Alan Duhs

Exploring the Links Between Corruption and Growth

Corruption is a widespread phenomenon, but relatively little is confidently known about its macroeconomic consequences. This paper explicitly models the transmission channels through which corruption indirectly affects growth. Results suggest that corruption hinders growth through its adverse effects on investment in physical capital, human capital, and political instability. Concurrently, corruption is found to foster growth by reducing government consumption and, less robustly, increasing trade openness. Overall, a total negative effect of corruption on growth is estimated from these channels. These effects are found to be robust to modifications in model specification, sample coverage, and estimation techniques as well as tests for model exhaustiveness. Moreover, the results appear supportive of the notion that the negative effect of corruption on growth is diminished in economies with low governance levels or a high degree of regulation. No one-size-fits-all policy response appears supportable.

Quality Assurance and the Quality of University Teaching

The quality of university teaching is increasingly the subject of political rhetoric, but doubt remains about both actual performance outcomes and the role and relevance of the Australian Universities Quality Agency (AUQA). Present quality procedures are found to be inadequate, and scepticism about AUQAs capacity to achieve its aims is well justified for two reasons: the almost complete lack of recognition of the importance of incentives to motivate teachers to allocate effort towards teaching at the expense of research; and the inadequate attention to the need for more accurate indicators of teaching performance. This paper suggests ways of improving the effectiveness of AUQA in raising the quality of university teaching. Two key reforms suggested are: (a) the wide reporting of more accurate teaching performance indicators; (b) a revised university funding model in which university income is based on teaching performance indicators in the same way that research income is based on research performance indicators.

Schumacher's Political Economy

The work of E.F. Schumacher is addressed in the broad context of economic philosophy. His economics present a frontal attack on neo‐classical economics. He likewise rejects a Marxist analysis of society. And while he shares some of the concerns of the institutionalists, he nonetheless stands apart from them in his questioning of the moral and philosophical foundations of the discipline. Schumacher can be considered a member of a fourth school – philosopher/economists.

Reducing Vertical Fiscal Imbalance in Australia: Is There a Need for State Personal Income Taxation?

Tax reform is back on the economic and political agendas. Two significant reports to governments in 1996 have highlighted deficiencies in the current arrangements. First, the Australian Productivity Commission (1996) has submitted to the Howard Government that there is a need for fundamental tax reform, given the inappropriate incentive and efficiency effects of the existing tax system. Secondly, the Queensland Commission of Audit has argued more specifically that “the degree of vertical fiscal imbalance (VFI) in the Australian Federation is extreme and dysfunctional”. The Commission adds that accountability of both State and Federal Governments is blurred in consequence, thereby reducing fiscal responsibility. Recent High Court decisions on the definition of excise taxes add further significance to the need for economic analysis of, and political debate of, plausible changes to Commonwealth-State financial relations. While the overall tax reform debate focuses on the issue of broadening the tax base, one specific issue important to the debate is VFI and the possible reassignment of Commonwealth and State taxes. In this context we argue that a State personal income tax surcharge would facilitate a reduction in the extent of VFI, and thus promote a more efficient economy and effective federation. Various tax options for reducing VFI are considered, along with implications for public sector accountability and efficiency.

Exports of Tertiary Education Services and the Queensland Economy

Exports of tertiary education services have become a growth industry for the Queensland economy. Since a policy change in 1987 from an aid to a trade approach to overseas students, fee paying overseas students have risen from a mere 5.9 per cent of all overseas students in 1987, to 89.6 per cent in 1995. Exports of tertiary education services from the Queensland economy now rival wool and wheat in importance. A number of marketing and policy issues arise in the context of further change in the services sector of the Queensland economy.

Implicit a prioris in the Evolution of Economics: Ratzinger's Alternative

The economics literature includes several critiques of the dominant utilitarian position, as respectively offered by Posner (1979), Rawls (1971), Sen (1987) and institutionalist followers of John Dewey. There is also now a rapidly growing literature on the economics of happiness. Another quite distinctive position of social importance on these issues is provided by Joseph Ratzinger, also known as Pope Benedict XVI. It offers an alternative conception of ontology and teleology, and reflects conceptions of freedom, happiness, man and rationality different from those found in orthodox economics, and different too from those found in the above-mentioned critiques. It intersects with recent writings of Lawson (2003), Nelson (2010) and Tilman (2008). In order to promote critical scrutiny of the a priori positions embedded in contending schools of economic thought, it follows that the implications of this Ratzinger critique should be consciously confronted by economists, including institutionalists, with whom various starting points are shared.

The National GST and Commonwealth-State Financial Relations: A Neglected Issue

While the introduction of the GST continues to dominate economic and political debate in Australia, in terms of its efficiency, equity and compliance cost implications, a neglected but important aspect of the tax reform package focuses on Commonwealth-State financial relations. A central feature of the reform is the replacement of a set of narrowly based and inefficient indirect taxes levied by the Commonwealth and State Governments with the national GST. This is accompanied by substantial reductions in personal income tax rates, giving rise to important implications for the degree of vertical fiscal imbalance (VFI), the efficiency of the State’s tax regimes and the capacity of the States to maintain discretion over their fiscal regimes. The Queensland Government has claimed that the initial State compensation arrangements were grossly inequitable, and that subsequent features of the initiative will impede the Queensland Government’s capacity to maintain its low taxation status. This paper concentrates on the themes of equity, VFI, State tax efficiency and the question of whether Queensland’s days as a low tax State have been ended. Although the degree of VFI can be expected to increase, the elimination of selected State taxes and their replacement with the national GST should facilitate efficiency gains. Moreover, it is concluded that the capacity for the Queensland Government to adjust the remaining components of its tax base, together with the reapplication of the Commonwealth Grants Commission methodology for distributing GST revenues to the States from 2002-03, effectively means that the national GST need not pose a substantial threat to the Queensland Government’s capacity to maintain its low tax status. The paper does not attempt to assess the precise impact of the national GST on the economic performance of particular industries in Queensland, which would require extensive econometric and statistical modelling and is outside the scope of this paper.

Elegance in Economics

Elegance in economic modelling is one determinant of the professional acceptability of “scientific” contributions to the economics literature. Just what determines the profession′s definition of “elegance” is a question less frequently asked. Social economists commonly appeal to questions of teleology or the implicit philosophy underscoring mathematically rigorous and elegant models. The particular difficulty they face, however, is that the socialization process which occurs in graduate schools inculcates regard for mathematical technique to a much greater extent than it heightens awareness of philosophical issues.

Reply to Dennis Rusche's critique of "Implicit A Prioris in the Evolution of Economics: Ratzinger’s Alternative"

Despite all the talk about a prioris and metaphysics, Cardinal Joseph Ratzingers criticism amounts to an attack on pluralism and the evolutionary scientific point of view from a traditional Catholic perspective. The proposal by Andrew Hodge and Alan Duhs to entertain Ratzingers criticism affords the opportunity to remind us of how John Dewey would respond from his secular, scientific point of view to the issues under discussion. From Deweys point of view, I discuss briefly issues about the nature and place of presuppositions, the nature of human potentiality, the place of faith, the way to view society and human character, the nature of human growth and freedom, teleology, the nature and role of reason and intelligence, the failures of absolutism, and the importance of the method of intelligence and democratic habits against the methods and institutions of absolutism.