Economics 101 is that a monopoly is fundamentally any enterprise with substantial ‘market power’ – that is, the capacity to set prices and cut back on quantity with little, if any, response from customers. While most monopolies arise through natural monopoly conditions (for example, essential services including water and electricity distribution), others simply develop when circumstances facilitate their entrenched establishment. Such conditions include high barriers to entry for potential competitors, legislative encouragement and context-specific advancement.
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Do we get the politics that we deserve?
The Australian political scene is widely considered as having been particularly tumultuous over the
past few years by virtually all political commentators.
A voice of reason
Despite the ministerial portfolio of communications not outwardly seeming closely related to economics, in the next few years it is shaping up to possibly be the most economically orientated area outside the treasury portfolio. Key upcoming policy decisions pertaining to broadband infrastructure, as well as likely deregulation of the telecommunications and media industries, are at the forefront.
When should you upgrade your phone?
The annual release by Apple of yet another ‘must-have’ iPhone – or in this case possibly two depending on your definition of ‘new’ – is an occasion that conduces many to reflect on whether it’s time they upgraded their mobile device.
A ‘rational’ guide to voting at an election
This article forms part of an ongoing series looking at economic issues as Australia heads into the Federal Election. More coverage can be found on the Election 2013 page of ESSA’s website.
The application of economic principles to election voting is a relatively simple process. A completely rational individual would simply vote for the political party that would best enhance their personal utility. If everyone did this, in theory at least, the party whose vision and policies best represented the country would win at an election.
An overview of the 2013 Australian federal election campaign
This article forms part of an ongoing series looking at economic issues as Australia heads into the Federal Election. More coverage can be found on the Election 2013 page of ESSA’s website.
The primary objective of a major party leader during an election campaign is to gain any advantage possible over one’s opponent. The incumbent ostensibly has a slight advantage in that they get to choose the election date.
Should you read this?
Good choice! What caused you to click through though? Was it a conscious decision? Also, if you think it was an intentionally conceived action, how do you actually know?
While you may not have spent several minutes comprehensively analysing the costs and benefits of reading this article in order to make an entirely rational choice, there was, if only subliminally, some form of decision-making process behind your decision.
The economics behind the politics of the federal budget
The Federal Budget is fundamentally – perhaps with a bit of accounting incorporated – an economic conception, right? Wrong. While in an ideal world the political implications of fiscal budgetary processes would be disregarded, the reality is that politics ultimately determines the economics of all government budgets – albeit to various extents. Perhaps paradoxically, however, economics still trumps out in the end. How so? Because the use of economics is often the best way to explain the politics behind the economics.
While last year the use of accounting manipulations was the most demonstrable element of the Federal Budget assailable for extensive analysis, this year there are myriad of components. These will now be explored – largely within the context of the economic concept of private interest theory. This theory is essentially that politicians, including Wayne Swan when preparing the budget, will make rational choices based on their own objectives when in a decision-making position. The primary objective pertaining to the budget for Swan, and by extension the Gillard Government, would ostensibly have been to deliver a well-received budget that will maximise their chances of being re-elected (or at least minimise the number of seats they lose) on September 14.
Has inflation targeting become a sporting event?
At the time of writing, available odds for this Tuesday’s RBA meeting are $1.40 for rates to remain unchanged, $2.20 for a decrease of up to 25 basis points and then a respectable $19 for a cut between 25 and 50 basis points. Any increase in the cash rate pays $34 but putting money on that would surely be the equivalent of backing a horse with a broken leg – unless it is called Black Caviar perhaps.
Will the Gonski reforms mean higher teacher salaries?
Great teachers inspire their students profoundly and provide a foundation from which learning is optimally facilitated. They often do not just teach the required material; rather, they show students the process of learning and thus enable them to achieve academically without as much direct teacher instruction and support. Perhaps the greatest problem facing Australia’s education system is that we simply do not have enough of these great teachers.
Superannuation: an incentive to save or upper-class welfare?
Superannuation reform – how boring, right?
I suspect you aren’t aware of this fundamental loophole though. Consider this. Currently, the Australian superannuation system allows an individual who has (a) reached 60 years of age and (b) decided to permanently retire to simply withdraw all of their funds from super – completely tax free – and then to splurge it all on whatever they like. It’s important to note that this amount could have been just a few thousand dollars or, alternatively, many millions and that despite the lump sum withdrawal ‘belonging’ to the individual, a large part of it would have been brought about through the subsidised nature of Australia’s superannuation framework. Here’s the real kicker though: having enjoyed a period of superfluous spending – potentially with millions of dollars – that same individual, provided that they were now aged 67 or older, would then be eligible to receive a full aged pension (and its many associated ancillary benefits) courtesy of the federal government for the rest of their life as long as they didn’t earn more than about $3,952 in a year (from interest on their now non-existent savings!) or have greater than $192,500 in assets, excluding their home. Does that sound reasonable to you?
A ‘rational’ analysis of the ALP leadership debacle
What was Kevin Rudd thinking? Seriously. Why would anyone with an ostensibly insatiable desire for reclaiming the prime ministership let the precarious ambience of uncertainty develop to the extent that it did only to then decline an opportunity to challenge? Well, it turns out that Rudd was simply making the ‘optimal’ strategic choice given the circumstances he found himself in.
The leadership saga, for the most part, pertained to two closely related variables: firstly, whether Rudd would challenge Gillard by standing for the leadership in a caucus vote and, secondly, whether a majority of the 100 members eligible to vote in the Labor caucus would back Rudd in a ballot. The relationship between these is that, as was later confirmed, Rudd would only be comfortable challenging if he had a caucus majority and, additionally, the caucus members would only risk switching allegiances if they thought that Rudd would actually run for the leadership (due to the repercussions of supporting the loser in a ballot).
However, despite these two variables being inextricably linked, it’s important to note that other sources of influence further complicated the respective decision-making processes for both Rudd and caucus members.