The Dog’s Bollocks

Truth is like a dog’s bollocks – pretty obvious if you care to look.

Well that’s clear, then, Malcolm…

The AgeMalcolm Turnbull gave his first campaign pitch for the Liberal Leadership at the National Press Club in Canberra yesterday. Among his qualifications he included his experience with running big businesses and banks and understanding the needs of corporate Australia.

He explained that he doesn’t belief government has any business telling people how to spend their own money, so instead of wasting taxes on grand schemes (like national infrastructure projects in transport, communications and water management I presume) he’ll give it back to the people through tax cuts and they can make their own individual choices about transport infrastructure, health services, education and the like! How original!

Message to Malcolm… um, didn’t we just have 12 years of that already? And didn’t the Australian people throw you out of government six months ago, despite the good times a’booming, because they want solutions to public problems that 12 years of free market laisez-faire economic management hasn’t provided?

Well good luck with that! They’ll be gagging for it in two years time. Not.

Filed under: Economics, Politics, ,

The market imperative for higher teacher pay

TimePlanVICTORIA will need to immediately recruit teachers from interstate and overseas to avoid a shortage of high school teachers, according to an internal report to the Brumby Government.

That might explain the recent pay rise for teachers. But will it be enough to compete in the global market for graduate teachers?

Since Thatcher gouged the British economy of sufficient capacity to train and supply its own teachers, Britain has been absorbing graduates from around the Commonwealth, Australia included, for more than two decades. Straight out of college, Australian Graduates can earn $AUD80—120,000 in Britain or any number of wealthy Asian and Middle Eastern countries.

We’ll either have to create greater demand for teacher training courses by paying teachers more, or we’ll have to make do with whatever teachers we can poach from countries less affluent than ours. India, Indonesia, Africa, South America, perhaps? I doubt that’s what Boltheads have in mind when they deride those leftist teachers unions holding the public to ransom, but that’s the market for ya.

Filed under: Economics, Education, ,

We was conned!

ABC OnlinePolice have revealed speed cameras were switched off on the West Gate Freeway two years ago, because they were unreliable. The predominantly male ‘it’s our inalienable right to speed just a little bit’ brigade are up in arms: “How dare they con us into obeying the speed limit!” An outrageous abuse of our human rights! Off with their heads!

Filed under: Ass Hattery, Politics,

Another economic illusion bites the dust

Joseph Stiglitz, winner of the Nobel prize for economics in 2001, and a former chief economist of the World Bank, says both developing and developed countries need to abandon inflation targeting or risk damaging their economies.

From ABC’s AM:

JOSEPH STIGLITZ: The countries that follow inflation targeting are likely to get themselves into trouble. Most countries today face imported inflation. To think that there is anything Australia can do to dampen global food inflation or global energy inflation is absolutely absurd.

EMMA ALBERICI: Do you accept the argument from our Treasury Secretary Ken Henry that inflation targeting of between two and three per cent has been a significant contributor to Australia’s economic prosperity?

JOSEPH STIGLITZ: No, I think that one of the major reasons for Australia’s economic prosperity are high commodity prices. Australia has been lucky about some of the things that it is exporting have gone up in price, and it would have taken a very bad mismanagement of the economy not to be doing very well under those circumstances.

And there was I thinking our highly successful World Class Finely-Tuned Ferrari Economy was down to the valiant efforts of John Howard and The World’s Second Best Treasurer, Peter Costello. Just goes to show that getting rich is not the same thing as good economic management.

Filed under: Economics,

The Ethics of Climate Change: Pay Now or Pay More Later?

Sci AmWeighing our own prosperity against the chances that climate change will diminish the well-being of our grandchildren calls on economists to make hard ethical judgments, says John Broome in a thorough analysis in Scientific American. The economists in our midst are naturally concerned with the impact of dealing with climate change and advertantly or otherwise encourage our politicians to err on the side of recklessness. The denialist debate prefers to cast doubt on the science, but Broome places the ball firmly back in the court of the economists. Climate change is the ethical issue of our time.

In a nutshell Broome argues:

  • Future generations will suffer most of the harmful effects of global climate change. Yet if the world economy grows, they will be richer than we are.
  • The present generation must decide, with the help of expert advice from economists, whether to aggressively reduce the chances of future harm or to let our richer descendants largely fend for themselves.
  • Economists cannot avoid making ethical choices in formulating their advice.
  • Even the small chance of utter catastrophe from global warming raises special problems for ethical discussion.

What should we do about climate change? The question is an ethical one. Science, including the science of economics, can help discover the causes and effects of climate change. It can also help work out what we can do about climate change. But what we should do is an ethical question.

By emitting greenhouse gases, are the rich perpetrating an injustice on the world’s poor? How should we respond to the small but real chance that climate change could lead to worldwide catastrophe?

In going about our daily lives, each of us causes greenhouse gases to be emitted. Driving a car, using electric power, buying anything whose manufacture or transport consumes energy—all those activities generate greenhouse gases that contribute to climate change. In that way, what we each do for our own benefit harms others. Perhaps at the moment we cannot help it, and in the past we did not realize we were doing it. But the elementary moral principle I mentioned tells us we should try to stop doing it and compensate the people we harm.

Weighing benefits to some people against costs to others is an ethical matter. But many of the costs and benefits of mitigating climate change present themselves in economic terms, and economics has useful methods of weighing benefits against costs in complex cases. So here economics can work in the service of ethics.

No wonder the Bolts of this world would rather deny there is even a problem. It’s much easier than reflecting on the ethics of one’s lifestyle and compensating for the impact we are knowingly inflicting on the world’s poor. We might have to make personal sacrifices! That would never do.

Economics in the service of ethics rather than personal affluence? I’d like to see that!

Filed under: Economics, Environment, Politics, Science, , , ,

Micro Credit revolution

Returning from a gig yesterday evening I heard Muhammed Yunus, founder of the Grameen Bank, on Radio National, speaking on eliminating poverty within 30 years.

Australia is witnessing yet another round of bank mergers. The big grow bigger on the pretext that size maters in a global economy. But small also matters. The Grameen Bank is heralded internationally as a lifesaver for tens of thousands of people. Based on the unworldly principle of micro credit the bank lends over half-a-billion each year. It invokes inverse rules of banking: if you have nothing they want to know you. Business Week named its founder Muhammed Yunus as one of the greatest entrepreneurs of all time. His portrait hangs next to Henry Ford and John D Rockefeller. Muhammed Yunus recounts the remarkable work of Grameen, over three decades. with the poor and neglected.

You can listen here or download to your pod.

Filed under: Big Picture, Economics, ,

The limits of productivity as a wage determinant

In the face of the latest post-budget concern by the commentariat that there will be a wages break out under Labor’s Industrial Relations regime, the Government is at pains to assure us that wages will only increase by improvements in productivity.

Productivity increases for wage increases have been a feature of Australian IR since the days of Hawke’s Wages Accord. While productivity is certainly an important factor in wage remuneration, it cannot logically be the only determinant. For example, a worker employed in the public sector would have to be twice as productive to earn the same relative amount once the cost of living has doubled.

While this could conceivably be the case in a manufacturing job with changes in technology (ignoring the likelihood that less people would be employed), how does this sensibly apply to nurses, police, doctors or teachers, where productivity isn’t determined by numbers of widgets produced? Will teachers need to teach twice as many kids or teach the same number twice as quickly? Will public hospital surgeons be required to operate on twice as many patients, or the same number twice as quickly? Such scenarios are patent nonsense.

The profit sector typically aspires to grow at 10% per annum. In this case, productivity increases in wages sufficient only to keep pace with the cost of living (say 4% per annum) will lead to a wage increase of around 30% after 5 years. Profits in the same period will have doubled.

Clearly wage determination must also be linked to profitability for an equitable growth in prosperity. This was a factor in The Accord’s Enterprise Agreements. Presumably market forces in the private sector, such as limits in the supply of highly skilled labour in the mining industry, for example, will lead to wage growth beyond that determined by productivity. In the public and not for profit sector wages growth must necessarily be linked with the increased cost of living and not on productivity alone.

Wages limited to productivity alone is the dream of free market ideologues as a means of enhancing profits by reducing the cost of labour inputs. Work Choices was an audacious and clumsy attempt to enshrine this imbalance in the Australian economy. It inevitably leads to greater profits and dividends for executives and shareholders to the detriment and cost of working families.

20 years ago, nearly 50 percent of working men and women in Australia were clustered around the middle income band. By 2005 that proportion has slipped to 37% for men and 44% for women*. The increased casualisation of the workforce, longer working hours and 7 day working weeks are all having an impact on the quality of family and community life with growing numbers of overworked or under-employed individuals suffering stress, family dysfunction, anxiety and depression.

Linking wages growth to productivity alone, without consideration of the growth in profits it brings and the burden of the increased cost of living, is inequitable and socially destructive. I guess how you see it depends on whether you think we live in a civil society or The Economy, or whether you are a worker or a business owner.

* Hugh Mackay, 2007, Advance Australia Where? p83.

Filed under: Economics, ,

The Budget spiv-fest

LeunigI’ve never heard such unmitigated prognosticative crap spoken in the current round of budget commentary. As Possum put it – laughing at the budget spiv-fest. Swann has delivered a competent budget, while seemingly achieving the miraculous – cutting spending and increasing spending at the same time. For weeks, Malcolm Turnbull was warning that budget cuts would slow the economy but more spending was needed. Well, he got his wished for.

There is still a sense of denial amongst the conservative economic talking heads. They concede that the Labor budget was not too bad, given that they are amateurs, and not the rightful proprietors of our nation’s public purse. A spiv from Access Economics last night appeared to be saying that the government is benefiting from enormous revenue flow from the commodities boom creating a huge surplus which we should do something with, but it shouldn’t be spent because it would be inflationary. Or something. The rules of the game have changed and the goal posts have been moved.

The conservatives have long told us that we can only spend money on health, education, the environment and infrastructure once the economy is good and we can afford it. Apparently now that the economy is good and we can afford it, we still shouldn’t spend money on these things because it might damage the economy. Catch 22. Money is really only meant for the wealthy and powerful. I think they would prefer that that budget surpluses be locked up into investment funds for private brokers to play the markets with for a nice little earner from coupon-clipping commissions. Or something.

That everyone is confused by the conflicting economic narratives of the commentariat suggests that Rudd’s first budget is a political success. The Government has kept its promises and is seen as economically conservative through its domestic cuts while signalling significant public investment in public infrastructure. If you can’t invest in infrastructure now, when can you? When hell freezes over? The average punter understands that there is more to life than framing budgets to satisfy market analysts.

With the shambolic incoherence of the opposition on matters budgetary, I cringe in anticipation of Brendan Nelson’s budget response. He might be better off just saying nothing, for it will no doubt confirm the total irrelevance of the Liberal Party at this time in our history. Turnbull has revealed himself as no saviour – witness his indignity that taxes have been increased! On alco-pops and cars costing more than $80k! Oh the outrage! And means testing is class envy! Give us a break.

Tough times indeed for Australia’s natural economic custodians.

Filed under: Economics, Politics,

‘Failing schools’ are a failure of government

The concept of the under-performing school is simply a tool for politicians to disguise their own unwillingness to provide appropriate resources to the education system to help lessen the impact of social inequality.

So says Graeme Smithies, recently retired from 35 years in schools, in The Age today. A refreshing statement of the bleeding obvious about the state of public education in Australia. These are the best bits:

The apparent underperformance by many of the students in those schools is a direct result of factors outside the control of the school – the socio-economic, demographic and family factors that children have experienced before they start school, and which they continue to experience in the 17 hours of every school day that they are not at school.

For more than 40 years researchers have identified a variety of socio-economic factors that can influence a child’s educational performance. Proponents of the underperforming school fallacy seem to ignore these factors.

I have never seen a definition of what constitutes an underperforming school, but those who use the term generally imply that the academic performance of its students, as measured by VCE results or literacy and numeracy testing, is below expected standards, or the standards achieved by schools in different suburbs.

The implication is that teachers at such a school are not doing their jobs well enough – and if they work harder, improve their methods or are replaced by better teachers, the problem will be solved.

The concept of the underperforming or failing school is based on a number of myths. The first is that student performance is entirely dependent on what happens in school, and that it is a consequence solely of the activities of teachers and principals and not of any factors outside the school.

The second myth is that all students come to school equally prepared, with equal ability and with equal levels of motivation, so that all they need is excellent teaching to excel.

Students who start school with the best chances of ultimate success will come from a home where the parents are well educated and where education is highly valued; where the child’s imagination and cognitive development have been stimulated and enriched by a wide variety of play and other creative experiences; where English is the first language, and the parents and other adults with whom the child has contact have strong linguistic skills in the English language.

They will come from homes where the child is read to frequently, the parents read and are seen to enjoy reading, and there is a large variety of reading matter; and the child has had at least a year of pre-school experience before starting school.

The absence of any or all of these factors will affect a child’s readiness for school. Lower parental levels of education, limited linguistic ability, lack of reading and books in the home, little use of the English language in families of non-English-speaking backgrounds, high levels of family unemployment and non-attendance at kindergarten are all more prevalent in the northern and western suburbs.

Rather than grapple with these issues, Howard chose to divert funds from public education to the private sector, exploiting every opportunity to create fear that public schools are failing, are valueless, only for povo’s, and it’s all the fault of those lazy leftist and elitist unionised ideologues known as teachers, and we’ll spend countless millions on testing the kids to prove it and show you that we’re tough in The War on Education.

Rather than ‘our failing schools’ it might be more instructive to regard the problem as a symptom of ‘our failing society’. Even in relatively affluent but time poor families, many kids from the earliest age grow up exposed to a mind numbing stream of sensational and trivial trash media dedicated to encouraging unsustainable and insatiable consumption of everything from junk food to lifestyles in the pursuit of pleasure and the illusion of happiness. Family and community are sacrificed on the altar of free market capitalism. As individuals we are driven by our vanities and insecurities to fear, anger, anxiety, intoxication, depression and unhappiness in ever greater numbers. And that’s just those of us who are well-educated and relatively affluent! In economically underprivileged areas, the problems are exacerbated with violence and crime.

The only long term answer to these problems is education, and lots of it. To continue the blame game as we have been doing for the last 12 years is simply shuffling the deck chairs on the Titanic. We are failing our schools, the students and the families they serve.

Filed under: Education, Howardians, Ideology, Politics,

The Dog’s Bollocks

What they say

The Dog's Bollocks: "Bollocks" is one of my favourite words, and this is now one of my favourite blogs and I've only been reading it for five minutes. – John Surname

This is the person who tried to analyse Hayek. This is actually a person who needs a shrink. – JC

Shut up slim. You’re an idiot.
Just you stay honest and keep that thinking cap on. – GMB

Insightful perspectives on politics and discussion of matters epistemological? I’m sold! - Bruce

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