Careers Guide 2015 

The UQ Economics Society is proud to announce that the 2015 edition of the Careers Guide is now available in the careers section. The Careers Guide is an annual publication containing a vast array of information on employer profiles, postgraduate opportunities, interviews & articles and application tips. Be sure to check it out!

The Guide has been expanded this year to include more employer profiles, internship profiles and even more advice and tips for interviews and the application process! If you have any questions or suggestions for the Guide please contact Phillip Womack, our Director for Publications.

UQES 2015 AGM 

Information Session
Date: Thursday 24th September 2015
Time: 3:00pm–4:30pm
Location: Forgan Smith (01) – Room E212
Date: Thursday 15th October 2015
Time: 6:00pm–9:00pm
Location: Hawken Engineering Building (50) – Room N202
Notice of AGM Given: 23/09/2015 (Wednesday)
Nominations Open: 23/09/2015 (Wednesday)
AGM Information Session: 24/09/2015 (Thursday)
Nominations Close: 13/10/2015 (Tuesday) 
AGM 15/10/2015(Thursday)

Million Dollar Point 

Having just returned from a holiday in Vanuatu (which, by the way, is an amazingly beautiful place to visit) I thought I would share some economics I picked up on the trip.  Now, I’m not talking about facts like the percentage of GDP represented by tourism. I’m talking about a classic case of prisoner’s dilemma.

Part of the trip included a visit to Million Dollar Point on the largest of Vanuatu’s 83 islands, Espiritu Santo. During World War II, Vanuatu was used as a military base by the Americans. After the conclusion of the war, the American forces had accumulated (as you can imagine) a lot of stuff – jeeps, tanks, weapons, and building materials like bulldozers and excavators used to build military facilities (including four airstrips).

The Americans didn’t have room on their ships to bring all their gear back (instead, they – rightfully – used available space to bring home the troops). Furthermore, many of their manufacturers at home had included clauses in their contracts preventing the American military from bringing home the products; fearing that flooding the market with cheap, ex-military goods would be detrimental to their business. These manufacturers wanted to protect their post-war domestic market.

So the Americans were left to wonder: what should they do with all this equipment?

It was offered to the Allies at a largely reduced price. Seems like a fair deal, right? The Allies, however, realized that the Americans couldn’t take it home, and thought they would be able to take it for free when the Americans inevitably left it behind. They tried to call the Americans’ bluff.

The American military loaded up all their vehicles with their equipment, placed bricks on the accelerators, and drove their gear into the ocean where it remains in up to 40m of water. Million Dollar Point was given its name for the [then] value of the dumped equipment and refuse.  Luckily it’s not renamed for inflation each year (or it would have been about Thirteen Million One Hundred and Fifty-Seven Thousand Dollar Point in 2014).

Both parties tried to do what they thought was best for them but ended up worse off .The Allies didn’t get their gear, and the Americans didn’t get any money for their equipment, due to their lack of cooperation.  

The only winner in this situation has been the tourism industry in Vanuatu. In the shallower waters, a beautiful reef is growing over the top of large guns, bulldozers and excavators. There’s a huge variety of marine life swimming around the rusting chassis of jeeps and smooth remains of thousands of Coke and beer bottles. Snorkelers pay 500 Vatu (a little over $5) to enter the beach.

There is also a thriving dive industry, taking tourists out to deeper waters where the equipment is almost perfectly preserved; so much so that divers can sit in the driver’s seat of a bulldozer from the 1940s.

So it is possible that, despite the enormous initial waste in 1942, a positive externality has been created. The Americans certainly could not have envisaged the benefit brought to the island’s tourism, and additional visitors to the country that their actions have resulted in.

By Eloise Jolly

The economics of climate change policy 

Global warning is a serious problem that has the potential to damage our planet in the foreseeable future. There is a consensus within the scientific community that it is increasing and needs to be addressed immediately. Viable solutions have been put forth such as a carbon tax, emissions trading scheme and others. So what is the issue? Scientists are giving grave warnings, and the government has solutions to reduce emissions. Easy? What is the problem? One of the most basic economic concepts learned in all first year microeconomic courses around the world can explain this seemingly bizarre behavior. Game theory - more specifically, Prisoner’s Dilemma.

If Australia implements a carbon tax and other countries do not, it will put it at a competitive disadvantage because the cost of manufacturing, exports and living will go up as a carbon tax will increase the price of some inputs and overhead costs. This will put other countries at a relative competitive advantage. This will decrease the NX component of the GDP equation as Australia’s exports become more expensive and imports become relatively cheaper. On the other hand, if all other countries implemented a carbon tax and Australia did not, Australia would become relatively more competitive.

The Prisoner Dilemma type situation becomes more obvious once the economics of the situation are analyzed. It is obvious the most beneficial outcome would be for every single country to implement a carbon tax of the same price so that no country loses its competitive advantage, and to reduce worldwide emissions. However we are currently in the prisoners dilemma where most utility maximizing countries don’t want to damage their competitive advantages with respect to trade, and hence are implementing either extremely conservative policy, no polices, or policies that will obviously not work. Each country is pursuing the strategy that will give them their best outcome, and given the post GFC global downturn in economic activity, anything seen as hindering already poor economic growth is not optimal. There is an incentive to undercut countries and not implement a viable climate change policy to gain the benefits of trade and also the benefit of reduced worldwide emissions without contributing. Not implementing climate change policy is a dominant strategy, and it is leading to a sub-optimal outcome, i.e. the Nash equilibrium is (no Carbon Tax, no Carbon Tax) if the players are Australia and all other countries.

There is a big issue at hand and a solution to reduce emissions. The fact that some governments around the world aren’t addressing it with an easy solution does appear to confuse and anger members of the population. Prisoner’s dilemma explains what appears to bizarre irrational behavior, is actually the opposite, rational behavior. The solution? Globally align climate change policy. Can this be done? Maybe, but politically it is very hard to do.  


By Richard Halabi