Wednesday, August 31, 2011

News Limited and a Media Inquiry

Suggestions for a "media inquiry" have arisen from the combined perception of the control of all print media in two camps, and the perception coming from overseas that the largest of these has institutionalised illegal practices and has been beyond scrutiny because of its own political power.

The most recent event in Australia has centred around The Australian and publication of a very meandering column and its retraction.

The PM has come out fighting, which News found disappointing. News seems to think it is okay just to apologise and move on.

This contrasts with the position of Andrew Bolt who has been unleashed and writes a snivelling little piece that suggests that the rehashing of the relationship between a young Ms Gillard and a union official is okay because "questions are raised about Gillard's judgment in having had this relationship".

So as far as the News bosses are concerned you make an error, apologise and move on. As far as Bolt is concerned your entire history must be blemish free.

The Bolt defence ignores the real problem with the stories - which is as I wrote before to act like Mark Antony's soliloquy and have the reader believe the things about which the article says "no accusation is being made."

Cabinet is considering what to do about News Ltd. It has to in any case since Bob Brown has already moved for one.

The challenge for the Government is what could productively come from a "media" inquiry. There is very little room to move on directly regulating content, both through a lack of Federal powers on print media and due to the implied free speech protections the High Court would find on any regulation that could be interpreted as limiting political commentary.

At the last print media inquiry News Ltd produced impressive arguments for why cities would in the future support only one print title. Thus far the market has reflected their forecast.

The two avenues that could be useful would be to formalise the alternative dispute resolution methodology that is the Press Council. Bolt's complaint that not everyone could ring John Hartigan to complain is reasonable. The response is to make it easier for everyone to complain, not make it reasonable to not respond to the PM.

The second would be to contemplate the extent to which the market power of the various news organisations extends vertically and horizontally. If I wanted to publish a new newspaper in, say, Adelaide, it would be far more viable if I could use News Ltd's printing and distribution facilities.

Cross media ownership restrictions will be reviewed by the Convergence Review. But these restrictions don't affect the growth of power through attrition.

So an inquiry could productively consider the possibility and benefits of an "access regime" and divestiture powers to ensure media diversity.

There is significant latitude as Bob Brown has only given notice that he will move "That the Senate establish an inquiry into media in Australia."

An inquiry focussed on complaint mechanism and market structure tools could indeed be productive.

Novae Meridianae Demetae Dexter delenda est


Wow - both parties we are told are getting themselves into a lather on what to do about the decline of manufacturing.

Tony Abbott's flirtation with protectionism has senior Libs threatening leadership change.

Meanwhile the PM faces a revolt over her refusal to hold an inquiry into manufacturing.

The incredibly wise Ross Gittins rightly points out that we should think of the future not the past and propping up manufacturing is a bad move. One could add that we should be more concerned about the off-shoring of call centres and software jobs. These are "knowledge" jobs. A lot of that off-shoring is driven by labour force availability not simply wage differentials. (One could add that the NBN could significantly change some of the economics of these jobs as they are possible to do by "telework" from home).

Lenore Taylor writing under the headline "Talk's cheap but manufacturers want solutions" wrote;

POLITICIANS talk big about helping crisis-stricken manufacturers, but they can do relatively little, unless they are prepared to either contravene Australia's international trade obligations or spend a shed load of money.

This is the point at which I say enough is enough.

A simple solution that doesn't breach trade agreements or cost money would be to tax the super-profits of the mining industry more, and to use the proceeds to reduce the corporate tax rate on all businesses.

This benefits not just manufacturers, but also other distressed sectors like retail and tourism.

The Government doesn’t need to wait to consider this though – it is already their plan.

What kind of ineptitude doesn’t use the meeting held on Monday yesterday as a rallying point for what is already good and effective policy?

Novae Meridianae Demetae Dexter delenda est

Tuesday, August 30, 2011

Digital Economy Round-Up - Issue 4

Malcolm Turnbull told the National Digital Inclusion Summit hosted by Huawei that income is the biggest barrier to bridging the digital divide.

He is, of course, using this to raise fears about the cost of broadband services under the NBN. That is a different conversation.

While the correlation between income and broadband adoption is well known, this does not mean that there needs to be a specific "broadband affordability" program. Incomes policy needs to be such that the individual consumer can afford to make the choice between having broadband or not. Broadband promotion campaigns need to convince the consumer to acquire broadband instead of, say, going to the pub.

Interestingly reports of a business group preparing to lobby the Treasurer for the first time has mentioned "The delegation is expected ... to canvass the opportunities for the digital economy to boost productivity." This is a good development given that the budget papers didn't make the connection.

The group involved is called The Global Foundation, and is a relatively high powered think tank structure I've not seen before.

But it might come as no surprise that the words above were actually sourced to Telstra's David Thodey who seems to be co-chairing their work on the "future economy".

Just as well given the demise of ATUG that at least someone in business is talking about the Digital Economy.

I've previously noted the Canadians Canada 3.0 event, which is an initiative of the Canadian Digital Media Network.

Interesting things are also happening in New Zealand. The new head of Alcatel-Lucent for the country has said "With New Zealand making an aggressive digital economy push, it's showing a belief in telecoms' potential to deliver growth."

That interest is being backed up by the Commerce Commission which has commenced a High Speed Broadband Services Demand Side Study.

Meanwhile in Australia people who do "economic development" for a living will be getting together at their annual National Economic Development Conference to discuss "Digital Economy - Future Economic Development Practices for Government, Business and Regional Organisations" in early October in Adelaide.

Meanwhile the Australian Information Industries Association (the AIIA) has rebranded itself as "the voice of the digital economy".

It seems to me we hear lots of supply side voices in this discussion, we hear a lot of government voices in this discussion - but in Australia very little from the demand side. ATUG had at least been trying through its Digital Economy Stakeholder's Forum but that is now no more.

The Internet Innovation Alliance in the US I referred to earlier has a membership of community and industry groups. However this seems more like the ACCAN meets AIIA than a genuine demand side group.

All we seem to have is our banks being unable to get their MAMBO project going. (See below)

From a 2009 report on MAMBO

The Me and My Bank Online proposal was floated by Bpay several years ago as a means of building on the member banks' successful platform for electronic bill payments.

But industry backers of the Bpay spin-off will need to demonstrate solid progress in opening the internet shopper payments market to competition before the board will withdraw its threat of regulation.

It is understood Mambo would allow individuals to register for their own Bpay codes, which they could use to enable personal online payments. So far, Bpay codes have been restricted to businesses and organisations.

The Mambo project stalled late last year following an assessment and a decision to halt funding.

Novae Meridianae Demetae Dexter delenda est

Market structures

The Federal Court decision in the case of the etcash acquisition of Franklins raises some interesting questions.

The first is to note that the judgement is based on the question of the ACCC's definition of a market and the court's decision that both Woolworths and Coles are actually involved in the wholesale market. It also hinged on the delightful thing called the "counterfactual" which is what is the likely outcome if the merger is not approved.

Counterfactuals are little more than modern day prophecies with economists and merchant bankers playing the role of soothsayers.

But the decision that the acquisition will not substantially lessen competition in the wholesale market does not mean that the merger improves competition.

Indeed as Heinz asserted today the home brand "revolution" is what is killing competition, and there is not a thing the ACCC can do about it.

From a technical point of view Coles and Woolies are using their market power in retail to exercise power in the upstream manufacturing market. Neither has enough market power to fall foul of the misuse of market power test.

The Competition and Consumer Act is fundamentally broken as a tool of economic policy. The concepts of "market" and "market power" and of "competition" embodied in it are sufficiently weak that any competent lawyer can steer their way around them.

The solution perhaps lies in a different set of laws that look more like the access regime laws under which the ACCC can declare certain things to be markets and to have specific characteristics. This could include simple things as specifying indices of concentration (such as the HHI)above which it would be determined a market is not effectively competitive.

In passing I will note however that vertical arrangements are not always bad. The move by AAP into telecommunications as AAPT was good, but the move by Telstra into media via Foxtel is less so. (Note that I worked for AAPT long after that, and I was up to my eyeballs in trying to make the Foxtel deal happen).

But talking of AAP provides an excuse to note the closure of its NZ counterpart the New Zealand Press association since their biggest market, Australian media, now owns the local media!

I will be speaking about competition policy for the digital economy at this year's Communications Policy and Research Forum. I will also be discussing the change in corporate Australia's relationship with competition policy in a column on ATUG..

Novae Meridianae Demetae Dexter delenda est

Broadband and jobs

I'm not a technological determinist. I don't believe that actions in the economy automatically follow from technology decisions.

It is a reason to be sceptical of cost-benefit analysis or any economic study that tries to imply that broadband or the internet "causes" certain economic benefits.

Equally any reasonable approach to economics recognises that the economy is not totally malleable - when you push into it at one point something will stick out somewhere else. So talking about "job creation" or "job losses" from one action is often stupid.

That said thanks to a retweet of a blog post by Kim McDonald today I stumbled on the Internet Innovation Alliance and their 10 facts about broadband and jobs and its associated press conference. They even have a state by state (USA) guide to the impact of broadband.

Interesting related work is a Deloitte report on the impact of 4G mobile on the US economy.

It is actually impossible to tie down direct future relationships between technology or investments and outcomes. If it were we wouldn't have Governments, just centralised economic planners.

What it is far easier to do is a "with and without" test. What are the prospects for a 21st century economy with ubiquitous high speed broadband and what are the prospects without? The short answer is that the former is clearly more adaptable and can adjust is production to match demands, the latter will be highly restricted in the opportunities it can pursue.

Novae Meridianae Demetae Dexter delenda est

Monday, August 29, 2011

The NSW Right and the paucity of Ideas

I will elsewhere do a detailed analysis of the two "journals" of the ALP - Challenge and Voice.

Today I just want to focus on one section of the Winter 2011 issue of Voice - and in particular one sixth of that.

The section was headed "6 New Big Policy Ideas". They were,
1. Green Grid for Australia - an extension of the national transmission grid to connect renewable resources
2. A new City for the Pilbara - a revamped version of the Whitlamite RED scheme.
3. Private Capital to fund Social Programs - which sounds cool but is really just outsourcing
4.Free up water licencing for environmental and economic benefit - which is just a piece of neoclassical economic theory about price signals of water
5. Time for a National Compensation Scheme - see below
6. Enshrine Parramatta As Sydney's Second CBD - self-explanatory, but long on how not why

These "Policy Ideas" are neither Big nor New.

Even in the write up for the National Compensation Scheme author John Della Bosca noted the then current Productivity Commission inquiry. Since then the report has been released, the Government has commited to a scheme and the Government has enrolled the States.

But when you get to the fine detail nothing yet exists. Till today when Per Capita is reported to be proposing a $15/week tax levy to fund the scheme. What the?

Like the ALP really needs another new tax?

What's more as the story notes "The call for a levy stands in contrast to the commission's recommendation that a national disability insurance scheme be funded out of general revenue."

I guess the romantic notions of big rural centres, of markets not Governments, reflects the thoughts of a group descended from Santamaria's Movement.

Mind you the left is no better.....

Novae Meridianae Demetae Dexter delenda est

Unions and the ALP, and the integrity of politicians - updated

There is an old adage that one should learn from one's mistakes.

The ALP, Federally and in NSW, needs to take the opportunity to do so. The nonsense about Craig Thomson and his credit card is now simply ludicrous.

I hope everyone realises that an employee misusing their employers credit card isn't normally a criminal offence. It is normally a civil matter that would involve dismissal and recompense. We still don't know what the expenditure on Craig Thomson's credit card was, it may have been legitimate "entertainment expenses" of other people. But even if it isn't legitimate the misuse isn't necessarily "criminal". There may be other bits I'm not aware of like the question of falsely swearing statements or some specific rules governing unions.

The Australian today withdrew a story filed by Glenn Milne that was grubby in the extreme. The story itself was triggered by a post on Andrew Bolt's blog in which some old well known matters are rehashed and dressed up as a "smoking gun" for the PM while wrapped up in suggestions that no suggestion of impropriety is being made. (see note).

The issue here is the damage being done to Labor by association with Unions that have become hot beds of intrigue, if not outright corruption. It is extraordinary for Milne to claim as he does that an outbreak of Union thuggery (the shovel incident) is evidence that the unions have given up on the Gillard government.

This is to ascribe to the unions a monolithic existence akin to descriptions of "the Left" or "The Right" used to join everyone associated with it into a single stance.

Bolt in his column on Saturday also referred to the theme of "cover-up". In it he also tried to harrangue the ALP for raising Senator Fisher's problems with the law. Tony Abbott has now defended the Senator because she has "serious mental health issues".

Both Abbott and Bolt miss the point of the PMs statement - which was that the standard in Australia is innocent until proven guilty. Accusations are not a reason to resign. Indeed the constitution is very clear, even guilt and imprisonment for less than a year is not a reason to resign.

The ALP is probably right not to ask Thomson to resign from the party. It wouldn't achieve much now.

And while there is some surprise that the PM is pursuing the role of a Parliamentary Integrity Commissioner the reality is that if such a position existed Mr Thomson's position would be likely to be more not less secure. The allegations have nothing to do with his integrity as an MP.

There has been a great history in the labour movement in general of concern about control from the outside. The party in the 20s and 30s struggled between communist influence and "tammany" - that is the exercise of power for the benefits it can deliver. The concern crystallised in the 40s with concerted efforts to reduce communist control in unions. But these efforts themselves became controlled from outside (by the Catholic Church based Movement).

It is time the ALP finally broke free from its industrial base and instead proudly exclaimed itself to be a democratic socialist party. In doing so it can distance itself from the grubby conduct that befalls it all too often.

Note: Mark Antony's famous soliloquy"I come to bury Caesar, not to praise him." is a classic speech in which the audience is meant to "decode" that when the speaker uses a negative it is indeed a hidden way of saying the positive.

News reports of the variety "It has been reported that John Smith brutally beat his wife. No accusation is being made that Mr Smith acted in any way other than as a caring and loving husband concerned for his life partner's well-being." clearly are designed for us to believe the first part. Why else would they be published?

Update: For a good explanation on the legal issues on Thomson and Parliament see this column by George Williams.

Novae Meridianae Demetae Dexter delenda est

Riots in London - lessons

Excellent item in The New Republic which analyses the response to the London riots.

The debate thus far is neatly summarised by a quote from Tony Blair "The left says they’re victims of social deprivation, the right says they need to take personal responsibility for their actions, both just miss the point."

The author, Geoffrey Wheatcroft, goes on to note that Blair then misses it as well.

After cataloguing the responses of both left and right, including some of the more extreme Tory versions, Wheatcroft offers the words of Daniel Patrick Moynihan.

The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.

The implied critique - having detailed how much of the childhood of the rioters was spent under Labour rule - is that in all its years in power Labour did nothing to change the culture of British society.

The embrace by social democrats of "market capitalism" has resulted in them failing to recognise that the core tenet - efficiency - is anti-equity. And equity still resonates.

Take the results of a survey reported today. The survey finds Australians believe that richest 20% have 40% of the wealth, but believe they should only have 24 percent.

The actual extent of inequality is far higher - the wealthiest 20% have 60% of the wealth. The survey found that the wealthiest and the poorest were those with the least understanding of how the actual distribution looks.

The relationship between the actual, estimated and ideal wealth distribution is best shown using the Lorenz curve that graphs cumulative wealth against cumulative population. As a service to my readers I include it below.

The lesson from the two stories. Social democrats (what Americans call "liberal" and I prefer to call "democratic socialists") who want to promote greater equity, both because it is "right" and because it will reduce other societal issues, need to first explain the extent of dis-equity in our community.

Novae Meridianae Demetae Dexter delenda est

Friday, August 26, 2011

NBN Co, community consultation and migration

Really good address to today's ACS-TSA SIG by NBN Co's Mike Kaiser on rewiring a nation.

Good explanation of the migration task and the associated communication task.

A lot of agreement that the ACCAN publication National Broadband Network: Guide for Consumers is the best explanatory document around. The document actually does address things like what speed do I need and what internal changes you might want to make to get the best use.

NBN Co will be moving into full scale deployment mode soon, where on a rolling three month basis they will outline the next twelve months of construction areas.

There looks to me to be a bigger win on Comms available from having a co-ordinated NBN Co/Govt/Consumer/SP comms process. At the moment there seems to be a separate Govt plan from NBN Co plan and that doesn't make sense.

Interesting comment from many present is that they don't have the simple communications tools on hand to help them explain what the NBN is and what it will mean to people.

Anyhow, it raises my own question. My telephone line is currently an aerial lead in - as is my Foxtel/Bigpond cable. Will NBN Co publish a guide so that I could instal my own duct that could be accessed to install the NBN when it gets to my house (in about nine years I reckon cause our BB is OK)?

Novae Meridianae Demetae Dexter delenda est

The "standard model" explained

Nice piece in today's The Conversation that starts;

The “traditional” beauty of theoretical physics is its equations. If we want to describe something, or the way something behaves, we can write down a relation between some properties we think that thing will obey.

The simplicity and symmetry of these equations – to someone who understands them – is amazingly beautiful.

So far so good. Yes that is a joy of Physics.

But the piece goes on to say;

Given the mass of a ball, the height, angle, and strength with which it is thrown, physics will tell you the path the ball with take through the air, how long it will be in the air for, and how far away and how hard it will hit the ground.

Physics can fully describe this system with just a few simple properties.

But, of course, it can't. Projectile motion happens in the real world so on top of the simple model based on initial velocity and gravity you need to allow for air resistance. The next simple iteration is to assume air resistance is proportional to velocity and tweak the model.

But real atmosphere has "winds" - and they are incredibly complex systems that can only be modelled statistically.

The system cannot be "fully described". It can be "satisfactorily described" for most practical purposes - including artillery attacks, dropping bombs and shooting rockets into space.

All these little perturbations matter when you get down to the level of particle physics.

The "standard model" of particle physics is both well described but also fails to account for all empirical results and has too many variables to really be a meaningful "explanation".

The search goes on for something better. I can't help wondering whether the physicists are all looking in the wrong places because they still believe this stuff about their ability to "fully describe" any system.

Note: An unfortunate side effect of this is that economists believe economic science can "fully describe" the economic system.

Novae Meridianae Demetae Dexter delenda est

Politics the Ergas way

I need to take more time to digest what is in the NBn Co SAU. But henry ergas has chimed in today with a contribution that implies the SAU guarantees increasing prices rather than merely an envelope that increases below which prices will remain.

The egregious part is the comment

That, of course, won't happen. Rather, the government has demonstrated its willingness to sacrifice every principle of sound public policy to get its way. It can, and likely would, try to direct the ACCC to accept the most offensive aspects of NBN Co's SAU.

He knows that the ACCC legislation specifies that the Minister CAN NOT direct the ACCC in the application of Part XIC of the (now) Competition and Consumer Act.

The most recent example was the NBN PoI decision where the Government and NBN Co both favoured the 5 PoI outcome but the ACCC selected the 121 PoI outcome.

He also errs in his accusation that the NBN Co's differential prices by speed differs from the flat rate pricing of the ULL. With ULL the customer buys the WHOLE pair (or in LSS all the above voice frequency). With NBN Co each premise has 100 Mbps of capacity which can be acquired by different providers. I can buy 4 12/1 services from different ISPs and have them delivered to the same NTU.

Better analysis is required on all sides of the NBN model. The false accusation of rising prices needs to be dismissed.

(Note: by the same token NBN Co should have figured that the price rise reference would result in these accusations, another example that they just haven't got their act together yet)

Novae Meridianae Demetae Dexter delenda est

Thursday, August 25, 2011

Managing Communications

In the dying days of my career at AAPT I had to briefly fight a battle to retain a single communications function that covered internal and external communications. I did so, which was the right thing for the company, and in the process sacrificed myself.

As my blog about NBN Co today noted, the internal communication about an organisation change was always going to result in an external story. At listed companies you get very much better at setting up a sequence of communications so that staff and external stakeholders are informed by you directly at the same time.

Further analysis of the NBN Co structure reveals that while there is now a "Chief Communications Officer" (there will be another blog post about nomenclature) there are still two OTHER communications functions. Reporting to Kevin Brown in his role as Head of Corporate Services, David Auld is the GM Training Strategy and Internal Communications. Meanwhile in Operations Mike Kaiser is still listed as acting in a "Community Relations" role.

By all means recognise that there are communication execution functions across the organisation. But don't fragment them.

You cannot tell vendors, suppliers and government (external stakeholders) one thing, communities another and staff a third. There is only one truth to be communicated and it needs to be communicated in a way that addresses all these audiences.

Note: I am of course only reacting to what I can glean. Presumably the new Chief Communications Officer will have his own views and possibly seek some realignment.

Novae Meridianae Demetae Dexter delenda est

All change at NBN Co

News broke yesterday afternoon of organisational changes at NBN Co. The first report I saw gave the credit to The Oz for this story.

There was no news release, the Oz and others were relying on reports they had received of Quigley's staff announcement. An immediate jump to the NBN Co website revealed no media release, but the pre-existing list of senior executives had disappeared from the tab About - People.

This morning that tab contains the content of the announcement and has been reproduced below.

The very first observation is that NBN Co would have been better advised putting out its own media release rather than rely upon the leaking of the staff announcement. They might then have managed to achieve the reporting of the CFO change as a retirement as per the announcement rather than a resignation.

The difficulty is that like so much of NBN Co's activities the moves raise more questions than answers. I don't propose to detail them here, only to note that the moves can be reasonably described as chaotic as Malcolm Turnbull has done.

A big question is what the expertise is of the new Chief Communications Officer in the core field of communications. The mangled handling of the announcement of the org changes is enough to suggest that GM Communications Andrew Sholl needs some help from above.

Indeed the much trumpeted last role at Telecom New Zealand seems to have been relatively brief. Simple research also has him quoted as supporting this campaign for abstaining from sex for the World Cup which attracted much derision.

He is a Computer Scientist by training whose last job before Telecom was running their largest retail distributor. There does not appear to have been a communications role in his prior career.

The move to create a COO is long overdue - but announcing that the CEO will "act" in the role is odd in the extreme as these people would have reported to the CEO anyway.

There may be more to comment on - I'm hunting down more details.

Organisational announcement
Message to staff:

24 August 2011

Mike Quigley
Chief Executive Officer

Today I am announcing a reorganisation of our management structure and the creation of a number of new roles in the company’s senior management team.

The reorganisation reflects our transition from a start-up focused on planning and network design to a company capable of delivering the full-scale rollout of the National Broadband Network across Australia.

The organisational changes include:

•The appointment of a Chief Communications Officer to manage government, media and stakeholder relations as well as oversee the public information campaign that will inform and educate the Australian public about the NBN rollout;
•An integration of sales, pricing, industry relations and regulatory functions in the expanded department of Product Management & Industry Relations;
•An increased focus on quality planning, control and improvement with the appointment of a Head of Quality;
•The creation of a new role of Chief Operating Officer with responsibility for construction, deployment planning, IT and network operations;
•The bringing together of supply chain management, procurement, commercial strategy and the management of the Definitive Agreements with Telstra and Optus, as part of the Corporate Services department.

In two short years NBN Co has moved from being an embryonic company to an established business that is ready to build and operate a national network.

In that time we’ve achieved some significant milestones: We’ve entered into 16 key supply agreements for construction partners, equipment suppliers and service providers; signed up 28 telcos and ISPs as wholesale and retail customers; and planned and developed the network architecture for the fibre, satellite and fixed-wireless services. In addition, we have concluded the Definitive Agreements with Telstra and Optus for access to their customers and infrastructure, subject to regulatory and shareholder approval.

That’s why it’s critical we move to the next step in our evolution. I am confident that this reorganisation of our management structure will enable us to deliver Australia’s largest infrastructure project in an efficient and coordinated manner.

The restructuring will see seven departments reporting into the CEO, including four newly-created or newly-consolidated departments. These are:

Chief Operating Officer encompassing the following functions: Construction (Dan Flemming, who is confirmed today as Head of Construction), Network Operations (Steve Christian), Planning & Design (Peter Ferris), Chief Information Officer (Claire Rawlins), New Developments (Archie Wilson), Health, Safety & Environment (Kim Flanagan), and Local Community Relations (which Mike Kaiser will continue to manage in the short term). A worldwide search has commenced for a COO. Until we make a permanent appointment, I will manage the COO’s responsibilities.

Chief Communications Officer, Kieren Cooney. Kieren is joining NBN Co in November to take up a newly-created position that will be responsible for the company’s Government, Communications and Stakeholder Relations. He will also oversee a nationwide consumer information campaign covering the migration from copper- and HFC-based telecommunications networks to the fibre-enabled NBN. Kieren has held senior executive positions across the telecommunications industry, most recently as Chief Marketing Officer at Telecom New Zealand. Previously he was CEO of Leading Edge NZ, a nationwide telecommunications reseller and retailer. Until his arrival, Kieren’s responsibilities will be managed by Kevin Brown.

Head of Quality, Mike Kaiser. Mike moves from his position as Principal, Government Relations & External Affairs to a new role responsible for implementing a comprehensive quality framework for the company.

Head of Product Management & Industry Relations, Jim Hassell. Jim’s department is now responsible for Regulatory Affairs including the WBA (Caroline Lovell), Pricing (Dieter Schadt), Revenue (Stephen Myers) and Industry Analysis. These functions join with his existing responsibilities for Product Management (Leica Ison), Sales (Ben Salmon) and Product Marketing (Tim Smith).

In other moves:

Corporate Services, headed by Kevin Brown, will now include Commercial Affairs and the Definitive Agreements with Telstra and Optus (Tim Smeallie) and Supply Chain Management (Robin Payne). These functions join with Procurement (Alasdair Fuller), Legal Affairs (Justin Forsell), Facilities (Graham Millett) and Security (Ben Heyes). The Company Secretary (Debra Connor) will report to the chairman of the board and Justin Forsell. A search has commenced for a Chief of Human Resources; Kevin will continue to act in this role until an appointment is made.

Chief Technology Officer Gary McLaren continues responsibility for Network Architecture & Technology (Tony Cross), the National Test Facility (Peter Girvan), and Product Engineering (Chris Roberts), Technology Vendor Liaison (Paul Lazarou), Transit (Andre Du Raan), Satellite (Matt Dawson) and Wireless (Joe Prelc).

Regrettably, as a result of the reorganisation Christy Boyce is leaving the company. I thank her for her contribution.

Also, Jean-Pascal Beaufret, our Chief Financial Officer, has informed me that he wishes to retire. Jean-Pascal has agreed to remain with the company until January 2012 while a search is conducted for his successor. Jean-Pascal has been an invaluable asset for NBN Co in developing our corporate plan and establishing robust financial systems. On behalf of all of us at NBN Co, we wish him well and thank him for his invaluable contribution.

What the reorganisation does not change however is the task at hand: which is to deliver a world class communications infrastructure that will sustain Australia for decades to come.

I’m confident we are putting in place the right structure to carry out that task on behalf of the Australian taxpayer.

I look forward to continue working with you to deliver this vital project for the nation.

Mike Quigley
Chief Executive Officer

Novae Meridianae Demetae Dexter delenda est

Wednesday, August 24, 2011

Market capitalism and higher education

Nothing typifies the descent of Western Society into the abyss of market capitalism so much as the way higher education has been debased.

No longer institutions of learning and research, they are only to be valued on their ability to churn out "employment ready" students and to do research in partnership with the corporate sector that can subsequently be commercialised.

A wonderful report in the London Review of Books on a UK White Paper (Higher Education: Students at the Heart of the System) provides a delicious catalogue of the process of this change.

The contribution has one of the best descriptions of the process by which market capitalism colonised public policy, writing;

Since perhaps the 1970s, certainly the 1980s, official discourse has become increasingly colonised by an economistic idiom, which is derived not strictly from economic theory proper, but rather from the language of management schools, business consultants and financial journalism. British society has been subject to a deliberate campaign, initiated in free-market think tanks in the 1960s and 1970s and pushed strongly by business leaders and right-wing commentators ever since, to elevate the status of business and commerce and to make ‘contributing to economic growth’ the overriding goal of a whole swathe of social, cultural and intellectual activities which had previously been understood and valued in other terms. Such a campaign would not have been successful, of course, had it not been working with the grain of other changes in British society and the wider world. Very broadly speaking, the extension of democratic and egalitarian social attitudes has been accompanied by the growth of a kind of consumerist relativism. The claim that one activity is inherently of greater value or importance than another comes to be pilloried as ‘elitism’. Arguments are downgraded to ‘opinions’: all opinions are equally valuable (or valueless), so the only agreed criterion is what people say they think they want, and the only value with any indefeasible standing is ‘value for money’. Government documents issued in the last 20 years or so are immediately identifiable by the presence of such buzz phrases as ‘it is essential to sustain economic growth and maintain Britain’s global competitiveness,’ ‘consumers must have a choice of services,’ ‘competition will drive up quality’ and so on.

Much later in the report it plucks an example of what our own Don Watson has dubbed "management speak";

Beyond the warped ingenuity of these Heath Robinson schemes to force ‘free’ competition to happen in closely controlled circumstances, such interest as the White Paper possesses may lie chiefly in its providing a handy compendium of current officialese, a sottisier of econobabble. One of the most revealing features of its prose is the way the tense that might be called the mission-statement present is used to disguise implausible non sequiturs as universally acknowledged general truths. Here is one mantra, repeated in similar terms at several points: ‘Putting financial power into the hands of learners makes student choice meaningful.’ Part of the brilliance of the semantic reversals at the heart of such Newspeak lies in the simple transposition of negative to positive. After all, ‘putting financial power into the hands of learners’ means ‘making them pay for something they used to get as of right’. So forcing you to pay for something enhances your power. And then the empty, relationship-counselling cadence of the assertion that this ‘makes student choice meaningful’. Translation: ‘If you choose something because you care about it and hope it will extend your human capacities it will have no significance for you, but if you are paying for it then you will scratch people’s eyes out to get what you’re entitled to.’ No paying, no meaning. After all, why else would anyone do anything?

Novae Meridianae Demetae Dexter delenda est

Top read of the day

This column from Wired is about the complexity of the structure of a crushed piece of paper and why the ball that results which is 90% air is so rigid.

For those economists out there still wedded to economic models derived from 19th century thermodynamics and electromagnetism, you might like to reflect on the thought that real world markets are much like the crumpled paper - apparently simple but really very complex.

The problem is we don't have X-ray microtomography to look at the structure of economic markets.

Novae Meridianae Demetae Dexter delenda est

Tuesday, August 23, 2011

I love Twitter

Without it I would never have really found out more about the loon right winger Daniel Pipes who appeared on QandA last night. (Note to producers - the combination of Pipes together with Doug Cameron was just too much extremism to get any dynamic going. Also the Craig Thomson nonsense was demeaning for QandA).

Courtesy of twitter I've found this blog post in which Pipes asserts that the Black Saturday bushfires were a jihadist attack. The best he can find is a muslim "gloating" - totally ignoring the fact that the muslim only refers to it as an act of god.

Ahh so glad the world has Daniel Pipes to defend it.....

Meanwhile, I can't help rethinking the whole discussion on democracy on last night's QandA and whether Israel is a good or bad example. In the final analysis I disagree with Nick Minchin that we have to find a "two state solution".

I actually reject the whole 1850s to 1950s obsession with national self-determination when it is anything other than anti-imperialism. It isn't about race culture or language but geography.

The people within a defined physical area agree to run their country co-operatively. There can be no space for theocratic states - be they muslim or jewish - or christian. The separation of church and state that Minchin happily mouthed works if all religions know they can be treated equally.

Our model for democracy should be a single state of Israel in which both Palestinians and Israelis co-exist. The unresolved issue is the dispossession of some Palistinians by the Israeli invasion. There is probably no alternative other than the UN - as author of the creation of Israel - shouldering that as a financial liability.

Novae Meridianae Demetae Dexter delenda est

Alan Jones and that rally - updated again

Jacqueline Maley has written in this morning's SMH about her experience with Alan Jones at the poorly attended rally yesterday. (They have also put up video).

He took objection to the question of whether he was being "paid" to appear. The question was perhaps a little naive - largely because Jones himself is a brand. To not appear - to leave the rally bizz to his competitors at 2UE - really isn't an option.

Jones response to David Lipson has also been reported today. This was over the now infamous "two kilometres of trucks" comment. A bit like the now incredibly famous "of all the carbon dioxide Australians are producing .000018 of a per cent." Jones when he has his errors explained to him does not know how to react.

"Grown ups" know how to acknowledge they are wrong, to make a correction and move on. Serious people go as far as Lord Keynes and note that when the facts change they change their minds.

But not Alan Jones. His brand is built in part on his infallibility - that every pronouncement is right, that every person he decides to befriend is a saint ("We pick and stick" he says, as if this were a rugby team selection).

The real horror is that he is teaching Tony Abbott this "demagogue-ary." Abbott knows there is no way for a double dissolution to be called, and that there is no basis for the GG to dissolve the House of Reps alone. Yet he bays to the crowd in his best Jones impersonation that which the mob wish to hear.

As someone tweeted yesterday - they hope the NSW and/or ACT police pursue Jones for the claim about the trucks stopped at the border.

Update - Crikey's Power Index has noted the two stories above but has added responses by Hadley and Jones this morning.

Hadley seems to think 200 trucks is more important than a revolution in Libya. Jones repeats his assertions about underhand police acts - but changes the story. Meanwhile he seems to be unsure of exactly what he thinks people are complaining about. In yesterday's video footage he was talking of rural suicides - many of which were drought related. Today it was citrus farmers and propositions that the Government should buy Australian crops and give them as food aid in Africa. Economically irrational on every level - not least the cost of shipping waste to a drought. Ship water, ship concentrated nutrients - not oranges.

Updated again - listen to the audio. Two things worth commenting.

Jones can't distinguish between "the border" and the Parliamentary Circle. State Circle is not five kilometres long - and if there were trucks filling it both ways - where were they going to go when they got onto Parliamentary Circle? weird.

How can Jones know whether Maley was afraid or not - how can he criticise her for leaving in those circumstances?

Novae Meridianae Demetae Dexter delenda est

Monday, August 22, 2011

The ALP - two views

Interesting to see so soon after my comment triggered by Rod Cavalier's report from annual conference two pieces in the media on related themes. The first is on management of national conference, the second is on union control.

Matthew Franklin reports in the Oz today that the ALP heavies have come up with a strategy to avoid a conference debate on same sex marriage. The ploy is to declare it a "conscience" issue. The supposed reasoning is that there is no value in looking to have conference dominated by a Greens issue.

But as a former ALP staffer tweeted on the story "Not sure how a majority of the FPLP voting against the PM is politically better than a majority of conference doing so."

I agree with the sentiment of the tweet - that where the division between ALP members takes place has no significance. I disagree with the import that the party can never be seen to be "disagreeing" with its leader pro tem.

Good politics would find a way to maintain the national conference as the supreme policy body, to recognise that members should be bound by the pledge on social and moral issues as much as economic ones. But good politics would also recognise that community opinion is still heavily divided.

A more useful and productive compromise would be an inquiry into relationships and the legal recognition of relationships in Australia. It could encompass a review of de facto relationships, and the now messy state of the legal recognition of de facto relationships that occur at the same time as marriage. That is, we have legally recognised a kind of polygamy.

Separately Bruce Hawker in the Oz has called for further reform of the ALP to reduce the union block voting power from 50% to 18% (the latter number to reflect the proportion of the workforce that are members of unions).

It is a good reflection of how futile was the Crean reform that took union control from 60% to 50%. But the move needs to be absolute. Political parties cannot be seen to be agents of external agents. The break needs to be complete.

I should note that Crean's poor judgement on this issue, the burning of political capital to achieve an insufficient reform, is a good reason why Ross Cameron is wrong in thinking the ALP might turn to Crean as a sacrificial leader.

Note: Long range prediction. If the next election is held in 2013 with Julia Gillard as PM, the ALP will win.

Novae Meridianae Demetae Dexter delenda est

I mightn't like him, but sometimes I admire him

Tony Abbott is not someone I describe as likeable. Despite manifestly having a social conscience and the capacity for empathy, as an individual what is more frequently on show is the pugalist. The scrappy fighter with the Oxford Blue that makes exercise look like something from a Rocky movie is the image he mostly portrays.

It is this that is "admirable", because, just like his physical pursuits, it is something I could not achieve.

How he can stare into the cameras day after day running out his latest cute metaphor, how he can run the line repeatedly that a Government that has the world's praise for handling the GFC is "incompetent", and how he can hold contradictory simultaneous thoughts at the same time.

Perhaps most admirable is his recently found skill to look a goose by NOT answering questions because he knows that any answer he gives merely makes him look more of a goose.

The rant today was inspired by Mr Abbott's call for Craig Thomson to be removed as the chair the HoR economics committee, saying it was;

very hard for someone who can't answer questions about his own credit card to credibly ask questions of the governor of the Reserve Bank about the nation's credit card.

The statement suggests that Mr Abbott's own "credibility" is beyond question. And so perhaps we find the real mid-term campaign that the ALP should mount, on Mr Abbott's credibility not his policy.

This is a campaign that should not be run by press release or in Prime Ministerial statements - see my earlier blog post on referring to the coalition. But it should be run by the ALP secretariat.

It also shouldn't use much of their (depleted) resources by using real TV advertisments. It should use YouTube.

And the target should be Mr Abbott's credibility. You start (or end) EACH piece with the Tony Abbott statement about not believing what he says. Add to it John Howard talking about core and non-core promises.

You then run separate clips on Mr Abbott's inconsistencies. 1. Does he or does he not believe in climate change. 2. Run his current non-belief together with his direct action policy. 3. Repeat the Jones interview on coal seam gas and the non-answers.

It sounds terrible when I say it like this, but Mr Abbott can be turned into an object of derision for his own words, and satire needs to play no part in it.

And to repeat this should be a party secretariat campaign, the PM should act as if Mr Abbott is irrelevant.

Novae Meridianae Demetae Dexter delenda est

Friday, August 19, 2011

A rarity - a measured Ergas piece

A good column today by Henry Ergas. He does a very good job of explaining why the property right in real estate is not the unconstrained right that people sometimes think it is or should be.

I think I marginally disagree with him on the politics though of why the Federal and State Governments might take different views to "developers". Nice to see though the acknowledgement of the central role of Government in both defining rights and in managing interests where markets would be ineffective in managing rights.

All way too complicated for his primary target - Tony Abbott - to understand though. As a Syd U alumnus and Rhodes Scholar he clearly used to be an intelligent man .... but he seems to have stopped thinking somewhere along the line.

Novae Meridianae Demetae Dexter delenda est

The Southern Highlands Branch Newsletter

Since attending the launch of Rodney Cavalier's wonderful book Power Crisis I have been a subscriber to the very worthy Southern Highlands Branch Newsletter that he edits.

The rules of subscription prohibit any quotation or attribution of content. I think, however, I would be allowed to note that the August 2011 issue gives a wonderful account of the tribal ritual of the ALP, the "annual" NSW State conference.

The fact that the ritual has changed over the years from a fiery forum in which policy and direction were debated and decided to a manufactured exercise largely staged to reflect a consensus and progress does not make it any the less ritual. As a cultural icon nothing could express more the state of the ALP in NSW than conference.

Due in no small part to my on again/off again relationship with the ALP I only ever attended two State conferences, both in the last decade. In my earlier incarnation I reached the position of President of Bennelong FEC and Secretary of (the then Eastwood) SEC without ever formally aligning myself with a faction. Quite simply I found the Right repugnant and too much of the Left impractical.

Reports have appeared elsewhere of the attack mounted by Cavalier at conference on Country Labor. It is a very good example of the symbolic clap-trap in the party, and of the paucity of content that evolves from the view of politics as marketing.

(Note: This is unfair to marketing. In one version of marketing all you do is survey the wants and needs of consumers and then reflect these back to them. A more strategic view is that you delve further into the interests of people to identify wants and needs they don't even express because they don't know how to. Changing the colour of your logo is the first kind. Inventing the iPod and iTunes is the latter. There is nothing particularly wrong with type 2 marketing as politics).

People outside the ALP still think in terms of the factions of "Left" and "Right" as representing some kind of ideological distinction, rather than merely separate strands of patronage. Even more interesting are the divisions within the left itself - as well detailed by Andrew Leigh. A related issue that bubbles through elsewhere is the extent to which the ALP left represents a genuine "socialist" path.

Whatever the basis and structure, the reality is that the two factions combined exercise almost the entire vote. There is one small group - OurALP - trying to change that.

Which brings us again to the question of "reforming" the ALP. This is a topic which - notwithstanding the Watkins/Chisholm and Bracks/Faulkner/Carr reports - still invites disagreement within the party. Primarily because every person who hears the word "change" decides it is a word that describes everyone else in the party - but not them.

So you have some who say it is about leadership (e.g. Paul Howes whose only knowledge of it is how to claim credit for the knifing of a leader that you didn't play a role in), while others talk about the need for policy initiatives to engage the electorate. But at core a failing organisation structure which provides no reason for membership, and the prospect of advancement only for how well you can play the patronage game, cannot deliver these outcomes.

An example of how strange the discussion is is the call by Watkins/Chisholm for better quality candidates but also for less central control. The ten old retired members and three neophytes that constitute the average branch are not going to be able to deliver on that ambition now.

And as I've previously noted the ALP has vigorously embraced all the modern ideas of online tools, different ways of engagement, etc. But at core all of that remains pointless when the major power controls of the party are still in the hands of organisations that represent a decreasing minority of Australia's workers.

For years it has been an ambition of the conservatives to "defund" the ALP by breaking its union ties. They seem to have stopped - because they now realize that union control of the ALP is what keeps it back.

Another theme in all party reviews has been the idea of connecting with other groups. This ignores the sorry history of the party and the influence of external bodies of both right and left seeking to gain control. But it is also a key distinction between the "soft left" and "hard left." The latter are great believers in forming associations with other groups of the left, whereas the soft left believe it is the ALP to which loyalty lies. This distinction can ultimately be applied to the relationship of the ALP to unions.

The Andrew Leigh article cited above attributes to Rodney Cavalier the statement I am in the Left because I’m in the Labor Party. Others in this room are in the Labor Party because they’re in the Left.

That neatly describes the position the party needs to get to. people are in the Labor Party because it is what they represent, not as a vehicle to represent the views they have formed elsewhere.

The ALP has a future - that future requires the recognition that everyone in the party has to change, not just everyone else.

Novae Meridianae Demetae Dexter delenda est

Monday, August 15, 2011

The PM and the Party

Nice to see a couple of former ALP heavyweights in the press today.

Stephen Loosely has joined the fray with a piece arguing that Gillard may be doing a Keating in fighting the hard policy yards, and so long as she gets the time she will get the outcome.

Meanwhile John Kerin has thrown his hands up in horror at the organisational state of the ALP.

It is hard not to see a link between the two. To fulfil Loosley's statement "Keating always observed accurately that good policy is good politics," the "good policy" that the PM wants to pursue needs to be told in a way that attracts dedicated support to the party.

The irregular arrivals (asylum seekers/boat people) issue is a good place to start. The policy the Government is currently pursuing aims to INCREASE the number of people we settle as refugees, while discouraging people from making a dangerous voyage.

This is the story that message that needs to be repeated (and maybe calling those arriving "irregular arrivals" might be a good place to start).

The PM should aim to win this on its merits, not just win it because it is a safe course between the extreme Left and extreme Right.

The other issue is the insane moment developing for the "new election" position. Paul Sheehan gives it a good run this morning. Interesting to note that this is a trucker initiative - and quite frankly we've had so many truckie protests over the years that no one will notice.

But more seriously, where did we get this idea that just because a Government mid-term becomes unpopular there should be an election? I've long been an advocate of annual elections and actually think they could work. But the current thinking is sheer lunacy.

Novae Meridianae Demetae Dexter delenda est

Gittins great again

It is hard to understand accusations of a left-wing bias in the press when Fairfax still provide weekly columns by Paul Sheehan and Gerard Henderson.

It is interesting though that it is their economics editor who has a consistent "market sceptic" view. This month he has already once this month written a column explaining that more reform designed to get Government out of the action isn't necessarily good.

Having jumped into praise for that contribution I need to do it today for another great contribution.

He develops the theme of understanding the decline in the rate of productivity improvement and posits that the decline may well be the consequence of a market failure than a government failure. After all, it is the market that has failed to deliver the productivity improvement.

He does so by focussing on the question of public infrastructure - primarily through education - and also analyses how various competition reforms have also weakened human capital.

Gittins asserts;

As part of our abstemiousness, we've gone for several decades underspending on all levels of education and training: early childhood development, schools, vocational training and universities.

I'm not going to subject this view to critical analysis. I happen to agree with it, especially in relation to secondary schooling (see note) and Universities.

In the area of competition policy Gittins sees the very real issue that by lauding competition we under-value co-operation;

But the human animal has achieved the great things it has not only as a result of competition between us but also as a result of our heightened ability to co-operate in the achievement of common objectives. The economists' conventional model is big on competition, but sets little store by co-operation, since it assumes we're all rugged individualists. Could it be that, by greatly increasing the competition most firms face in their markets, micro reform has reduced the amount of productivity enhancing co-operation?

A further possibility is that, in turning up the heat of competition in so many markets, and in spreading market forces into areas formerly outside the market, micro reform has diminished our ''social capital'' in ways that adversely affect economic performance.

There's no place for trust, feelings of reciprocity or norms of socially acceptable behaviour in the economists' model, so they tend to under-recognise their importance. But you only have to observe a loss of trust within the community to realise the high cost that loss imposes on the economy as well as society.

The less we feel we can trust each other, the more avoidable costs we impose on the economy in spending on supervision and monitoring, security devices and security people.

I could add that the "market model" as applied to human resources has seen an under-investment of in-firm people development. he solution to a skills shortage (or worse change in skill requirements) is to simply "go to the market".

To remind us of what Gittins is arguing against let's consider this rant in The Punch. The person asserts they've lost faith in Labor because it isn't economically rationalist but is instead "a party of protectionism, intrusive government, wealth redistribution and union power."

I won't repeat my comments from The Punch. Here I want to merely note the incredibly productive role Unions have made over time in insisting on the development of human resources, not least in requiring firms to train and re-train employees.

Contrast this with the bellowing of the still new Member for Bennelong. John Alexander reckons we need to review penalty rates because they impeded economic activity. His example?

We have many examples in our region of coffee shops and the like not trading on weekends because of penalty rates. It is something that must be addressed and it must be addressed without the position of the worker is king and must be given these rights. There's no benefit in having the right but not having the job. The consumer loses, business loses and the employer loses.

I live and work in Bennelong. No coffee shop that I wish to use on a weekend is not open on a weekend. But since when were we going to have a "coffee shop led" economy? (Don't get me wrong, the service sector is large and important, it is shop? And why not cafe?)

"Reform" is a much more complex concept than merely "less government".

(More generally the role of government is to make markets that work).

Note: I've written previously about the issue of maths and science education in high schools. I asked a casual maths teacher about it - what would they do. His simple answer was pay Maths teachers more. Because it is a compulsory subject maths masters always have full classes and have a higher ratio of kids not interested in being there.

Novae Meridianae Demetae Dexter delenda est

A letter to LEK and Fairfax

According to a report in the Oz Fairfax has called in LEK to review the Australian Financial Review and its paywall.

I've talked about Fairfax before as well as the plan to share the presses with News.

I'm firmly of the belief that the best solution for Fairfax is a single national daily with city specific editions. The AFR print version should cease to exist and be re-badged as the business section of this paper. The online AFR should include the stories from the print version free, some additional free content under the NYT model (you need to register, you can only see a certain number of stories for free, but everything is accessible).

I'm of course not privy to all the data available to LEK - there may be a better option. But at the very least if the review doesn't evaluate this option it is an ineffective review.

Novae Meridianae Demetae Dexter delenda est

Thursday, August 11, 2011

London and Norway

So soon after the world has recoiled in horror from the bombing and slaughter in Norway we are confronted by the images of rioting youths in London, and later other UK cities.

I put the two together because there are some significant similarities - despite the fact that one is a mass movement and the other an apparent lone individual.

The similarities I wish to explore relate to the role of global media, the existence of a "manifesto", the exercise in "blaming" and finally the wider context of terror.

Global Media

The events in Norway and the UK aren't, in reality, extra-ordinary. Similar things have happened before in other places. However they feel more real and pressing because of the coverage they are able to receive. The Paris riots of 1968 came to us in news reports that were read to us or that we read in a newspaper. The London riots come to us as repeated footage of real people in real streets with real fires. The damage and spread looks far more extensive because of the way it is shown.

Don't get me wrong - this is a good thing. We can only benefit from having a greater appreciation of what is happening.

but as an audience we aren't yet trained to recognise the distinction between the scale of coverage of an event and the scale of an event itself. Earthquakes and tsunamis in developed countries look more devastating because we see more pictures.

The manifesto

Norways's mass murderer had a "manifesto" that was not explicitly racist but decried muliculturalism. However he had a specific dislike for what he called "cultural Marxists".

Off the back of London we
are warned by Merv Bendle about the influence on the rioters of a particular revolutionary tract called The Coming Insurrection. (It is online as a blog and a pdf).

Bendle is better known to me through his rants in Quadrant about the proper place in our history for the (valiant men)/(poor misguided fools) who fought for Australia in World War I. (Bendle is, of course, one of those who thinks only the former should be used and can't contemplate that both can apply). It is no surprise that for him the cause of insurrection is left-wing trouble makers, not something real like disadvantage or entirely social, the kind of thing that will happen occasionally in otherwise stable systems.

My point is that the manifesto is an attribute of the underlying issue not a motivation.


When bad things happen, someone or something has to be responsible...right? well that's what the commentators think.

Keith Windshuttle catalogued the claims that Breivik "represented the armed wing of hysterical Right commentary." citing sources such as Aaron Paul for the claim. This is really the counterpoint to the Bendle claim that London is the consequence of leftwing writing. Good to see such diversity of views among the Quadrant set.

It is interesting to note that since many of the rioters are clearly non Anglo (but not all) the cause has not mostly been blamed on multiculturalism - that surprisingly has been reserved for Norway.

More practically Paul Sheehan argues that "widespread policy failures" have bred a "feral" underclass. But Sheehan's cure is less welfare. Good diagnosis but poor cure.

Guradian columnist Zoe Williams opined;

There seems to be another aspect to the impunity - that the people rioting aren't taking seriously the idea it could rebound on them. .... This could go back to the idea that people just don't believe they'll go to prison any more, at least not for something as petty as a pair of trainers.

This perhaps comes closer to the mark. But the issue isn't really about whether incarceration is a real threat or not. The kids rioting have no fear not because they don't see the risk of incarceration, just that doing gaol time won't ruin their lives. They see themselves as having no future to look forward to.


Norway and London though are both examples of terror. Not necessarily terror as an organised centralised act by an agent like Al Quaeda or the Bolsheviks, or terror by the state as in Nazi Germany, Soviet Russia or the French Revolution.

But it is terror as a political act. And we need to understand terror and its attraction.

Terror is a strategy that makes the powerless powerful. Here we get into the real bowels of discussing a democratic parliamentary democracy - it is meant to be one where no one is subject to the arbitrary exercise of power by another.

But that isn't true of modern "Western" society. Galbraith identified the power of the corporation. More recently we see in Australia the naked exercise of corporate power in ads on policy from tobacco, mining and gambling industries. But ultimately Rob Burgess writing for Business Spectator nailed it, corporations are marketing affluence to the poor.

Novae Meridianae Demetae Dexter delenda est

Tuesday, August 09, 2011

More on complexity economics

Since my complexity economics I have been making slow progress on the underlying paper.

I've turned up a couple of interesting papers in the Review of Political Economy by Holt, Rosser and Colander.

The first in 2004 is The changing face of mainstream economics which is a description of the study of economics itself as a complex system, and that it is changing into something new.

This year they have followed it up with The complexity era in economics in which they argue that the new thing they wrote about is "complexity economics", how it has grown out of the neoclassical and heterodox schools and how it will change the way we understand economic phenomena.

What I want to do today is just give some simple practical examples of what complexity economics can look like. The examples are all drawn from Physica A which is actually a journal of statistical mechanics. The examples I'm choosing are ones that could be relevant to our understanding of telecommunications markets.

The first is Evolution of cooperation among mobile agents with heterogenous view radii which isn't even from the econophysics section but the dynamical processes section of the journal. The paper is interesting because it is an advance on the Axelrod work and the way to explain co-operation using a more intricate model of agents which interact with a group of other agents. A conclusion is that co-operation is best facilitated by small interaction "circles" and a slow moving speed. This raises the potential issue that a fast moving networked economy DOESN'T facilitate co-operation as much as our older economy.

The second is A Markovian model market—Akerlof’s lemons and the asymmetry which models the degree of information assymetry (as measured by a consumer's perceptive capacity) and shows that Ackerlof's complete market failure occurs at a computable value for this. A potentially very important conclusion for industry is that;

When β is closer to 1 (symmetric information), the market becomes more profitable for high quality goods, although high and low quality markets coexist.

That is, co-operative effort by industry to improve consumer understanding of product offerings INCREASES INDUSTRY PROFIT.

The other two examples are ones that help with one of my favourite issues - understanding market structure and adoption rates.

In Dynamics of market structure driven by the degree of consumer's rationality the model shows how market structures evolve where the degree of consumer "rationality" (meaning how bounded it is) determines how the market evolves. It makes predictions that the size distribution of firms follows Zipf's Law and that the growth rate distribution follows Gilbrat's law. There is a perfect data set of firm size distribution over time for Australian carriers - but it is Zipf like but not actually Zipf in its distribution.

In Evolutionary model of an anonymous consumer durable market an evolutionary dynamic is set-up to explain purchase and innovation in consumer durables markets in which equilibrium is a special case. This I find of interest because in the global comparison of broadband take-up rates it is the different shapes of the S shaped diffusion curves that needs to be "explained", not the penetration at any point in time.

Two things need to be noted here.

The first is about the relationship between "complexity economics" and "econophysics". They are in essence the same thing, only the latter come to it through maths and physics. Econophysics does spend a lot of time discussing stock-markets - these are where all the infamous "quants" came from that got the investment banks into some of their trouble. But it also discusses complexity using dynamic models.

A word of caution has been issued by Steve Keen reminding the econophysicists that much of the economic science from which they wish to build has no foundation.

But equally the econophysicists need to recognise that what they are doing is still really economic science - not, as argued in Is econophysics a new discipline? The neopositivist argument, a new discipline. That thesis firstly completely misrepresents physics as "positivist" science, and ignores the claims made by the likes of Friedman that they were engaged in positive science.

As my larger piece argues we do blur the boundaries between economic science and political economy, the latter being prescriptions based on the former and an ethical stance on what our goals should be.

So what should be done. As I also noted recently complexity economics needs to be married to good maths. But I also note that the University of Melbourne seems to have had a foray into econphysics entirely from the Physics and Maths Departments. Meanwhile UQ has an ARC Centre for Evolutionary Economic Systems.

In the words of Steve Keen;

The most important thing that global financial crisis has done for economic theory is
to show that neoclassical economics is not merely wrong, but dangerous.

To replace it we need to apply mathematics to heterodox economics. It is forgotten that the original neoclassical "revolution" came about by the application of the then current maths of physical systems to economics. (see How Economics became a Mathematical Science and More Heat than Light)

Novae Meridianae Demetae Dexter delenda est


Declining sharemarkets always create the opportunity for storeies about the impact on specific sectors.

It raises the better question - how have tech stocks compared to the market (ASX 200).

For IT stocks;

For telco stocks

I'd conclude the sectors have pretty much followed the market - but that telcos are doing just a bit better than the market overall.

In other words - move on folks - nothing to see here!

Novae Meridianae Demetae Dexter delenda est

God and economics

At last week's ACCAN/ACMA Summit on the Reconnecting the Customer report I got mentioned for the best tweet, being

DT says you can't embed an ethical basis into coroporations without an external motivator - hmmm sounds like God. #RTCsummit

The context was a discussion on whether regulation of telcos was required and one speaker advanced the proposition that regulation was necessary because firms won't self regulate - in his terms the
"ethical basis" has to be imposed by an external agent.

That's where God comes in - because under a religious world view we only act morally because of the intervention of God. And the only reason to behave morally is God's retribution.

Interestingly the fact that Adam Smith had a place in his economic world view for God as the creator of the natural order of markets. In fact, Veblen noted this as one of his critiques of neoclassical theory (the three part "The Preconceptions of Economic Science).

Put simply, the theory of self-interested rational utility maximisation is counter to the principles of an organised society and moral behaviour.

The good news is that dynamic, evolutionary models demonstrate that self-interested agents can and will create a system of trust - this was demonstrated by Axelrod in his Evolution of Cooperation.

The intent of my comment was that the proposition must be wrong - firms just like people can iteratively create moral behaviour and norms. The regulatory question then is not how to impose the norms but how to affect the dynamics so that the morals evolve.

Novae Meridianae Demetae Dexter delenda est

Monday, August 08, 2011

Sharing the presses ... part 2

New reports in the Oz that News and Fairfax are close to a JV for printing newspapers, this time in the . Last time I commented on the story it also came from there - are they trying to put external pressure on Fairfax to do the deal?

As I said before it does raise competition concerns and would be an acquisition under s50. If the ACCC can have concerns about a merger between FOXTEL and AUSTAR one can expect them to be more worried about a print sharing deal.

The challenge is that both transactions clearly do increase "efficiency".

Novae Meridianae Demetae Dexter delenda est

Yet another great Gittins column

A great column by Ross Gittins in today's SMH.

Today he takes solid aim at people clamouring for more "micro-economic reform" but rightly points out that such reform has never provided enduring changes to productivity improvement rates. What does that is technology and innovation, a subject standard economists still treat as "exogenous" to their models.

What I loved though is his very simple explanation for how it is that economists (and business people) who have unbounded faith in markets are forever calling for some kind of government action. Partly paraphrased he wrote;

We need to remind ourselves that governments don't actually run the economy, business people do. So if businesses aren't generating much productivity improvement, the obvious place to look is at the behaviour of business people.

Conventional economics' foundation assumption that economic actors are always and everywhere rational [and] as a general rule markets get it right.

It follows that, if the market isn't delivering satisfactory outcomes, it could be a case of ''market failure'', but it's much more likely to be a case of ''government failure''. It must be something the government's doing that's stuffing things up. Thus does every problem in the private sector become the government's fault.

Beautiful when you think about it. As he says this is the complete rationale for "micro-economic reform" which is coded as "government does less".

I would note one deviation from the Gittins position. He notes that the only exception to the rule that reform is less regulation is in the area of market power (basically monopolies and collusion).

It is interesting to note that in the 1980s and 1990s all of Australia's big businesses were clamouring for competition in some other sector, the banks wanted competition in airlines, the airlines wanted competition in banks, while everyone wanted competition in telecommunications. But by the 21st century big business - as largely represented by the BCA - took the position that Australia's small economy needed these firms of big size to achieve scale efficiencies.

And this is (as Gittins notes) the dirty little secret of technological advance - it increases economies of scale - big firms get bigger.

It will be nice when echnocrats and business writers start getting it that the challenges of the new economy are much different to simply getting less government intervention.

Novae Meridianae Demetae Dexter delenda est

Australian Democrats Watch - episode .....

I have to hand to the remaining Australian Democrats recognition for their valiant fight.

National executive member Paul Young has used OnLine Opinion to remind us that the ADs still exist. A quick review of their website suggestes that Julie Melland and team have made great strides in re-establishing a functioning machinery.

Technically the machinery fell apart after their early 90s success led to being flush with funds and a centralisation that then collapsed once funds dried up.

It might help Paul Young however to get his history right. Don Chipp only has the chance to create the Australian Democrats because of the pre-existing Australia Party and the Liberal Reform Movement.

Paul is right that there was no single event that sparked the party's demise except the creation of the Greens. The fundamental difficulty for the party is the "cognitive disidence" between its 5 principles - which are all quite libertarian - and its objectives - which are all quite activists.

The party was a party of the middle that the ALP at first colonised, which drove out the Democrats but created the opportunity for the Greens to the Left of the ALP.

There possibly is a role for the Democrats - but they actually need to rework the principles and objectives before doing more policy work.

Novae Meridianae Demetae Dexter delenda est