1. That part of the reason for retaining the law on parallel importing was that local book providers already face competition from imported books.  If this is the case there must indeed be significant cost savings in buying books in global markets rather than purchasing them locally.  This runs counter to claims that the price savings in allowing parallel imports are low. If they were low local publishers would have little to fear anyway.

2. If Australia seeks to support local authors – I don’t reject this –  then give them a subsidy not penalise all consumers with higher prices.  Local authors don’t like this because their dependence on goverrnment handouts becomes explicit but such subsidies are less restrictive than partial prohibitive tariffs on trade and provide comprehensive protection for Australian authors even in the face of online purchases. 

It is just so important for people to learn some basic economics.  Governments can get away with this interest group-driven stupidity that inflicts net costs on society as a whole only because not enough people understand some basic logic about markets.

Update: Useful comments by Joshua Gans and a critique by Sinclair Davidson.

I don’t agree with the gist of the message here – the US need a more inclusive healthcare system, probably need more public spending on education and the globe certainly needs US GGE controls to bring about an effective international agreement. But I enjoyed this cartoon that sums up the conservative view of Obamaism.  The right’s paranoia is aired more explicitly here. again I disagree with the central message – it seems to me if you do wish to stimulate the economy do so in ways that provide a broad range of much needed social payoffs. You get a potential stimulus benefit plus a potential social payoff bonus.

BTW, Leamer was the first major forecaster to warn of the US housing bubble.  I couldn’t find a transcript of his remarks tonight but he was surprisingly optimistic.  Leamer sees the tough times now as storing up a lot of latent demand for cars and housing.  Indeed he sees the US economy rebounding strongly in a couple of quarters with even the housing sector recovering strongly.  I find this difficult to understand given the pervasive rottenness of US credit markets.  It is not only an issue of a short-term downturn in demand. Ben Bernanke sees the problem - the US can return to growth this year provided that the financial system is put in order.  Its a monumentally big proviso given that the debt binge lasted for more than a decade.

Sisira is Sinhalese but recognises systematic discrimination against the Tamils who have responded with random acts of terror.

BTW the response to this YouTube here in Melbourne has been a daily outpouring of hateful, unbalanced emails and mail directed at Sisira and sent to his university colleagues – myself included. It is an extraordinary stream of bile that does not convey much information but which does show the depths of feeling that drive this conflict and hence its intractability.

Gracious and serious this is a speech worth listening to. There is much sense amid the rhetoric and Obama is – as everyone now knows – a talented man of enormous charisma. But as I stressed a few days ago the difficulties facing the US and hence Obama are immense*. The positive changes will only take effect gradually – a couple of terms in office at least.

He seemed so relaxed and yet determined. As I have said before I think Obama has the makings of being a great US president. He has buried the race issue because there is no issue of a Obama being an ‘accepted’ black man – he is an outstanding person, period.

I assume the interest group pressures on him will be as great as for other presidents but there is a backbone there that augers well. I am optimistic.

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* As many have pointed out this was the worst inauguration day in US history for stock market prices. The US banks plummeted (shares of Bank of America, under pressure over its Merrill Lynch takeover shares dived 29%. JP Morgan dropped 21%, Citigroup 20%, Wells Fargo 24% and Goldman Sachs 19%) and as a group seem destined to fail. Nouriel Roubini, is quoted saying ‘losses in the US financial system could hit $3.6tn before the credit crunch ends – which, he said, means the entire US banking system is effectively bankrupt”.

This is a stunning statement backed up in markets. The Dow dropped 4% mainly because of the banks while, in Australia, the ASX dropped 3.1% with banks again pounded but resource stocks being even more heavily dealt with – BHP-Billiton announced 3400 workers in Australia will be sacked.

What a mess. The US banks may need to be nationalised or put into receivership.

‘a New York Times poll found 79% think Barack Obama will improve the nation – a level of support that is higher than for any incoming president in 3 decades’.

Cynics might say that this optimism partly reflects disaffection with the current President George Bush.  Maybe true and, in any event, optimism can feed disappointment. It is wonderful news that a black man is entering the White House but we should not assume that a public works program will resolve America’s intractable soccial and economic problems:

Ten trillion dollars have evaporated in the greatest stock market crash since the 1930s. Twenty million Americans face negative equity, 30 million Americans are in poverty, 40 million have no health insurance. The numbers just keep piling up…..
And so, pretty soon, we will all probably start to complain that Obama is a man of straw, a media creation, a triumph of style over substance; more a celebrity than a politician – a “polebrity” to use the latest ugly neologism.

Americans must be realistic and demand only the possible. Obama has already begun the difficult task of trying to hose down expectations.

I have been am particularly fascinated by the beautiful Peking University Campus and by the happy youth here. Many foreign students are also here studying happily. The Chinese hospitality to visitors is superb. The Chinese postgraduate students are intelligent and have strong academic motivation. Their questions on my climate change policy were rewarding to me and valuable as a way of improving the paper. One perceptive student criticised global trading arrangements to implement low cost global carbon controls from the perspective of Coasian transactions costs! These students know a lot of economics. The students even have an ‘on campus’ group which studies climate change.

To be frank I can think of no comparable group in Australia. I wonder why not. Why the difference?

I also wonder why it is that Australia sees Chinese students as a source of university funding rather than a chance to interact with a great civilisation. Foreign students in China have a Chinese buddy who helps them with such things as language difficulties. Why doesn’t Australia do the same thing?

I think Australia has things to learn and mimic from the new China.

My provisional overall impressions about China? Too many to blog about and far too contradictory at this stage – yes it was only a short visit. Nearly forty years ago I heard the Zen philosopher Alan Watts say that the two things that would most drive the world’s future were LSD and China. I think he got the first one wrong but on the second point I feel he is right. China will be both the world power and the key global economic force – that is something I have long believed. But China will also be a world cultural and academic centre. The signs are all there. The Chinese place a high priority on education, on learning from the rest of the world and have a candidness about current Chinese problems.

The fact of Chinese wealth and power is vaguely known to many. The Chinese themselves see it more clearly and are already preparing for hickups in terms of perceived ‘threats from China’ as the world comes to see it more starkly as a reality. The world’s economic institutions were designed without China’s blessing – I am sure they will insist on more regulated structures. Many other things will change as the dominant role of the US and Europe fade.

I’ll try to sort out my ideas on these issues at a future date. At present I am typing these notes on the free internet service at Hong Kong airport. I like the fact that luggage trolleys within this airport (and Beijing) are also free – a courtesy appreciated by tired out travellers without local currency. A thought that occurs to me is the efficiency and courtesy in this airport compared to the disgracefully degraded facilities at airports such as Los Angeles with their incredibly rude and inefficient customs agents.

The US is squandering its wealth by dissaving and standing by as its infrastructure degrades. China has one of the highest savings rates in the world and is building a new society with high educational and cultural values. I am over-generalising but there seems to be some sort of lesson and sign for the future here.

Maybe spending the last week in China has dented my democratic ideals but I think the Obama suggestion makes a lot of sense.