Following David’s excellent post on the NBN, a somewhat related aside.

Malcolm Turnbull was interviewed on AM yesterday about the NBN review, followed by a brief minuet around some current political dramas.

What a contrast. By comparison, his colleagues still seem be struggling with the basic craft of politics. And, for that matter, with the English language.

The paradoxes of politics

In an everyday political sense I suppose we can’t really blame Little Bill Shorten for cynically and dishonestly demonising the Abbott government’s mooted tax increases and spending cuts. After all, Abbott cynically, dishonestly and very successfully demonised Labor’s carbon and mining taxes. What’s sauce for the goose is sauce for the gander, as they say.

On the other hand, perhaps we really can’t blame Tony Abbott for doing this either, because Labor and the trade union movement (prominently including Little Bill Shorten at the time) cynically and dishonestly demonised the Howard government’s Work Choices system, despite the fact that it was an entirely reasonable and fair one at least once the “no disadvantage” test was restored. Then, of course, there is Kim Beazley’s (and before that Paul Keating’s) even more cynical and dishonest demonising of Coalition GST proposals despite the fact that Keating himself had championed precisely such a tax back in the 1980s.

I guess the bottom line is that dishonestly demonising opponents’ policies is the everyday business of politicians. It’s the business of the government politicians of the day to sell their policies effectively and persuade the electorate that the Opposition’s arguments are indeed dishonest scaremongering.

That would seem clearly to be the case with the current budgetary situation. Economists largely agree that weak leaders from both political parties over the last decade (Howard, Rudd and Gillard) largely squandered the windfall of the China-driven resource boom by creating permanent spending programs (largely of a middle-class welfare nature under Howard) and equally permanent tax cuts despite knowing that they were being funded by the inherently temporary proceeds of the resource boom. Presumably they all knew what they were doing but hoped that the chickens would come home to roost on some later government’s watch. It looks like the chickens have arrived, because it is now unavoidably apparent that there is a long-term structural deficit which will not be repaired without tough measures both on the revenue and spending sides of the ledger.

No doubt Abbott and Treasurer Joe Hockey could, if they wished, have avoided taking the tough decisions by claiming (truthfully in a narrow sense) that there isn’t a “budget emergency” and that Australia’s net debt will only peak at around 17.5% of GDP in a few years time, which is much less than nearly all of our major western trading partners. But that would be ignoring the fact that it will indeed become a larger and larger problem over the years, with a high probability that deficits will continue indefinitely into the future and the interest burden continue progressively to increase until it really does become a significant impediment to government policy. Far better to grasp the nettle now and take the hard decisions while faced with a weak and discredited Opposition with a radically unimpressive and tainted leader in Little Bill Shorten.

Of course, it could all end in tears for the Abbott government, with the apparent decision to impose a temporary income tax levy on high income earners (and perhaps increases in fuel excise) being seen by history as Abbott’s “no carbon tax” moment and a courageous decision in a Sir Humphrey Appleby sense. Nevertheless, as someone who prefers sound policy to political theatre I certainly hope not. As far as one can tell from the budget leaks, it would appear that what Abbott and Hockey have in mind is very much sound economic policy. Fortunately, I think that Abbott is a much better political salesman than either Rudd or Gillard. Moreover, with any sort of luck the Coalition should be able to keep a figurative foot on Labor’s throat through an unending stream of embarrassing news stories emerging from former High Court Justice Dyson Heydon’s royal commission into trade unions. Mind you, the current ICAC hearings in New South Wales provide an amusing illustration of the propensity of independent inquisitions to end up biting the instigator that fed them as well as the intended target.

Moreover, in a somewhat perverse and paradoxical sense, a royal commission which exposes and dramatises the skulduggery of a significant minority of the trade union movement may actually be to the ALP’s benefit in the long term. Labor renewal in my opinion depends on reducing the almost complete dominance of a tiny cabal of union and faction leaders over both Party administration and preselection. They are unlikely to surrender power willingly, but may well be much easier to displace if preoccupied by defending themselves before a royal commission and avoiding imprisonment for corrupt activities.

Artists Resale Royalties: a piece of pie…

The ARR scheme so far has cost taxpayers just over $2.2 million and as of December 2013 has delivered a total of 7,800 royalty payments, to 800 artists (or estates) with a median value of about $105 per payment. The scheme has, in three and a half years, only generated a total of less than $200,000 in management fees. It is unlikely that the scheme will be self-funding any time soon, if ever. And what has this costly public art project delivered? A make-work scheme for arts administrators, a restraint of trade and what is essentially an anti-progressive tax: the more you have, the more you receive. Below is a pie chart of resale royalty distributions by value. Note: the construction of the pie chart needed a few ‘extrapolations’ where information from previous years is used to categorise the latest data. These extrapolations might not be perfect.(see footnote below)

The pie chart makes it clear that royalties on resales of individual artworks for more than $10,000 each, account for 59% of all the money collected, yet these top rank payments – about 550 in total -  only account for just 7% of the total number of individual payments of the scheme. (BTW many thanks to Paul Fritjers for the tasty pie chart.)sales by price

On the other hand the bottom 44% (2,946) of individual payments have only accounted for just 9% of all the money collected. The median value of this bottom bracket of payments is about $55; the average individual transaction cost to CAL, alone, is $30.The only point of these thousands of very small, costly payments is to conceal the real, anti-progressive nature of ARR. Continue reading

Artists Resale Royalties: on bullshit, part three

Australia’s Artists Resale Royalty (ARR ) scheme has so far cost taxpayers $2.2 million in direct support. And over many years the publicly funded lobbyists for this scheme, headed up by the National Association for the Visual Arts  Ltd, have additionally spent a lot of public money on lobbying for their scheme. ARR is a very political project. It is imposed by law on a lot of small ‘sole trader’ businesses; it imposes quasi-compulsory collective management on artists and also imposes a restraint of trade on an art market where profit margins are generally quite thin. ARR is not an ‘art project’.  

The fact that these publicly funded arts organisations have, for years, been free to use public money, intended for art projects, to conduct a very partisan political campaign really rankles.

The lobbyists for compulsory ARR are involved in a ‘last ditch’ lobbying campaign for their compulsory ARR scheme to “continue”.  As always there is a lot of fudge and misleading by omission to their advocacy. In particular they continue to claim that the majority of royalty payments, to date, have gone to indigenous artists: in this case to date is a very very large lump of fudge.

In the first years of the scheme’s operation, most of the royalty payments raised were on resales of indigenous art. However because resales of indigenous art make up only about 10-15% of total art resales by value, it is inevitable that in time more and more of the royalty payments will come from the resales of non-indigenous art. And it is also inevitable that the distribution of royalty payments by value must, eventually, map to the universal truth that when it comes to the resale of art: artworks by the top 20 artists most favoured by the market get most of the money and the next 80 or so of bestselling artists get most of the remainder.

The agency charged with administering the scheme, the Copyright Agency Limited (CAL), recently released some updated figures and information about the operations of the ARR. I also note that this detailed information was not made available at the time of the ARR review process. The following analysis is based on the figures provided within that report.

Generally speaking, analysis of the top 21 payments confirms that this scheme is already starting to follow the usual market pattern: a handful of sales of a handful of top 20 artists  constitute most of the total value of art resales and therefore most of the total value of collected Art Resale Royalties.  This is despite the fact that the scheme apparently only currently affects about 10% of resales (according to CAL’s report). Obviously as the scheme starts to affect more and more of the majority of  art resales, the skewing of the distribution to a handful of artists such as Whitely, Nolan, Williams etc will inevitably become more pronounced. It would only take the scheme to collect another 10 to 20 high-end sales in the next year, for it to push the distribution to the handful of artists most favored by the market towards 30% or more.

The breakup of the top 21 resale royalty payments is :

Continue reading

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)

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:

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Predictions versus outcomes in 2013?

In the last 5 years, I have made a point of giving clear predictions on complex socio-economic issues. I give predictions partially to improve my own understanding of humanity: nothing sharpens the thoughts as much as having to actually predict something. Another reason is as a means of helping my countries (Australia/the Netherlands) understand the world: predicting socio-economic events is what social scientists should do, even if they will often be wrong.

Time to have a look at my predictive successes and failures over the last few years, as well as the outstanding predictions yet to be decided. Let us start with what I consider my main failure.

                 Failed predictions

The main area I feel I haven’t read quite right is the conflict in Syria, as part of the general change in the whole Middle East. I am still happy with my long-run predictions for that region, where I have predicted that urbanisation, more education, reduced fertility rates, and a running out of fossil fuels will lead to a normalisation of politics in a few decades time. But at the end of 2012 I was too quick in thinking the Syria conflict was done and dusted. To be fair, I was mainly following the ‘intrade political betting markets’ which was 90% certain Assad would no longer be president by the end of this year, but the prophesised take-over of the country by the Sunni majority has not quite happened. The place has become another Lebanon, with lots of armed groups defending their own turf and making war on the turf of others. The regime no longer controls the whole country, but is still the biggest militia around.

What did I fail to see? I mainly over-estimated the degree to which the West would become involved. Continue reading

The Xmas quiz answers and discussion

Last Monday I posted 4 questions to see who thought like a classic utilitarian and who adhered to a wider notion of ethics, suspecting that in the end we all subscribe to ‘more’ than classical utilitarianism. There are hence no ‘right’ answers, merely classic utilitarian ones and other ones.

The first question was to whom we should allocate a scarce supply of donor organs. Let us first briefly discuss the policy reality and then the classic utilitarian approach.

The policy reality is murky. Australia has guidelines on this that advocate taking various factors into account, including the expected benefit to the organ recipient (relevant to the utilitarian) but also the time spent on the waiting list (not so relevant). Because organs deteriorate quickly once removed, there are furthermore a lot of incidental factors important, such as which potential recipient is answering the phone (relevant to a utilitarian)? In terms of priorities though, the guidelines supposedly take no account of “race, religion, gender, social status, disability or age – unless age is relevant to the organ matching criteria.” To the utilitarian this form of equity is in fact inequity: the utilitarian does not care who receives an extra year of happy life, but by caring about the total number of additional happy years, the utilitarian would use any information that predicts those additional happy years, including race and gender.

In other countries, the practices vary. In some countries the allocation is more or less on the basis of expected benefit and in the other is it all about ‘medical criteria’ which in reality include the possibility that donor organs go to people with a high probability of a successful transplant but a very low number of expected additional years. Some leave the decision entirely up to individual doctors and hospitals, putting huge discretion on the side of an individual doctor, which raises the fear that their allocation is not purely on the grounds of societal gain.

What would the classic utilitarian do? Allocate organs where there is the highest expected number of additional happy lives. This thus involves a judgement on who is going to live long and who is going to live happy. Such things are not knowable with certainty, so a utilitarian would turn to statistical predictors of both, using whatever indicator could be administrated.

As to length of life, we generally know that rich young women have the highest life expectancy. And amongst rich young women in the West, white/Asian rich young women live even longer. According to some studies in the US, the difference with other ethnic groups (Black) can be up to 10 years (see the research links in this wikipedia page on the issue). As to whom is happy, again the general finding is that rich women are amongst the happiest groups. Hence the classic utilitarian would want to allocate the organs to rich white/Asian young women. Continue reading