Circular economy chat with Craig Lawrence – my latest podcast episode

I recorded a great interview with my colleague Craig Lawrence of Lytton Advisory earlier this week on the concept of a Circular Economy, which is creeping into economic and environmental policy discussions and into government publications. For instance, the Circular Economy is referenced in the Queensland Government’s waste strategy , which includes a waste levy to divert waste from dumps and various measures to promote recycling. According to the Queensland’s Waste Strategy website, the waste strategy “focuses on transitioning to the principles of a circular economy to help retain the value of material in the economy for as long as possible.” But what on earth is a Circular Economy, and does it make any sense?

I thought Craig would be a good person to chat with regarding the merits of the Circular Economy concept, as Craig does a lot of consulting work on the economics of waste and recycling, and he’s a former manager of teams of economists in Queensland’s State Development department. Craig thinks that there is some merit in the Circular Economy concept, but we need to apply hard-headed economic thinking when it comes to the specifics. This is a great point from Craig, because Australia’s Productivity Commission has repeatedly questioned the merits of a range of environmental policies such as plastic bag bans and measures to promote recycling (e.g. check out Is banning plastic bags the best option to tackle litter and reduce waste? and Container deposit scheme very likely a costly bad idea).

Toward the end of the conversation, Craig notes:

I think that there’s an opportunity here [with the Circular Economy]. The linear concept, I don’t think is sustainable. And so we need to do something different. But I don’t think that there’s a blanket solution or an easy panacea. And I still think the economist in me wants to analyse and collect data, and look at individual markets and look at specific opportunities and weigh them up…I don’t want to be running or pushing a green solution for the sake of a green solution. I want to know that it’s something that is actually workable, viable, something that is going to increase economic utility,  consumption, and can also engage with business properly as well.

Nicely said, Craig. I’ve now published my conversation with Craig as Episode 70 of my Economics Explored podcast. So if you’d like an overview of the Circular Economy concept and a hard-headed assessment of it from an economic perspective, check it out and let us know what you think. Finally, thanks to Craig for the interview and for his sharing of it on his Lytton Advisory website.

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Qld CHO emergency powers extension bill submission

Yesterday 5pm was the deadline for submissions to the Queensland Parliamentary Inquiry into the bill to extend the COVID-19 public health emergency and the Chief Health Officer’s emergency powers until 30 September. Queensland’s Parliament has only one chamber and the Government has a large majority in it, so there’s no doubt the bill will pass. So making a submission to it was probably a futile exercise, but I thought I’d prepare one to help clarify my thoughts on our COVID-19 response.

I know the pre-emptive Greater Brisbane lockdown was popular with the majority of Queenslanders, but I’m worried our CHO is too quick to resort to the authoritarian lockdown method, which should only be a last resort when your contact tracing and testing methods have failed to control the spread and your public health system is at risk of being over-whelmed. With the concerning news coming out of the Grand Chancellor at Spring Hill, I expect the CHO will be considering another Greater Brisbane lockdown, so I’ll be tuning in to every Queensland Government COVID media conference for the next week or so.

The text of my submission to the Queensland Parliament’s Health and Environment Committee is reproduced below.

Queensland Parliament House, corner of George and Alice Streets, Brisbane


Thank you for the opportunity to provide this submission to the Committee regarding the Public Health and Other Legislation (Extension of Expiring Provisions) Amendment Bill 2020. I am a former public servant, at the national and state levels, and a professional economist with a Brisbane-based consulting business, and I believe I can make a useful contribution to this inquiry regarding the Queensland Government’s decision-making process on COVID-19 measures. My contribution is structured around five propositions.

1. Queensland is relying heavily on one unelected official, but none of us is infallible.

I do not support the Bill as currently drafted, and I believe the Queensland Government should rethink its current COVID-19 decision making process, which places too much reliance on an unelected official, the Chief Health Officer (CHO).[i] It has been disappointing to see the Premier declare she has not made important decisions affecting the lives of millions of Queenslanders, but has delegated that decision making to the CHO, who, again, is unelected and not fully accountable to the public.

2. The Premier and her Cabinet should be the ultimate decision makers and they should seek outside advice and second opinions on controversial measures such as the Brisbane lockdown.

The Greater Brisbane lockdown was controversial, and the Premier should have sought out external views before agreeing to it. This decision appears to have been made with no appreciation of the importance of people’s civil liberties. It was done due to an excessive application of the Precautionary Principle. But as the Obama administration’s regulation czar Cass Sunstein has written in his book The Cost-Benefit Revolution (on p. 173):

…there is a serious, even devastating problem with the Precautionary Principle, at least in its crudest forms: risks are on all sides of social situations and efforts to reduce risks can themselves create risks.

What about the risks posed by lockdowns to mental health and to victims of domestic violence? How are these risks weighed up in decision making?

The CHO’s call on the Greater Brisbane lockdown may not have been the correct one. The Committee is no doubt aware that ANU Professor Peter Collignon criticised the lockdown on 2GB radio, as reported by the Courier-Mail on Monday 11 January 2021:

A leading Australian infectious disease expert has criticised Greater Brisbane’s snap three-day-lockdown, saying it was an “unreasonable” over-reaction that “won’t solve the problem”.

We also know that, as advised by the World Health Organization (WHO), lockdowns should be a last resort measure, when your public health system is at risk of being over‑whelmed, given the fact lockdowns bring their own economic and social costs.

3. Public policy decision making depends on value judgments, and those value judgments are best made by elected Ministers, accountable to the public via the Parliament and at the ballot box.

In his 2020 Keeble Lecture to the Planning Institute of Australia (Qld) on 5 November 2020, former Queensland Government Minister Ian Walker made the timely and correct point that:

No expert advice is free of value based factors. There is no “neutral” advice. Don’t ditch your values—but acknowledge that they are there and own them where appropriate.

Even if they are not always explicit about it, economists tend to adopt the same normative premise, that articulated by Jeremy Bentham, that our governments should act to achieve the greatest good or happiness for the greatest number. I would like to see the CHO explain the normative or ethical premises that take her from her ‘is’ statements to ‘ought’ statements. How does she resolve David Hume’s is-ought problem? This has not always been clear. Some decisions of the CHO’s appear to be based on a very strong Precautionary Principle (e.g. the Greater Brisbane lockdown), but others appear more Benthamite or utilitarian (e.g. decisions around movie stars and footballers). It is legitimate to question what value judgments the CHO is making and whether she is being consistent in her decision making. 

4. While it is right for governments to protect public health, too little regard is being paid to civil liberties, and we should be very wary of making ordinary behaviour illegal.

Last weekend, 2 million plus residents of Greater Brisbane were subjected to a lockdown, even though at the time there was only one reported case of someone with the mutant COVID-19 virus.

Supporters of the lockdown could argue it was necessary to control the spread of the mutant COVID‑19 virus. Possibly, but necessity could be used to justify highly undesirable interventions in the future. In 1783, in the House of Commons, the British statesman William Pitt the Younger said:

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.

We should have a strong preference for governments simply recommending particular actions over requiring particular actions be performed with the threat of fines or charges if they are not.

5. None of this is to say that the economy should come before public health, but we need to recognise that some COVID-19 measures are highly costly and undesirable and need to be applied with caution.

Obviously, we need to control the spread of COVID-19 which is undeniably a serious disease. On 13 July 2020, I told the Queensland Parliamentary Inquiry into the Government’s economic response to COVID‑19:

Austan Goolsbee, who was chair of President Obama’s Council of Economic Advisers, said that, in a time of pandemic, the best thing you can do for the economy has nothing to do with the economy.

The public health response is critical to ensuring the economy can safely re-open and can return to some semblance of normality as soon as possible. On the public health response, the government deserves credit.

It may be that in future years, after we’ve had a detailed look at evidence from across the world, we learn a different public health response may have had less of a short-run economic cost. But, at the moment, we’re not 100 percent sure of the optimal public health response, and decision makers need to exercise their judgement. 

I stand by that statement, although I have disagreed with some state government decisions since then, particularly regarding some interstate border restrictions and the Greater Brisbane lockdown. I think we can apply a more rational approach to decision making in the future, one which is not solely reliant on the CHO’s advice and one in which the Premier or her Cabinet makes the decisions.

I understand the CHO is doing an exceedingly difficult job under incredible pressure, and she has generally done well. I do not mean to be too critical. I am expressing these views because I think we can do even better in our response, and prevent unnecessary job losses and business failures.

Thank you again for the opportunity to make this submission. I would be happy to discuss my views with you or Committee members at a mutually convenient time in the future.

[i] I recognise that the Premier or the Health Minister cannot be expected to make every decision relevant to public health, so the relevant provision should be drafted in a way that allows the delegation of powers to officials to direct certain individuals (infected with COVID-19 or suspected of being infected) to get tested, isolate, or go into quarantine. But any decisions pertaining to whole populations in a geographical area should only be made by Ministers, in my view.

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Qld Premier right to call for review of national hotel quarantine arrangements

The Grand Chancellor, around lunchtime on 13 January 2021, with ambulances lined up, ready to transfer quarantined guests to other hotels, and with police officers keeping watch.

The Grand Chancellor Hotel in Spring Hill is around the corner and up the hill, around a 300m walk, from my office at the Johnson Hotel on Boundary St. I never imagined it would end up being the place from which the UK mutant COVID-19 strain would spread into the Queensland community. Hopefully the community transmission remains limited to the cleaner and her partner (not counting the quarantined guests infected in the hotel) and we don’t end up in another lockdown. The Premier has rightly suggested we need to review quarantine arrangements for international travellers to Australia (check out this Perth Now report). This is a point that was well made in a comment on my last Saturday post by QEW reader Paul, who made it in the context of a critique of my views on the Greater Brisbane lockdown, and I’ve hoisted it from comments to reproduce it below:

The current issue is not whether lock-downs are necessary (they are) but how the more transmissible strain of the virus got into Australia. This is clearly a failure of quarantine at international borders. Hotel quarantine in major cities is an extremely foolish idea. You can’t contain a highly transmissible virus in a commercial hotel. Of course some people will break quarantine, of course some people will make mistakes, of course some people are stupid and ignorant – that’s just the human condition and quarantine procedures must take this into account.

All incoming overseas travellers should quarantine for 2-3 weeks in purpose built facilities in isolated areas before being released into the Australian population. For example demountables built near the RAAF northern bases (RAAF Scherger or RAAF Learmonth). Remote and isolated, nothing but kangaroos and crocodiles. The airstrips are designed for fighter jets and transports and can take overseas commercial planes. Plenty of locally built air conditioned demountables built for the mining industry. A mere $100M (petty cash in the Federal Budget) would be enough to bring Australians home and restart the immigration program. These demountables could be used by defence subsequently in northern exercises.

Quarantine in remote locations is not a new idea. It was standard practice near ports in the nineteenth century.

Quarantine in remote locations is obvious to any one dealing with human or agricultural animal/plant quarantine. We can keep agricultural viruses such as ‘foot and mouth’ disease in cattle out. Hard to think of any reason it is not done with Covid 19 other than wanting to help the economy of inner city hotels and perhaps of party donors.

While Paul and I aren’t fully in agreement on lockdowns, I think he’s made some excellent points about hotel quarantine and his idea is well worth consideration by National Cabinet. Hopefully, they’re already considering something along these lines.

The ambulances were lined up outside the Grand Chancellor for much of the day.
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Need to improve Qld’s COVID decision making after unreasonable Greater Brisbane lockdown

The Queensland Government needs to improve its COVID decision making process after the absurd three-day Greater Brisbane lockdown, which thankfully wasn’t extended beyond 6pm last night. ANU Professor Peter Collignon yesterday criticised the lockdown on 2GB radio, as reported by the Courier-Mail:

A leading Australian infectious disease expert has criticised Greater Brisbane’s snap three-day-lockdown, saying it was an “unreasonable” over-reaction that “won’t solve the problem”.

Very true. It’s one of the worst decisions from the state government in a long time. The decision was made by Queensland’s (unelected) Chief Health Officer Dr Jeanette Young whose advice is always followed by our Premier, based on what she has said in various press conferences. The Queensland Parliament is currently considering whether to extend the CHO’s extraordinary emergency powers out to 30 September. It will, of course, and there’s little point in making a submission to the Parliamentary Inquiry, but I would suggest we urgently need to improve our COVID decision making process in Queensland. Greater use should be made of external experts such as Professor Collignon and others. With the Grand Chancellor cleaner’s partner also infected with COVID, there is the definite possibility the Queensland Government could tighten restrictions if infections increase, and we want to make sure any decisions are well made and subject to rigorous scrutiny.

I asked my old friend and former Treasury colleague Joe Branigan of Tulipwood Economics, who co-authored Getting Australia Safely Back to Work with Henry Ergas, what he thought about COVID decision making in Queensland and here’s what he replied:

The Premier (and Cabinet) must be the ultimate decision-maker. Jeanette Young’s objective is too narrow, so there’s no balance to the decision. The 3-day lockdown has been a total farce – why not request voluntary mask carrying in crowded places, with no lockdown? Silliness.

Absolutely. Thanks to Joe for letting me reproduce his reply.  

Finally, I should note that, overall, the Queensland Government and other governments across Australia have largely done a good job in managing COVID, except for the hotel quarantine fiasco in Victoria and some harsh interstate border restrictions. Australia is clearly in a better position than most other countries. But we can still do better. Improving the decision making process in Queensland would hopefully prevent bad decisions such as the three-day Greater Brisbane lockdown in the future.

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Ten years since the 2011 floods

Ten years ago today, a swelling Brisbane River flooded the city, and made us question whether we really needed that $9 billion of climate-resilient water infrastructure the state government had commissioned in the middle of the drought, when there were fears rainfall would be permanently lower due to climate change.* The Queensland floods, which caused tragic loss of life and billions of dollars of property damage, were Premier Anna Bligh’s finest moment, as she rallied Queenslanders in that challenging time, and we saw thousands of Queenslanders help out in the clean up, the so-called Mud Army.

Ten years ago today, I posted the following images on QEW, which I snapped around Toowong and Auchenflower on Tuesday afternoon, 11 January 2011.

Police officers inspecting the flooding on the street running alongside Auchenflower train station. In the background, the croquet club field is a lake.
Land St, Toowong on the afternoon of 11 January 2011. I had to take off my shoes and roll up my trousers to walk through the water to get home around the corner.
Flood tourism at Regatta CityCat Terminal, hours before the flooding Brisbane River lifted the pontoon off its support poles and it drifted away.

*For more on the mid-to-late 2000s SEQ water crisis, check out my 2018 book Beautiful One Day, Broke the Next.

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Lockdown reading – Bezonomics

One company that has done very well out of COVID is Amazon (see share price chart below). The wealth of its founder Jeff Bezos soared, and he has seemed untouchable as the richest man in the world, although he has just lost that title to Elon Musk, possibly only temporarily. Bezos is obviously an exceptional entrepreneur, but I never realised just how exceptional until I read Brian Dumaine’s Bezonomics, which I finished reading today, during the Greater Brisbane Lockdown. As other reviewers have suggested, Bezonomics is hagiographic about Bezos, but it clearly shows how he’s always had a long-term vision of global domination of multiple markets, and how he’s been extraordinarily successful in achieving his objectives so far.

Amazon takes advantage of what Dumaine calls the “AI flywheel” (borrowing from Jim Collins), whereby Amazon gets to know its customers better as it gathers more data on them and is then able to offer them better targeted products they are more likely to buy, meaning larger sales volumes and economies of scale, driving down prices, and encouraging further purchases. In the context of the development of Alexa in 2011, Dumaine explains the basics of the AI flywheel on p. 226:

…start with the customer first, find ways to drive down costs, which frees capital to invest in more features, which attracts more customers, which allows for economies of scale to drive down costs, and so on…

Bezonomics explains how Amazon pushes its customers into Prime membership and how Prime has forced Amazon to become super-efficient in warehousing and distribution, so it is now a threat to traditional logistics giants such as FedEx. The book also highlights Amazon’s large market share in cloud services through Amazon Web Services (AWS), which NYU Marketing Professor Scott Galloway has predicted Amazon will spin off this year as a way of appeasing US regulators who may be contemplating antitrust action against Amazon (check out this WebProNews story).

Dumaine argues Amazon is moving into new industries such as healthcare and its AI flywheel will help it quickly gain large market share. Bezonomics speculates Amazon won’t just be in the pharmaceuticals sales business, but in telemedicine as well, via its Alexa devices. On p. 230, Dumaine writes about the potential for a Prime Health service:

Feeling down in the dumps? Alexa might suggest that the [Prime Health] member contact their doctor. (Amazon has filed a patent for Alexa to pick up the sound of sniffles or a cough, and Alexa already offers simple first-aid advice.) When the member asks Alexa to set up an appointment with an Amazon-recommended doctor (five stars!), a time and day is downloaded to his or her calendar. At the appointed time, a doctor pops up on the screen and conducts the exam.

You can see where this is going. The consultation could result in pharmaceutical products being purchased via Amazon. Genius, and all part of Bezos’s plan for global whole-of-economy domination.

In the end, Dumaine does not see a need for antitrust action against Amazon (e.g. forcing a breakup of Amazon into different businesses, and at least separating the selling platform from Amazon’s own retail business, as Senator Elizabeth Warren has suggested). This is even though Bezonomics does highlight some pretty sketchy practices of Amazon, including aggressively competing against independent sellers on the platform with its own line of products. Dumaine accepts Amazon’s assurance it is not using confidential data on independent sellers, and he rejects antitrust action against Amazon, as he sees Amazon ultimately as a force for good for consumers, providing a wider range of products at lower prices than otherwise.

Here I should note that the European Commission has a different view on Amazon’s use of independent sellers’ data, as announced on 10 November last year, in a press release:

The European Commission has informed Amazon of its preliminary view that it has breached EU antitrust rules by distorting competition in online retail markets. The Commission takes issue with Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third party sellers.

The Commission also opened a second formal antitrust investigation into the possible preferential treatment of Amazon’s own retail offers and those of marketplace sellers that use Amazon’s logistics and delivery services.

Let’s see what happens in the US under the Biden administration, as I wouldn’t be surprised if we see some aggressive action there, although Bezos’s ownership of the Washington Post may provide some protection.

Bezonomics may be too uncritical of Amazon and Bezos, but it’s very worthwhile reading nonetheless. It opened my eyes to the scope and scale of Bezos’s ambition, and the chance that he may well realise it.

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Thoughts after first full day of Brisbane lockdown

Twenty-seven hours into it, I’m still doubtful about the wisdom of the Greater Brisbane lockdown, especially on a day when no new COVID community transmission cases were announced, and on a day when, bizarrely, our Premier appeared to celebrate her power to close down the capital in her social media posts (see below).

Instagram post from Qld Premier showing how lockdown has shut down Felons Brewery at Howard Smith Wharves

Yes, COVID is a serious disease, and we don’t want to end up like the US or UK, but it’s currently the middle of Summer, not Winter, Brisbane is much less dense than British or American cities, and we’ve only had one recent case of community transmission.

Before substantially inconveniencing two million people and denying many businesses much needed trade, it would have been good for the government to provide a firmer justification for the sudden lockdown. Yes, the government is applying the Precautionary Principle, but, as I discussed with Joe Branigan last year, we should be sceptical of using that principle in public policy:

The Precautionary Principle and COVID-19 – podcast conversation with Joe Branigan

Apparently, if we have just one more case of community transmission before Monday 6pm, the lockdown will be extended until the end of the month. How can people or businesses make plans if a panicky Chief Health Officer and Premier can impose a lockdown with only ten hours’ notice and with such sketchy justification, as they did yesterday?

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Brisbane Lockdown 2.0 – the sequel no one wanted

To keep Queenslanders safe, our state government has decided to lock down the over
2 million residents of Greater Brisbane for the next three days, but its sudden, unexpected announcement at 8am sparked immediate panic buying in our supermarkets, and an exodus of people from the capital to the regions and other states, possibly spreading the mutant UK COVID strain there. Great job, Queensland Government.

The National Cabinet is supportive of the lockdown so I will withhold judgment for now, other than noting it would have been good for our Premier or Chief Health Officer to have signalled earlier this week they would even contemplate doing this. It came as a bit of a surprise, given we only have one reported case (so far) of the mutant UK strain, the cleaner from the Grand Chancellor, and thankfully she doesn’t appear to have travelled many places.

It’s too early to predict what the economic implications of this will be, as so much depends on whether the mutant COVID bug has been spreading in the community. That said, we fear this Brisbane lockdown will extend well beyond three days, as the Health Minister has suggested it could (e.g. check out this Brisbane Times report). When I dropped into my office at the Johnson Hotel this afternoon, I saw one of my neighbours, an engineer, and his partner carrying out two widescreen monitors from his office. He needs them to work on his spreadsheets and CAD diagrams, and he’s obviously thinking this is going to last much longer than three days.  

We may need to rush that vaccine out after all if the mutant COVID strain is spreading. Otherwise, we will see further lockdowns and loss of economic activity, possibly requiring an extension of JobKeeper, meaning larger deficits and more debt.

On financing the COVID-19 government debt, I spoke with UQ Associate Professor Begoña Dominguez earlier this week, and our conversation is now available as Episode 69 of my Economics Explored podcast. I interviewed Begoña about a thought provoking video she recorded for the UQ Economics School at the end of last year on Financing the COVID-19 Government Debt. One idea of Begoña’s that I really like is that we should think of support provided during COVID in the context of a social contract, whereby in an emergency like a pandemic we readily assist people but if it turns out we have over-compensated people (as we may have in Australia as I noted in my 9 December 2020 post) we have some mechanism to claw back some of that assistance. Conversely, if it turns out we’ve under-compensated some people, we increase assistance to them or give them a tax rebate in the future. Possibly, assistance could be generous in a pandemic, given the radical uncertainty about the future, but the assistance could be given as an income-contingent loan.

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Cannabis Industry to Light Up – guest post by Stephen Thornton

The win by the US Democratic Party of two federal senate seats representing the state of Georgia creates a situation whereby the Republican Party will lose their majority in the Upper House. Given the Democrats control the House of Representatives, this means their legislative agenda will now be able to be more easily realised. One positive outcome of the win, depending on your viewpoint, is that the cannabis industry in the United States and elsewhere is likely to be a beneficiary of the flip of the senate seats.

Cannabis bills have been passing the US Lower House in recent years but stalling in the Upper House. As reported in the Motley Fool, the win by the Democrats may see important financial services legislation enacted to allow the industry access to much needed banking services which would be a boon for cannabis companies. While most states in the US have legalised medicinal cannabis and almost one-third of states have legalised, or are in the process of legalising, recreational use cannabis, it is still illegal at the federal level. This should now change.

The Queensland Government should be watching this closely. Here, things have moved a lot slower. While medicinal cannabis is now available for doctors to prescribe, including in Queensland, the Therapeutic Goods Administration (TGA) expects that medicines included in the Australian Register of Therapeutic Goods (ARTG) will have been considered or prescribed first before seeking approval to prescribe cannabis. Up to 31 December 2020, the TGA had only approved around 85,000 applications for medicinal cannabis products for conditions including chemotherapy-induced nausea and vomiting, cancer and neuropathic pain, and spasticity from neurological conditions.

However, there has been some movement as reported by FreshLeaf Analytics with the TGA having decided to allow registered low-dose CBD products, up to 150mg per day, to be sold over the counter at Australian pharmacies without a prescription. While the implementation date is February 2021, product availability is expected to be later this year or even in 2022.

But it is the recreational cannabis use space where we are still a long way behind the US. As I wrote in 2018, an Australian Senate committee considered a private member’s bill from (then) Senator David Leyonhjelm to allow any State or Territory Government to legalise and regulate cannabis due to it being considered less harmful than alcohol use and tobacco use, and that otherwise law-abiding recreational cannabis users were cast as criminals, which increases pressure on the criminal justice system and supports organised and violent crime. Leyonhjelm’s lead should be followed by one or more of the major political parties, with support from the states.

Number of cannabis arrests 1997-98 to 2018-19 in NSW, Victoria, Queensland & national total

Source: BGE, compiled from Australian Crime Intelligence Commission annual Illicit Drug Data reports

Queensland has been the leading state for cannabis arrests for the last 20 years, arresting nearly 22,000 people in 2018-19, which places an unnecessary financial burden on the state budget given similar sized states like Colorado are now collecting taxes from cannabis sales. Indeed, I have previously estimated that the tax revenue alone for Queensland could be around $90 million/year with criminal justice system and other cost savings on top of that.

It is likely that the legalisation of cannabis at the federal level in the US will take place in the next year or so. Canada legalised recreational cannabis on a national level in 2018. This is the time for Queensland to commence a comprehensive investigation into the benefits and costs of a regulate-and-tax model, of which I undertook a preliminary examination in 2016 (see report here). For a wide-ranging discussion on the cannabis industry both overseas and in Australia, you can listen to this episode of the Economics Explored podcast.

Dr. Stephen Thornton is the principal of BG Economics. Disclosure: Stephen has a shareholding in a cannabis company listed on the ASX. This article should not be considered as providing financial advice.

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Post Corona by Scott Galloway is recommended reading

The best commentator on what the post-Corona business world will look like is arguably NYU Stern Business School Professor Scott Galloway, an entrepreneur turned professor and YouTuber who GQ has labelled “Gordon Gecko with a social conscience”. I’ve recently read his brilliant new book Post Corona: From Crisis to Opportunity, which is available at Dymocks on Queen St Mall. Galloway’s thesis, as summarised in the back-cover blurb, is that:

…the pandemic has generally not been a change agent so much as an accelerant of trends that were already well underway.

For instance, higher education has been ripe for disruption for a couple of decades now. With the pandemic, we are seeing traditional universities across the world struggling, and some below the top tier may fail. Galloway sees potential collaborations between the top universities worldwide and Big Tech, collaborations which certainly could threaten Australian universities. This is an interesting idea Galloway advances on p. 147:

MIT and Google could jointly craft two-year degrees in STEM. The myth/magic of campuses and geography is no longer a constraining factor—most programs will be hybrid soon, dramatically increasing enrollments among the best brands.

Australian universities have already had to make big cuts to deal with a loss of international students and their fees during COVID (check out the Guardian Australia report Almost 10% of Australian university jobs slashed during Covid, with casuals hit hardest), and I know it’s been tough on many academics, some of whom have taken Voluntary Early Retirements. But universities may face further pain as students worldwide come to expect online learning and as agile new providers stand up to challenge universities. One idea I heard on a podcast the other day was that a major consulting firm, say a McKinsey, could offer its own MBA program and attract students and revenues away from business schools. Traditional university programs will also be threatened by providers who have fully adapted to the potential of online learning. Seth Godin’s Akimbo workshops which encourage activity-based learning and regular peer feedback are good examples of what is possible. So, I think Scott Galloway is on the right track with his observations regarding higher education.

In Post Corona, Galloway reiterates his critique of the big four tech companies (Google, Facebook, Apple, and Amazon), noting big tech has profited from COVID as lockdowns have prompted people to spend more time online: using social media, streaming, and shopping. Galloway has been calling for antitrust action against Big Tech for several years, and, as I discussed on my podcast a couple of weeks ago (check out Regulating Big Tech), such action does appear to be forthcoming, which is good news.

Galloway ends his book with a call for measures for greater redistribution to deal with growing inequality in the US. He makes a good point about how COVID relief in the US has tended to favour corporations and their shareholders rather than the bulk of the population. Assistance in Australia has been much better targeted, although arguably it has been overly generous, as I discussed in my post Aussies over-confident after being over-compensated by Gov’t for COVID-recession.

I can highly recommend Post Corona by Scott Galloway, and I’d also recommend his very insightful video 2021 Predictions (Companies & Trends to Watch).

Cover of Post Corona by Prof G, Scott Galloway

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