The Wild West ... the outback ... The new world of the 1800s was a time of true liberty. People stood on their own merits. They won or they lost and they reaped the rewards or swallowed the consequences. There were no cubicle dwelling civil servants hell bent on saving you from yourself. No planning permits no licenses no permissions no heritage overlay no bylaw no regulators no inspectors. And guess what ... it worked

This site is set up to provide a forum for a number of like minded professional economists to post and comment on contemporary issues. There are a number of regular contributors whose bios are made available on the site. Most if not all of these contributors use a pseudonym for the simple reason that they are practicing economists who must take into consideration the commercial implications of posting their opinions.

While some may feel that this is a bit of a gutless approach it is the only way we can ensure free and open discussion without jeopardising our paycheques.

Friday, February 26, 2010

Realestate deals in the USA

Wednesday, February 24, 2010

Writing speeches for Kevin (RR)

Its very surprising to find this article in the AGE ... its definitely worth checking out, and as you go through the comments you'll find it comes as no surprise to anyone that has worked in government previously.

However, i do differ from some of the comment in that i think the liberals empowered their ministers much more than kevin does.

thanks to IPA for pointing it out

Regulatory madness (RR)

Hows this for regulatory madness.

I just heard from a reliable source that work cover NSW is seriously considering regulating pall bearers so that they have to wear hard hats ... apparently an open grave means that the site is considered dangerous ... ergo hard hats.

Its sort of hard to pull off a sombre funeral when you have six blokes standing around the coffin in bright yellow hard hats ... or perhaps there will be special black ones .... or white ones with doves on them .... or sky blue ones with pictures of the pearly gates on the front.

or for that special funeral ... hardhats covered in flames.

Whats next ... is the priest going to have to throw a safety harness around the gravestone?

I would like to see their regulatory impact statement, in particular i would love to see the stats on falling into open grave related accidents.

Its about time someone introduced kill a bureaucrat day!!!!

Bagwhati on Moyo on Aid

Very good article from Bagwhati reviewing a book by Dambisa Moyo (an African economist)

If your interested you should also check out White Mans Burden

10 Questions for 2010: 6 to 10 (Roy Rodgers)

  1. Endangered species.... how do they get listed? Have any species ever come off the list .... that is, has any species ever been deemed to be no longer endangered? How often is the list reviewed, is it subject to independent assessment? Can you appeal a listing? Is it an effective way of protecting wildlife? What constraints does a listing have for commercializing a species? If preservation is the end goal, commercialization is the one sure way of achieving that outcome ... look at cows, do you think they are in danger of extinction? How does the definition of endangerment deal with changes in demand from humans and substitution or technical obselecence? Whales would be a good case study. Some species have had up to 50 years of protection, so how are they going? can they now be delisted? Do we now have enough blue whales? Are their current stocks sustainable given that we would no longer demand whale oil in anywhere near the quantities we did prior to the development of substitutes such as petroleum?

  2. This is a very Australian specific question ... when I turn on my digital tv and shuffle through my 400 available channels... what the hell is going on ... why are they basically all empty ... how come there are only four channels (sorry .. plus the extra re-hash ones that roll out the one program series for weeks on end!) ? Surely this is a massive government and policy failure. All that excess capacity just sitting there, all that opportunity for us to communicate, educate and entertain each other is just being wasted. How on earth does the commonwealth minister for broadband, something or other and the digital economy loudly and proudly declare that he will not let another any new entrants compete against the four incumbent tv channels .... why not? It's not as if there isn't enough space for a couple more? It's not as if competition would erode our appetite for such brilliant local content as funniest home videos and the 20 to 1... no way not under his watch. He seems to be boasting his credentials as a protectionist. Standing tall and screaming for all the world to hear ... Fk the consumer!!! And this guy is from the labour party.

  3. Afghanistan ... I just don't get Afghanistan. How can a little piece of unproductive rock with virtually no redeeming economic value cause such a massive headache to the world? Why has the world been fighting for centuries in this place .... How does this country come to have the ability to engage the most powerful countries on earth in war? The English, the Russians and now the Americans. What can economics tell us about the seemingly unique ability of Afghanistan to compel the most powerful countries in history to invade it.

  4. Why do heritage trams exist? You don't get heritage buses. How can there be any value in being forced to sit on a rickety, uncomfortable, unsafe tram? Why would you want to? Buses and trams are perfect substitutes (or as close to as you're going to get) Does the simple fact that trams run on rails while buses run on tyres mean trams are somehow more valuable, more endearing?

  5. One more ... economics, globalization and cuisine. I would like to know how food cultures react to various changes in the resource availability that accompany mass migration programs. The most obvious example is Chinese. How does a cuisine evolve once it migrates to another country and as a consequence is subjected to a whole new bundle of available resources ... what makes a cuisine successful in its new environment, how do some cuisines manage to maintain their essential characteristics? Australian Chinese is obviously very different from Chinese Chinese which is again very different from American Chinese.
Ponder on .....

Monday, February 22, 2010

why is it American cartoonists get it?

Wednesday, February 17, 2010

10 Questions for 2010: 1 to 5 (Roy Rodgers)

  1. We all love the dali lama ... but what would the political economy look like if he was actually in charge of Tibet. The dali is essentially a theological dictator, and while i understand hes reportedly a fairly compassionate guy do you really think you would want a religious leader of a strong monastic sect, with all that it entails in charge of government. How do you deal with a political leadership that sees the ultimate utility of a country as its devotion to a rigid religion and the realization of some form of spiritual enlightenment. Whatever fiscal or monetary policy these guys produced would have to be a complete farce. how would vested interests compete for policy outcomes. Do you really want a guy who believes in self denial and asceticism in charge of your essential infrastructure program. Very interesting public choice question.

  2. Queuing behavior when boarding and alighting from airplanes. Lets start with boarding. I'm always in awe of how they manage to get people to queue in the first place let alone stand in the queue for 10 minutes while they fumble with the boarding passes. It's not as if getting in line early and standing there is going to get you to your destination any faster, it won't even get you a better seat (as these are already assigned). And then there's the question of why every one jumps up as soon as the plane lands. Why? There doesn't appear to be any benefit from doing so. Planes empty row by row so you don't get off any faster, at best maybe you can push in front of one of the guys from the row in front of you, but again what's the point, you all end up at the baggage carousel where you have to wait 20 minutes for the bags to come out, by which time you've lost any advantage from your pushing to get off the plan. Chillax (as my 7 year old would say!)

  3. Why is popular media, particularly TV and the big screen, such a big bunch of lefties. Liberal media commentators are far and few between and liberal orientated movies are far and few between. I find this very perplexing especially when you consider that Hollywood would have to be one of the most merit based market sectors there is, why are businessmen always portrayed as greedy, and private companies as always corrupt. Why didn't Hollywood go the other way? What role does economics and incentives have and why isn't economics portrayed accurately.

  4. In a similar vein, I would like to know how rock stars reconcile the obvious tension between their anti-capitalist herding behavior and the fact that they themselves are the robber barons of the modern capitalist system?I love spearhead, but i often wonder why if micheal franti was so sincere he hasn't released the intellectual property associated with all their music into the public domain ... why are those that scream so loudly about social ownership the first to protect their own property. Should they lead by example? In another related question ... why does the left produce all the good music? why is it classical liberals have to make do with Country and Western.

  5. How come people are slow to realize the opportunity cost in their houses? By this I mean when you look at Sydney and Melbourne - two cities with the most unaffordable housing in the developed world ... how come there are still inner city suburbs like Footscray, where houses are worth 500 000 to 600 000 smacks and yet there are still heaps of bogans living in these expensive dilapidated shacks with their commodores parked dutifully on the footpath. Why haven't they realized the opportunity cost associated with their little shit heaps and buggered off? 500 000 buys a lot of cold chisel CDs.
I recently received some critical feedback from one of the two people (excluding fellow authors and associated family members) who follow this blog .... apparently I am a 'long winded bastard'. In the spirit of self betterment I've split the questions for 2010 into two separate articles ... so stay tuned and questions 6 to 10 will appear here soon.

Thursday, February 4, 2010

Ramirez on global warming

Tuesday, February 2, 2010

Green fallacies (Roy Rodgers)

Environmentalism has really picked up over the last couple of years. Its influence on public policy has become all invasive. Environmental outcomes are now pursued with scarce regard for the associated costs and impacts on the wider community. Simple concepts of public benefits tests and robust cost benefit analysis have all but disappeared. Who cares about the bang for our buck ... if we can save an endangered frog we must do it (whatever it is) ... further to that, who cares if we are not confident that the frog is actually endangered or indeed that the frog actually exists, we must do it regardless just in case there is a frog and it is endangered ... we must take a precautionary approach if we are to ensure that sustainability is achieved.

Well on your bike you dreadlocked, no soap, no shoe red ragged feral ... enough is enough.

The time has come for environmentalists to start justifying their policy prescriptions. The time has come for the greenies to defend themselves. No more easy rides or free lunches. The vast bulk of environmental pap that has to date been blindly accepted by governments must be put under the microscope.

As an active participant in the development of policy, its implementation and its ongoing operation I can only cheer what appears to be an awakening of the public consciousness to the dangers of blind acceptance of environmental agendas.

In that spirit I thought there may be some value in trying to identify the main fallacies that underlie allot of environmental argument. Those that deal with government either in a consultative role or in an operational role would have encountered one or more of these fallacies, probably a multitude of times over the last 5 or so years.

The fallacies

Some of the following fallacies relate direct to the the thesis of globally-induced man made warming while others are more broadly applied over the wider environmental agenda. All of them are well known to anyone who has studied logic and argument.

  1. Defending an argument by attacking your opponent personally is called a fallacy of abusive analogy which is a highly specialised version of the ad hominem argument. Basically the opponent or their behaviour is compared with something which will elicit an unfavourable response from the audience. It is a very simple tool for diverting attention away from the merits of the opponents argument.

    The demonisation of any dissenting view is a fallacious approach. Sceptics are not equivalent to holocaust denialists. Sceptics are simply questioning the science and at the end of the day scepticism itself is a cornerstone of modern science. We don’t hang scientists, we don’t draw and quarter them, we don’t expose them to social ostracisation simply because they disagree.

  2. Argumentum ad numeram wrongly equates the numbers in support of a contention with the correctness of it. Ideas which have mass support are no more likely to be right than those that don't. The validity of an argument is totally independent of the number of people who support its contentions.

    The assertion that there is a consensus in the relevant sciences is equally crap and irrelevant. There is now more than enough evidence that the idea of consensus is blown. Enough notable scientists have spoken up and enough sceptics petitions have been made public that anyone contending there is consensus is full of it. There is consensus about gravity, there is consensus about evolution, there is consensus about the existence of dinosaurs ... there is no consensus about man induced global warming. And in any case consensus doesn't matter. Science is not about everyone agreeing with each other, its about the discovery of truth. Truth is true no matter who believes in it, or who doesn't.

  3. Argumentum ad bullshitus. An outright lie ... a plain and simple false analogy.

    Carbon dioxide is air ..... its not carbon, its not soot, and its not dirt. Put your hand up if your sick of hearing some idiot mention dirty air or show pictures of some black sooty monster in the sky. Carbon dioxide is air, its an integral building block for life as we know it. As a simple experiment cup your hands in front of your face and breath into them. Now quickly have a look .... that’s the stuff that’s killing us ....air. I know its hard to believe but what you are now holding in your hands is literally the very stuff that all this current drama is about ... air.

  4. This is a modern fallacy so lacks a swank Latin title ... it is a mix of the fallacy of blinding them with science, with a bit of ex-post-facto fallacy (that the past dictates the future) and generous lashings of false precision. The false precision fallacy is an attempt to impart more confidence in the assertions than the evidence for them actually merits. The next time you read an article that says global temperature will increase by 3.5 degrees over the next 20 years, ask yourself why not 3.6?

    Models are right? As an economist i can tell you outright that anyone who believes they can model human behaviour and forecast it accurately over the long term ie the next 100 years has been sniffing too much glue. No one can accurately model human behaviour over the short term let alone the long term. Human beings especially those in modern capitalist democratic societies are unparalleled in history in terms of their ability to innovate and create. For example, consider fossil fuels or actually just consider one fossil fuel ... petroleum .... how many times have peak oil nut jobs had their say. Ever since the sixties there has been a steady procession of modellers predicting oil reserves to run out within the next 3 years (i don’t know why the always go for 3 years but they do). The reality is that oil is nowhere near being depleted.

    What these modellers fail to predict is the ability of the market to adjust to increased price ... growing scarcity ups price, increased price generate greater levels of investment which increase supply through innovation, price goes down. Despite the constant threat of depletion oil prices have remained relatively constant over the last half century (in real terms). The modellers shouldn't be ridiculed for not being able to predict oil prices but they should be ridiculed for not possessing enough self awareness to recognise the inherent inability to meaningfully model such technological development.
    The problem with man made global warming models is the unpredictability of the man made part which is only exaggerated by the long term view these models take.

  5. The fallacy of composition, what it true for one member of a set is true for all members and subsequently for the set as a whole. For example ignoring the south pole and focusing on the north implies that of course the earth is heating if the poles are melting ... self evident.Picking individual members of a set of environmental outcomes as indicative of the outcome for the set as a whole is fallacious.

    They seem to cherry pick their results. For example, a couple of weeks ago a group of principles IPCC authors released a paper (coincidentally just in time for Copenhagen). The report makes a big thing about low ice coverage in the arctic. However it gives no coverage to growing ice coverage in the Antarctic, I don’t know about you but for me to be convinced that the lack of ice in the north is global warming they need to explain why this is more important than the net global gain in ice coverage or the seeming exponential growth of ice in the Antarctic ... does the south not matter.

  6. The classic fallacy of reification. The environment is an abstract concept much in the way that a firm is an abstract concept. All a firm is, is a collection of of labour and capital, just as an environment is a collection of Flora and fauna. It fallacious to treat the firm as a thing. the firm doesn't think, the firm doesn't produce things, and the firm doesn't play soccer. High level executives may undertake strategic decisions, production line workers may use capital to produce products and both executives and underlings may play soccer. But the firm itself is nothing more than an abstract concept.

    Just as GIA is nothing more than an abstract concept. GIA doesn't weep, GIA doesn't morn the good old days when dinosaurs farted their way into global warming and GIA most certainly doesn't play soccer.

    The environment is not some big breasted female entity that is feeling slightly hurt because we have discovered intensive cropping techniques. The environment is a bundle of physical actualities regarding soil, water, weather, flora and fauna. It is not some god that needs to be worshipped. All animals seek to control and influence the environments they live in. The environment does not need to be saved or preserved as a moral imperative. We along with every other living thing should seek to manage our environments to the degree we can to benefit us as a species.

  7. The false dichotomy. Man Vs Nature. A dichotomy is a splitting of a whole into two non-overlapping parts. In set theory terms its basically taking one set and splitting it into subsets that are mutually exclusive and jointly exhaustive. In the context of an argument these sets are seen as opposites ... its either one or the other. As discussed, this fallacy totally ignores the fact that man is part of the environment ... we are in fact natural.

    Man is a part of the environment. We are the apex species. It makes absolutely no sense to proposition a world without man. We evolved on this planet, we didn't come here in big space ships. We are part of the environment. Given the existence of man the proposition of a world without man (nature) is an inherently unnatural thing to do. It doesn't matter how special we think we are, we are part of the ecosystem.

    When was the last time you turned on the discovery channel to find a documentary that considered the Serengeti without lions or the pacific without sharks ... obviously there would be more gazelle and more tuna ... but whats the point, sharks and lions are part of the environment and man is also part of that very same environment. That concrete tower I work in most days is no more unnatural than the big termites nests I used to always be in awe of every time i went bush with my dad as a young boy.

    Further, it makes absolutely no sense to proposition that nature without man is the optimal environment ... Optimal for whom? Definitely not for us ... is that also true of the pacific without sharks or western Queensland without termites.

  8. Celebrities are not climatology experts. Rock stars and actors have no more credibility when it comes to the environment than you or I. Just because they had a string of hits in the 90s doesn't mean they have their finger on the pulse. I personally cant stand the celebrity global warming attracts. Al Gore and Bono are wankas ... 100%.

    This is an extreme version of
    argumentum ad verecundiam. An appeal to false authority.... its an appeal to celebrity. Bono is an expert at rock music 90s style. Just because he is famous does not have any bearing on the validity of his statements in regard to the environment. Advertisers have long been aware of this fallacy, in fact its kept many Australian Olympic swimmers financially afloat long after they start to become fat and non competitive.

  9. Stop consuming or there will be nothing left for the rest of us. This fallacy is an economic one, its the fallacy of the the Malthusian trap. While the reverend Malthus is widely regarded by economists as somewhat of an embarrassment, his thesis that economic growth is not only constrained but ultimately unsustainable due to the physical availability of resources is to environmentalists as junk is to junkies.

    While on the face of it the Malthusian contention that we will all eventually starve may seem to have some merit, it makes the fatal error of treating resources and their associated productivity as static. It take no account of how markets operate to signal investment and depends on a very simplistic definition of scarcity that does not allow for innovation to drive changes in efficiency in use. The discussion under fallacy 4 in relation to peak oil also serves as a good example of the Malthusian fallacy.

  10. Risk aversion is better than risk neutrality or risk affinity. This is the precautionary fallacy, there is absolutely no reason a risk adverse approach will result in better outcomes.

    A perfect example is the banning of DDT, which goes something like this ... a whole mess of bureaucrats read a well intentioned book called silent spring, they all jump up off their collective backsides and declare ... wow we better stop spraying mosquitoes with DDT, otherwise it may be the case that we inadvertently kill innocence wildlife ... granted there's not a lot of data to support the idea, but hey we better ban it or we may just create an ecological disaster .... millions of Africans die from malaria. Who said being risk adverse didn't have costs.

    The other problem with the precautionary principle is just how precautionary do you want to be. Unfortunately in life everything has risk associated with it. Doing something may be risky, not doing something may also be risky. Ultimately someone has to pick what risks matter and what risks don't, and when they do the precautionary principle becomes nothing more than an expression of their own prejudices.

  11. The sustainability fallacy, there seems to be a growing contention that all natural resources need to be managed in a sustainable manner, otherwise we are creating inter-generational inequities. Rubbish, the desirability of treating a resource sustainably as opposed to just letting it deplete should be dictated by the net value associated with each approach. Its not inconceivable that some resources are just too expensive to treat sustainably or alternatively, that some resources run the risk of technical obsolescence and as such should be depleted as much as possible prior to obsolescence.

    Some resources by definition can't be treated sustainably ... eg oil.

  12. The doomsday fallacy, environmentalism is permeated with the idea that disaster is just around the corner. That if we don't act now we are stuffed. The doomsday fallacy is a fallacy simply because in real life as we converge on a true crisis point we inevitably invest more in addressing the issues and finding solutions or alternatives. That is free markets will if left to their own devises, just simply deal with it. Doomsday never arrives.

    The interesting thing about this fallacy is that Australia along most of the developed world has been aggressively implementing environmental policy for the last 30 years or so. If we are still dangling over the precipice of environmental collapse, this would imply that none of the previous policy was effective in any way. Have we just witnessed nye on 30 years of collective policy failure.

    Given that the vast bulk of these policies and prescriptions are the direct result of the lobbying of the environmental movement, we must ask both ourselves and the dreadlocked losser standing on my doorstep, all well intentioned in his chuck yagger rip offs , nose piercing and little shiny plastic green peace badge ... why in the name of all thats holy would we want to pursue more of the same.

    If what you are saying is true and we are all being flushed down the poo hole of environmental disaster ... you and your dreadlocks are not the answer, you are by your own admission part of the problem. So bugger off and lay your intellectual cable on someone else's doormat
Give it a burl

Now that we've identified a set of fallacies we should see if we can find some in action.

The following link references a forum on recycling. LINK (thanks to sparker for providing the link)

Its a great discussion. On one side you have a rational headed German engineer and on the other you have a couple of emotionally motivated greenies. See how far in you get before you can identify a fallacy. The most obvious one is the Malthusian Trap Fallacy . And this is a superb example of it being played for all its worth. The user of the fallacy has even brought in props to illustrate the point.

Its also worth watching because its one of the few forums Ive seen that actually has a critical audience with an intellect capable of participating in the discussion.

Friday, January 29, 2010


Hitler's take on the iPad

Thursday, January 28, 2010

More Ramirez

Ramirez on Obama

Ramirez on Global Warming

Ramirez on the Economy

Does green = red? (Roy Rodgers)

Have those sneaky red little bastards crawled back under the bed?

When Fukuyama predecticted that we had just witnessed the end of history in 1992 what he was refering to was the death of socialism and the triumph of the classical liberal system. He was brave enough (or silly enough) to theorise that the battle of the great 'isms was over.

Fukuyama thought that the overthrow of communism meant that classical liberal democracy combined with technologically driven capitalism were end points for the collective evolution of society and of the politic. In other words they were in themselves final forms of government and economic organisation.... thus end points in history.

I'm going to go out on a bit of a limb here and suggest that while it's bleedingly obvious to everybody that socialism lost the battle last century, all those skivvy wearing , beret donned old red raggers (I swear to god they wear berets, I've only been to one Fabian presentation down at trades hall, but the beret count was at least 70%) and the dreadlocked, no shoe, no soap brigade of new stinky red raggers didn't just pack up their misguided 'ism and become accountants. NO NO NO ... they went out and found themselves a whole new cause... a whole new 'ism.

What Fukuyama didn't forsee was the rise of the next great 'ism ... environmentalism.

On the face of it, environmentalism would appear to be apolitical. Anyone can want to save the planet, you don't have to be a closet Marxist, a leafy suburbs labourite, you don't have to be a democrat, you can be a free marketeer, you can be a clasical liberal, you could even be an anarco- capitalist. After all, Abbot is a commited environmentalist ... he's going around talking about raising a green army no less (obviously an approach that would leave all his truly liberal supporters scratching their heads thinking '..what the hell is going on?').

The thing is ... any analysis of the proposals, policies and positions of the green movement and the broader environmental agenda leads to the obvious observation that it has no appreciation of the power of markets, no grasp of the ineffectiveness of centeralised planning and an apparent abject hatred of property rights. Environmentalism is fixated with the idea of market failure, greenies see externalities everywhere. And their answer is fairly straight forward ... socialise environmental assets (whatever the hell 'environmental assets' are) and directly control people's behaviour through regulation.

All the trappings of the socialist system appear to be dutifuly reproduced in the environmental movement. Don't get me wrong, I'm not saying there are reds under the bed and that we need to invade Vietnam. What I am saying is that there appears to be an incredibly strong relationship between the policies of groups such as WWF, GreenPeace, guys like Al Gore and Oxfam (although these guys appear to have the conflicting objectives of being green and promoting economic growth? work that out ... nut jobs) and the policy approaches previously adopted by just about any failed socialist state you wish to name.

And at the heart of this approach is an apparent faith in the power of centeralised control.

Just as an aside ... it's quite ironic that the environment fared much worse under socialism and communism than it did under the capitalist liberal democracies. How's that for an inconvenient truth.

Why we need to drag the reds out from under the bed.

While being more or less the child of socialism, environmentalism is much more ambitious than its predecessor. It lays claim to not just saving humaniy but saving the very planet we live on.

The grandioseness of its ambition is matched only by the inevitability of its failure. And the reason its doomed to fail is quite simply that it has chosen to ignore the lessons from the demise of socialism and has centred itself yet again on the idea that burecrates in cubicles can, through the powers of coercion vested in them, produce effective outcomes. This is an absolute crock of an idea, always has been an absolute crock of an idea and always will be an absolute crock.

So who cares? ... the reason it matters is that, while history has shown us that liberal societies are very robust and can over time reject such destructive ideology ... the process shouldn't be considered inevitable and if it does occur, it takes time. It took a good 30 years for Australia to shake off its social democratic chains and become a liberal democracy. It took the prime ministerships of Hawke, Keating and Howard to get Australia to the point where it's at now. Despite the dribble of big kev and the seemingly endless burden of the nanny-state we are still much more liberal than we were under prime ministers such as Fraser.

The added danger is that once embedded you may never be able to roll it back. Only the abrasive bullheaded strength of Margret Thatcher was capable of dragging the UK out of its socialist funk. And it took the gun-swinging cockiness of Ronnie Regan to halt the seemingly inevitable slide of the US into social democracy. People like this don't come along every day and it's not advisable to pin your hopes on one of them magically appearing at just the right moment to ensure that the bad 'isms are all swept away. France never got its Thatcher and subsequently is still unable to raise its head above the stink of its own socially democratic system.

Yes Australia was lucky enough that it got its silver headed little bodgy, but I think its fair to say that if he actually knew what he was doing he may not have done it.

Once entrenched, 'isms are very hard to get rid of (...if they can be gotten rid of). And the longer it takes us to get rid of the bad 'isms the more costs we will accumulate. In the case of environmentalism, those costs will be a suppressed economic growth (meaning incomes will be lower than otherwise) and ironically it probably means were not going to be able to deliver the strong environmental outcomes that liberal capitalist economies have to date.

One saving grace may be that unlike previous manifestations, environmentalism is associated with a set of objectives that are at lest in theory measurable. This gives its opponents ample ammunition to hold the ism to account. If you want to go and save lovely tree frogs, we should be able see just how effective you are by simply counting frogs. No matter how much you believe in global warming, unless the temperature actually goes up the thesis is doomed.

We need to deal with environmentalism. And one of the very first things we need to do is to stop treating it as the 'holy of holies' and subject it to some cold hard critical analysis, much as we do everything else. Environmentalists need to defend their arguments, justify their policy .... greens need to come clean and face the public in an open and transparent manner.

One way in which to do this is to examine the fundamental assumptions underlying their aruguments.

Tuesday, January 19, 2010

Here we go (Roy Rodgers)

Big kev is back and he is back in a big way.

Yesterday’s declaration of kev's next election winning platform is guaranteed to bring on the laughs. 100%

Here is, the next self declared saviour of social democracy, announcing that Australia needs to return to the productivity levels of the 90s. That we need to pull our socks up and work that bit extra.

See the Australian

Big kev has said its all up to us, only we the workers can save the economy. We need to achieve the 2% annual productivity gains that were delivered under the Hawke, Keating and Howard tripartite.

Well smack me over the back of the head, am I missing something or isn’t it true that these productivity gains were the result of one of the most liberalising eras in Australian history? These productivity gains were the direct result of microeconomic reform, of privatisation and corporatisation, of tax reform of labour market reform ... reform as in liberalisation ... reform as in the freeing up of markets. It was the 80s and 90s that saw Australia transform itself from a social democracy into a liberal democracy, and it was this transformation that gave us the wealth we have now.

Obviously this simple observation is totally lost on big kev. Or is big kev now going to change colours ... is he no longer going to be the pinkly tinged social democrat of his dreams? I doubt it, I’d say he just hasn’t twigged that the 90s productivity growth is solely attributable to stuff that he doesn’t want to and is not ever prepared to do.

Let's have a look at his run on microecomic reform to date;

  • Removal of work choices ... the very first roll back of a liberal reform in the last 30 years
  • Re-union-ification (I know there’s no such a word) of the workforce. This year, for the first time in a decade or so we were subject to the labour phenomenon of Christmas strikes ... thank you santa
  • Promotion of protectionist policies ... see recent decision in relation to Australian publishing and anti dumping laws
  • Selective handouts to industry ... here go and make me a green car, oh you were already making one ... well you might as well take the cash anyway!
  • Reintroduction of progressive taxation and payments ... see the robin hood delusion wayne swan is currently suffering under
  • Reintroduction of the welfare orientated approach ... see response to housing affordability crisis ... ie more public housing

The list just goes on and on. While I have to admit big kev is very hard to pin down on anything the one thing we can say with any certainty is that he is NOT a microeconomic reformer.

Do you think for a second that big kev may seek to address our current issues in the provision of health services by decentralising health planning, privatising assets, empowering consumers to make their own choice ... I DOUBT IT

Do you think for a second that big kev may want to reform the tax base by removing exemptions from GST, moving the focus away from income based taxation or instituting flat rate income taxes, abolishing distortions such as negative gearing, abolishing company tax, distributing mineral royalties through positive tax returns, getting rid of absurdities such as payroll tax and stamp duties.... I DOUBT IT

Do you think for a second big kev will want to reform the labour market by abolishing the minimum wage, promoting individual workplace agreements, abolishing unfair dismissal ... I DOUBT IT

Do you think big kev has the stomach to tackle issues associated with the provision of basic services such as water and sewerage (can you honestly see any privatisation in these areas). Do you honestly think big kev has an agenda of reducing government service provision. If we need money lets sell the ABC, that would free up approximately a billion a year in budgetary funds and would also provide government with some ready cash to retire the mountain of debt it now has.... I DOUBT IT.

Do you think for a second that big kev will want to address housing affordability by removing constraints on land supply, abolishing hidden taxes such as developer charges, abolishing stamp duties, removing heritage overlays ... I DOUBT IT

That’s not to say that Mr Abbot has the necessary where-with-all either.

Undoubtedly big kev's form of reform is going to be regulate ... interfere ... coerce ... spend money. None of which is going to have a positive impact on productivity.

The hilarious thing is that he is going to ask us to deliver productivity growth similar to that associated with the advent of market based reforms by .... wait for it ... wait for it .... wait for it .... doing exactly the type of things those original reforms were aimed at addressing.

Monday, January 18, 2010

More Haiti (Roy)

Just came across this reuters article

You cant help but begin to be concerned about the effectivness of the response when you read things like this

Five days after the earthquake, scores of untouched corpses, now bloated and stinking, remain on streets. Red Cross officials have repeatedly said no one should fear disease from dead bodies after the earthquake that is believed to have killed up to 200,000 people.

"I don't understand why everyone is worried about a disease risk," Haitian Red Cross President Michaelle Amedee Gedeon told Reuters. "Do we have cholera in Haiti? No. Do we have the plague in Haiti? No. Rodents, water will not get contaminated. The only bad effect from the corpses is the smell."

On Sunday, more bodies appeared overnight, with locals saying they were thieves burned and shot by lynch-mobs, gangs and police. They said about 20 people were killed like that.

Lets hope for the best (Roy Rodgers)

Haiti is an absolute disaster, and i wish nothing but the best for those that have fallen victim to the recent earthquake.

However, I would be interested in knowing how the humanitarian effort is going. Whether its getting food and supplies to those who need it as quickly as possible.

The following is an excerpt from Haiti's 2009 poverty reduction strategy.

Strategic-level entities: the Strategic Orientation Investment Council (COSI), the Donor Advisory Committee (DAC), and the Priority Arbitration Committee (CAP) are not yet officially up and running. At the operational level, the Interministerial Committee for Implementation Coordination and Monitoring (CICSMO) is up and running and is chaired by the Minister of Planning and External Cooperation. The Executive Secretariat of CICSMO, the key entity for the entire implementation mechanism, the Interministerial Subcommittee for Sectoral Coordination and Monitoring (SCTICSMO), and the Departmental Subcommittees for Implementation Coordination and Monitoring in the regions (SCDCSMOs) have been established. SCTICSMO is holding its ninth monthly coordination and monitoring meeting (thanks to a fist full of euros).

wow ... what a load of bureaucratic crap ... do all those committees seriously give anyone any faith that they have the whole development thing under control.

Poverty reduction strategies apparently describe a country's macroeconomic, structural and social policies and programs aimed at promoting economic growth and of course .. reducing poverty. The strategies are prepared by government and 'development partners' such and World Bank and the IMF.

Lets hope the disaster relief effort is better organised than the poverty relief effort.

Saturday, January 9, 2010

My burning ring of fire (Roy Rodgers)

My apologies to anyone who has been following this blog ... we have been pretty quiet for the last couple of months. It's safe to assume that like myself the rest of the posse have been swamped with end of year real work and family commitments. So apologies for the lack of content but I’m sure you’ll understand. And I'm sure the new year will bring plenty of well informed insightful comment from the seditionists (as an aside I am laying it on a bit thick... other than the other contributors and my mum I am fairly sure no one is actually following the site).

That said, I now find myself on a job in regional Australia suffering through one of those sleepless (slightly itchy) nights in a lovely regional motor inn. The brown brick and crap Win TV programming are miles away from the comforts of home. The rattly air conditioner and the moldy $5 mars bar in the mini fridge are dismal compensation.

I must admit that the sheets are crisp, if not exactly pearly white, but the pillows cases were rather crumpled and I’m not convinced they were crumpled in the not ironed but washed sort of way. And can someone please explain why there is a spa big enough to accommodate 5 truck drivers sitting in the bathroom.

Enough whinging ... this blog is about the environment and man made global warming.

Where I currently stand

Rather than start preaching about the pros and cons of the global warming debate, I thought there may be value in declaring exactly where I stand on the issue straight up, just so that we clear that there is no hidden agenda or undeclared philosophical position behind the rest of the blog.

I am not a climatologist, I have no idea how the environment works in a physical sense, and I admit that I remain to date uncommitted one way or the other. By uncommitted I mean I am still open to the idea were it to be presented in a convincing manner. I am probably best characterised as an agnostic global warmist.

Our policy response

On the other hand I am quite clear about what I think our policy response should be. Regardless of the accuracy or validity of the underlying science Australia needs to adopt some form of emissions policy. The reasoning has absolutely nothing to do with the environment but quite alot to do with trade.

We are a small, incredibly open economy, our welfare is wholly dependent on our ability to trade openly and without restrain with the rest of the world. If we were not to implement some form of policy we would inevitably see a backlash from our trading partners in the form of foreign carbon taxes and quotas placed on our exports. A new form of protectionism dressed up as carbon neutralisation. The thing is that it doesn’t matter so much whether it's true or not but rather whether the rest of the world believes it, and if it does we need to make sure our windows are dressed accordingly.

It follows from this pragmatic view that we would be best served by pursuing policy that can be removed once it is recognised not to be of any further use. For example, were the world to continue to cool rather than warm we may at some point come to the conclusion that global warming as a hypothesis is invalid, in which case we would wish to discard those policy instruments we implemented to combat warming. Instruments like a carbon tax would be relatively easy to discard. All one has to do is simply cease collecting the tax. Regulation would also be relatively easy to discard ... we just abolish it or to use the right wording to reduce the regulatory burden.

The trick is to avoid implementing policy that can’t be readily discarded. For example, it won’t matter if we no longer believe in climate change, if we have implemented an emissions trading scheme you can bet your bottom dollar that we will never get rid of it. History shows that once you have granted people rights to property (in this case the right to emit) and those people have made significant investments in these rights, it is incredibly difficult for democratic government to roll back these rights or to abolish them.

To borrow a phrase from the environmental lobby ... we should take a precautionary approach to policy.

Economics and the warming sceptic?

One of the most confusing and to be honest, confronting things about global warming is the manner in which very well educated people approach the theory of man made global warming as if it were a matter of faith (faith defined as belief not based on evidence). The reason that this is so surprising is that most of the people I know are economists and are by definition sceptical of just about everything.

Climatology and economics may seem to be a world apart, but both disciplines share a number of similar traits. Neither science is a lab coat science. Both attempt to model complex systems (granted the climate is much more complex than the economy). Both base future expectations on a collection of a wide range of historical data which is inevitably cobbled together from a variety of sources.

Both are intimately concerned with human behaviour. While economics deals directly and almost exclusively with the modelling of human behaviour, its pretty safe to assume that any long term modelling of human induced warming must also have at its core a model of human behaviour. If it doesn't then we are in real trouble.

While there are alot of similarities we should also note that Economics has been around longer, has better data and has developed its own advanced from of statistical analysis. So while economics may be somewhat less ambitious as climatology, it's reasonable to assume it's more mature as a science in what it does.

If you presented most economists (such as my mates) with 100 year forecasts generated by an extremely complex economic models , they would immediately assume the results were at best totally unreliable and at worst absolutely totally unreliable. The thing is that economists are incredibly sceptical about their own science and its ability to generate long term reliable forecasts, and especially so in the macroeconomic field. There are even quite well established branches of economics (such as the Austrians) that hold such modelling in complete disregard. We know intuitively just how fragile forecasts can be.

By way of example, its worth considering the forecasts of Paul Samuelson (a celebrated Nobel prize winning Keynesian Economist) who in the 1961 edition of his famous textbook of economic principles, wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster. As a result, Samuelson contended that one could comfortably forecast that Soviet GNP would exceed that of the United States by as early as 1984 or perhaps by as late as 1997 and in any event Soviet GNP would greatly catch-up to U.S. GNP. The following graph is lifted from the textbook.

As your probably aware ... to call this a poor forecast is like calling Bob Ellis an intellect --but it gets worse because in subsequent editions Samuelson presented the same analysis again and again except the overtaking time was always pushed further into the future so by 1980 the dates were 2002 to 2012. How wrong we he ... and he was one of the smart ones (thanks Marginal Revolution).

The confronting bit is that if you present these very same sceptical economists who don't trust their own analysis with a 100 year forecast from a climate model that predict significant and material change (no less than the end of life as we know it), they will all drop their calculators in a state of abject panic and start hoarding tins of baked beans for the forthcoming Armageddon. This seeming unquestioning acceptance is despite the fact that climate models are by definition trying to model something infinitely more complex than any single economy, and that the data the models are being fed is nowhere near as clean as economic data.

Ask yourself this simple question, as an economist, what would you say to your friend if he she came to you one day and said ...

Friend: ....hey Roy, I've developed a model of the global economy that can predict macroeconomic outcomes over the next 100 years... and guess what, my model says were all going to die. Say why don’t we start implementing massive policy change based on the outcomes of my model.

Roy: on your bike buddy

Granted economics as a science has been around allot longer than climatology. It has more runs on the board and more embarrassments to contend with (hopefully this translates into lessons learnt). Maybe that is why we are much more modest about the reliability of our models than our fellow scientists the climatologists. We know from bitter experience that 9 times out of 10 you will inevitably be wrong. ... just like the joke says ... Economists have successfully predicted 9 of the last 3 recessions.

Maybe it's time climatologists learned a little bit about intellectual humility.

Maybe the joke will go something like ... Climatologists have successfully forecast the warming associated with the last ice age (or something equally as lame) ... the inconvenient joke?

I'm not saying climate change is wrong ... I simply don't know ... all I am saying is next time someone comes knocking on your door telling tales of doom PLEASE PLEASE be a little bit sceptical.

Thursday, January 7, 2010

Regulation gone crazy

Well Christmas has come and gone and now its sale time.

Awhile ago we posted a blog regarding the absurdity of predatory pricing. While the content of the blog was 100% accurate, the blog itself was very much tongue in cheek. After all how stupid would a regulator need to be to go down that road … surely no one would … not given the ready availability of so much good economics.

Well they have, and as anticipated the outcome is nothing short of absolute lunacy.

Where did they do it? Where else, but that bastion of anti capitalism, social democracy and good cheese. France!

Sales in France are governed by specific legislation. Laws supposedly designed to stop unfair competition and protect small shopkeepers from those "all year" sales by large stores who can afford to sell some items at a loss. In France out of the sales period, it is an offence to knowingly sell goods at a loss, again a measure designed to protect small shopkeepers from large retail groups

Trading laws stipulate that there are two periods for sales in France. Winter sales from January to February and summer sales from June to July. In each case, the sales last for five weeks. All goods on sale must have been in the shop for a minimum of thirty days prior to the sale date. No buying in cheap stock and selling it as a sale item. Reductions’ must be visibly displayed in percentage terms. labels must also show the old pre sale price and the new sale price. Retailers are allowed to reduce their prices three times in the sales - after the first fortnight, and again in the final week.

Outside the official sale periods, retailers are allowed two weeks in the year, to use at their discretion, for extra sales such as pre-Christmas sales or spring sales. Shops are allowed to run "special offers" on certain items of stock throughout the year i.e. - a rack of cheap "end of line" clothing. Shops that are closing down, or refitting are allowed to hold sales - "everything must go" with written permission from local authorities.

Yesterday morning many shops (with permission from their local trading authorities) were open at 7am. Needless to say that the starting date is a national one decreed by the government. (thanks to for these nuggets of info).

It never ceases to amaze me how blatant anti competition laws are often dressed up as pro competition rather than what they truly are …. Articles for Government sponsored cartel governance arrangements.

Aside from mad Frenchmen, its also worth noting that the American fiscal stimulus bail out framework has just started to produce some dodgy results

Bailout hearing

More follies

Sorry ... couldn't help myself ... heres another folly from 2007

Start Friday on a high note (Roy)

Start Friday with a laugh.

I've recently discovered the spring follies that American business schools seem to love producing. Youtube is fantastic.

Here is a link to a 2009 spring folly from Columbia School of International and Public Affairs.