The latest ranking of MBAs by The Economist is accompanied by a simple summary of the impact on income, tuition fees and completion time for the top twenty.
It raises the simple question of "is the MBA worth it". For the analysis below I've made the following assumptions.
* The starting salary (salary at graduation less the percentage increase) would have been salary in perpetuity without study.
* The starting salary is income foregone for the duration of study (note this could be adjusted to add a variable number of months to gain post-study employment)
* The post graduation salary is salary in perpetuity after graduation.
* Total investment is salary foregone plus tuition fees (it might also need to include travel fees and a marginally increased accommodation cost).
* The benefit of the study is the salary increase.
* The total costs are incurred at the end of the study period.
* The discount rate is a bank rate (in Australia) that the individual could have earned on their investment, not what it would cost to borrow it.
The table below then lists the breakeven period in years from studying the MBA;
School Breakeven (Years)
Dartmouth 4.739753219
Chicago 7.099505598
IMD 2.38168461
Virginia 5.229798065
Harvard 6.226036989
Haas 6.012883336
Columbia 6.691201258
Stanford 5.634683547
York 2.201795183
IESE 2.314012985
MIT Sloan 6.221474851
New York 4.934890324
London 4.234646527
HEC Paris 1.801230378
Penn Wharton 6.147176899
Carnegie Mell. 5.233258692
ESADE 2.193307709
NW Kellog 6.443697885
INSEAD 4.23724441
Duke 4.430517136
(analysis available here)
This doesn't take into account other "opportunity costs" (or benefits) of locking yourself away (or networking). But I think I know why I never bothered.
Novae Meridianae Demetae Dexter delenda est
Friday, October 14, 2011
Asher's foolishness
So Allan Asher has been caught out providing Greens Senators with questions to ask him at estimates. The action has been called unwise and grubby.
It has been met with calls for explanation or resignation.
I agree with all those comments. Asher himself said;
I chose this unorthodox approach to bring my concerns to the attention of the Parliament and the public. I would welcome a discussion regarding the establishment of a parliamentary committee or some other accountability mechanism to specifically review my work and with whom I could raise issues of concern without compromise to the independence of my office.
Therein lies the particular issue. We have a number of statutory offices that are not subject to Ministerial direction like a Department. The ACCC, ACMA and ASIC are such bodies. Minister's can't really be "held to account" for administration in some ways by pleading the agency's independence.
Asher is not the first head of an agency to find budgets an issue. The ACMA utilised a number of channels to make submissions about the impact of Tanner's "efficiency dividend" on small agencies. There are routes other than feeding questions to Senators.
However, there does appear to be merit in creating more direct parliamentary oversight of agencies that are created to be independent of the Executive.
That said, it is hard to understand why Asher was not simply patient enough to include the issues in his annual report.
Novae Meridianae Demetae Dexter delenda est
It has been met with calls for explanation or resignation.
I agree with all those comments. Asher himself said;
I chose this unorthodox approach to bring my concerns to the attention of the Parliament and the public. I would welcome a discussion regarding the establishment of a parliamentary committee or some other accountability mechanism to specifically review my work and with whom I could raise issues of concern without compromise to the independence of my office.
Therein lies the particular issue. We have a number of statutory offices that are not subject to Ministerial direction like a Department. The ACCC, ACMA and ASIC are such bodies. Minister's can't really be "held to account" for administration in some ways by pleading the agency's independence.
Asher is not the first head of an agency to find budgets an issue. The ACMA utilised a number of channels to make submissions about the impact of Tanner's "efficiency dividend" on small agencies. There are routes other than feeding questions to Senators.
However, there does appear to be merit in creating more direct parliamentary oversight of agencies that are created to be independent of the Executive.
That said, it is hard to understand why Asher was not simply patient enough to include the issues in his annual report.
Novae Meridianae Demetae Dexter delenda est
Green barreling and the MFP
Henry Ergas has launched a tirade against the Government's climate change policy. He is reasonably concerned about the prospect of "painting the pork barrell green" through the $10B in subsidies available from the Green Energy Finance Corporation.
My problem is that I don't see much better on the other side where EVERYTHING is by "direct action."
I don't accept the generic conclusion that;
. Rather, analyses consistently conclude that each dollar spent on this type of government venture simply crowds out one dollar of private investment elsewhere in the economy. But that government dollar both achieves less than the dollar it displaces and costs more, because distorting taxes are needed to raise it. It therefore ends up costing two or more dollars in lost income.
Targeted investment in creating comparative advantage can work in the long run. But the focus has to be on identifying places where investment in capability can generate returns. Australian Governments have invested successfully for years in agriculture research to create comparative advantage in agriculture markets.
He also completely loses me by asserting "the Hawke Govt Multi-Function Polis sought to get us into electronics?" Blowed if I know where that came from.
The MFP was a proposal from Japan's MITI for a city based on adapting all the latest in technology. It was made in the late eighties. The proposal looked more like a plan to build a giant Japanese retirement village on the North coast of Queensland. By 1990 one report described it as;
a model city for 21st century conditions, arising out of the new possibilities for urban living associated with telecommunications, internationalisation and an information intense environment.
The Government tried to engage with the plan hiring Clem Doherty of McKinsey (now on the NBN Board). The implementation of it swung from being a network of MFPs in each state (to avoid having to decide) before uniquly settling on a swamp near Adelaide. Having now not met any of the Japanese objectives interest from there wained and the proposal slowly died.
I'm also struggling to understand how the world "slumped" in electronics after the late eighties? Maybe the established economies did, but that's a very large part of China and Korea's industrial output.
Note 1: I have somewhere (or had) a copy of the original MITI proposal. If I find it I'll put it up on a website somewhere.
Note 2: There is a wealth of information available on the MFP. Below is a short bibliography from Trove.
The multifunction polis / David Kennedy
Multifunction Polis Conference, 8-10th November 1989, Bond University, Gold Coast, Australia : conference papers
The multifunction polis : an evolving process / Thomas Mandeville
Multifunction polis : social issues study : a report / prepared for the Department of Industry, Technology and Commerce by David Yencken
Queensland multifunction polis : the natural choice for Australia's future
Serendipity city : Australia, Japan and the multifunction polis / Walter Hamilton
The clever city : Japan, Australia, and the multifunction polis / Ian Inkster
Evaluation of Commonwealth support for the multifunction polis / Bureau of Industry Economics
Novae Meridianae Demetae Dexter delenda est
My problem is that I don't see much better on the other side where EVERYTHING is by "direct action."
I don't accept the generic conclusion that;
. Rather, analyses consistently conclude that each dollar spent on this type of government venture simply crowds out one dollar of private investment elsewhere in the economy. But that government dollar both achieves less than the dollar it displaces and costs more, because distorting taxes are needed to raise it. It therefore ends up costing two or more dollars in lost income.
Targeted investment in creating comparative advantage can work in the long run. But the focus has to be on identifying places where investment in capability can generate returns. Australian Governments have invested successfully for years in agriculture research to create comparative advantage in agriculture markets.
He also completely loses me by asserting "the Hawke Govt Multi-Function Polis sought to get us into electronics?" Blowed if I know where that came from.
The MFP was a proposal from Japan's MITI for a city based on adapting all the latest in technology. It was made in the late eighties. The proposal looked more like a plan to build a giant Japanese retirement village on the North coast of Queensland. By 1990 one report described it as;
a model city for 21st century conditions, arising out of the new possibilities for urban living associated with telecommunications, internationalisation and an information intense environment.
The Government tried to engage with the plan hiring Clem Doherty of McKinsey (now on the NBN Board). The implementation of it swung from being a network of MFPs in each state (to avoid having to decide) before uniquly settling on a swamp near Adelaide. Having now not met any of the Japanese objectives interest from there wained and the proposal slowly died.
I'm also struggling to understand how the world "slumped" in electronics after the late eighties? Maybe the established economies did, but that's a very large part of China and Korea's industrial output.
Note 1: I have somewhere (or had) a copy of the original MITI proposal. If I find it I'll put it up on a website somewhere.
Note 2: There is a wealth of information available on the MFP. Below is a short bibliography from Trove.
The multifunction polis / David Kennedy
Multifunction Polis Conference, 8-10th November 1989, Bond University, Gold Coast, Australia : conference papers
The multifunction polis : an evolving process / Thomas Mandeville
Multifunction polis : social issues study : a report / prepared for the Department of Industry, Technology and Commerce by David Yencken
Queensland multifunction polis : the natural choice for Australia's future
Serendipity city : Australia, Japan and the multifunction polis / Walter Hamilton
The clever city : Japan, Australia, and the multifunction polis / Ian Inkster
Evaluation of Commonwealth support for the multifunction polis / Bureau of Industry Economics
Novae Meridianae Demetae Dexter delenda est
Thursday, October 13, 2011
Pirates and Occupiers
Various
http://theconversation.edu.au/how-can-australias-politics-be-improved-2996?utm_source=The+Conversation+Daily+updates&utm_campaign=50e27d0fde-DailyNewsletter&utm_medium=email
Pirate party
The Occupy Wall Street mob continue to confound analysts. The latest is a piece that sees the major learning from the occupiers the use of social media.
That, I'm afraid, is already old news. If you needed OWS to alert you to the capacity of social media to whip up a storm, then you've been living under a rock.
The piece ends "The greatest irony would be businesses learning from the protesters and becoming more effective." He states this because as far as he understands OWS is;
A “hashtag revolt”. It’s a description that goes to the heart of their lack of specific demands as they huddle around pizza boxes, sleeping bags and dress up as zombies to challenge the influence of corporations on government and the growing income gaps in society.
I continue to be bemused by the thought that OWS has no "specific demands" and that they are inherently anti-business or capitalism.
They are people who are trying to tell us that capitalism and democracy are both broken, and they are broken because both have allowed power to become concentrated. They don't want them replaced - they want them fixed.
A counterpart to OWS has been the European development of the Pirate Party, which has recently started to achieve electoral success.
The German Party has its foundations in a libertarian approach to the Internet. One of the things that this approach reveals is a faith in crowd-sourcing, of commons, ultimately of co-operative endeavour. As a group they have a particular stance on how the question of intellectual property should be dealt with. They have more faith in the co-operative rather than property rights approach.
The other initiative they have is "liquid democracy" which is an attempt to combine representative and direct democracy. Rather than electing one person to represent you on everything you get to vote for different candidates for different things. So, say, you like Liberals to manage the economy but the ALP on social policy you give the Liberals the right to represent you on one and the ALP on the other.
The concept has merits - and would work better if we moved to the idea of members of parliament having a vote equal to the size of their electorate (or number of people who preferred them in a multi seat electorate)rather than just one vote.
You could then envision a multi-member electorate of three members each of whom has a different numbers of votes on different issues. It is the kind of innovative idea that can come from applying 21st century technology to democracy.
Unfortunately the Australian party is not that well advanced.
I won't, however, be holding my breath expecting anything similar from those trying to "renew" the ALP.
Novae Meridianae Demetae Dexter delenda est
http://theconversation.edu.au/how-can-australias-politics-be-improved-2996?utm_source=The+Conversation+Daily+updates&utm_campaign=50e27d0fde-DailyNewsletter&utm_medium=email
Pirate party
The Occupy Wall Street mob continue to confound analysts. The latest is a piece that sees the major learning from the occupiers the use of social media.
That, I'm afraid, is already old news. If you needed OWS to alert you to the capacity of social media to whip up a storm, then you've been living under a rock.
The piece ends "The greatest irony would be businesses learning from the protesters and becoming more effective." He states this because as far as he understands OWS is;
A “hashtag revolt”. It’s a description that goes to the heart of their lack of specific demands as they huddle around pizza boxes, sleeping bags and dress up as zombies to challenge the influence of corporations on government and the growing income gaps in society.
I continue to be bemused by the thought that OWS has no "specific demands" and that they are inherently anti-business or capitalism.
They are people who are trying to tell us that capitalism and democracy are both broken, and they are broken because both have allowed power to become concentrated. They don't want them replaced - they want them fixed.
A counterpart to OWS has been the European development of the Pirate Party, which has recently started to achieve electoral success.
The German Party has its foundations in a libertarian approach to the Internet. One of the things that this approach reveals is a faith in crowd-sourcing, of commons, ultimately of co-operative endeavour. As a group they have a particular stance on how the question of intellectual property should be dealt with. They have more faith in the co-operative rather than property rights approach.
The other initiative they have is "liquid democracy" which is an attempt to combine representative and direct democracy. Rather than electing one person to represent you on everything you get to vote for different candidates for different things. So, say, you like Liberals to manage the economy but the ALP on social policy you give the Liberals the right to represent you on one and the ALP on the other.
The concept has merits - and would work better if we moved to the idea of members of parliament having a vote equal to the size of their electorate (or number of people who preferred them in a multi seat electorate)rather than just one vote.
You could then envision a multi-member electorate of three members each of whom has a different numbers of votes on different issues. It is the kind of innovative idea that can come from applying 21st century technology to democracy.
Unfortunately the Australian party is not that well advanced.
I won't, however, be holding my breath expecting anything similar from those trying to "renew" the ALP.
Novae Meridianae Demetae Dexter delenda est
Fantasy from the IPA
Only an ideological puritan from the IPA could argue that the volatility in equity and other markets is all the fault of Governments.
The item notes
There is also international empirical evidence to suggest that share markets returns are lower and volatility is higher when legislatures are in session, which is not altogether surprising given the role of taxation and regulatory policies on the economic climate for private sector activity.
and
Economic growth, be it at a national or global level, can only be led from the front by a private sector unencumbered by the unsustainable debts, uncompetitive tax regimes and onerous regulations of big governments.
A fascinating read really that completely fails to address the actual problem, which is that markets have two means of valuing assets, and that one of them can result in incorrect movements. What I didn't say is that at heart the conditions identified by Keynes for creation of a depression is a case of just the same kind. When consumers think prices will decline in the future or their income is insecure they stop spending thus fulfilling the expectation. Such cycles are not broken by natural market forces.
The reported comment of Kevin Rudd that "the global economy as a 'wild beast,' and that the task of policymakers is to 'tame the beast to the greatest extent we can.'" can be read two ways. One - what I think is the intended one - is to act to ensure market rules are established so that markets work. The other would be to assume it means replace markets with something else. As all totalitarian regimes have found you can't replace markets, merely drive them underground.
It would be nice if fans of markets were to talk about real markets and real people.
Novae Meridianae Demetae Dexter delenda est
The item notes
There is also international empirical evidence to suggest that share markets returns are lower and volatility is higher when legislatures are in session, which is not altogether surprising given the role of taxation and regulatory policies on the economic climate for private sector activity.
and
Economic growth, be it at a national or global level, can only be led from the front by a private sector unencumbered by the unsustainable debts, uncompetitive tax regimes and onerous regulations of big governments.
A fascinating read really that completely fails to address the actual problem, which is that markets have two means of valuing assets, and that one of them can result in incorrect movements. What I didn't say is that at heart the conditions identified by Keynes for creation of a depression is a case of just the same kind. When consumers think prices will decline in the future or their income is insecure they stop spending thus fulfilling the expectation. Such cycles are not broken by natural market forces.
The reported comment of Kevin Rudd that "the global economy as a 'wild beast,' and that the task of policymakers is to 'tame the beast to the greatest extent we can.'" can be read two ways. One - what I think is the intended one - is to act to ensure market rules are established so that markets work. The other would be to assume it means replace markets with something else. As all totalitarian regimes have found you can't replace markets, merely drive them underground.
It would be nice if fans of markets were to talk about real markets and real people.
Novae Meridianae Demetae Dexter delenda est
Wednesday, October 12, 2011
The Member for Wentworth
There it is in Hansard.
Interjector - Would the honorable member be prepared to sell the Post Office?
Member for Wentworth - No.
The Member for Wentworth though is not the current one, but indeed the Member for Wentworth in 1946, Eric Harrison. By then he was a former Post-Master General, and was then the Deputy Leader of the Liberal Party. The occasion was the debate on the Overseas Telecommunications Bill 1946.
The record of the debate in both chambers is well worth a read in the light of my comments earlier today. There were a couple of opposition members concerned about socialisation, but their bigger concerns were over whether overseas telecommunications should be in a Commission rather than in the Post Office with the rest of communications, and over the payment to be made to the private owners of the wireless connections.
It seems mighty strange in hindsight that it was Liberal members urging the combination into one Department and opposing a Commission structure.
The identity of the company from whom the assets were bought also provides an interesting tale on the concept of life being better under a private sector firm - because that company was Amalgamated Wireless (Australasia), better known as AWA. In its later life AWA was famous for going broke on the back of unwise foreign exchange transactions reflecting some of the weaknesses in the governance model of corporations. It then crafted a living repairing gaming terminals, a business they have grown and are now selling their brand for Big W stores "home brand" TVs and other electronics.
I've also finally got around to putting together some of the information from the 1910 Royal Commission. As also noted earlier the UK only finally moved to full public ownership of telecommunications in 1912, and the US debate on the matter started in 1913. Yet there was very little reference to it all in the Royal Commission.
The report at paragraph 16 merely noted;
During his examination the Permanent Head showed that he had no personal knowledge of post and telegraph systems in other countries, other than that acquired by reading the British Post Office Reports. He also referred to a modern economic writer on the British telegraphs and telephones. The conclusions of this writer have, in the opinion of your Commissioners, no relevance to the Commonwealth Post and Telegraph Department, as his object was to establish a case against Government ownership.
The comment appears to be to Robert Townley Scott's reference in his opening statement referring to the Hugo Meter's The British state telegraphs : a study of the problem of a large body of civil servants in a democracy. Meyer also wrote Public ownership and the telephone in Great Britain : restriction of the industry by the state and the municipalities. These are in their own right interesting an interesting read, but had little impact.
The committee seems to have only asked two others about the question of ownership, one of who was Alexander Graham Bell. Bell gave his evidence in August 1910 after the Committee report had basically been written. His only observation on Government ownership was that it might impede innovation, and recommended the establishment of a Laboratory. The history of the Labs at the PMG and Telecom is an interesting one in its own right. Suffice to note here that after privatisation TRL was closed.
More interestingly Bell talked about the importance of twisted copper pair over single wire (with earth return). Equally interesting is the discussion on efficiency of exchanges, and the desire to get more than one service over a pair of wires.
I kind of reckon based on his evidence in 1910 that Bell today would be backing the NBN.
Novae Meridianae Demetae Dexter delenda est
Interjector - Would the honorable member be prepared to sell the Post Office?
Member for Wentworth - No.
The Member for Wentworth though is not the current one, but indeed the Member for Wentworth in 1946, Eric Harrison. By then he was a former Post-Master General, and was then the Deputy Leader of the Liberal Party. The occasion was the debate on the Overseas Telecommunications Bill 1946.
The record of the debate in both chambers is well worth a read in the light of my comments earlier today. There were a couple of opposition members concerned about socialisation, but their bigger concerns were over whether overseas telecommunications should be in a Commission rather than in the Post Office with the rest of communications, and over the payment to be made to the private owners of the wireless connections.
It seems mighty strange in hindsight that it was Liberal members urging the combination into one Department and opposing a Commission structure.
The identity of the company from whom the assets were bought also provides an interesting tale on the concept of life being better under a private sector firm - because that company was Amalgamated Wireless (Australasia), better known as AWA. In its later life AWA was famous for going broke on the back of unwise foreign exchange transactions reflecting some of the weaknesses in the governance model of corporations. It then crafted a living repairing gaming terminals, a business they have grown and are now selling their brand for Big W stores "home brand" TVs and other electronics.
I've also finally got around to putting together some of the information from the 1910 Royal Commission. As also noted earlier the UK only finally moved to full public ownership of telecommunications in 1912, and the US debate on the matter started in 1913. Yet there was very little reference to it all in the Royal Commission.
The report at paragraph 16 merely noted;
During his examination the Permanent Head showed that he had no personal knowledge of post and telegraph systems in other countries, other than that acquired by reading the British Post Office Reports. He also referred to a modern economic writer on the British telegraphs and telephones. The conclusions of this writer have, in the opinion of your Commissioners, no relevance to the Commonwealth Post and Telegraph Department, as his object was to establish a case against Government ownership.
The comment appears to be to Robert Townley Scott's reference in his opening statement referring to the Hugo Meter's The British state telegraphs : a study of the problem of a large body of civil servants in a democracy. Meyer also wrote Public ownership and the telephone in Great Britain : restriction of the industry by the state and the municipalities. These are in their own right interesting an interesting read, but had little impact.
The committee seems to have only asked two others about the question of ownership, one of who was Alexander Graham Bell. Bell gave his evidence in August 1910 after the Committee report had basically been written. His only observation on Government ownership was that it might impede innovation, and recommended the establishment of a Laboratory. The history of the Labs at the PMG and Telecom is an interesting one in its own right. Suffice to note here that after privatisation TRL was closed.
More interestingly Bell talked about the importance of twisted copper pair over single wire (with earth return). Equally interesting is the discussion on efficiency of exchanges, and the desire to get more than one service over a pair of wires.
I kind of reckon based on his evidence in 1910 that Bell today would be backing the NBN.
Novae Meridianae Demetae Dexter delenda est
What is the opposite of Godwin's Law?
I don't know what the opposite of Godwin's Law is, but in a strange piece of irony it appears that Malcolm Turnbull is trying to define it.
The irony is, of course, that it was another Godwin (Grech) who caused Turnbull so much trouble when leader, resulting in a classic case of over-reaching and rhetorical flourish. To remind you Godwin's Law states "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1."
As the Wikipedia entry notes "Godwin's law is often cited in online discussions as a deterrent against the use of arguments in the widespread Reductio ad Hitlerum form." Turnbull has resorted to Reductio ad Communism (see note below). Turnbull started by simply relying on the Economist Intelligence Unit report on broadband investments (for purchase here). (That report and Turnbull's reliance on them show a complete lack of understanding of the principles of both economics and accounting...but more on that later.) But Turnbull's rhetorical flourish got the better of him, to the press he reportedly said;
This is the telecommunications version of Cuba. Cuba is the last communist state … I stand corrected, there's North Korea too. [Communications Minister] Stephen Conroy doesn't even have a North Korea to his Cuba, he's a one-and-only.
(Intriguingly what looks like the official Cuba promotion site Cuba.com picked up the story and ran it without comment.)
Let's start with some simple facts. There has been a national telecommunications monopoly for fixed line access in Australia since before Federation. The introduction of competition reforms and encouraging competitive investment did not fundamentally change that.
As I outlined in a recent submission to the ACCC the fixed line access network is even more a natural monopoly now than it was before. The decision being made is not whether to have a monopoly or not - that is determined by the cost structure. It is how to regulate that monopoly. As Senator Conroy said at the press conference announcing the FTTH version of the NBN;
This solves once and for all the core problem created when the previous Prime Minister privatised Telstra a decade ago without ever resolving the conflict of a private monopoly, owning the network infrastructure and dominating the retail market.
Australia's telecommunications network was Government owned until 1996. Indeed Government ownership was the global norm. The British government assumed full ownership and control of the British telephone system on 1 January 1912. Even the US Bell System (AT&T) was placed under Government control for one year to 1 August 1919.
In the discussion leading up to this the head of AT&T Theodore Vail said "all monopolies should be regulated." (See John Brooks Telephone).
Despite Robert Menzies determined efforts to ban the Communist Party, there is no evidence that he ever saw the ownership of the telecommunications network as socialist in any way. The entry on Menzies on the National Museum of Australia website notes;
Following increasing public dissatisfaction with Joseph Benedict Chifley's Labor government, the Liberal and Country parties swept to power at the general election on 10 December 1949. The fall of JB Chifley's Labor government followed a series of Communist-inspired strikes, controversies over Labor's wish to nationalise private banks, medical practitioners, transport and communications, and mounting public impatience with continuing wartime austerity measures.
The nationalisation of communications proposed referred to was only of overseas links. Ann Moyal in Clear Across Australia (at P.181) details how the Cable and Wireless Ltd monopoly on international cables was regarded as an impediment to war efforts. The initiative to replace Cable and Wireless' monopoly with "autonomous but interlocked government-owned telecommunications entities" was proposed by Australia and New Zealand at meetings of the (British) Commonwealth Communications Council in 1944 and 45.
It was enacted in Australia in 1946 and only one parliamentarian, a Liberal Senator from WA, took exception to a separate overseas telecommunications body 'when officers of the Post-Master's General Department are capable of undertaking their work.' (To be fair I should go read the debate on the OTC Bill to see if any Liberal voices were raised against this nationalisation or proposing privatisation of the PMG, and also read Alexander Grahame Bell's evidence to the 1910 Royal Commission .... but that will have to wait).
Ultimately the question is not whether government ownership of natural monopolies is communism; it is whether it is good policy (noting Vail's comment that "all monopolies should be regulated.") Sanford Berg and John Tschirhart in their Natural monopoly regulation: Principles and practices note;
If regulation of private natural monopolies results in inefficient production techniques and output prices, then one solution might be to socialize these monopolies: change the ownership from private to public. However, this proposal raises the hackles of many consumers, producers and regulators for reasons that extend beyond the domain of economic analysis.
Within the realm of economics though they list three main studies comparing cost of private monopolies versus public ones, Two conclude that public monopolies operate at lower cost, while the third finds no difference. The major basis for the assertion of the inefficiency of public enterprise is an article by Alchian (in a 1965 paper in Il Politico which only seems to be held in 4 libraries in Australia). Berg and Tschirhart state;
Alchian and subsequent authors have argued that public ownership will be less efficient because managers of public firms have more latitude in pursuing non-profit-maximizing objectives. Yet their hypothesis was not supported by the data.
The neo-liberal faith in privatisation is like so much of the neoclassical economic framework - a triumph of theory over observation, of analysis over empiricism.
Finally a note on the EIU study. The Australian Government financing of the NBN is totally by way of an equity investment in an enterprise that will return the cost of capital. The other programs it is compared to appear to be all grants - just like all the Howard Government programs. That Government can fund telecommunications this way is demonstrated by the PMG/Telecom story. The telecommunications function was financed by loans from the Commonwealth from 1959 on. All those loans were repaid with interest owing prior to privatisation in 1996.
If Malcolm Turnbull really wants to invoke a "communist" stance he might target a policy of "direct action" on climate change instead of the use of a price - but that is happening on his side of the chamber.
I propose Turnbull's Corollary to Godwin's Law "As a politician with no policy keeps talking, the probability of an illogical comparison approaches 1."
Note: Reductio ad Communism has been proposed previously for a Wikipedia entry but immediately deleted due to lack of references. Any readers who feel inclined to remedy that with references to Turnbull feel free (unless I get there first myself).
Novae Meridianae Demetae Dexter delenda est
The irony is, of course, that it was another Godwin (Grech) who caused Turnbull so much trouble when leader, resulting in a classic case of over-reaching and rhetorical flourish. To remind you Godwin's Law states "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches 1."
As the Wikipedia entry notes "Godwin's law is often cited in online discussions as a deterrent against the use of arguments in the widespread Reductio ad Hitlerum form." Turnbull has resorted to Reductio ad Communism (see note below). Turnbull started by simply relying on the Economist Intelligence Unit report on broadband investments (for purchase here). (That report and Turnbull's reliance on them show a complete lack of understanding of the principles of both economics and accounting...but more on that later.) But Turnbull's rhetorical flourish got the better of him, to the press he reportedly said;
This is the telecommunications version of Cuba. Cuba is the last communist state … I stand corrected, there's North Korea too. [Communications Minister] Stephen Conroy doesn't even have a North Korea to his Cuba, he's a one-and-only.
(Intriguingly what looks like the official Cuba promotion site Cuba.com picked up the story and ran it without comment.)
Let's start with some simple facts. There has been a national telecommunications monopoly for fixed line access in Australia since before Federation. The introduction of competition reforms and encouraging competitive investment did not fundamentally change that.
As I outlined in a recent submission to the ACCC the fixed line access network is even more a natural monopoly now than it was before. The decision being made is not whether to have a monopoly or not - that is determined by the cost structure. It is how to regulate that monopoly. As Senator Conroy said at the press conference announcing the FTTH version of the NBN;
This solves once and for all the core problem created when the previous Prime Minister privatised Telstra a decade ago without ever resolving the conflict of a private monopoly, owning the network infrastructure and dominating the retail market.
Australia's telecommunications network was Government owned until 1996. Indeed Government ownership was the global norm. The British government assumed full ownership and control of the British telephone system on 1 January 1912. Even the US Bell System (AT&T) was placed under Government control for one year to 1 August 1919.
In the discussion leading up to this the head of AT&T Theodore Vail said "all monopolies should be regulated." (See John Brooks Telephone).
Despite Robert Menzies determined efforts to ban the Communist Party, there is no evidence that he ever saw the ownership of the telecommunications network as socialist in any way. The entry on Menzies on the National Museum of Australia website notes;
Following increasing public dissatisfaction with Joseph Benedict Chifley's Labor government, the Liberal and Country parties swept to power at the general election on 10 December 1949. The fall of JB Chifley's Labor government followed a series of Communist-inspired strikes, controversies over Labor's wish to nationalise private banks, medical practitioners, transport and communications, and mounting public impatience with continuing wartime austerity measures.
The nationalisation of communications proposed referred to was only of overseas links. Ann Moyal in Clear Across Australia (at P.181) details how the Cable and Wireless Ltd monopoly on international cables was regarded as an impediment to war efforts. The initiative to replace Cable and Wireless' monopoly with "autonomous but interlocked government-owned telecommunications entities" was proposed by Australia and New Zealand at meetings of the (British) Commonwealth Communications Council in 1944 and 45.
It was enacted in Australia in 1946 and only one parliamentarian, a Liberal Senator from WA, took exception to a separate overseas telecommunications body 'when officers of the Post-Master's General Department are capable of undertaking their work.' (To be fair I should go read the debate on the OTC Bill to see if any Liberal voices were raised against this nationalisation or proposing privatisation of the PMG, and also read Alexander Grahame Bell's evidence to the 1910 Royal Commission .... but that will have to wait).
Ultimately the question is not whether government ownership of natural monopolies is communism; it is whether it is good policy (noting Vail's comment that "all monopolies should be regulated.") Sanford Berg and John Tschirhart in their Natural monopoly regulation: Principles and practices note;
If regulation of private natural monopolies results in inefficient production techniques and output prices, then one solution might be to socialize these monopolies: change the ownership from private to public. However, this proposal raises the hackles of many consumers, producers and regulators for reasons that extend beyond the domain of economic analysis.
Within the realm of economics though they list three main studies comparing cost of private monopolies versus public ones, Two conclude that public monopolies operate at lower cost, while the third finds no difference. The major basis for the assertion of the inefficiency of public enterprise is an article by Alchian (in a 1965 paper in Il Politico which only seems to be held in 4 libraries in Australia). Berg and Tschirhart state;
Alchian and subsequent authors have argued that public ownership will be less efficient because managers of public firms have more latitude in pursuing non-profit-maximizing objectives. Yet their hypothesis was not supported by the data.
The neo-liberal faith in privatisation is like so much of the neoclassical economic framework - a triumph of theory over observation, of analysis over empiricism.
Finally a note on the EIU study. The Australian Government financing of the NBN is totally by way of an equity investment in an enterprise that will return the cost of capital. The other programs it is compared to appear to be all grants - just like all the Howard Government programs. That Government can fund telecommunications this way is demonstrated by the PMG/Telecom story. The telecommunications function was financed by loans from the Commonwealth from 1959 on. All those loans were repaid with interest owing prior to privatisation in 1996.
If Malcolm Turnbull really wants to invoke a "communist" stance he might target a policy of "direct action" on climate change instead of the use of a price - but that is happening on his side of the chamber.
I propose Turnbull's Corollary to Godwin's Law "As a politician with no policy keeps talking, the probability of an illogical comparison approaches 1."
Note: Reductio ad Communism has been proposed previously for a Wikipedia entry but immediately deleted due to lack of references. Any readers who feel inclined to remedy that with references to Turnbull feel free (unless I get there first myself).
Novae Meridianae Demetae Dexter delenda est
Tuesday, October 11, 2011
Strangest headline
Gerard Henderson's SMH column today was headed Unions choose masters over members in carbon tax debate
It is strange in two ways. Firstly, despite commenting on the uniqueness of Australia's unions in supporting action on climate change, at no point did the article assett that their position was determined by the ALP.
But the stranger idea is the implied reversal of roles. After all we are forever being told that it is the unions that are the "faceless" bosses of the ALP. I, of course, blame the non-existent Fairfax sub-editors not Henderson.
Novae Meridianae Demetae Dexter delenda est
It is strange in two ways. Firstly, despite commenting on the uniqueness of Australia's unions in supporting action on climate change, at no point did the article assett that their position was determined by the ALP.
But the stranger idea is the implied reversal of roles. After all we are forever being told that it is the unions that are the "faceless" bosses of the ALP. I, of course, blame the non-existent Fairfax sub-editors not Henderson.
Novae Meridianae Demetae Dexter delenda est
Copyright and patents
There are few things in life more difficult to decide than what the appropriate regime is for the creation and protection of "intellectual property." I say creation to refer to the creation of the property right not the creation of the the original work. Intellectual property rights like all property rights are actually social constructions.
At one end of the scale there is an argument that strong property rights create the opportunity to be rewarded for intelectual endeavours and hence create an important incentive to intellectual pursuits.
At the other end of the scale there is the argument that knowledge itself is a social entity, that there is more to be gained by sharing the intellectual output to create more. Scientists think of this as Newton's "standing on the shoulders of giants" while economists think of it as Romer's "new growth theory."
The latest place it is emerging is in an endless series of disputes about the IP in various smartphone and tablet devices, including now the Amazon Kindle Fire. (The telco industry of course began with just such a controversy.)
This case like many others looks like a patent troll - someone who buys patents to make money by suing others for using the IP without paying a fee.
Interestingly in Australia the field of copyright saw a decision last year that a telephone directory is not an "original work." (I use that as the basis for not trying to assert copyright to certain graphs I provide at DigEcon Research. They entail a great deal of work, but aren't original work.
One wonders if the same kind of logic could be applied to patents. How could a patent "covering the act of tapping an icon on the tablet's touch-sensitive display to perform an action" be regarded as intellectual effort worthy of enshrining in a property right? Does someone want to patent pointing with your finger in a shop to indicate what you want to buy?
Someone needs to do more than fiddle at the edges with the definitions of all aspects of intellectual property. The rights created need to be limited to the minimum amount necessary to genuinely create incentives, and to eliminate prospects of pursuit of windfall gains.
And as a context-sensitive aside, Steve Jobs was renowned as a pursuer of his intellectual property rights. Not mentioned much this week was the fact that Apple twice had to pay The Beatles for the right to use the Apple logo in relation to electronic music, the issues being driven mostly by the inclusion of the MIDI interface in the Mac and later the iPod and iTunes.
Novae Meridianae Demetae Dexter delenda est
At one end of the scale there is an argument that strong property rights create the opportunity to be rewarded for intelectual endeavours and hence create an important incentive to intellectual pursuits.
At the other end of the scale there is the argument that knowledge itself is a social entity, that there is more to be gained by sharing the intellectual output to create more. Scientists think of this as Newton's "standing on the shoulders of giants" while economists think of it as Romer's "new growth theory."
The latest place it is emerging is in an endless series of disputes about the IP in various smartphone and tablet devices, including now the Amazon Kindle Fire. (The telco industry of course began with just such a controversy.)
This case like many others looks like a patent troll - someone who buys patents to make money by suing others for using the IP without paying a fee.
Interestingly in Australia the field of copyright saw a decision last year that a telephone directory is not an "original work." (I use that as the basis for not trying to assert copyright to certain graphs I provide at DigEcon Research. They entail a great deal of work, but aren't original work.
One wonders if the same kind of logic could be applied to patents. How could a patent "covering the act of tapping an icon on the tablet's touch-sensitive display to perform an action" be regarded as intellectual effort worthy of enshrining in a property right? Does someone want to patent pointing with your finger in a shop to indicate what you want to buy?
Someone needs to do more than fiddle at the edges with the definitions of all aspects of intellectual property. The rights created need to be limited to the minimum amount necessary to genuinely create incentives, and to eliminate prospects of pursuit of windfall gains.
And as a context-sensitive aside, Steve Jobs was renowned as a pursuer of his intellectual property rights. Not mentioned much this week was the fact that Apple twice had to pay The Beatles for the right to use the Apple logo in relation to electronic music, the issues being driven mostly by the inclusion of the MIDI interface in the Mac and later the iPod and iTunes.
Novae Meridianae Demetae Dexter delenda est
Occupy Wall Street
The ever delightful Chris Wallace on breakfastpolitics today gave the title In which I underestimate Occupy Wall Street to Sophie Mirabella's column in The Punch which was really title Protestors occupied with glib, childish, pointless fantasy.
I think Chris is more on the money.
Mirabella is absolutely right that the movement that is "Occupy Wall Street" is just a lot of un-happy campers. It isn't a movement driven by a specific agenda for reform. Mirabella writes;
Protest against a policy, protest against a corrupt Government if you want – but protesting against democracy and capitalism just seems so… well… laughable, pointless and politically adolescent.
In that she shows she is missing the point. These aren't people protesting about democracy or about capitalism - but about the way democracy and capitalism are practised today. She is right they don't know what they want - but they do know they don't want "more of the same." No amount of Mirabella ranting about the current Government not being a "good government" in Australia rebuts the revulsion the public is now displaying for the way politics is conducted.
As my first criticism I'll choose the much vaunted claim that an opposition doesn't need to reveal its policies until an election. That is inconsistent with the idea that it is a representative democracy - I want to know how the candidates will react to the unknown events in the future, not what their manifesto of things to be delivered is. Whitlam failed (in part) by not adjusting the manifesto to the economic circumstance; Howard learnt early the idea of "core" and "non-core" promises.
It is by the party and candidates core beliefs that I would like to judges them as my representatives.
The USA has it far far worse with a Congress determined to spend its life in posturing rather than action. There was a great episode of the West Wing in which Josh stated that he didn't want success in social welfare reform because it was too useful as a campaign tool.
More reasoned commentators note that "Historians like to collect things, to study them later, because to be a historian is to know that no one can understand the present until it’s past." They note with Mirabella that there is no agenda, but they reflect that earlier movements started the same way.
Nineteenth-century grass-roots populism made twentieth-century progressivism possible. Then, the rhetoric of revolution created energy for reform. Whether that will happen here remains to be seen. So far, no one is proposing a set of reforms; there’s nothing akin to the early-twentieth-century reformers who were part of the good-government movement.
A more detailed chronology of the protest concludes;
And not posting clear demands, while essentially a failing, has unintended virtue. Anyone who is at all frustrated with the economy--perhaps even 99% of Americans--can feel that this protest is their own.
That's actually a really good way to plan change - spend the time to understand the problem before leaping to solutions.
To understand the public frustration, understand the failings of the sector that are the centre of the protest - the finance sector. That's why the movement started at Wall Street.
In a recent Washington Post column titled There are no rogue traders, only rogue banks Barry Ritholtz noted;
Banks are supposed to have expertise in preserving capital and managing risk. If they cannot discharge those simple duties, then perhaps they should not be in the business of finance. Most of all, they should not be engaging in behavior that puts taxpayer money at risk.
And therein lies the nub of the issue - no one has confidence any longer than the financial system actually works. And fiddling with Basel III regulation is only part of the issue. At the heart of this lies the very culture of capitalism.
And that is nowhere better represented than in the obscenity that is CEO and senior executive compensation. Writing in the SMH today Michael West challenges the "labour market" view of executive salaries and wonders why when company performance declines executive salary stays high. Actually, the problem is the way the market is structured. The executives are all effectively in higher demand when life is tough - it is harder to manage a firm in bad times than good.
The real issue is how firms have dealt with the conundrum identified by Berle and Means that senior executives manage companies for their benefit, not the shareholders. CEOs like growth because it makes their job bigger, even if the capital being reinvested in the company could get better returns for shareholders if distributed as dividends.
The "solution" to the conundrum, to align the CEO incentive to the investors, fails because of the erroneous assumptions of efficient market theory. As discussed here yesterday there are problems with using market prices of assets as real measures.
But the biggest issue of all is that the bulk of money invested in equities comes from investors seeking long term, not short term, returns. The solution to that is to structure truly long-term bonuses - that is the bonus payments are only calculated and paid five years after the relevant period - including after termination, resignation or retirement. They should be calculated on the basis of total return (dividends + capital growth) over the period relative to either the overall market or a sectoral market.
Government can influence this outcome through the taxation system, by dramatically increasing tax on income paid as salary and reducing it on income paid as long term bonus.
An interestingly different view of the relationship between pay and performance was advanced in On Line Opinion today on politicians salaries. Under the heading "pay peanuts get monkeys" the author states that;
When the ceiling of your earnings is in the mid 300′s (notwithstanding the perks) the appeal of going into public office for this calibre of person is reduced, considering their earning potential in the private sector. Particularly when you consider the impact on their personal life: politicians are away from their family for significant periods of time, missing birthdays, anniversaries and pet funerals in the backyard.
I tend to think the issue is more the overpayment elsewhere rather than the under-payment here. But I also think we erred in the Latham inspired decision to change superannuation entitlements. I certainly didn't like well superannuated pollies going out to make second careers as consultants, but what we need is more a scheme that reduces that tendency. There is nothing more obscene than the current model that sees a political career as merely the pathway to the "higher" career of consultant. Just more salary doesn't solve this - a good superannuation scheme that is diminished by post political earnings is better.
To return to my first target. Sophie Mirabella needs to realise that the protesters are justifiably angry at both the way capitalism is conducted and the operation of our democracy.
It is inadequate of her to respond like Marie Anionette of being informed the peasants had no bread to eat and saying they should eat cake.
Novae Meridianae Demetae Dexter delenda est
I think Chris is more on the money.
Mirabella is absolutely right that the movement that is "Occupy Wall Street" is just a lot of un-happy campers. It isn't a movement driven by a specific agenda for reform. Mirabella writes;
Protest against a policy, protest against a corrupt Government if you want – but protesting against democracy and capitalism just seems so… well… laughable, pointless and politically adolescent.
In that she shows she is missing the point. These aren't people protesting about democracy or about capitalism - but about the way democracy and capitalism are practised today. She is right they don't know what they want - but they do know they don't want "more of the same." No amount of Mirabella ranting about the current Government not being a "good government" in Australia rebuts the revulsion the public is now displaying for the way politics is conducted.
As my first criticism I'll choose the much vaunted claim that an opposition doesn't need to reveal its policies until an election. That is inconsistent with the idea that it is a representative democracy - I want to know how the candidates will react to the unknown events in the future, not what their manifesto of things to be delivered is. Whitlam failed (in part) by not adjusting the manifesto to the economic circumstance; Howard learnt early the idea of "core" and "non-core" promises.
It is by the party and candidates core beliefs that I would like to judges them as my representatives.
The USA has it far far worse with a Congress determined to spend its life in posturing rather than action. There was a great episode of the West Wing in which Josh stated that he didn't want success in social welfare reform because it was too useful as a campaign tool.
More reasoned commentators note that "Historians like to collect things, to study them later, because to be a historian is to know that no one can understand the present until it’s past." They note with Mirabella that there is no agenda, but they reflect that earlier movements started the same way.
Nineteenth-century grass-roots populism made twentieth-century progressivism possible. Then, the rhetoric of revolution created energy for reform. Whether that will happen here remains to be seen. So far, no one is proposing a set of reforms; there’s nothing akin to the early-twentieth-century reformers who were part of the good-government movement.
A more detailed chronology of the protest concludes;
And not posting clear demands, while essentially a failing, has unintended virtue. Anyone who is at all frustrated with the economy--perhaps even 99% of Americans--can feel that this protest is their own.
That's actually a really good way to plan change - spend the time to understand the problem before leaping to solutions.
To understand the public frustration, understand the failings of the sector that are the centre of the protest - the finance sector. That's why the movement started at Wall Street.
In a recent Washington Post column titled There are no rogue traders, only rogue banks Barry Ritholtz noted;
Banks are supposed to have expertise in preserving capital and managing risk. If they cannot discharge those simple duties, then perhaps they should not be in the business of finance. Most of all, they should not be engaging in behavior that puts taxpayer money at risk.
And therein lies the nub of the issue - no one has confidence any longer than the financial system actually works. And fiddling with Basel III regulation is only part of the issue. At the heart of this lies the very culture of capitalism.
And that is nowhere better represented than in the obscenity that is CEO and senior executive compensation. Writing in the SMH today Michael West challenges the "labour market" view of executive salaries and wonders why when company performance declines executive salary stays high. Actually, the problem is the way the market is structured. The executives are all effectively in higher demand when life is tough - it is harder to manage a firm in bad times than good.
The real issue is how firms have dealt with the conundrum identified by Berle and Means that senior executives manage companies for their benefit, not the shareholders. CEOs like growth because it makes their job bigger, even if the capital being reinvested in the company could get better returns for shareholders if distributed as dividends.
The "solution" to the conundrum, to align the CEO incentive to the investors, fails because of the erroneous assumptions of efficient market theory. As discussed here yesterday there are problems with using market prices of assets as real measures.
But the biggest issue of all is that the bulk of money invested in equities comes from investors seeking long term, not short term, returns. The solution to that is to structure truly long-term bonuses - that is the bonus payments are only calculated and paid five years after the relevant period - including after termination, resignation or retirement. They should be calculated on the basis of total return (dividends + capital growth) over the period relative to either the overall market or a sectoral market.
Government can influence this outcome through the taxation system, by dramatically increasing tax on income paid as salary and reducing it on income paid as long term bonus.
An interestingly different view of the relationship between pay and performance was advanced in On Line Opinion today on politicians salaries. Under the heading "pay peanuts get monkeys" the author states that;
When the ceiling of your earnings is in the mid 300′s (notwithstanding the perks) the appeal of going into public office for this calibre of person is reduced, considering their earning potential in the private sector. Particularly when you consider the impact on their personal life: politicians are away from their family for significant periods of time, missing birthdays, anniversaries and pet funerals in the backyard.
I tend to think the issue is more the overpayment elsewhere rather than the under-payment here. But I also think we erred in the Latham inspired decision to change superannuation entitlements. I certainly didn't like well superannuated pollies going out to make second careers as consultants, but what we need is more a scheme that reduces that tendency. There is nothing more obscene than the current model that sees a political career as merely the pathway to the "higher" career of consultant. Just more salary doesn't solve this - a good superannuation scheme that is diminished by post political earnings is better.
To return to my first target. Sophie Mirabella needs to realise that the protesters are justifiably angry at both the way capitalism is conducted and the operation of our democracy.
It is inadequate of her to respond like Marie Anionette of being informed the peasants had no bread to eat and saying they should eat cake.
Novae Meridianae Demetae Dexter delenda est
Monday, October 10, 2011
Australia's North
Mark Latham in today's AFR (behind paywall) takes aim at coalition Finance spokesman Andrew Robb. He has two lines of attack; both are justifiable but one may be a little unwise.
The first is to criticise Robb's support of the latest piece of coalition cargo cultism - the belief in the opportunity to "develop the North." I actually think the coalition support of this is a little bit of an old coded message on yellow hordes - by populating the North we make it harder for arrivals.
But Latham points out the simple logic. The water from the big wets is unreliable, at least very variable. The soil is poor. The Ord River Scheme is still not a viable proposition.
Unfortunately for the ALP its own Paul Howes called in Voice for a city in the Pilbara - on the grounds that it could house all the FIFO miners. The proposal ignores all the simple reasons why it is not an area for a sustainable city.
Latham's other line is to question the wisdom of a person with a history of depression as Finance Minister. In this he is on less safe ground. It is always worth asking if a person's health can withstand the requirements of a job, but also to be prepared to allow the someone can "get better". The same is true of drug-addicts and any other "past life."
In addition Cabinet government is a collective, not individual, act - despite the supposed rejection by Liberals of collectivist outcomes. There is in reality very little of substance Ministers achieve without the support and endorsement of their Cabinet colleagues.
Novae Meridianae Demetae Dexter delenda est
The first is to criticise Robb's support of the latest piece of coalition cargo cultism - the belief in the opportunity to "develop the North." I actually think the coalition support of this is a little bit of an old coded message on yellow hordes - by populating the North we make it harder for arrivals.
But Latham points out the simple logic. The water from the big wets is unreliable, at least very variable. The soil is poor. The Ord River Scheme is still not a viable proposition.
Unfortunately for the ALP its own Paul Howes called in Voice for a city in the Pilbara - on the grounds that it could house all the FIFO miners. The proposal ignores all the simple reasons why it is not an area for a sustainable city.
Latham's other line is to question the wisdom of a person with a history of depression as Finance Minister. In this he is on less safe ground. It is always worth asking if a person's health can withstand the requirements of a job, but also to be prepared to allow the someone can "get better". The same is true of drug-addicts and any other "past life."
In addition Cabinet government is a collective, not individual, act - despite the supposed rejection by Liberals of collectivist outcomes. There is in reality very little of substance Ministers achieve without the support and endorsement of their Cabinet colleagues.
Novae Meridianae Demetae Dexter delenda est
High speed and computerised trading
Interesting item today by a sociologist on The Conversation about the danger of high-speed trades in stock markets.
It contrasts with other reports of studies that conclude;
Economic research thus far provides no direct evidence that high frequency computer based trading has increased volatility.
Of course, the absence of evidence that high-speed trading increases volatility does not mean that it high-speed trading doesn't increase volatility. But the bigger question isn't just what happens to volatility but how markets are affected.
The particular issue is how a trader, automated or otherwise, values a stock. Like any asset there are two sources of future value for the stock. The first is the income stream from it represented by the value of dividends and an appropriate (see note) discounting formula. The second is the likely future price realised when the asset is sold.
The difficulty in real world markets is how much weight should be given to each. More specifically what is the right response for a trader to make as asset prices move without any corresponding change in expectation of future earnings? If prices are increasing do you buy (on the expectation of future increases) or sell (as the price is now higher than the value of future earnings).
Accountants don't help much because they have accounting rules about assets being "marked to market" - which was partly the issue in the GFC as finance houses reported massive profits by revaluing market assets despite the fundamentals not being there.
The second issue is the extent of correlation between asset prices. The GFC in part occurred because of an assumption that not all house prices would decline at once - but they did. That invalidated the risk modelling that underpinned the derivatives.
The same is true of stockmarkets. Fear of a recession will drive down all stock prices because the fundamentals change - recession equals lower profits. But that small shift based on fundamentals then feeds into the future price expectation.
My sense is that speedier automated trading doesn't increase volatility as such. But standard market models tend to ignore the kinds of real world distributions identified by Talebi in Black Swan or Mandelbrot in the Mis-behavior of Markets.
The other unanswered question is whether once markets have sunk into a hole high-speed automated trading makes it harder to climb out of them.
These are issues that I think are better resolved not by statistical analysis of market behaviour but by agent-based modelling of markets. The latter would provide the means to experiment with market rules designed to manage pricing better. An example of a possible rule is to limit the use of "mark to market" in accounting - that assets cannot be re-valued up faster than a rate of double CPI purely on the basis of "mark to market", and that equally they must be re-valued down strictly according to "mark to market." I don't know how well that rule would deal with the issue. That's why simulation would be desirable.
Note: Discounting is used by economists as if it is easy. However, the first thing we know is that real traders apply "hyperbolic" discounting - they overweight short term payments. The second is that the appropriate "discount rate" is really the market price of another asset - Government bonds - plus other unknown risk factors. In other words "discounting" sounds like a scientifically sound procedural method but it is as much gueework (or estimation) as science.
Novae Meridianae Demetae Dexter delenda est
It contrasts with other reports of studies that conclude;
Economic research thus far provides no direct evidence that high frequency computer based trading has increased volatility.
Of course, the absence of evidence that high-speed trading increases volatility does not mean that it high-speed trading doesn't increase volatility. But the bigger question isn't just what happens to volatility but how markets are affected.
The particular issue is how a trader, automated or otherwise, values a stock. Like any asset there are two sources of future value for the stock. The first is the income stream from it represented by the value of dividends and an appropriate (see note) discounting formula. The second is the likely future price realised when the asset is sold.
The difficulty in real world markets is how much weight should be given to each. More specifically what is the right response for a trader to make as asset prices move without any corresponding change in expectation of future earnings? If prices are increasing do you buy (on the expectation of future increases) or sell (as the price is now higher than the value of future earnings).
Accountants don't help much because they have accounting rules about assets being "marked to market" - which was partly the issue in the GFC as finance houses reported massive profits by revaluing market assets despite the fundamentals not being there.
The second issue is the extent of correlation between asset prices. The GFC in part occurred because of an assumption that not all house prices would decline at once - but they did. That invalidated the risk modelling that underpinned the derivatives.
The same is true of stockmarkets. Fear of a recession will drive down all stock prices because the fundamentals change - recession equals lower profits. But that small shift based on fundamentals then feeds into the future price expectation.
My sense is that speedier automated trading doesn't increase volatility as such. But standard market models tend to ignore the kinds of real world distributions identified by Talebi in Black Swan or Mandelbrot in the Mis-behavior of Markets.
The other unanswered question is whether once markets have sunk into a hole high-speed automated trading makes it harder to climb out of them.
These are issues that I think are better resolved not by statistical analysis of market behaviour but by agent-based modelling of markets. The latter would provide the means to experiment with market rules designed to manage pricing better. An example of a possible rule is to limit the use of "mark to market" in accounting - that assets cannot be re-valued up faster than a rate of double CPI purely on the basis of "mark to market", and that equally they must be re-valued down strictly according to "mark to market." I don't know how well that rule would deal with the issue. That's why simulation would be desirable.
Note: Discounting is used by economists as if it is easy. However, the first thing we know is that real traders apply "hyperbolic" discounting - they overweight short term payments. The second is that the appropriate "discount rate" is really the market price of another asset - Government bonds - plus other unknown risk factors. In other words "discounting" sounds like a scientifically sound procedural method but it is as much gueework (or estimation) as science.
Novae Meridianae Demetae Dexter delenda est
Social media, marketing and Government engagement
I'm a bit of a "social media sceptic". For one thing I don't think social media is a substitute for a well-designed and managed web-presence. I worry about firms who are investing more in their Facebook page than their webpage.
To me that is like spending more time on advertising than the customer experience.
Similarly I'm concerned about crowd sourcing and the tendency for "mob effects" created by social media. This becomes particularly of concern to the use of social media by government and in public policy.
By extension though, that also highlights the importance of monitoring and engaging with social media. One of the interesting features of the Queensland floods at the start of 2011 was the targeted rebuttal of false stories being spread by social means.
That said, if you get over the hype, then you certainly know that you should at least have a strategy. The slideshow below comes from Tiffany St James. There is much I'd choose to disagree with in it...but it at least raises the questions that should be asked in developing a modern "digital strategy"
Novae Meridianae Demetae Dexter delenda est
To me that is like spending more time on advertising than the customer experience.
Similarly I'm concerned about crowd sourcing and the tendency for "mob effects" created by social media. This becomes particularly of concern to the use of social media by government and in public policy.
By extension though, that also highlights the importance of monitoring and engaging with social media. One of the interesting features of the Queensland floods at the start of 2011 was the targeted rebuttal of false stories being spread by social means.
That said, if you get over the hype, then you certainly know that you should at least have a strategy. The slideshow below comes from Tiffany St James. There is much I'd choose to disagree with in it...but it at least raises the questions that should be asked in developing a modern "digital strategy"
Novae Meridianae Demetae Dexter delenda est
Friday, October 07, 2011
Broadbanding America
In a speech US FCC Chairman Julius Genachowski has outlined plans for revision to the universal service arrangements to get broadband to rural areas of the USA.
In introducing these reforms he spoke of his visit to Libery Nebraska.
When I was in Liberty, I met with a group of residents at the local American Legion.
The people I met had a lot in common with all of us and all of America. They work hard. They care about their country. They care about their kids. They believe in the American dream, and want their community and children to have as much a chance for success in the 21st century as they had in the 20th.
But in one important respect, their lives are different from most Americans. Most of the people living around Liberty don’t have access to broadband. The infrastructure for high-speed Internet simply isn’t there.
I don’t know whether, a few years ago, they were concerned about the absence of broadband Internet where they live. But during our discussion, the group I met – which ranged from seniors to students -- was very clear that the absence of broadband in their community was having real costs and consequences.
One older man said he wanted to open a hunting lodge. He said he was sure it would be successful, but that without broadband it would be impossible.
A farmer at the meeting said he needs to participate in online auctions for equipment and cattle. He said he can’t without a fast Internet connection that allows him to bid competitively in real-time.
Two parents told me about their son, a young serviceman who has done three tours of duty. His friends overseas were having video chats with their families, but he couldn’t.
Other parents at the table spoke about how their daughters couldn’t access the Internet at home to research papers or email their teachers. They said many of their classmates who lived in other towns were online, and they just wanted the same opportunity for their kids.
It’s not just a theory. It’s a fact. Broadband has gone from being a luxury to a necessity for full participation in our economy and society.
There followed the most horrible description of the failings of their Universal Service Fund and Intercarrier Compensation arrangements. Unfortunately the mess that he was describing as the "Connect America Fund" and the "Mobility Fund" did not really sound much better.
To Australian ears they were sadly reminiscent as the kinds of failed broadband programs we experienced prior to the NBN.
More importantly they constitute the kind of externalised transfer payments that Gans and Hausman think is better than a Government built network.
I have responded to Gans' challenge and made a submission to the ACCC on Telstra's SSU. In that I outline the direct and indirect network effects of broadband and the reasons why the Government's NBN plan is an effective way to internalise the externality.
A real pity that the USA cannot embrace the idea of Government owned infrastructure. They did early in the 20th century briefly consider doing it to the telephone. It is not too late, and far more efficient than spreading cash thinly across poorly designed network initiatives.
Novae Meridianae Demetae Dexter delenda est
In introducing these reforms he spoke of his visit to Libery Nebraska.
When I was in Liberty, I met with a group of residents at the local American Legion.
The people I met had a lot in common with all of us and all of America. They work hard. They care about their country. They care about their kids. They believe in the American dream, and want their community and children to have as much a chance for success in the 21st century as they had in the 20th.
But in one important respect, their lives are different from most Americans. Most of the people living around Liberty don’t have access to broadband. The infrastructure for high-speed Internet simply isn’t there.
I don’t know whether, a few years ago, they were concerned about the absence of broadband Internet where they live. But during our discussion, the group I met – which ranged from seniors to students -- was very clear that the absence of broadband in their community was having real costs and consequences.
One older man said he wanted to open a hunting lodge. He said he was sure it would be successful, but that without broadband it would be impossible.
A farmer at the meeting said he needs to participate in online auctions for equipment and cattle. He said he can’t without a fast Internet connection that allows him to bid competitively in real-time.
Two parents told me about their son, a young serviceman who has done three tours of duty. His friends overseas were having video chats with their families, but he couldn’t.
Other parents at the table spoke about how their daughters couldn’t access the Internet at home to research papers or email their teachers. They said many of their classmates who lived in other towns were online, and they just wanted the same opportunity for their kids.
It’s not just a theory. It’s a fact. Broadband has gone from being a luxury to a necessity for full participation in our economy and society.
There followed the most horrible description of the failings of their Universal Service Fund and Intercarrier Compensation arrangements. Unfortunately the mess that he was describing as the "Connect America Fund" and the "Mobility Fund" did not really sound much better.
To Australian ears they were sadly reminiscent as the kinds of failed broadband programs we experienced prior to the NBN.
More importantly they constitute the kind of externalised transfer payments that Gans and Hausman think is better than a Government built network.
I have responded to Gans' challenge and made a submission to the ACCC on Telstra's SSU. In that I outline the direct and indirect network effects of broadband and the reasons why the Government's NBN plan is an effective way to internalise the externality.
A real pity that the USA cannot embrace the idea of Government owned infrastructure. They did early in the 20th century briefly consider doing it to the telephone. It is not too late, and far more efficient than spreading cash thinly across poorly designed network initiatives.
Novae Meridianae Demetae Dexter delenda est
Thursday, October 06, 2011
Another note on wireless
Some commentators noting the popularity of wireless devices err in confusing the use of handheld devices with actual mobility.
I made this point briefly in a submission yesterday to the ACCC consideration of the Telstra SSU. I was using download data to demonstrate how little the download is on wireless data devices compared to fixed.
Today I noted a week+ old story that reported the lessons learnt by Deutsche Telecom as recounted by their CTO.
It's more a wireless experience than a true mobile experience. In reality they use mobile handsets for fixed usage.
In addition, 80 percent of people's data traffic comes from just three cell phone towers--one near home, one near work, and one someplace in between.
Just to drive the point home about wireless;
Deutsche Telekom also considered what it would take to completely satisfy the European Union's goal of bringing broadband at 100 megabits per second--enough for Internet, phone, and TV data--to customers in a large urban area without using fixed lines. The upshot, using Berlin as a test: it's not practical.
A company would need communication stations every 0.009 square kilometers, he said. My quick math, based on Wikipedia's judgment that Berlin covers about 892 square kilometers, is that more than 99,000 towers would be needed.
Novae Meridianae Demetae Dexter delenda est
I made this point briefly in a submission yesterday to the ACCC consideration of the Telstra SSU. I was using download data to demonstrate how little the download is on wireless data devices compared to fixed.
Today I noted a week+ old story that reported the lessons learnt by Deutsche Telecom as recounted by their CTO.
It's more a wireless experience than a true mobile experience. In reality they use mobile handsets for fixed usage.
In addition, 80 percent of people's data traffic comes from just three cell phone towers--one near home, one near work, and one someplace in between.
Just to drive the point home about wireless;
Deutsche Telekom also considered what it would take to completely satisfy the European Union's goal of bringing broadband at 100 megabits per second--enough for Internet, phone, and TV data--to customers in a large urban area without using fixed lines. The upshot, using Berlin as a test: it's not practical.
A company would need communication stations every 0.009 square kilometers, he said. My quick math, based on Wikipedia's judgment that Berlin covers about 892 square kilometers, is that more than 99,000 towers would be needed.
Novae Meridianae Demetae Dexter delenda est
Wednesday, October 05, 2011
Leadership speculation
Kristina Keneally made a public appeal to her Federal Parliamentary colleagues under the heading Changing leaders is not the answer for Labor.
I read this just after reading another description that said if the FPLP did change leaders it "will have entered a recently charted, previously unknown, far reach of the Universe, known as the Keneallys."
The current malaise in the ALP, both Federally and more importantly its near elimination in NSW, has had me turning to my somewhat broad political library. In it I found this description;
The [X] Party has a leadership fixation. So it is not surprising that [Y]’s accession to the position …was accompanied by great expectation and standing ovations from among the party faithful. There were references to a new team which would make a fresh start. It sounded exciting until you remembered that much the same had been said about [Z].
[Y] may do better than [his/her] immediate predecessors. Or not. But [his/her] election … will not automatically solve the [X] Party’s problem. … The history of the last decade and more demonstrates that when engaged in national politics, [the X Party] tend to be outperformed by their counterparts. This is true of the leadership, frontbench, backbench, staff, even rank and file. It suggests that the [X] Party’s problems are organisational and cultural – and will not necessarily be overcome by yet another leadership change.
The task for [Y] and the [X] team is not just to win the next election. It is to re-establish [the Party] as the natural, or predominant party of government in Australia by winning three or four terms on the trot. This will require considerable political skills along with an efficient and knowledgeable party machine. In other words, [the X Party] need to set about reform and reinvigoration. ….
There can be no resolution of the [X] Party’s current problems until there is recognition that the party is in long-term decline. …The Party needs dramatic changes to its structure and policy positions. If both were implemented, cultural change would follow.
That could so very easily be a description of the ALP at both levels and of its Federal leader.
But the words instead come from Gerard Henderson's Menzies' Child" The Liberal Party of Australia 1944-94, the leader in question was Alexander Downer, and the year was 1994.
History tells us that the Liberal Party in near despair turned again to John Howard and he went on to win his four terms on the trot (1996, 1998, 2001, 2004). I do not actually think that history would be repeated necessarily with a Rudd return.
But equally I think complete despair is unwarranted...but action is required.
Novae Meridianae Demetae Dexter delenda est
I read this just after reading another description that said if the FPLP did change leaders it "will have entered a recently charted, previously unknown, far reach of the Universe, known as the Keneallys."
The current malaise in the ALP, both Federally and more importantly its near elimination in NSW, has had me turning to my somewhat broad political library. In it I found this description;
The [X] Party has a leadership fixation. So it is not surprising that [Y]’s accession to the position …was accompanied by great expectation and standing ovations from among the party faithful. There were references to a new team which would make a fresh start. It sounded exciting until you remembered that much the same had been said about [Z].
[Y] may do better than [his/her] immediate predecessors. Or not. But [his/her] election … will not automatically solve the [X] Party’s problem. … The history of the last decade and more demonstrates that when engaged in national politics, [the X Party] tend to be outperformed by their counterparts. This is true of the leadership, frontbench, backbench, staff, even rank and file. It suggests that the [X] Party’s problems are organisational and cultural – and will not necessarily be overcome by yet another leadership change.
The task for [Y] and the [X] team is not just to win the next election. It is to re-establish [the Party] as the natural, or predominant party of government in Australia by winning three or four terms on the trot. This will require considerable political skills along with an efficient and knowledgeable party machine. In other words, [the X Party] need to set about reform and reinvigoration. ….
There can be no resolution of the [X] Party’s current problems until there is recognition that the party is in long-term decline. …The Party needs dramatic changes to its structure and policy positions. If both were implemented, cultural change would follow.
That could so very easily be a description of the ALP at both levels and of its Federal leader.
But the words instead come from Gerard Henderson's Menzies' Child" The Liberal Party of Australia 1944-94, the leader in question was Alexander Downer, and the year was 1994.
History tells us that the Liberal Party in near despair turned again to John Howard and he went on to win his four terms on the trot (1996, 1998, 2001, 2004). I do not actually think that history would be repeated necessarily with a Rudd return.
But equally I think complete despair is unwarranted...but action is required.
Novae Meridianae Demetae Dexter delenda est
Pangrams
Column 8 todayprovided an answer to the question of whether a shorter pangram than "The quick brown fox jumped over the lazy dogs" could get as short as 26 - i.e no repetition. I thought it unlikely as there just aren't enough vowels.
They happily advise a 29 letter one that repeats the "i" twice and the "" once...."'Quick wafting zephyrs vex bold Jim."
They also list "Playing jazz vibe chords quickly excites my wife."
Now I just have to remember them next time I want a pangram.
Novae Meridianae Demetae Dexter delenda est
They happily advise a 29 letter one that repeats the "i" twice and the "" once...."'Quick wafting zephyrs vex bold Jim."
They also list "Playing jazz vibe chords quickly excites my wife."
Now I just have to remember them next time I want a pangram.
Novae Meridianae Demetae Dexter delenda est
Tuesday, October 04, 2011
On Tony Abbott
Chris Wallace in her excellent BreakfastPolitics today titled Gerard Henderson's column about attacks on Tony Abbott's catholicism as In which I flay Mitchell & wrist tap Costello for sectarianism.
The core of the piece was a critique of Susan Mitchell's book Tony Abbott: A Man's Man. In passing he throws a soft punch at Peter Costello for his column accusing Abbott of being more DLP than Liberal.
The core of Henderson's complaint is one he frequently returns to - that attacks on Abbott are thinly veiled sectarianism and that in reality they are attacks on the Catholic Church.
Costello's piece is unfairly tagged in this way - it really was - as I wrote elsewhere a piece trying to depict Abbott as a collectivist rather than as a Catholic, though some unwise words late in the piece did create the opening for the Henderson critique.
Mitchells's book, however, deserves to be considered more widely than Henderson has done. Firstly, I doubt whether Mitchell is "sectarian" as this would imply an attack from a protestant as opposed to an irreligious position.
At the core the Mitchell thesis is that all the mentors in Abbott's life have come from a paternalistic, misogynist mindset. The fact that these key influencers have mostly come from a particular strand of conservative Catholicism has been allowed to distract from that core message. Tony Abbott is the destructive pugalist that she describes - and that is the message that the progressive side of politics needs to understand.
That such a view is not identical to Catholicism is best identified by reading Kristina Keneally's explanation in Eureka Street of why she supports gay marriage. In Twitter conversation she was asked to explain how she reconciled her feminism with her Catholicism, to which she replied she couldn't do it in 140 characters but would consider it for another Eureka Street post.
Mitchell is also wrong to think that merely exposing the paternalist side of Abbott will lead to success. As George Lakoff outlines in Moral Politics the paternalist mindset is how conservatives "think". They appeal to a model of society which combines libertarian values with a strong directive central figure to punish wrong-doers. This actually has wide appeal because everyone thinks the central power is directed at someone else - and the fact that gats, the unemployed, ethnic minorities, even big business can all get at different times "targeted" the overwhelming message is of the big strong leader defending the individual from "the others".
Mitchell provides an interesting example in her quote of Winston Churchill "The women's suffrage movement is only the small edge of the wedge; if we allow women to vote it will mean the loss of social structure and the rise of every liberal cause under the sun. Women are well represented by their fathers, brothers and husbands."
She is also wrong to raise a fear that Abbott's Catholicism creates a fear of a risk to the separation of the Church and the State. While that doctrine was in the English tradition principally founded in the long term settlement of the issue that bedevilled the British Monarchy in Tudor and Stuart times, there is little real risk that Abbott sees any role for the re-establishment of the arbitrary rule by God appointed monarchs or bishops.
There is, however, reason to be concerned about the ongoing "appeasement" movement by all politicians that continues to create roles for religious sponsored charities. But part of the response needs to be for more secular charities.
My proposition is that Mitchell is right in her assessment of Abbott and the influences upon him, but is wrong to describe it as merely Catholicism.
What more do we know of Abbott?
Today he outlined what Wallace called "My (very short) plan for economic happiness." It rested on six planks;
The best way to have lower taxes and better services is to build a more productive economy.
Here's the Coalition's six point plan: first, encourage more people into the workforce; second, make public institutions more effective and responsive; third, cut red tape; fourth, improve competition rules; fifth, get greater value from infrastructure spending; and sixth, reform workplace relations to encourage higher pay for better work.
The first point about workforce participation is explained as a mix of more women through paid parental leave and more programs to get people off welfare. The reform of "public institutions" is described as "community-controlled" schools and hospitals.
Nothing is said about points three, four and five. The "cutting red tape" has become a mantra about de-regulation that no one really knows what it means. There is no explanation of improving competition rules, but it looks like a bit of an appeal to the "get Coles and Woolies" faction.
Finally he is making an appeal on workplace reform that others thought had escaped him - not that I can see how any part of the Fair Work Act makes it harder to reward employees with higher pay for greater productivity. (These AIG surveys of business attitudes are notoriously bad methodologies).
So we have what looks like a plan - but isn't. It looks like the big strong directive Government that will "bash up" the others - welfare recipients, bureaucrats, public institutions, big business, and unions.
Mitchell's other big claim about Tony Abbott is that he is really still exactly the same person he was as a schoolboy and a University student. As I've previously noted the young Tony Abbott and I were involved in student politics at the same time. Long story but I was the Vice-President when he was the President of the Sydney University SRC in 1979. As an interesting aside the Hon sec Treasurer who went on to be the next SRC President was Paul Brereton - now both a Major-General in the Reserve and a Supreme Court judge. (Since the time of writing Paul has retired from the Defence force and following a nice e-mail from the CRESD Webmaster I have removed the link that used to be at the underlined section. DH 14 Sept 2014) In his latter capacity he is currently hearing both the Rinehart and Pratt cases.
Note: I have also previously noted the reference to my Aunt in an earlier Mitchell book. I didn't point out that we thought it a bit rough that Mitchell described her as being a bit more free because her mother was dying of cancer.
Novae Meridianae Demetae Dexter delenda est
The core of the piece was a critique of Susan Mitchell's book Tony Abbott: A Man's Man. In passing he throws a soft punch at Peter Costello for his column accusing Abbott of being more DLP than Liberal.
The core of Henderson's complaint is one he frequently returns to - that attacks on Abbott are thinly veiled sectarianism and that in reality they are attacks on the Catholic Church.
Costello's piece is unfairly tagged in this way - it really was - as I wrote elsewhere a piece trying to depict Abbott as a collectivist rather than as a Catholic, though some unwise words late in the piece did create the opening for the Henderson critique.
Mitchells's book, however, deserves to be considered more widely than Henderson has done. Firstly, I doubt whether Mitchell is "sectarian" as this would imply an attack from a protestant as opposed to an irreligious position.
At the core the Mitchell thesis is that all the mentors in Abbott's life have come from a paternalistic, misogynist mindset. The fact that these key influencers have mostly come from a particular strand of conservative Catholicism has been allowed to distract from that core message. Tony Abbott is the destructive pugalist that she describes - and that is the message that the progressive side of politics needs to understand.
That such a view is not identical to Catholicism is best identified by reading Kristina Keneally's explanation in Eureka Street of why she supports gay marriage. In Twitter conversation she was asked to explain how she reconciled her feminism with her Catholicism, to which she replied she couldn't do it in 140 characters but would consider it for another Eureka Street post.
Mitchell is also wrong to think that merely exposing the paternalist side of Abbott will lead to success. As George Lakoff outlines in Moral Politics the paternalist mindset is how conservatives "think". They appeal to a model of society which combines libertarian values with a strong directive central figure to punish wrong-doers. This actually has wide appeal because everyone thinks the central power is directed at someone else - and the fact that gats, the unemployed, ethnic minorities, even big business can all get at different times "targeted" the overwhelming message is of the big strong leader defending the individual from "the others".
Mitchell provides an interesting example in her quote of Winston Churchill "The women's suffrage movement is only the small edge of the wedge; if we allow women to vote it will mean the loss of social structure and the rise of every liberal cause under the sun. Women are well represented by their fathers, brothers and husbands."
She is also wrong to raise a fear that Abbott's Catholicism creates a fear of a risk to the separation of the Church and the State. While that doctrine was in the English tradition principally founded in the long term settlement of the issue that bedevilled the British Monarchy in Tudor and Stuart times, there is little real risk that Abbott sees any role for the re-establishment of the arbitrary rule by God appointed monarchs or bishops.
There is, however, reason to be concerned about the ongoing "appeasement" movement by all politicians that continues to create roles for religious sponsored charities. But part of the response needs to be for more secular charities.
My proposition is that Mitchell is right in her assessment of Abbott and the influences upon him, but is wrong to describe it as merely Catholicism.
What more do we know of Abbott?
Today he outlined what Wallace called "My (very short) plan for economic happiness." It rested on six planks;
The best way to have lower taxes and better services is to build a more productive economy.
Here's the Coalition's six point plan: first, encourage more people into the workforce; second, make public institutions more effective and responsive; third, cut red tape; fourth, improve competition rules; fifth, get greater value from infrastructure spending; and sixth, reform workplace relations to encourage higher pay for better work.
The first point about workforce participation is explained as a mix of more women through paid parental leave and more programs to get people off welfare. The reform of "public institutions" is described as "community-controlled" schools and hospitals.
Nothing is said about points three, four and five. The "cutting red tape" has become a mantra about de-regulation that no one really knows what it means. There is no explanation of improving competition rules, but it looks like a bit of an appeal to the "get Coles and Woolies" faction.
Finally he is making an appeal on workplace reform that others thought had escaped him - not that I can see how any part of the Fair Work Act makes it harder to reward employees with higher pay for greater productivity. (These AIG surveys of business attitudes are notoriously bad methodologies).
So we have what looks like a plan - but isn't. It looks like the big strong directive Government that will "bash up" the others - welfare recipients, bureaucrats, public institutions, big business, and unions.
Mitchell's other big claim about Tony Abbott is that he is really still exactly the same person he was as a schoolboy and a University student. As I've previously noted the young Tony Abbott and I were involved in student politics at the same time. Long story but I was the Vice-President when he was the President of the Sydney University SRC in 1979. As an interesting aside the Hon sec Treasurer who went on to be the next SRC President was Paul Brereton - now both a Major-General in the Reserve and a Supreme Court judge. (Since the time of writing Paul has retired from the Defence force and following a nice e-mail from the CRESD Webmaster I have removed the link that used to be at the underlined section. DH 14 Sept 2014) In his latter capacity he is currently hearing both the Rinehart and Pratt cases.
Note: I have also previously noted the reference to my Aunt in an earlier Mitchell book. I didn't point out that we thought it a bit rough that Mitchell described her as being a bit more free because her mother was dying of cancer.
Novae Meridianae Demetae Dexter delenda est
Another score for fibre
In a piece overly titled "NBN may reduce need for new power plants" iTWire has reported Rod Tucker's comments that though increased internet usage will continue to increase the energy demands of the sector - especially through data centres - the NBN will limit that demand.
In a great line Tucker said "Unlike fibre, wireless is energy hungry."
It would be interesting to undertake a full energy audit of some telecommunications technologies. For example, would a monopoly wireless business with lots of smaller base stations use less power and what would be the energy saving/cost of different topologies in construction as well as operation.
What is the energy consumption inherent in actually building the NBN? All those civil engineering works use a lot. What is the energy saving in reduced maintenance costs for copper and the end of linesman and techs visiting pillars to connect services?
Like so many things, a simple analysis of one feature is not the whole story.
(Pity the event the iTWire story talks about is in Melbourne ....)
Novae Meridianae Demetae Dexter delenda est
In a great line Tucker said "Unlike fibre, wireless is energy hungry."
It would be interesting to undertake a full energy audit of some telecommunications technologies. For example, would a monopoly wireless business with lots of smaller base stations use less power and what would be the energy saving/cost of different topologies in construction as well as operation.
What is the energy consumption inherent in actually building the NBN? All those civil engineering works use a lot. What is the energy saving in reduced maintenance costs for copper and the end of linesman and techs visiting pillars to connect services?
Like so many things, a simple analysis of one feature is not the whole story.
(Pity the event the iTWire story talks about is in Melbourne ....)
Novae Meridianae Demetae Dexter delenda est
What do they teach in science these days
It is really hard to keep the car on the road when listening while driving and hearing news stories like the one I heard this morning on the 8:30am Triple J news.
An item on a new telescope in Chile cited as the world's most powerful radio telescope concluded that the objects the telescope is looking at "are so far away that the light and radiation is only just reaching the Earth."
I took that to mean "just now" and it might actually have been what it said. Is there any other kind of light and radiation a telescope could see? Like light and radiation that reached the Earth last week, month or year? Surely not radiation that won't reach the Earth till tomorrow.
If the "just" is meant to reflect the arduous journey of the photons through the vastness of space - well, we know that the only thing that will stop the photon is other matter and that space is pretty empty. Most photons just keep on keeping on.
The other possible interpretation is that the distance relates to the dispersion of the light (as the square of distance) and hence the further away the object the lower the statistical likelihood of photon hitting the Earth - or more specifically just a much much lower signal intensity.
But the description "just reaching the Earth" isn't the same thing at all.
I'm sure all the people in the Triple J newsroom are probably journalism or Arts graduates, but surely they should have a better grasp of basic science than that.
Novae Meridianae Demetae Dexter delenda est
An item on a new telescope in Chile cited as the world's most powerful radio telescope concluded that the objects the telescope is looking at "are so far away that the light and radiation is only just reaching the Earth."
I took that to mean "just now" and it might actually have been what it said. Is there any other kind of light and radiation a telescope could see? Like light and radiation that reached the Earth last week, month or year? Surely not radiation that won't reach the Earth till tomorrow.
If the "just" is meant to reflect the arduous journey of the photons through the vastness of space - well, we know that the only thing that will stop the photon is other matter and that space is pretty empty. Most photons just keep on keeping on.
The other possible interpretation is that the distance relates to the dispersion of the light (as the square of distance) and hence the further away the object the lower the statistical likelihood of photon hitting the Earth - or more specifically just a much much lower signal intensity.
But the description "just reaching the Earth" isn't the same thing at all.
I'm sure all the people in the Triple J newsroom are probably journalism or Arts graduates, but surely they should have a better grasp of basic science than that.
Novae Meridianae Demetae Dexter delenda est
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