Recently, we had a policy discussion forum about the issue of whether Australia should follow most of the rest of the OECD and introduce the right to paid maternity leave. For the full slides, see here.

During the discussion I introduced the topic of paid maternity in the context of the recent proposals by the Democrats and the Greens to guarantee women 14 weeks of paid maternity leave, with the payment being at the level of the minimum wage and provided by the government. Such a scheme would apply to about 100,000 women a year which would make the cost close to half a billion a year. From an economic point of view, the relevant question to ask is whether there are any market failures at work that would warrant such an appeal to the public purse.

Alison MacIntyre argued this scheme does make sense from an economic point of view because of the benefits to the rest of society of having children to perpetuate the nation. The scheme is an effective subsidy from families without children (who pay part of the tax population paying for the scheme) to families with children. Since private employers do not take such beneficial social incentive effects into account they are not going to be in favour of maternity leave, and indeed would discriminate women if they as employers would have to pay for such a scheme. Private individuals deciding to have kids do not obtain the full societal benefits of having kids. Hence Alison argued we needed a government funded scheme to bribe people into having more kids, or at least to help them out. Most other countries indeed have such a scheme, varying from 12 weeks to a whole year of paid maternity leave. Alison pointed out that women’s groups support it and many large businesses already have such schemes anyway.

Ben Ives on the other hand argued we should not have a scheme like this. His main argument was that having children strongly disrupts the worker-employer relationship, putting an unfair burden on employers of their employees taking time off to care for children, quite apart from the actual wage cost of a maternity scheme. The right to return to the same job when pregnant would furthermore add unfair costs on the employer of training temporary replacements who would then unfairly have to be gotten rid off when the leaver returns. Ben supported the idea that employers should be able to discriminate on the basis of expected pregnancy since this entailed a relevant business cost, and that in general the government should not try to achieve social outcomes (more kids) by labour relations regulation. Ben argued that the incentive to have more children was going to be quite small and probably only relevant at the bottom end of the wage distribution. Finally, Ben made the argument that there was no pressing reason to want a higher population in the first place and that we already have enough kids in Australia.

What the discussion made chrystal clear is that kids are a nuisance from the point of view of the businesses hiring the parents and that any wish to increase the child bearing of workers is going to have to recognise that businesses have little incentive to work along with such schemes. Ben is probably spot on in his assertion that most selfish employers have good reasons to shun people who might get pregnant. Should we as a country ever get really worried about low fertility rates therefore and also want the women with kids to be able to be competitive in the world of work, heavy interference in the worker-employer relation when child bearing is involved is inevitable.

From Crikey!

(the figuring behind the blue line is set out here).

I was disappointed and perplexed that an excellent service run by Regional Express (REX) between Melbourne and Canberra was discontinued a few years ago. The tickets were a fair bit cheaper than the competition – and you just had to sit in a turbo prop for an extra half hour or so reading away quietly.

Oddly, the planes weren’t very full, so perhaps it was discontinued from lack of demand rather than because of predatory pricing from the majors. In any event, Qantas has been running turbo props on the same route for a long time. Then I read the story below the fold on Crikey! and I might start asking if they’re jets – or go with my preferred carrier – Virgin Blue. Continue reading →

"It’s like the Ferrari of bikes" says photographer Sam Ash. In Friday’s Financial Review Magazine Ash is pictured standing next to his red Tommasini fixie — a bike with one gear and no brakes. Given that the average age of AFR Magazine readers is 46 this doesn’t bode well for the fixie’s future as a sub-cultural status symbol.

The fixed gear craze started among bicycle couriers and quickly became a symbol of urban cool along with paraphernalia like the ‘messenger bags’ they used to carry their deliveries. With no brake levers, gear shifters or cables, a fixed gear bike has an elegant, stripped down look. But with no freewheel, a fixie can be tricky to ride. It’s not like the BMX bike you had as a kid. The rear gear is fixed to the back wheel which means that if the wheel is moving then so are the pedals. You can’t coast.

In the past the bikes were owner built — sometimes using a bike frame designed for velodrome racing and sometimes using and old road bike frame. But now many of the major brands are selling off the shelf single speed and fixed gear models. The craze has attracted mainstream media attention with articles in the Guardian, Christian Science Monitor and Wired Magazine. Even the Wall Street Journal is in on the act. Last year Hannah Karp reported:

Newer devotees represent a milieu far from the bike-world fringes – including doctors, teachers and Wall Street traders. This summer, hundreds of fanatics will descend on Traverse City, Mich., for the second annual Fixed Gear Symposium, organized by a 60-year-old real-estate broker. Bailey Fidler, a sales associate at Boston’s Wheelworks bike store, says it used to be unusual to see anyone over age 40 shopping for a fixed-gear bike; now, he says, about half the bikes go to those in that age range.

In the Weekend Australian Magazine (Oct 13-14) Fiona Harari wrote about the more mainstream craze for lightweight road bikes. She quoted Bicycle Queensland manager Ben Wilson, "People can’t afford a Porsche. Not many can drive them. But many people can afford a $4000 bike. It’s less than a John Howard baby bonus." So for the cashed up 40-something lawyer having a mid-life crisis, the only problem is making the thing go… or stop.