Re: California

["Leigh Harkness" <Leigh@xxxxxxxxxxxxxxxxxxxx>]

Paul

Thanks for your response.  We in Australia have also had our second largest
airline collapse just over a year ago.

What happens to economists when they leave the educational institutions and
enter the policy institutions?  I suspect that they find that to succeed,
they must adopt the values of the institution and leave their education
behind them as if it were some frivolity of youth.

Regards

Leigh




----- Original Message -----
From: <phillp2@xxxxxxxxxxxxxxx>
To: "Leigh Harkness" <Leigh@xxxxxxxxxxxxxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, October 18, 2002 9:39 PM
Subject: Re: California


>
> Leigh,
> The problem is that in theory natural monopolies must either be
> publicly owned with a requirement to average cost price (or
> marginal cost price with a public subsidy), or, if privately owned, be
> publicly regulated to do so (and the regulator must not be subject
> to becoming captive to the private company). (This model and its
> policy implications were developed by Pigou long before Keynes.)
> Since economists are, for the most part, ideolgically (and
> irrationally) opposed to public ownership and/or regulation they are
> forced to either ignore (or deny the existence of) natural monopoly
> or argue for duopolistic (or oligopolistic) competition which, to
> survive, must adopt economically inefficient monopoly type
> prices/practices. We have just gone through this in Canada with
> the bankruptcy of our second largest airline at great loss to the
> workers and to the shareholders as a result of deregulation and
> privatization of the largest airline, Air Canada.  But the economists
> in the competition bureau can't see beyond their ideological
> blinders and are demanding, as a sollution, not re-regulation but --
> would you believe it? -- more competition.
>
> Paul Phillips,
> Economics,
> University of Manitoba
> Send reply to:  "Leigh Harkness"
> <Leigh@xxxxxxxxxxxxxxxxxxxx>
> From:           "Leigh Harkness" <Leigh@xxxxxxxxxxxxxxxxxxxx>
> To:             "Sven R Larson" <slarson@xxxxxxxxxxxx>,
<pkt@xxxxxxxxxxxxxxxx>
> Subject:        Re: California
> Date sent:      Tue, 22 Oct 2002 22:16:31 +1000
>
> > Sven
> >
> > You wrote:
> >
> > > This theory already exists. Every 100-level micro student learns it.
> >
> > My frustration is not so much with the students, but the practicioners.
Its
> > good to hear that students are learning their economic theory.  But how
long
> > before practicing economist put these theories into practice.
> >
> > Ricardo developed the theory of comparative advantage nearly 200 years
ago.
> > Yet today we still have the IMF and World Bank advising countries to
impose
> > policies based upon the theory of absolute advantage.  They tell
countries
> > to cut costs to improve their trade performance.
> >
> > Similarly, Keynes explained how balance of payments problems were caused
by
> > excess demand yet there are economists advising countries that it is a
price
> > or exchange rate problem.
> >
> > And now we have theories that tell us that monopolies can be optimal
> > entities to provide certain services but people claiming to be
economists
> > telling us that we need to create competition in those industries.
> >
> > It is no wonder that in this world of so much economic enlightenment,
> > enlightened economies are amongst the badly performing.
> > Regards
> >
> > Leigh
> >
> >
> >
> >
> >
> >
> >
> >
> >
> >
>
>
>