Keynes what do you do sir

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Once during a high-profile government hearing a critic accused him of being inconsistent, and Keynes reportedly answered with one of the following: When events change, I change my mind. When the facts change, I change my mind. When my information changes, I alter my conclusions. When someone persuades me that I am wrong, I change my mind. Here are some additional selected citations in chronological order.

Keynes was depicted as someone who was known to change his mind on economic questions [MKLF]: Keynes is always ready to contradict not only his colleagues but also himself whenever circumstances make this seem appropriate.

He presented another version of the saying that he credited to Keynes [MKSK]: Keynes provided his own impeccable defence of being protean. The investment would have turned out to be a very bad one. By selecting Option 2, the worst the investor can do is avoid losses by not investing if the cash flows decline. Real options analysis ROA is a technique that allows the systematic quantification of the economic value of flexible decision-making.

Unlike standard NPV analysis or CBA, ROA recognises that investors can alter the way a project is rolled out as circumstances change and calculates the value of the project under different possible investment strategies rather than a single, fixed strategy.

A key insight from the ROA literature is that the value of flexibility can be particularly large if:. This means ROA can be particularly useful when valuing infrastructure investments—such as: roads, rail lines, ports, airports, water networks, desalination plants, water recycling plants, telecommunications networks, mining and exploration assets, gas pipelines, electricity grids and power stations.

This is because infrastructure investments tend to be long-lived so economic conditions can change materially over the life of such assets , and typically involve billions in sunk costs. Given the size of the project, it is astonishing that the Rudd Labor government, which pledged to deliver the NBN, refused to conduct a CBA to assess its merits. The ambitious choice to build fibre to the premises was intended to deliver a network with sufficient capacity to last for generations, but also involved the highest construction costs.

The decision to roll out fibre to the premises was particularly controversial because it was unclear in , when the plan was first announced, that there would be sufficient future demand to justify the broadband speeds and build costs associated with a fibre to the premises network. Whether fibre to the premises would be truly worthwhile depended on what sort of applications would emerge, and how consumers would choose to use broadband services, in future. No account was taken of the option to delay or to build gradually.

When Labor lost the general election, the incoming Coalition government commissioned a CBA of the project. That study assessed the net benefits to taxpayers of three options for rolling out the NBN. It concluded that, against the base case scenario of halting the project immediately:. A commendable aspect of the CBA—which made it stand out compared to most other government CBAs—was that it made some effort to account for optionality. The CBA recognised that a key uncertainty was the extent of future growth in demand for high-speed broadband.

The study concluded that whilst a multi-technology mix rollout would offer slower speeds than a fibre to the premises rollout, it would allow the NBN to be upgraded at a later date, if demand turned out to be higher than anticipated.

The authors of the CBA modelled the net benefits of having the ability to upgrade later if required, under a multi-technology mix rollout, instead of building full fibre to the premises capability upfront. Figure 2 presents the value of the multi-technology mix rollout over and above the fibre to the premises rollout if:.

Overall the [multi-technology mix ] MTM scenario has significantly greater option value than the [fibre to the premises] FTTP scenario. On the other hand, should future demand grow more rapidly than expected, the rapid deployment of the MTM scenario allows more of that growth to be secured early on, with scope to then upgrade to ensure the network can support very high speeds once demand reaches those levels. World Show more World. US Show more US.

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