About David Walker

David Walker is the principal of publishing consultancy Shorewalker DMS (shorewalker.net) where his current projects include editing Public Accountant magazine for the Institute of Public Accountants. David has previously been chief operating officer of publishing firm WorkDay Media, director of communications and advocacy for the Business Council of Australia, director of policy and communications for the Committee for Economic Development of Australia, site director for online finance start-up eChoice and an editor and columnist at The Age. He has written professionally on economics, business and public policy since 1987 and spent three years in the Canberra Press Gallery. Contact him on 03 8899 7790 or email [email protected]

Viewing the broadband future

The latest cost-benefit analysis of various Australian broadband proposals is out. It’s part of a report from an inquiry chaired by former Victorian Treasury head Mike Vertigan.

And it says in essence that Australia’s expected growth in demand for bandwidth is big enough to make the NBN viable, but small enough to make the government’s alternative look better.

I would have expected to hear the report’s authors out there defending it, but Mike Vertigan has never been keen to put himself forward in the public debate. So today much of the media I saw has been dominated by critics, and they’ve mostly been saying that a useful cost-benefit analysis is impossible, so we should just build the NBN. Paul Budde was making the claim this morning on ABC Radio, and lesser-known experts such as Sydney Uni’s Kai Riemer have been saying the same thing.

This claim – that we can’t usefully analyse the NBN’s costs and benefits – is hooey.

We can’t do a precise cost-benefit analysis, given how much Internet use is likely to change over the next decade or two. And whatever analysis we do should be up-front about how much guesswork is involved. But cost-benefit analyses are not just helpful; they’re also inevitable. Indeed, everyone who says “we should just build it” actually is doing a cost-benefit analysis. Typically they’re just doing a really sloppy cost-benefit analysis in their head, and setting their median estimate of the benefits at, approximately, Unimaginably Huge.

And Unimaginably Huge is almost certainly an overstatement.

“We can’t begin to imagine what people could do with upload speeds on an industrial scale,” Riemer told News Limited.

But of course we can begin to imagine that. Here’s how. Continue reading

Iran Air Flight 655: How did Australia react?

A question for Troppodillians: does anyone have a record of the Australian Government’s response to 1988′s accidental US shootdown of Iran Air Flight 655?

I ask because the parallels with the MH17 shootdown are so clear.

At a political level the government’s response has so far been well-judged. There are few negatives in getting upset about the deaths of Australians overseas, particularly at the hands of a group aligned with a nation whose policies we rightly dislike, whose statements we quite sensibly distrust, and with whom we have few important links.

But at a moral level, it seems to me difficult to judge this episode more reprehensible than the Flight 655 shootdown. MH17 was shot down by untrained yahoos informally but closely connected to the Russsian government, probably by mistake. Flight 655 was shot down by the USS Vincennes on the orders of a formally trained US warship commander, fairly certainly by mistake.

The US, remarkably, never apologised to Iran or anyone else over the shootdown.

And my dim recollection is that the Australian Government responded that it was all a regrettable accident. Hansard’s online search doesn’t return anything from 1988. Does anyone have more detail?

A reminder of the response to Flight 655, from the careful-with-the-facts for Age journo Tim Colebatch (who was a foreign correspondent in Washington at the time): Continue reading

Ben Hills’ monument to newspaper journalism

Ben Hills has a new book out – Stop the Presses! How Greed, Incompetence (and the Internet) Wrecked Fairfax. It’s published by (surprise!) News Corp’s HarperCollins. Its essential thesis is that the Fairfax media group, owner of The Sydney Morning Herald and The Age, is in trouble because it has been run by nongs. Boards and managements have been too dumb to exploit the opportunities of the Internet, Hills reckons. He thinks Fairfax should have bought Seek and carsales.com.au and realestate.com.au. Fairfax also needs to be run by “people who know about media”, he complains.

Hils has done some great journalism over the years, notably on the asbestos industry and medical scams. But this book looks like a mis-step.

Since Hills is making a virtue of plain language, I’ll copy him: Hills’ theory is tripe, and I’m surprised more people aren’t calling him on it. In the media, most people seems to be treating him very politely.

But Stop the Presses! also has its lessons – though perhaps not the ones Hills draws.

Continue reading

Shorewalker’s flotsam, April 2014

An experiment in occasional linkage to insights that might outlast the daily news cycle. If you find any of it interesting, let us know in the comments.

  • Prepare for the knowledge automation transition to take decades (ABC Radio National Future Tense) – How long might it take for developed economies to make the transition to knowledge automation in the 21st century? One answer, from Tyler Cowen: About 60 years, the same as it took to transition to muscle automation from 1780. Cowen adds: “In the very long run it will be splendid, but along the way it’s not always going to feel splendid.” The program quotes Erik Brynjolfsson, co-author of The Second Machine Age, noting once again that in the US around the mid-1990s productivity and wealth became decoupled from employment and median income, which stagnated. The concentration of reward in a knowledge economy was neatly predicted by the late Sherwin Rosen in 1981′s The Economics of Superstars, but more and more people are coming to understand it.
  • flakeJust say “no” to flake (Australian Marine Conservation Society) – Never mind the WA shark saga. Misguided as the WA government’s actions may be, they are insignificant next to the issue of commercial shark fishing. Try something else with your chips.
  • Teach your kids to keep trying (Farnam Street blog) – How does a US public school chess program keeps winning national competitions? By teaching grit: “I really believe that’s why we seem to win girls’ nationals sections pretty easily every year: most people won’t tell teenage girls (especially the together, articulate ones) that they are lazy and the quality of their work is unacceptable. And sometimes kids need to hear that, or they have no reason to step up.”
  • Ask yourself whether you want happiness or meaning (Roy F Baumeister) – Psychology professor Roy Baumeister on creating a meaningful life: “Time spent imagining the future was linked especially strongly to higher meaningfulness and lower happiness … If you want to maximise your happiness, it looks like good advice to focus on the present, especially if your needs are being satisfied. Meaning, on the other hand, seems to come from assembling past, present and future into some kind of coherent story.” Baumeister suggests four “needs for meaning”: purposes that guide your actions, justifications for your actions, actually making a difference (efficacy) and feeling you’re a good person. What is the meaning of life? There are thousands of different ones, but they respond to these four needs. A shrewd commenter asks: is it tautological to say that the meaning of life is to find meaning, without deciding what the good meanings are?
  • Opternative wants to bring the eye exam online (Digital Trends) – The range of services challenged by online services grows by the day. The US-based Opernative startup offers online and app based eye tests on your desktop and tablet computer. They are targeting a cost of $20 for an exam. (Optometry offers an interesting pointer to how the market can deliver lower-cost health solutions, since it does not have the same regulation as other medical fields.)
  • Australia is a global payments system leader  (Public Accountant) –Beverley Head on an unexpected success, driven in part by the RBA’s desire for more payments innovation. We lead the world in contactless payments, and new payments mechanisms are proliferating here. “The RBA’s 2012 strategic review of innovation in the payments system made a series of recommendations … [It] spurred the creation of a collaborative payments hub, allowing near real-time settlement. There are also now plans to establish a central addressing hub that could let people transfer funds knowing only the payee’s mobile phone number … The major banks are racing to mobile payments.”
  • Productivity has had its best two years since 2001-02 (AAP) – Remember how the Gillard Government was a disaster for labour productivity? No, it wasn’t. Labour productivity has just recorded its fastest two years of growth since 2001-2002. It’s a productivity boom! So a triumph for Labour then? No, not really that, either. The real answer to the puzzle is the one Bob Gregory put forward some time ago. The worst labour productivity performances are in mining and utilities, and that’s mostly because of all the investment they’re doing which hasn’t yet paid off. Business-people mostly keep going on about labour productivity as a problem because they want to convince us of the need for further labour market deregulation. But as the Grattan Institute’s John Daley has pointed out, there’s no evidence this will provide much of a transformation.
  • Don’t start environmental measures by assuming stupidity (Eric Crampton) – Why carbon pricing works better than fuel standards: “Imagine that you set a fuel economy standard instead of a carbon/petrol tax in a world where customers are forward-looking and not idiots. Well, once they’ve bought the more efficient car, the value they derive from burning another litre of petrol increases substantially: they can drive farther, and they’re not charged any more for that litre of petrol. And so a lot of the reductions in carbon emission you might have expected get whittled away by that people drive more. If you’d done it instead with a petrol tax, the marginal cost of another litre of petrol is higher. People still flip to the more efficient vehicle, but petrol usage doesn’t rebound as much as a consequence because the marginal cost of a litre is higher.” Greg Hunt almost certainly knows this, but the same story applies to direct action efficiency measures promised at some industrial facility.
  • carparkProtecting historic buildings costs nothing, right? Wrong (The Urbanist, Alan Davies) – Uses the debate over Melbourne’s Total Car Park to tell some preservation truths. First, not all ageing buildings will end up loved. Second, “historical significance” is not worth endless money. “Most of the claims to historical significance are arcane [and] aren’t compelling either; in fact they verge on the inconsequential when compared to the cost of protection  … Compared to how most history is recorded – in books, on film, on a plaque, or in a museum – protecting buildings is an extraordinarily expensive exercise.” Maybe it’s time for Edward Glaeser’s idea of a a fixed annual “preservation budget”. (I’d pay good money to preserve Dr Davies intact forever, though.)
  • We can graph stories (Kurt Vonnegut on Youtube) – Kurt Vonnegut explores the shape of stories – an idea which started off as his rejected masters thesis – and explains why Cinderella is like The Bible. “Anyone can graph a simple story if he or she will crucify it, so to speak, on the intersecting axes I here depict.”

  • Most Australians don’t see God as essential to morality (Pew Research Center) – In Australia, just 23 per cent of people say you must believe in God in order to be moral. Only five of 40 countries recorded a lower percentage. And there’s a gulf between the attitudes of high-income and low-income nations. Even the US, an outlier amongst rich countries, recorded a lower percentage than any country poorer than Russia. With one exception – China. But in China the concept of “God” has long carried a different cultural package.
  • The Australian military should not take over the war on asylum seekers (John Menadue) – John Menadue gets it right: the Australian military has made a grievous misjudgment in allowing itself to become central to asylum-seeker policy implementation. “For political purposes the government has deliberately embarked on a policy and a language to militarise the asylum seeker issue in the same way the Howard Government did in the ‘war on terror’. It is designed to highlight the government’s resolve, to play to our fears about a threat and to lessen our rights to be informed … But the ‘war on terror’ and the so-called ‘war on asylum seekers’ would in fact be much better conducted by police, customs and our intelligence services … Senator Conroy has been criticised for saying that General Angus Campbell, the head of Operation Sovereign Borders, has participated in a ‘political cover-up’. In my view that is precisely what the government and General Campbell have done.”
  • Read the greatest opening in journalistic history (The Atlantic) – This essay, titled The Dark Power of Fraternities, loses its way quickly and fails to answer, um, fundamental questions. But the first four long paragraphs have a dementedly poetic dissonance between writing style and subject matter that elevate them to greatness. “It takes a certain kind of personal-injury lawyer to look at the facts of this glittering night and wrest from them a plausible plaintiff and defendant, unless it were possible for Travis Hughes to be sued by his own anus.”
  • Rent Much Ado About Nothing – Filming the original screwball rom-com in noirish modernity, Joss Whedon delivers the most watchable Shakespeare adaptation in decades. The cast, stuffed with Whedon regulars, clearly had the time of their lives filming on a tiny budget, in a 12-day gap before their director went back to editing the tedious Avengers movie. There have been versions with better line readings, but rarely a more convincing spirit. Ought-to-be-huge-star Amy Acker’s smart, vulnerable, wonderful Beatrice commands centre stage, like Whedon heroines before (or is that after?) her. BuffyFirefly and Dollhouse fans already know this, but Whedon takes a Shakespearean delight in wordplay and pace-changing, and it pays off hugely here. Watch with your significant other.

Could the press gallery please score Bronwyn Bishop?

Much of the time, the public can make up its own mind on public events once it get a decent helping of facts; the theatre commentary from the parliamentary press gallery – a little of which I used to write – is more entertainment than vital input.

But on the running of the parliament, the press gallery really does have something to offer. The gallery watches parliament day after day. If the speaker is doing a bad job, the gallery is uniquely placed to say so.

So it’s surprising that there’s been so little judgment of Bronwyn Bishop’s performance in the speaker’s role. I would really like to know more about how she’s going. I was somewhat surprised to turn on the TV late one night and see her telling Tanya Plibersek to withdraw the remark “if the number is zero, just say it”. But maybe that was an aberration. I’m not watching all the time. The gallery is. And yet most of the media is avoiding judgment just at the time when judgment is needed. It’s not just me; Barrie Cassidy remarked on Insiders this week (at the 25:47 mark) on the gallery’s unusual coyness.

Slight diversion: I like Bronwyn. She’s charming and razor-sharp, and I always enjoyed talking with her when I was in the parliamentary building. She also occasionally read my stories when I was a gallery member, a tactic which like many journalists I found endearing. It was a story I wrote about then ATO chief Trevor Boucher that she pursued in a somewhat infamous committee hearing flare-up in 1992. (The story wasn’t prompted by any discussion with her; she simply picked up on it.)

But I always thought Bronwyn’s speakership was going to go one of two ways. She would accept that this was her last gig and try to make it her best gig, extending the examples of the three most recent speakers and being a fairly neutral arbiter, but with the trademark Bishop steeliness that would make her an absolute legend. Or she would remain fiercely partisan and fail, as Labor’s “Leaping” Leo McLeay had done before her. (Contrary to Tony Burke’s claims, the Opposition of the day moved a motion of no confidence in Leo, too, back in 1992; it also failed.)

With Bronwyn, it’s usually black or white.

At time of writing, only two senior journalists have committed their judgments of Bronwyn to print. Both think she’s botched the job.

  • Michelle Grattan, The Conversation: “Bishop doesn’t even give the impression of trying to be fair. She hasn’t been able to establish authority in the job – an elusive quality that is bound up not just with fairness but with an ability to know when to be tough and when to be lenient – and when to bring a touch of humour … Bishop is very obvious in favouring the government side and it comes through in her tone – she is often dismissive, sometimes bordering on rude, to Labor MPs, sounding like the cross school mistress.” She would have done better with a ministry.
  • Dennis Atkins, Courier-Mail: “She is the most biased occupant of the chair I’ve seen in 33 years of coming to and living in Canberra …” Atkins specifically rates her as worse than Leaping Leo.

Let me know in the comments if I have missed any other judgments from Gallery members. On this one, it’s worth keeping score.

Update 1: Two other gallery commentaries:

  • Gabrielle Chan, Guardian: “To the most untrained eye, Bishop is clearly batting for the government, often refusing to hear Labor’s points of order, joining in on government jokes at Labor’s expense and taking the mickey out of the opposition herself. Labor, without the numbers, can do nothing but sit on its hands.” (Hat tip to Zacster - interesting blog there)
  • Peter van Onselen, Sunday Mail (Adelaide): The most brutal of them all, and back in November to boot. “Bronwyn Bishop is going to be a hopeless Speaker. Not, of course, if you are a partisan who happens to enjoy the Coalition winning the day in Question Time, for Bishop ensures that happens on an all-too-regular basis. She is hopeless for anyone who thinks a Speaker operating with even just a modicum of independence is good for our parliamentary process … The overtly partisan style she has adopted is unlikely to change. In fact, it will probably harden … I didn’t have much time for the performances of her predecessors Harry Jenkins or Anna Burke during Labor’s time in power but at least they tried to develop non-partisan approaches to rulings … Bishop can’t even keep her snide remarks out of her partisan interventions … a hack who might as well be sitting on the benches behind the Prime Minister.”

Update 2: That link to the motion of no confidence in Leaping Leo back in 1992 has some interesting commentary by then Deputy Opposition Leader Tim Fischer:

McLeay has named eight members who have been suspended.

Let me ask those present in the gallery how fair they might think this is: seven of them were in fact from the coalition and just one was from the Government. That is not a bad ratio. This year we have had another two from our side of the House, so the ratio is nine on this side sent to the sin bin and further and just one on the Government side.

I think there would be an absolute riot at the SCG or the Sydney football ground if there were rulings from a referee in that ratio.

No prediction, sadly, of what would happen at the SCG if there were a 98 to zero record on suspensions.

Update 3:

  • Jack Waterford, Canberra Times: The Canberra veteran argues that fairness is not a speaker’s only virtue. “Bishop is in a class of her own for making no pretence of hiding her bias, and for making herself an active participant, and interjector, in debates. Sometimes, however, it is a little unfair that the referee, already playing for one side, makes so free with her power to throw players on the other side out.” But the core of the job is “ensuring the efficient management of the legislative and talking-shop agenda of parliament through the sausage machine. Bronwyn performs admirably … Her sheer feistiness in prosecuting it makes parliament a far more entertaining institution than it has been when someone boring but scrupulously fair-minded has been in charge of proceedings … I cannot think of a debate this semester which was the worse, or less well-informed, simply because Bishop had remorselessly shot every Opposition soldier who had put their head above the parapet.” (Hat tip: Spanky McPhee)

The Pell Principle: Mission will trump morality

The current inquiry into institutional child abuse holds some interesting lessons about the nature of religion, which I’ll stay clear of here. But it also holds a larger lesson about the ability of organisations to act morally and to act properly in the absence of external regulation. This will not be news to a lot of people, but I see many others misunderstanding it over and over again.

It’s this: For most organisations, most of the time, mission trumps morality.

Any substantial organisation is run by people who spend a lot of time upholding its virtues and the value of its activities and people. They buy into its mission. They internalise its mission. And so they should. That’s how leaders get things done.

This leaves them terribly placed to decide how moral issues between the organisation and other parties should be resolved. Their first, second and third instinct is to protect the organisation.

That is why self-regulation is a bad idea when the stakes are high.

And for proof, you need look no further than Cardinal George Pell’s evidence to the child abuse inquiry. A man who runs an organisation (the Sydney archdiocese of the Catholic Church) devoted to moral questions, who has engaged intellectually on moral questions for most of his life – and yet when the chips were down, Pell admitted that his concern for the financial health of his church trumped any desire to provide recompense to child abuse victim John Ellis and others like him.

From the Sky News report of Pell’s evidence, which seems reasonably reliable:

[Pell] admitted the church didn’t deal fairly with Mr Ellis “from a Christian point of view”, but in a legal sense it did nothing improper.

Dr Pell said he was consoled by a legal ruling protecting the church’s property trustees from being sued.

The commission has heard the archdiocese of Sydney has property and cash worth $1.2 billion.

Mr Ellis sued the church over the abuse he suffered at the hands of a priest between the ages of 13 to 17 in the 1970s, but lost the case in 2007 when a court ruled the trustees weren’t liable.

Lawyers disputed in court that the abuse had occurred, cross-examining Mr Ellis over a number of days, despite the church having previously accepted that it had happened.

Dr Pell said he regretted the action.

“I regret that. I was told that it was a legally proper tactic,” he said.

The church subsequently pursued Mr Ellis for $550,000 in costs, despite a psychiatrist assessing Mr Ellis as being in a fragile mental state.

What was going through Pell’s mind, you might ask. The answer is: his institutional mission, to ensure the success to the church. His moral mission was put aside.

You might think money is the point of it – that to adapt Upton Sinclair, leaders will not put morality first because their salaries depend on their not putting it first. And you may be right. I have my doubts. If you’re any sort of leader, salary is less important than success.

And if George Pell will put the mission first, most organisational leaders will do it.

A strong moral code within the organisation will guarantee nothing. After all, what group has a stronger moral code than the major monotheistic religions?

Self-regulation? Corporate social responsibility? Good corporate citizenship? In the clinches, most organisations will abandon or constrain them in order to preserve the organisation. Leaders will convince themselves that the wrong course is the right one, because the wrong course is the one that meets the organisational objectives. Sitting around the boardroom table, leadership groups will come to agree that weak arguments are strong ones, that bad behaviour is required behaviour, that wrong is right. That they are good people with strong moral codes in their personal life will mostly not matter.

Mission will trump morality.

Call it the Pell Principle.

Drought: the rising dust-cloud of dumb

Is there any area of public policy in Australia that gets weaker treatment than agriculture these days? Whether it’s milk prices or agricultural investment, the normal Australian tough-mindedness about policy gets shunted aside in favour of emotive puffery. Not too many people want to be tough-minded when it comes to our farmers – not nearly as tough-minded, anyway, as they were when they were taking the subsidies away from the TCF industries employing migrant women in Melbourne in the 1980s.

Now I can think of a few reasons for this.

  • Lack of adaptability: People who have lived on a farm all their lives will find it really hard to do anything else. They may be tough but they’re really not that adaptable that they could just move into town and settle down running a milk bar. And no-one wants to shove them off the farm just because they can’t make a go of it.
  • Effort: Farmers are actually working extremely hard, which to most people (me included) makes them more deserving than some.
  • Nostalgia: Clem Smith, Manangatang farmer, has a higher and longer-established place in our national mythos than Vera Dimopoulos, Coburg house cleaner and former seamstress.
  • Distance: Most of us live a long way from farming communities, so we are free to breathe in the myth of farming without observing the less pleasant realities.
  • Our emotional relationship to food: The food issue somehow trigger things in our psyche that make us more amenable to bad policy solutions.

So as we prepare to read the coverage of the latest drought relief announcement, here are a few ideas on drought relief and farm policy that seem in danger of getting lost in the dust:

Continue reading

Shorewalker’s flotsam, February 2014

This is an experiment in occasional linkage to insights that might outlast the daily news cycle. If you find any of it interesting, let us know in the comments.

  • Clock Tower, Freetown, Sierra Leone, October 2009, by Flick user Matt Stephenson

    Clock Tower, Freetown, Sierra Leone, October 2009, by Flickr user Matt Stephenson (licence)

    Five reasons why 2013 was the best year In human history (Think Progress) – Summary: Even in many poor countries we have fewer early deaths, growing life expectancies, declining extreme poverty, rising happiness, fewer wars, less violent crime, big drops in unwarranted discrimination of all sorts. “721 million fewer people lived in extreme poverty ($1.25 a day) in 2010 than in 1981, according to a new World Bank study.”

  • Massive review reveals consensus on GMO safety (Real Clear Science) – “The scientific research conducted so far has not detected any significant hazards directly connected with the use of genetically engineered crops.” From a systematic review of 1,783 research papers, reviews, relevant opinions, and reports published between 2002 and 2012. Opponents of GM food increasingly looks like the left’s version of global warming sceptics.
  • The growing Australian medical tourism market (ABC) – Rising numbers of the Southeast Asians middle class coming to Australia for advanced treatments such as robotic surgery, in vitro fertilisation (IVF) treatments and cancer care.
  • Apple passes Microsoft (Ben Evans) – Technology analyst Benedict Evans notes that “… in Q4 2013 the number of computers sold by Apple was larger than the number of Windows PC sold globally. If you add Windows Phone to the mix they’re more or less exactly equal.” Just five years ago Apple’s OSs weren’t shipping on a tenth as many devices as Windows. (Actually Evans is probably a couple of quarters early in calling the “passing” point, but whatever.) Of course, Android passed them both sometime in the past two years. And then there’s this company, both weird and relentless …
  • Why the Winter Olympics are in Sochi (The Economist) – ”Sochi was chosen mainly because it is a favourite playground of Vladimir Putin, Russia’s president. He spends much time at his Sochi residence and intends the games to be seen as proof of his mastery over nature and a symbol of his international legitimacy. Yet the choice is, ironically, entirely apt in one respect. Since Soviet times Sochi has had a reputation as a brash and seedy resort, a hotspot for holiday sex and a place where black-marketers and underground entrepreneurs from across the Soviet Union spent their not-always-honestly-earned roubles.”
  • Yes, you can do experiments to see whether evolution is true (ScienceBlogs) – Researchers at Michigan State University have been watching E. coli evolve the ability to eat citrate, among other things. “After 33,127 generations Lenski and his students noticed something strange in one of the colonies …”
  • Paul Hogan’s Oscar speech (Youtube) – Since the Oscars are coming … Hogan never won, but he did give a speech, and it was a beaut. Has there ever been a more easygoing, less anxious and angst-ridden comedian than Hoges in ordinary-bloke mode? And can someone please resurrect his style?
  • Felix Salmon reckons news has a great future in a social world (Reuters)  –Latest in a fine series. “We’re at an excitingly early stage in working out how to best produce and provide news in a social world. There are lots of business models that might work; there are also editorial models that look like they work until they don’t. But if you look at the news business as a whole, rather than at individual companies, it’s almost impossible not to be incredibly optimistic.” I need to re-read this the next time I’m down to lecture to journalism students.
  • Alan Greenspan

    Alan Greenspan by Flickr user tl8745a (licence)

    Alan Greenspan says asset price bubbles are hard to spot (Harvard Business Review) – Read it all for some profound thoughts about finance, including the problems with letting financial firms be corporations. And the mere fact that you don’t like him doesn’t mean he’s wrong:
    “You can spot a bubble. They’re obvious in every respect. But it is impossible for the majority of participants in the market to call the date when it blows …
    “Every day for most of the period from, let’s say late 1980s, basically, through the end of my term, I would get almost every week people predicting that the world was coming to an end. That the economy was going to crash. ‘There are imbalances. There’s too much debt. There’s too much speculation.’ After a while you begin to say that this stuff is random …
    “When [Eugene] Fama and [Robert] Shiller got the Nobel, in the New York Times, they have Fama saying about Shiller’s forecast of a decline in housing prices, ‘Aw yeah, he’s been saying that for years.’ … Even if you believe it, you shouldn’t say that. I mean it’s un-nice in the extreme. But the problem is it’s true.”
    Having half-expected every year since 1999 that house prices would start declining – and having been wrong almost every time – I see Greenspan’s point. My first year involved in financial markets was 1987, at the end of which Greenspan and his global colleagues staged a highly effective post-bubble monetary easing. No wonder he thought bubbles were best handled after they burst.

  • Life as a video game: the strategy guide (Oliver Emberton) – ”Most importantly, successful players put their time into the right things. Later in the game money comes into play, but your top priority should always be mastering where your time goes.”
  • The shortlist for the Sony World Photography Awards is out – Just click. It is well known that the world’s three most photogenic non-human creatures are tree frogs, orangutangs and praying mantises, but this year’s shortlist shows wildebeest have their moments too.
  • Joshua Gans and Stephen King are re-releasing Finishing the Job for free (Core Economics) – Exploration of Australian policy issues in health, housing, education and transport by two of our finest public policy thinkers. As far as I can recall, the issues discussed are mostly unresolved since the book’s original release, so you’ll get a bargain.
  • Alain de Bouton explains The Philosophers’ Mail (The Spectator) A tabloid website written by philosophers, and far weirder than that description makes it sound. Perhaps not his best idea ever, but certainly, um, different. “If we are going to be interested en masse in the poor international test scores, we need to take our fragilities on board and therefore get serious, very serious, about trying to make important news not just ‘important’, but also beguiling – almost as tempting to hear about as Taylor [Swift]’s legs.” Actual website here.
  • Turn away from comparison by turning off Facebook (Daily Dish) – I long ago tired of claims that social media is something unprecedented. Teenage kids used to spend hours on the phone before the Internet came along; Victorian-era diary entries consist in large part of entries shorter than 146 characters. But I do wonder whether Facebook can encourage an unhealthy fixation on measuring ourselves against others. “Facebook … plays into some very unpleasant human social characteristics, foremost the temptation to evaluate one’s own worth based on a comparison with others: what they have, what they do, where they holiday, etc. It is a profoundly unspiritual experience.”
  • Photography is fine (xkcd)
    I hate when people take photos of their meal instead of eating it, because there's nothing I love more than the sound of other people chewing.

Losing manufacturing is what rich countries do

Now that Holden is to stop making cars in Australia, we’re already hearing about the impending death of Australian manufacturing.

Before you descend into gloom, take a look at this manufacturing data from the World Bank. It sets out how manufacturing value-added has been moving, as a share of GDP, for most of the countries on the planet.

Summary: If present trends continue, eventually the only country making stuff will be South Korea. Plus maybe Bangladesh and Nicaragua.

Slightly smarter summary: The richer you get, the less manufacturing you have.

Australian manufacturing’s share of GDP peaked some time well before 1990, and in the past 20 years or so its manufacturing value-added as a share of GDP has dropped from around 15 per cent to around 9 per cent.

Sounds pretty bad? Maybe not. That decline is of the same order as other developed economies, although it started from a lower base than most. Canada’s manufacturing decline is very similar to ours, right down to the media fretting.

But surely it’s a very different story for places like China? Let’s look at the data. When did Chinese manufacturing peak as a share of GDP? Ooh. 1980. They’ve been going downhill ever since, if you want to see manufacturing as all-important.

How about Germany? Continue reading