HT New Matilda.
Tell ‘em they’re dreaming
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Monthly Archives: May 2011
We’re all Fabians now: The long debate over conditional welfare
While she admired Winston Churchill, his resistance to conditional welfare was exasperating. For years Beatrice Webb had been arguing with Churchill and other Liberals about social insurance and she was getting nowhere. She insisted that: "Doling out weekly allowances, and with no kind of treatment attached, is a most unscientific state aid". But in 1911 the government ignored her advice and set up an insurance system that made relatively few demands on recipients.
Webb wanted to prevent problems like sickness and unemployment by making income support conditional on responsible behaviour. Together with her husband Sidney she argued for a system based on the "doctrine of mutual obligation between the individual and the community." Under this system:
… new and enlarged obligations, unknown in a state of laisser faire, are placed upon the individual — such as the obligation of the parent to keep his children in health, and to send them to school at the time and in the condition insisted upon ; the obligation of the young person to be well-conducted and to learn ; the obligation of the adult not to infect his environment and to submit when required to hospital treatment. To enforce these obligations — all new since 1834 — upon the individual citizen, experience shows that some other pressure on his volition is required than that which results from merely leading him alone (p 270-271).
The Liberal government compulsory insurance scheme posed a threat to the Webb’s vision of conditional welfare. Continue reading
Professional Regulation: divvying up the spoils
“States that require dental hygienists to be supervised by dentists suffer a 1 percent annual reduction in the output of dental services.”
The Effect of Licensing on Dentists and Hygienists by Morris M. Kleiner and Kyoung Won Park, NBER working paper No. 16560.
As states require occupational licenses for everyone from surgeons to interior decorators. Licensing in effect creates a regulatory barrier to entry into licensed occupations, and thus results in higher income for those with licenses.
In Battles among Licensed Occupations: Analyzing Government Regulations on Labor Market Outcomes for Dentists and Hygienists (NBER Working Paper No. 16560), co-authors Morris Kleiner and Kyoung Won Park use state variations in dental hygienists’ licensing, along with data from the 2001-2007 American Community Survey, to estimate the value created by limiting occupational competition through licensing.
Like dentists, dental hygienists clean teeth, apply sealants, take X-rays, and screen for dental problems. Because dentists are in the majority on the state licensing boards that license dental hygienists in most states, they can in theory create rules that limit the extent to which dental hygienists can compete with them. In fact, most states require dental hygienists to practice under the direct supervision of a dentist, but some allow dental hygienists to own their own practices, clean teeth, and apply sealants.
The authors find that in states that allow dental hygienists to have their own practices, hygienist employment is about 6 percent higher than in other states, and hygienist earnings are about 10 percent higher. At the same time, the growth rate of dentists’ employment is lower — 1.5 percent per year versus 2 percent — in these states.
Assuming that less stringent regulation of dental hygienists has no effect on the quality of services they provide to patients, the authors calculate that reducing regulation would reallocate about $1.34 billion from dentists to dental hygienists and would reduce the output losses caused by restricting employment by $80 million. Overall, Kleiner and Park estimate, states that require dental hygienists to be supervised by dentists suffer a 1 percent annual reduction in the output of dental services.
A survey of Australian economic opinions
The Economic Society of Australia is conducting a survey of Australian economists, seeking their opinions about a range of current policy issues, as well as on matters relating to the profession itself. The survey has been emailed to all members of the Society and to those economists for whom email addresses were found (economists from econ departments in Australia). The survey closes in two weeks time and the results will be presented at the ACE conference in July, with expected articles in newspapers and online fora.
The idea of the survey is to give a voice to the thousands of economists in Australia who do not regularly talk to the media, by asking their views on economic issues. The survey asks opinions about fiscal deficits, education policy, taxation policy, carbon taxes, trade policy, and basically anything that has been controversial in economic policy debates in the last 10 years or so. Essentially this is an opportunity for Australian economists to have their say.
In order to do the survey, you need to be invited. Economic society members are automatically invited and merely have to click on a link in an email that is sent to them to reach the survey. Nearly all academic economists have been sent an email that invites them indirectly: they have to send an email to the main person organising the survey, Richard Hayes (r.hayes@mbs.edu) , who then sends a personalised link. Yet, basically any economist in Australia who is keen to have their say should feel themselves invited to mail Richard and ask to be included. This for instance goes for economists in ministries, banks, and regulatory institutions.
The survey has a number of academic and institutional sponsors, including of course most prominently the Economic Society headed by Bruce Chapman and with Jonathan Pincus who heads the sub-committee that oversees the running of the survey. On the academic side, Richard Hayes from the Melbourne Business School is the main person organising and running the survey with me and Joshua Gans as ‘silent academic partners’ in the endeavour.
Similar surveys have been run in the US and the UK, and a previous one in Australia was done by Fred Argy who has been consulted about this version too. Experience shows that the average responses to topical questions show up a lot in newspapers and policy debates and also serve as an internal reality check for economists (what do their peers think?). The voice of economists matter. Obviously, the survey is anonymous, with almost no personal information actually gathered.
Paralysis by serial veto
If you look at the picture on the left, you’ll see a ladder on the upper right window looking at the entrance to the Church of the Holy Sepulchre. You may not believe it, but there’s more chance than is usually the case with relics that the church is on the right spot. It’s location was not arrived at in the middle ages, but in the third century by St Helena, Constantine’s Mum who turned up in Jerusalem and looked for relics.
Anyway, the attentive viewer might assume that the ladder will be moved some time soon, it’s job in lifting up some tradesman to work on the window done. But you’d be wrong, something which is well illustrated by the companion photo from the late nineteenth century. There’s that ladder again!
In fact the ladder turned up sometime in the 1850s. So what’s it still doing there? This is the explanation offered by Atlas Obscura which offers itself as a “compendium of the world’s wonders, curiosities, esoterica (I guess this qualifies in the latter two categories).
The church is run by six denominations – Greek Orthodox, Armenian Apostolic and Roman catholic church, with lesser duties shared by Coptic, Ethiopian and Syriac Orthodox churches.
The whole edifice is carefully parcelled into sections, some being commonly shared while others belonging strictly to a particular sect. A set of complicated rules governs the transit rights of the other groups through each particular section on any given day, and especially during the holidays. Some of the sections of the church however still remain hotly disputed to this day. Arguments and violent clashes are not uncommon. In November 2008 the internet was flooded with videos of a fistfight between Armenian and Greek monks in one such dispute. A small section of the roof of the church is disputed between the Copts and Ethiopians. At least one Coptic monk at any given time sits there on a chair placed on a particular spot to express this claim. On a hot summer day he moved his chair some 20cm more into the shade. This was interpreted as a hostile act and violation of status quo. Eleven were hospitalized after a fight resulting from this provocation.
This state of affairs makes any agreement about renovations or repairs on the edifice impossible. The church is in a state of decay as a result.
The famous immovable ladder is a bizarre outcome of this religious stubbornness pushed to extremes. Some time in the first half of the 19th century, someone has placed a ladder up against the wall of the church. No one is sure whom he was, or more importantly, to which sect he belonged. The ladder remains there to this date. No one dares touch it, lest they disturb the status quo, and provoke the wrath of others. The exact date when ladder was placed is not known but the first evidence of it comes from 1852.
The ladder hasn’t moved since.
The immovable ladder is a nice metaphor for decision making with large groups or within complex systems of rules or regulations. Satisfying them all can be hard. And when the obstacles are not ‘hard’ ones, they can be soft sociological ones. Within bureaucracies one is ill-advised to offend anyone gravely – often even if they’re not very important. People don’t like other people getting their noses seriously out of joint and will go to some lengths to preserve harmony and consensus. So the immovable ladder goes into my slide pack to illustrate the problems of paralysis by serial veto. And below the fold, you’ll find a spooky codicil to the story. Just spooky. Come in Dan Brown, come in.
Fabian liberalism? Noel Pearson on conditional welfare
It’s a rainy night and an inexperienced young driver speeds into a sweeping bend. Well over the speed limit he loses control, wrapping his car around a tree. When the ambulance arrives it’s touch and go. Unless the paramedics cut him out the wreck and get him to hospital, he’ll die on the side of the road.
Some hardline classical liberals insist that people who take risks shouldn’t expect others to pay for the consequences. Uninsured drivers shouldn’t expect emergency workers to cut their mangled bodies from car wrecks and have taxpayers support them through a lifetime of disability. People who build on flood plains shouldn’t expect helicopters to pluck them from their roofs when the rain comes. And kids who drop out of school and then find that they can’t get jobs shouldn’t expect to get welfare.
In a recent piece for the Australian, Noel Pearson challenges the view that "people should have the right and freedom to make their own choices but not wear the consequences." He calls that view ‘libertarian welfarism’. It says to people:
Here is the social support, there are no conditions attached to it, you are free to do with it as you wish, and if you and your children come to grief we will make sure there is another safety net to tackle that fallout as well.
Of course the flip side to this arrangement is that those who make prudent choices don’t get to enjoy the full consequences either. Along with more fortunate risk takers, they give up a large share of their incomes to support people whose choices didn’t work out. Hardline classical liberals argue that unless you’ve caused someone else’s poverty you are not responsible for alleviating it — even if the person is poor through no fault of their own.
But Pearson rejects the hardline position. Continue reading
Commonwealth Grants Commission bleg
I am hoping one or more of the economics and public policy gurus who read and write for Troppo might be be able to help me with the following question:
Does the Commonwealth Grants Commission analyse and report on the way States and Territories actually spend their untied grant (GST) funding i.e. whether and to what extent they actually spend it on the areas in respect of which the State/Territory’s level of need for funding purposes was calculated? Or does it just assess the State’s notional revenue-raising capacity and the amount that would notionally be needed for that State to provide its residents with roughly the same level of government services and infrastructure as other States, but not assess whether untied funds are then spent on remedying the services and infrastructure deficiencies on which the funding formula is based?
I should explain the reason for my query. I’m researching a paper dealing with contemporary NT governance and related issues in the light of the centenary of the handover of the Northern Territory from South Australian to Commonwealth control in 1911. One of the assertions that is frequently made about NT governments of both political persuasions is that the NT is generously funded by the Commonwealth in large measure to remedy Aboriginal disadvantage, but in fact successive NT governments have diverted much of that money to “pork-barrelling”urban electorates where government is won and lost. This recent article by veteran NT-based Murdoch correspondent Nicolas Rothwell puts the case eloquently:
Memory lane – debating economic reform in the 1980s
This is a page of links to pdf files of press cuttings from the mid 1980s when the debate about economic reform started to get really vigorous. Some of these are slow to load, so be patient.
This is the list of links. It is pretty scary stuff. Have we progressed?
Alan Ashbolt, far left pioneer in the ABC, reviews a collection of papers rubbishing the New Right, notably citing dozens of their own publications but next to nothing from the actual people or think tanks of the movement.
A piece from The Bulletin documenting the “over the top” rhetoric of Bob Hawke and others attempting to discredit the reformers.
The national president of the ALP, calling the troops to rally and defeat the New Right.
Neville Wran, in the John Curtin Memorial Lecture, calls the NR “anti-Australian”.
A piece by (then) young Glenn Milne on “the politics of hate”.
A really silly piece by Phillip Adams.
Barry Unsworth, then Premier of NSW, preparing to “beat the issue of the NR to death” before the Greiner landslide. Sadly, much of the Greiner landslide was a reaction against Federal ALP reforms and they struggled to win a second term.
Employer representative labels the NR “fascists”! Over the top attacks were bipartisan.
SMH commentary on the radicalism of the NR. Not too bad for the SMH! It has clearly gone backwards.
Strong language from the Labor left – nazis!
Gary Punch (ALP) on the IR landscape after an epic win for the good guys at the Mudginberri meatworks.
Senator Walsh warns that the bad guys are taking over the Libs. If only!
Good profile of some important movers in Western Mining, Hugh Morgan and Arvo Parbi.
John Hyde on the capture of the intellectual high ground!