Geelong - an idea for the $24 million

We've all heard about the closures at Ford in Geelong because management was too stupid to track markets trending to fuel-efficient or hybrid engines rather than 6-cyclinder guzzlers.  ABC reports on a $24 million pick-me-up for the Geelong region.  I know what I'd do with it - help make Kardinia Park's capacity bigger than Telstra Dome's.

OK, I'm a long-suffering Cats fan, can't remember the last flag as I was only 3 years old, and to give full-disclosure, I had a part time job with the Cats nearly 30 years ago during by Uni days, but it's not just the extra funds for the club, the chance of real home-ground finals and hopes for future premierships that I'm worried about, it's straight economics.

Geelong's economy is not so dependent on the Ford factory as on the success of the footy club.

While I can't lay my hands on the specific reference, I recall a 1970's study that showed productivity in Geelong industry on Mondays was much higher (at least 10%) if the Cats were victorious on the weekend.

Not only that, the happy townsfolk (it's the only AFL club that is not from a capital city, and anybody in Geelong or the Western Districts who doesn't barrack for the Cats is considered a "traitor") spend much more out on the town after a win.  After a loss, nobody feels like going out for a meal.  In a bad season, the hospitality industry loses big time.

With a larger crowd capacity, and a good reason to have more home games actually at home rather than in the corporate showpiece that is Telstra Dome, there would be a huge boost to the economy.  In Victorian government budget estimates inquiries 2004/5 (p10) Minister Simon Madden gave details about $26 million project ($13.5M from the state) that created the new Eastern stand:

The construction project is boosting local business and creating around 70 jobs in terms of flow-on effects, and the flow-on effects from the project are in the order of $42 million. It is estimated that each home game in Geelong generates in excess of $2 million to the local economy.

$24 million dollars on Kardinia Park improvements would not only lead to jobs, pride, and increased revenue to the Geelong region, but a few extra home games (and wins) would give invaluable publicity to the region, which has some damn fine beaches a bit further down the highway.

I don't think there'd be a single person in Geelong (apart from maybe a couple of black sheep who demonstrate antisocial tendencies by supporting Collingwoord) would object to this use of $24 million.

Rudd's principles apparently non-core

What has happened to the Kevin Rudd that wrote an article the "Faith in Politics" essay in the October 2006 edition of The Monthly?

In it, he praises the ethical stance of Deitrich Bonhoffer, the German theologian and activist who was assassinated for his part in one of the earlier plots to kill Adolf Hitler (not the more famous 1944 plot involving von Stauffenberg.

In the following November 2006 edition of The Monthly, Rudd continued to attack with the essay "Howard's Brutopia", again using the first principles of Christianity, morality and social justice to explore some of the many hypocrisies of the federal executive and its agenda.

Has Rudd lost his intellectual capacity for argument, lost a supposed desire for justice, lost his courage, or were the essays simply a ploy to get the attention of the compassionate and educated right and left before moving on to play to the masses?

Rudd, who was able to reconcile an apparently "terrorist" act against the elected leader of a nation-state with the moral necessity of Bonhoffer's action (no mean feat in the current climate), should have stood up for the principles of justice and separation of powers we once thought were part of the Australian polity.  He has abrogated this duty as a politician in a liberal democracy.

Rudd, and indeed the ALP as a whole, seems to be playing the small-target strategy, apart from mention in the press about calls for price-monitoring for groceries and petrol.  Such calls are appealing to the masses, but informed people of both left and right know this is bunkum: Australian fuel prices are very low by world standards, and the ability of regulators to control prices in a market with few suppliers is minimal (as demonstrated by the failure to fix the lending pratices and treatment of small-balance accounts by the banks).

In the November 2006 essay, Rudd attacks Hayek, "scriptwriter" for the Howard regime's attacks against the traditional values of liberal democracies:

Hayek railed against classical conservatives for standing for nothing, arguing that liberals and conservatives had merely formed a tactical alliance against communism. But his new definition of morality was itself disturbingly minimalist.

By his recent silence on the way the rule of law is being dismantled in Australia, Rudd shows his own definition of morality, his own apparent defence of traditional notions of a just society, to be tactical and "disturbingly minimalist".

Rudd, at least qualitatively, is guilty of exactly the thing for which he berated Howard: the cynical ditching of principles for political expediency.

Review of David Marr's "His Masters Voice" - QE26

This has been updated HERE

The current issue of the Quarterly Essay (Issue 26), with David Marr's His Master's Voice - The corruption of public debate under Howard is well worth reading.

It is shocking because while it discusses changes over the Howard (and to a lesser extent, the Keating) years, it concentrates on events over a few months earlier this year, many of which I had not heard of, including censorship of Hansard.  The dispassionate account of specific events makes it all the more shocking.

Marr covers both legislative changes and administrative actions.

While I had realized that something was rotten, from the few events raised in the press, the sheer relentlessness of governmental attacks on what we consider standard parts of a civil society astounded me.

David Marr also offers an insightful review of the differences between the attitudes to freedoms and rights between the US and Australian republic, and correlates this with the form and content of the language of settlers and the English parliamentarians at the time.

In my opinion, while the QE is always an excellent read (a fifty page essay required to cover the issues adequately, and it's satisfying get the chance to really sink your teeth into something meaty), this is the most informative and important issue of the QE since John Birmingham's review of the changes to Australia's military strategy and administration.

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See also:
Other blog reviews of QE26:
Andrew Norton (a self-confessed "classical liberal)
Politically homeless (a member of the Liberal Party).
(Funnily enough, neither of these blogs like the article as much as little-ol-lefty me)

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Keep uranium for research and medicine while we still have it

Given that the world has between 20 and 60 years of uranium left, nuclear power is only a short-term option unless you have a fast-breeder reactor that generates plutonium.

Plutonium's most important application is as a fissile material for nuclear weapons (or as a radiologic poison - a "dirty bomb") although it can be used for power generation, so it's worth wondering if Howard has nuclear weapons in his agenda, not just nuclear power.

Although technically I'll give qualified support to nuclear power, this does not include fast-breeder reactors, because of issues with both nuclear safety and nuclear weapons proliferation.  Since the bad news about minerals reserves came out, even the pebble-bed reactor that I don't have major objections to doesn't have even a medium-term future.

So, either by the time Australia builds a normal reactor, it will have only a short lifespan, or if we generate plutonium in fast breeders (to deal with low uranium supplies), the plutonium will almost undoubtedly end up in weapons.

Nuclear energy doesn't have a future: we should be reserving it for research and medical purposes while we still have it.

Democrats will attempt to create Peace Commission

The Australian Democrats are planning to introduce a private members bill (the Peace and Non-Violence Commission Act 2007).  In many ways this is more far-reaching and significant than their attempt to get the Cluster Munitions (Prohibition) Bill 2006 through - a bill unfortunately rejected, despite the many submissions in its favor.

The reason this bill is so important (from the draft I've read) is that it sets out to create the conditions that allow peace to develop, rather than attempt to control any belligerent or inhumane activities, and has a large educational component.

The draft bill's full name is A Bill for an Act to establish a Commission for peace and non-violence, and for related purposes and aims at the following:

• Establish the Peace and Non-Violence Commission as an independent statutory body to promote throughout the community the pursuit of peace and non-violence as an objective and responsibility of national government
• Align Commonwealth government activity with United Nations policy in the promotion of peace
• Publicise Australia's obligations under international humanitarian law.

It's a pity there are too few recent successes of Australia's promotion of international humanitarian law.  If there were, there'd be much less chance of us being a terrorist target: after all, even Bin Laden said just before the Iraq war that moslems should not attack places like the Nordic countries.

The draft seeks not only to promote international peace, but also domestic conflict between groups in Australia.  Importantly, it has a strong educational agenda for schools, and a research component to look for new ways of developing a civil Australia, and a civil world.

Another important part is the promotion of economic rights, not just the prevention of frank violence.

The draft proposal divides up the Commission into a number of separate offices:

• Peace Education and Training
• Domestic Peace Activities
• International Peace Activities
• Technology for Peace
• Arms Control and Disarmament
• Peaceful Coexistence and Non-Violent Conflict Resolution
• Human Rights and Economic Rights

In the hope of increasing the chance of getting the bill through, while it aims to be binding on the government, it precludes the possibility of prosecution.  It's a pity that prosecution is not an option, but our current executive is as likely to allow this as the proposal to make lies by politicians subject to prosecution.

I urge everyone to keep an eye out for this bill when it is referred to committee, and send in your own submission in its support.

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See also: How-To make a submission,
Current parliamentary inquiries,
my other blog's page on parliamentary submissions.

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Pell and Stem Cell Research

Archbishop Pell wants priests to refuse communion to any Roman Catholic MP who votes in favor of stem cell research in the NSW parliament.

While he talks about monstrous human-animal hybrid embryos, he misuses the word embryo (it doesn't deserve the term until much later), he forgets that human-animal chimeric concepti aren't viable, and his theology is muddled.

Either his deity creates a soul for each conceptus whether or not it will implant, in which case he thinks the majority of concepti that don't implant (usually the woman is "a couple of days late") deserve a requiem mass, or the omniscient deity knows that the conceptus will not become a live birth and doesn't bother creating a soul.

If Pell's deity doesn't create souls, then it's none of Pell's business.

If Pell's deity does create souls for human-animal hybrids, then why does the Roman Catholic church object to the proposals to grant gorillas and chimps quasi-human rights, given that they are much closer to human than a human/hamster chimeric conceptus?

Pell is also saying to all those waiting for the expected benefits of stem cell research, including sufferers of type-1 diabetes, Parkinson's disease, et al, that Pell's deity wants their suffering to continue.

Actually, it's probably silly of me to expect logical or theological consistency from a man who follows not the compassionate sayings of Jesus, but the traditions of the CDF (formerly known as the Spanish Inquisition) of which he is a member.

What is and is not torture

There is a simple way of deciding what is and is not torture, a problem explored by Monday's Four Corners program on ABC 2007-05-04.

It is not torture if each member of the cabinet and the highest court in the land can subject their nearest relative (over the age of 16) to the treatment they want to consider legal.  (A separated but not yet divorced spouse or mother-in-law does not count!)

It is torture if one of the members of cabinet or the court cannot bring themselves to do it to a family member.

After all, if it isn't degrading or agonizing, and it helps to bring in regulations in the best interest of the nation, why should there be any objection?

Privatizing Australia Post

Last night's ABC Lateline Business report about CommSec Chief Economist Craig James' call to privatize Australia Post (2007-06-04) seems completely self-serving and against the interest of the federal budget.

Australia Post was corporatized into a Government Business Enterprise so that Post would be self-funding and not need to go to government every year to seek funds for Community Service Obligations (CSOs) or to raise capital.  As sole shareholder, the net benefit to the federal budget of keeping Post as a GBE is between A$500 million and A$1 billion per annum.

• The CSOs were estimated at $88 million per annum (very low compared with $300 million about 5 years ago), which includes the standard letter service to places back-o'-Bouke including Christmas Island (which has a WA postcode), subsidized by the difference between the cost of a stamp and the 25 cents it costs to deliver a letter between two places in the same metropolitan area.
• Post provides an annual dividend of between $300 million and $400 million a year to the federal government.
• Often Post gives a "special" dividend to the government (like an ex gratia payment) of between $100 million and $200 million per annum

To put these annual budget benefits into perspective, this is about the same amount of money that funds CSIRO each year.

The one-off benefit to the government of a $7 billion purchase price (probably inflated by James to bolster his argument) suggests that within 10 years, the government would start incurring a net annual loss to fund the CSOs.  This is weird as this implies a Price/Earnings (PE) ratio much lower than the market usually accepts for businesses of between 15 and 20 years.

One of Jame's arguments for privatization is the success of the privatization of DeutschePost and its partnership with logistics supplier DHL.  This ignores two things: (1) the limited distances within Germany and (2) Post could already partner with DHL anyway, replacing the thousands of individual subcontractors it already uses for deliveries and pickups, and thus reducing administration costs.

Let's also consider that the $88 million CSO probably only includes the cost of delivery for standard letters and parcels regardless of distance and underestimates the costs of CSOs such as maintaining a presence in rural communities, and the interaction between citizens and governments through things like statutory declarations, electoral enrollments, money orders and the like.

Let's also examine the extra costs to government of privatizing Australia Post:

• The extra oversight and annual argy-bargy to negotiate CSO reimbursements would not be cheap
• There is a huge cost to separate data in information systems because information appropriate to private enterprise and that held as an agency of government lacks any "Chinese walls".  This is similar to the problems of privatizing the corporatized agencies that manage Drivers' Licences.
• The cost of organizing the backlog of data that would need to be handed over to the National Archives
• The cost of preparing due-diligence information to potential purchases within an organization that has never had to meet commercial standards of reporting.
• The fees paid to consultants for organizing the sale

It is also worth looking at the impact to Australia Post's cashflow if it loses the credibility of being an agency of government:

• The expected drop in walk-in business (to interact with government) would impact sales within the Licensed Post Offices and Post Shops which operate as a franchise, and thus the value of the franchise fees would be lower
• There would be a likely drop in revenue earnings from the bill-paying and banking activities, so the "commission" from the approximately $50 billion of financial transactions would drop.
• Mailing houses (mass mailing of bills and other business-reply post) that mainly target metropolitan areas would not need to go through Australia Post for delivery would go via other logistics organizations.

So, apart from the political fallout of service provision to remote areas, the difficulties of providing another means of interacting with government, the privatization of Australia Post is economic lunacy for the government.

Personally, if I was the government, before I even thought about privatization I'd send in the auditors to look for management slack, examine the massive changes required in the information systems including the costs of correct classification of data for privacy purposes, and encourage outsourcing through major logistics suppliers rather than a horde of individual private contractors.

Climate change crisis to reduce poverty?

So as not to be too depressed, I tried to think of a silver-lining to the grey cloud of climate change, and see one candidate being poverty reduction in third-world countries.  I'll give my reasons why this might happen.

The key assumption is that rising economic powers such as China and India will have increasing power at international treaty tables, and will push for per-capita CO₂ emission standards as this is to their advantage (they have low per-capita emissions compared to the developed world, particularly Australia and the USA). 

Per-capita CO₂ cap-and-trade regimes would mean a huge cashflow from the developed world with high emissions to the third world with low emissions.  There is the added advantage that the formula is pretty simple, so once adopted, if further cuts were needed, diplomatic arguing becomes superflous.

The cashflows from the developed world would allow for poverty reduction at levels even the Bob Geldofs and Bonos could not imagine, providing that the cash is properly managed in the target countries and fairly distributed rather than merely enriching dictators.  This could be achieved if good-governance practices were required for third world countries to be included in cap-and-trade schemes.

So, China and India would get cash receipts without the need to industrialize (and pollute) so much, and become a heroes (if not saviours) to the entire third world.  There is significant and growing trans-Himalayan trade, so these two countries are natural economic allies, and together would reap the benefits of such a diplomatic coup (including increased access to the mineral resources of Africa.

A side effect arises from the fact that America, as the highest per-capita CO₂ emitter, would be a huge source of this cash, and would be faced with the need to decrease spending on armaments to prevent the political backlash from a population suffering dropping living standards.  This is something China would welcome.

When would this happen?  Probably when Asian consumer spending overtakes USA consumer spending, i.e. between 2010 and 2015.

So, to summarize, per-capita CO₂ emissions trading is fair and easier to administer, is in the economic and political interest of rising economic powers, and would lead to huge cashflows to the poorest countries in the world.  That's a significant silver lining!

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See also previous posts:
Per-Capita CO₂ Emission Standards?
Wargamer's view of Shanghai market jitters

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Desperately seeking new economics

Lots of links at bottom of this post

There is a desperate need for a new economic schools of thought, ones that reject the concept of externalities as an oxymoron, and concentrate on the fundamentals.

The problem is that most people think economics is about money.  It ain't necessarily so.

Economics is about resource usage and distribution: the resources of the planet, including the human resources.  Money is just an artificial construct, and found only in a subset of all possible economic systems.

When you help a friend paint a room and he helps you set up your computer, when you give your toddler's old baby clothes to the new parents next door, when you help a stranger change a tyre, you engage in economic transactions that involve no money.

Over recent decades, economic behaviours, once transacted with the currency of human kindness, are increasingly transacted with the currency of the realm.  This raises the GDP, the figures make governments appear better economic managers, but we are diminished as a society, and the transactions have more overheads.

The key metrics should not be growth of gross world product, but the Human Development Index (HDI), Human Poverty Index (resource denial in HPI-1 and HP-2), Global Hectares per person (GHA), along with geophysical metrics (e.g. water, temperature, resource reserves, etc).

What is needed is the development of new paradigms of economics that increase HDIs and decrease GHAs.  If this makes the GDP irrelevant, who cares?

Economists should start focussing on a resource we control that can have increased production without depleting the planet: human resourcefulness.

This raises questions about what students learn in economics curricula.

Do they study other economic systems, such as barter and gift economies, that do not involve financial transactions?  Do they study concepts like the "tragedy of the commons"?  Do they study the ways resourcefulness can be increased?  Do their equations include terms for fixed resources of the planet such as rare earth minerals?

Perhaps sociology and the earth sciences should make up a large part of economics courses, so graduates are suited to the challenges of third millenium economic management.

We'll know we'll have the chance to save the planet when 3 or 4 consecutive Nobel Prizes for Economics are given to economists who don't study money.  If the judges announced such a bias, the laws of supply and demand would ensure that economic research was carried out into ways that would save society and the planet instead of destroying them.

Economists are a useful resource for the planet, but we mismanage the best minds in the field.  We need to change that.

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• Posts in this blog
  • Viva Fidel Verde (Comparisons of HDI and GHA of selected countries)
  • Per-Capita CO₂ Emission Standards argues that radical changes in Australia are needed if per-capita cap-and-trade rules are introduced.
  • Climate change may not be our worst problem (Rare earth metals rarity)
• Other Resources
  • WWF Living Planet Report 2006
  • UNDP Human Development Reports
  • HDR 2006 which concentrates on water
  • Excel Worksheet for HDI calculations
  • Interative HDI calculator
  • Interactive Graphs showing comparative efficiency of different countries at turning GDP into HDI
  • IPCC WG3 AR4 Report
  • Beyond Kyoto - A New Global Climate Certificant System by Prof. Dr. Lutz Wicke (ESCP-EAP, European School of Management)
  • Atlas of the Biosphere from Center for Sustainability and the Global Environment (SAGE) at the University of Wisconsin.

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