Monthly Archives: September 2011

Post-modernism and the media

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Two diametrically opposed takes on the Australian Bureau of Statistics’ newly released 2009-10 Household Expenditure Survey:

Spending survey busts struggling families myth (ABC news item):

Claims that many Australians are doing it tough and households are being weighed down by the soaring cost of living no longer match up with the facts.

A comprehensive analysis of household spending by the Bureau of Statistics shows that in real terms we are richer than we were six years ago, and while we’re spending more on essentials like housing and transport, we are also spending more on recreation.

Incomes have risen 50 per cent and that suggests that although we may be paying more for goods and services, we are consuming more as well.

Snapshot of a nation under stress (The Australian):

ONE in four households relies on welfare benefits while one in seven is spending more than it earns, as increasing cost-of-living pressures bear down on families. …

Of the nation’s poorest households, one in 10 went without meals and 7.3 per cent could not afford to heat their homes in winter during 2009-10, according to a six-yearly snapshot of spending by the Australian Bureau of Statistics. Australians are having to spend more than half their income on the basics – housing, food and transport – as the soaring cost of living bites into spending on life’s luxuries. One in eight households could not pay their bills on time.

The ABS household expenditure survey reveals that households are under as much financial stress now as in the lead-up to the 1998 east Asian economic crash.

The “financial stress” afflicted some of the nation’s wealthiest people, with almost one in seven high-earning households failing to pay bills on time and 8.8 per cent seeking financial help from friends and family.

Try this quick quiz.  Which story gives a more accurate picture of the ABS survey? Hint – It isn’t Rupert’s “journal of record”.  How unusual.

Climate Change: how can we adapt?

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On Monday, the Crawford school at the ANU ran a symposium on whether or not the government policy on carbon emissions was good policy. The video of the event should shortly appear here.

The main surprise for me was to see how clearly some of  the other economists speaking there, like Warwick McKibbon, David Pierce, and Henry Ergas, were skeptical about the prospects of serious coordinated international efforts to reduce carbon emissions.

The message of my presentation was that it is time to get more serious about adaptation. The synopsis of my presentation is over the fold.

 

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Wordpress and themes bleg

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I’ve been musing about the possibilities of updating Troppo’s “look and feel” (although I haven’t yet caucused with Nicholas and Don about it).  What I have in mind is a more “newspaper-ish” arrangement, probably a bit like Larvatus Prodeo with the front page displaying a feature slider, excerpts from the 8-10 most recent posts and displays of recent post headlines in selected popular categories.  I would also like to add some aggregated RSS feed headlines from other blogs.  I even like the theme LP uses (although without the ghastly purplish-pinkish hue).

I’m sure it can all be done, it’s just I have no idea how and no time to acquire the expertise.  Moreover Ozblogistan Fuehrer Jacques Chester is busy finishing his Honours thesis and won’t be able to help either.  What we need is someone with expertise in the Wordpress backend including some web design capability at least sufficient to “tweak” existing Wordpress themes.  If you fit the bill and are interested in helping, please contact me at ken dot parish at cdu dot edu dot au.  I’m not sure whether the meagre Troppo bank account (from the days when we hosted advertising via OLO) could run to much in the way of payment, but we can certainly feature your name and credentials in lights on the front page.

 

Labor’s asylum seekers stance – die on your feet!

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A comment by Chris Lloyd on my post about last week’s High Court decision brings into sharp relief why it will be a high risk strategy for the Gillard government to adopt a policy of wholly onshore processing of boat-arriving  (and by definition visaless) asylum seekers.  That especially applies if applicants are accommodated in the community after health, identity and security clearances rather than in mandatory universal detention, even though that’s the way most countries in the world treat asylum seekers and the way the Refugee Convention specifies.  Chris comments:

I honestly believe that if we did what Ken suggests we will have 20,000 arrivals in 2012 and 200,000 in 2013. There is simply no limit to the number of refugees – loosely defined – who will come here if PR is guaranteed. Who the hell would wait in a camp?

Of course, no-one can absolutely guarantee that Chris’s scenario won’t occur.  All that can be said is that it’s highly unlikely in the long run (although in the short term people smugglers might offer drastically discounted passage in a bid to break the government’s nerve).  Britain has a much more difficult job in defending its borders against asylum seekers than Australia.  You can swim the Channel at a pinch, trains and boat and planes connect it to Europe every few minutes, and it’s geographically close to the primary asylum seeker-generating countries of Africa and the Middle East.  Moreover, Britain has long allowed asylum seekers (visaless or otherwise and irrespective of mode of arrival) to remain free in the community while their applications are processed, once they have passed initial health, identity and security clearances .  And yet Britain’s total number of asylum seeker applicants has fallen from 33,960 in 2004 to 24,250 in 2009 (I don’t have last year’s figures):

The annual asylum figures for 2009 show that overall applications fell 6% to 24,250 with 27% of decisions resulting in official permission to stay, 17% given full refugee status. During 2009 a total of 64,750 failed asylum seekers were deported or left Britain voluntarily – 5% fewer than the previous year.

A total of 28,000 people were held in UK Border Agency detention centres last year, including 1,065 children.

Britain has toughened up its asylum seeker policies in recent years but still basically adheres to the Refugee Convention expectation that asylum seekers will not be imprisoned during assessment except for a good, specific reason.  Thus it is reasonable to project that UK numbers represent an upper bound to likely Australian asylum seeker numbers if we adopt similar policies to most other western countries (i.e. community-based processing).  Indeed it is unlikely that our numbers will approach these levels on an ongoing basis. WE are a remote island continent far away from the places that generate most refugees.  In the context of an overall Australian migration program involving 200,000-300,000 migrants per year (including 457 work visas), this is a drop in the ocean.  Moreover, it is evident from the British figures that the success rate drops as total numbers of asylum seekers increase. Britain’s success rate is just 27% and has been at about that level for many years, whereas Australia’s has generally been above 70%.  There is nothing in the Refugee Convention,  broader human rights principles or commonsense (or last week’s High Court decision) that prevents any country including Australia from assessing refugee applications rigorously, especially for those who arrive without ID and cannot independently establish their identity.

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School camps: We report, you decide

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Lord of the FliesIn campaigning for the State election John Brumby racked his brains wondering what he could promise for the state education system and, at some cost, came up with . . . school camps. Can’t say I thought it was the most important thing that could be done with a few additional millions of dollars in education, but what would I know?

School camps are all the rage in Australia’s private schools, or at least Victoria’s ones. They raise equity problems at state schools because they’re expensive. Not so much of a problem at the more expensive end of the private school market. Indeed some schools have you spending literally over a thousand dollars on carefully prescribed camping kit.

Of course if kids want to go on these things that’s well and good.  But lots of kids don’t.  But there seems to be a strong consensus in schools that these exercises are Very Good. So much so that some schools actually spend a term or a year in semi-camp conditions – although obviously for that period of time it’s a cross between a camp and a boarding school. This also seems to be growing in popularity.  I recall Prince Charles going to Timbertop, but now there are quite a few similar operations.

I heard the Principal of one Melbourne girls school say that their year 9 exercise where all the girls go away for the entire year really matures the girls. I’ve also heard of horror stories in which eating disorders surge and bullying reaches new heights.

Anyway, as you know Troppo shares virtually all of its basic philosophies with Fox News, most particularly our commitment to open and honest deliberation. In what may (but almost certainly wont’) become a series of such posts, we ask . . . . What do you think (Oh Troppodillians)?

An idea for performance pay in education: Guest Post by Avi Waksberg

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Here is a guest post by Avi Waksberg. NG

Should we pay teachers performance bonuses for teachers based on standardised testing of their pupils? The teachers I’ve spoken to about this have invariably argued that it encourages them to ‘teach to the test’ whilst neglecting hard to test skills. In contrast, most economists I’ve spoken with favour some kind of ‘merit pay’, often raising promising examples from Israel (Lavy 2004) or Colorado (see de Grow 2007). However, imposing performance-based compensation upon hostile teachers seems a good way to ensure the approach does not work. (Chait 2007).

I am confident that people respond to incentives. However, teaching is difficult to quantify, complex and multidimensional. These are job characteristics that Dixit (2002) found tend to make performance pay less likely to be used. This leads to a situation where we focus on simplified metrics. But if incentives are not well targeted or the desired outcome accurately measured, then the response will be to overly focus on those aspects that are measured at the expense of other responsibilities. This is what underlies the complaint that teachers would be encouraged to ‘teach to the test’.

Moreover, there is no consensus on what constitutes teaching excellence. Is a teacher supposed to maximise: grades, enthusiasm for learning, clear thinking, university entrance, lifetime income, or life satisfaction? Goldhaber (2009) argued that while we may know little about how to objectively and accurately quantify teacher productivity, this problem is surmountable using merit pay programs with several evaluation components (such as Principal or peer evaluation, school-wide analysis, professional development and incentives for hard-to-fill skills and positions). However, any form of merit pay would still require the support of teachers, schools and administrators. Successful programs often emphasize collaboration and improvement rather than dividing teachers into ‘winners’ and ‘losers’.

I have a suggestion that, while incentive-based, seems to have registered a more positive response from teachers I have interviewed. Instead of rewards based on test results, I suggest offering prizes to teachers for posting excellent lesson plans to password-protected teachers’ forums (such as the Ultranet that is used in Victoria). This would potentially have the added advantage of encouraging a sense of sharing and collegiality among teachers, whilst not making them feel under-appreciated and judged in the way that bonuses based on testing can. If only teachers who are logged into secure forums can download the lesson plans, then it would be easy to simply record unique downloads (i.e. the number of downloads from different teacher logins as opposed to total number of downloads) and offer rewards to teachers for the most downloaded lesson plans in each year and subject. This approach has the advantage of addressing the tricky problem: what quantifies good teaching? In essence, we let the people who are best qualified to answer, the teachers themselves, decide what represents the best in their field.

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Interest Rates aren’t ammunition

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After reading this Australian article, I looked for the relevant US diplomatic cable, largely because the paper cannot be assumed to quote things accurately or in context. I found something else that worried me though. Here’s two excerpts, with my emphasis.

Although the Board had intended to wait a few months for the new expansionary rate to flow through the economy, [Reserve Bank Assistant Governor for Economics] Edey said the Board agreed that further deterioration in the global economy merited another aggressive cut in February. The Board decided to pause on cuts in March, in part to give the Reserve Bank enough ammunition down the road in case the economy spirals into deeper recession.

And later

Steven Kennedy, Chief Macroeconomic Advisor to PM Kevin Rudd, told us April 1 that he and his Treasury Department colleagues are increasingly frustrated with the RBA. Praising the Bank’s initial response to the global financial crisis, Kennedy said that the RBA’s aggressive approach helped reassure markets and complimented the Government’s stimulus packages. He complained that the RBA is “schizophrenic” in that the Banks simultaneously believes that Australia will be hit hard but that it should hold off on further rate cuts in order to “keep its powder dry” in case things get worse.

This is what disturbs me. I hope it’s just the diplomats projecting a typically American love of guns and thus gun analogies onto others. When it comes to monetary policy “keeping your powder dry” doesn’t make any sense.

Instead lets use a differing analogy of a central banker driving a car along an undulating road. Her task is to keep to a constant speed. In Australia under inflation targeting this speed is 2-3% CPI growth, but it could be steady growth in nominal GDP if you are so inclined. At boom times the car is heading down a hill and goes faster, with higher credit growth and inflation. The banker eases off the throttle. In bad times the car hits a climb and starts to slow, and the banker puts her foot down in order to maintain a constant speed. On any given slope there is an appropriate level of throttle for the desired speed.

Now imagine the car has hit a steep slope. She obviously responds by opening up the throttle. But she is unsure about whether the slope will get steeper still. Should she refrain from pushing the accelerator too much so she can push it harder if the slope does get steeper? Should she be saving accelerator just in case?

That wouldn’t make any sense. If the road gets steeper it won’t matter if she is able to push the pedal down from a higher starting point. If a pedal to the floor can’t make the car go fast enough up the hill, it doesn’t matter how early or late you pushed it there.

Similarly, there is no model I know of that would explain why, with a given macroeconomic climate, a given interest rate would be more stimulative provided it had followed a drop. If things got worse, why would you get better credit growth, consumption and investment by dropping the cash rate from, say, 2% to 1% than you would have seen if it was already 1%. Given the macroeconomic climate, it is either sufficient or it is not – whether people borrow, lend or invest enough at that rate isn’t related to whether it was a big change from last month. Continue reading →

Driving the final nails into a political coffin

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On any view yesterday’s High Court decision holding the Malaysia Solution to be unlawful is a smashing blow to the Gillard government and an equally smashing win for asylum seekers and the people smugglers who capitalise on their desperation.  In the slightly longer term it also poses a thorny policy question for the now inevitable Abbott Coalition government.  The decision may well render any renewal of the Howard government’s Pacific Solution effectively pointless.

By a 6:1 majority (Heydon J dissenting) the Court held that the Minister lacked legal power to send the 42 asylum seekers (and by extension any future asylum seekers) to Malaysia for refugee assessment and processing. It was a decision based on administrative law and statutory interpretation grounds rather than constitutional law issues.  Four Justices (Gummow, Hayne, Crennan and Bell JJ) adopted asylum seeker senior counsel Debbie Mortimer’s most audacious position, namely that:

  1. the question of whether Malaysia was a “safe third country” for the purpose of the Migration Act 1958 was a “jurisdictional fact” i.e. a factual situation which must exist prior to any power in the Minister to send asylum seekers there for assessment;
  2. this jurisdictional fact could not exist unless the country concerned was legally bound under its own domestic laws and/or international law to provide protection in a Refugee Convention sense, to provide proper assessment of refugee claims, and to protect basic human rights standards for all returned asylum seekers; and
  3. the existence of the  jurisdictional fact of safety also requires that the actual practices and procedures of the country in question are effective in securing that safety.

Factual preconditions 1 and 2 to Ministerial power at least did not exist in Malaysia, and indeed the Minister did not even claim that they did (nor could he given that the Arrangement with Malaysia expressly stated that it was not legally binding on Malaysia).

French CJ and Kiefel J denied that the factors above could be regarded as jurisdictional facts, but held that nevertheless their absence meant that the Minister had made a “jurisdictional error of law”  in concluding that Malaysia was a safe third country.  He had misconceived the legal question he was required to address, namely whether Malaysia could be regarded in law as a safe third country.  At least as the issues and reasoning were applied in this case, it made no real difference whether the Minister’s error was classified as one  of fundamental fact or of law.

The Court also held for the asylum seekers on the guardianship issue relating to unaccompanied minors, but that was almost irrelevant given the major premise.

The big long term question is whether the Court’s decision renders any plausibly deterrent form of offshore processing effectively impossible in future.  Gummow, Hayne, Crennan and Bell JJ adverted expressly to the Howard government’s Pacific Solution:

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