary system.

Economics does not try or need to model individuals, for the same reason that the government doesn't try individual legislation. As for the assumption of infinite growth, it is certainly a phrase I never heard of in 4 years of economics. That people continually strive to improve their lot is given. In 2nd year economics, the competition for labour hours in quality of life issues was dealt with, and the requirement to provide more than simply cash as an incentive.

The welfare state collapsed under its own inefficiency. The standard of life of the lowest paid has increased more through liberal economics in the last couple of decades than it ever did under socialism.

Shadow Minister,

You seem to have a real handle on both the political debate and the economics relating to this proposed Carbon Tax. Can you do me, and methinks a great many others, a great favour by giving us your thoughts on the proposed tax (being, on what we have been allowed to know of the proposition so far, and perhaps on what else it may entail), and on the alternatives - such as government grants/investment in sustainable energy development.

I don't like Garnaut's argument, and don't believe he has really looked at alternatives - not since he was originally commissioned to produce a report to support Rudd's CPRS. Also, I don't think he's nearly as smart as he thinks he is.

On TV recently I saw a piece showing Ms Gillard visiting an Oz solar plant, supposedly one of the biggest (factual or proposed) in the world, and heard Gillard say this was an example of private industry pressing forward with investment in alternatives BECAUSE OF the government's introduced Green Energy target. However, I also heard mention of the project being funded by a government grant. What was not mentioned was any ratio of private vs government investment in this project. I think Ms G was doing her usual thing and tailoring her statements to political interest, rather than the naked TRUTH!

Given the growing opposition to this tax, by industry, the workers and the unions - over potential job losses, industry moving offshore, and far greater cost of living increases than mooted (as well as the inbuilt complexity and uncertainty of the whole blessed thing) - Could you PLEASE give us your thoughts, on the economics and on alternatives.

Thanks also for the link to The Australian. You've already made my day.
I really hope you check back on this thread. Holding my breath.

Shadow Minister,

A Post Script: I'm a bit tired of the political debate which is clouding discussion on the REAL ISSUE - which is the carbon tax. I'm also tired of the skeptics and naysayers - BECAUSE I think what really matters is the efficacy and sincerity of this proposed tax. It is TIME we focused on what this tax may, or may not do, to OZ, to all of us. It is time we focused on the FACTS relating to the tax itself, and on whether it is really a responsible and effective mechanism.

I can't help feeling Ms G is only pushing this tax as a tax-grab on the one hand (because of as yet undeclared huge budget black holes, perhaps), and on the other hand as a last ditch attempt to lever Labor towards a slim hope of remaining in power after the next election. Neither of these potential motivations can justify this tax imposition (as an alternative to coming clean with the Oz public), nor do I believe that this tax has anything whatsoever to do with addressing climate change, and nor do I really believe that it is the most effective way for Oz to build a sustainable energy future.

Sorry for getting a bit ahead of myself. I am really interested in YOUR VIEWS on this matter, and should not be demonstrating a closed mind by railing on. My apologies.

Apologies also to Tristan for not being the least bit interested in Liberal-Socialism or Easter Bunnies. My head is sore enough already.

Also sorry to the climate skeptics who keep saying "convince me, convince me; give me the proof!" They unfortunately miss the point altogether, being that we are addressing a new tax scheme, not global warming - whether it exists or not is entirely irrelevant to the discussion. (As really are the underlying political motivations.)