Six Stars on Cullen Bay

3d84c60ca26b8789798908c189ff10abIt looks like we may be getting a six star hotel across the road from our place at Cullen Bay. A proposal by Paspaley the Pearl King has been shortlisted by the Giles government along with two others. Apparently the winner will receive unspecified government largesse to kickstart a suitable development. I don’t quite know what a six star hotel is but I suspect from the name alone that I won’t be able to afford to stay there.

I’m not personally worried by the news. The development site is reclaimed land at the tip of Myilly Point and was created and designed for a tourist hotel from the moment when the Cullen Bay Marina Estate emerged from the swamps of Kahlin Bay in the early 1990s. It’s adjacent to high-rise apartment blocks (including the one where we live), cafes, restaurants, a ferry terminal and the marina itself. In other words, it would be difficult to imagine a more suitable site for such a development, as long as the building is well designed and sympathetic to the high profile waterfront site.

However, none of the foregoing facts inhibited predictable vocal opposition to the development as soon as its possibility was announced a couple of days ago. Seemingly within minutes Margaret Clinch of PLAN was on ABC talkback radio opining that a hotel on the Myilly Point site, or indeed seemingly anywhere else, was completely unacceptable. Margaret is an indefatigable warrior on urban planning and environment issues, and exactly the sort of person a young, thrusting city like Darwin needs to curb the excesses of greedy developers and unscrupulous politicians. The problem is that she has seldom struck a development project to which she isn’t completely opposed, and the six star hotel clearly isn’t an exception.

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Posted in Politics - Northern Territory | 3 Comments

Re-imagining my “ideal” tax system

With the ongoing partisan squabbling about tax accompanying the imminent federal election, I thought it might be worth setting out my own “wish list” for an ideal tax system.

As readers know, I am not an economist or accountant, and I have made no attempt to calculate whether the proposals discussed below would raise enough revenue to fund current and expected government expenditure needs and to eliminate the federal deficit over a reasonable period of time.

I would be interested in reader observations or calculations about that, as well as your thoughts on the workability of these ideas.  I’m not interested in being told about their political non-feasibility. I am well aware that in Australia’s contemporary political culture just about any tax proposal no matter how sensible and workable will be automatically demonised in extravagant terms by the opposing political party and by interest groups who see themselves as losers, to the point where any meaningful change becomes politically impossible.

That’s why I refer to this as my “ideal” tax plan.  It could only ever be implemented by a government with a majority in both Houses very early in its term of government, and even then it’s highly unlikely that any government would have the guts, except perhaps if our economy ends up in similar shape to that of Greece.  Nevertheless I think there is a point in re-imagining what a good tax system would actually look like.

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Posted in Death and taxes, Politics - national | 12 Comments

Would sortition help against corruption?

Political parties and institutions in Australia and the US are increasingly dominated by interest groups representing the few, leading to a large policy-induced increase in inequality in recent decades and a long raft of new policies favouring the few by giving them the tax receipts of the many. One hypothesised solution to the problem of having these coalitions strangle the public interest is to make more use of sortition, ie to have randomly selected citizens decide more things in public life.

Currently, citizen juries are used in criminal cases, but one can in principle use sortition to select ‘policy juries’, to select members of parliament, to select local councillors and mayors, etc. It was quite normal in ancient Athens to do so, hence we know it can work in some circumstances.

The general pros and cons of sortition have been debated ad infinitum over the centuries, with the main recognised advantage that one gets more involvement of the citizenry and less coalitions within the set of the governors. The main disadvantage is that you get people deciding on things they are fairly ignorant about, which is a problem when long-experience and knowledge is called for. The ancient Athenians knew this tradeoff too: whilst they selected their councillors randomly, they were more picky when it came to their war leaders.

I want to think out loud just what is likely to happen to the problem of special interests in Australia in two different scenarios: if we’d select our MPs randomly, or if we’d decide on mayor policies via citizen juries.

The short answer is that the problems are likely to be worse with sortition. The long answer is over the fold. Continue reading

Posted in bubble, Cultural Critique, Economics and public policy, Ethics, Geeky Musings, History, Information, Law, Libertarian Musings, Life, Philosophy, Political theory, Politics - national, Public and Private Goods, regulation, Social Policy, Society | 64 Comments

Trained incapacity at the highest levels of the academy

“There are some ideas so absurd that only an intellectual could believe them.”

George Orwell

Paul Krugman as ever had the right expression. An intellectual crackup. Just in the 1930s when it was becoming obvious that communism, if it was to liberate humanity was certainly going to do it via an extraordinary degree of brutality, so there were plenty of intellectuals doubling down on how great it was. Likewise as the US Republican party has disappeared into conspiracy, paranoia and creationism as it’s given itself over to cranks and wackos, there’s been lots of support for its basic ideas not just from academic hucksters like George Gilder but also from those at the highest levels of the academy.

New classical economics is the perfect preparation for this because it’s tricky to excel in its maths and while you’re doing it you might miss the fact that its micro-foundations are absurd. The new classical explanation for the Great Depression is that it was a spontaneous holiday taken by rational, forward looking utility maximising workers.

Anyway there’s a cast of oddballs with Nobel Prizes in economics who buy this stuff and last week John Cochrane who’s a leading, but not Nobel Prize winning light at Chicago let us know how we could cure all known diseases massively expand the US economy by slashing regulation.

Anyway, Brad Delong made easy work of this and Cochrane offered a woeful response. Greg Mankiw likes to stay out of trouble, but couldn’t help himself from linking to Cochrane. And Noah Smith Taylor delivers the coup de grace.

I particularly recommend Brad’s slides which you should be able to follow just by imagining what jargon like “out of sample” must mean.

Posted in Economics and public policy | 4 Comments

Single sex schools improve performance in low performing schools

The Effect of Single-Sex Education on Academic Outcomes and Crime: Fresh Evidence from Low-Performing Schools in Trinidad and Tobago
by C. Kirabo Jackson

Abstract:

In 2010, the Ministry of Education in Trinidad and Tobago converted 20 low-performing pilot secondary schools from coed to single-sex. I exploit these conversions to identify the causal effect of single-sex schooling holding other school inputs (such as teacher quality and leadership quality) constant. After also accounting for student selection, both boys and girls in single-sex cohorts at pilot schools score 0.14Ï∞ higher in the academic subjects on national exams. There is no robust effect on non-academic subjects. Additionally, treated students are more likely to earn the secondary-school leaving credential, and the all-boys cohorts have fewer arrests. Survey evidence reveals that these single-sex effects reflect both direct gender peer effects due to interactions between classmates, and also indirect effects generated through changes in teacher behavior. Importantly, these benefits are achieved at zero financial cost.

Posted in Economics and public policy, Education | 1 Comment

Evidence based policy II: The Evaluator General

The Future of Evidence-based PolicyCross posted at The Mandarin

In the first part of this essay, I elaborated on evidence-based policymaking and service delivery, pointing to all manner of pathologies that must be dealt with to deliver something effective. The way in which KPIs distort reporting and can pervert incentives have been well known at least since Gosplan, though no doubt one could find examples of it in the ancient world.

But there are many more problems from the myriad practical challenges and compromises involved in measuring outputs and outcomes to pathologies of culture and delegation. Yet feedback between delivery of policy and services and measurement of outcomes is fundamental to building a high performing organisational capability. I also pointed to the grand, progressive project of the nineteenth century that saw all manner of institutional development.

Just as an aside, since I mentioned how antithetical academic culture is to evidence-based policy, I note that think tanks have evolved to fill that space but sadly they are mostly funded to push ideological barrows. The British have introduced ‘what works’ centres to fill the void. They’re focused on discovering and communicating information to practitioners in a way that is useful – whereas academics are engaged in an activity that (scandalously) many argue is largely indifferent to being useful or even right.

In any event, this post sets out the case for a new institution — the evaluator-general. The problems the institution must solve or, to speak more modestly, ameliorate, include:

  • ensuring that monitoring and evaluation is done well – no mean feat given the inherent difficulty of the task coupled with its lowly status compared with grand policy making which is where the big public service career payoffs are.
  • the bureaucracy’s penchant for soft secrecy andeuphemism which ramifies through every level of the service and through to its political masters
  • the need to build a relationship of mutual respect and accommodation — of true collaboration — between monitoring and evaluation at the coalface and its aggregation and standardisation at the system level. That means:
    • Finding ways to interdict the ‘default’ setting in such arrangements for those in the centre of the system — who are typically at the top of a hierarchy from dictating terms to those at the coalface.
    • Monitoring and evaluation at the coalface should be principally for the purpose of optimising effectiveness and efficiency at the coalface. But its output should also flow to the centre where it will be used to make decisions on the quality and efficacy of the services being delivered at the coalface and thence in ‘managing’ the coalface including by rewarding and penalising, expanding and contracting services. The perverse incentives such a process unleashes must degrade the information and its flow as little as possible.

So here’s what I propose.

Rather than simply being talked about by prime ministers as if it were all commonsense, evidence-based policy and its organisational underpinning — monitoring and evaluation — becomes a key function of any concerted endeavour in the public sector as accounting is. (I’ll make some limiting comments on this later, but for the purposes of exposition assume a concerted endeavour is a program — like chaplains in schools, the R&D tax credit or a police program to reduce domestic violence.)

No new program could be introduced without a properly worked up monitoring and evaluation plan. Existing programs would be systematically exposed to this regime over time. Evaluation should be done at the level of delivery. As this occurs, further synthesis and analysis at various levels will typically occur.

Evaluation would be done by people with domain skills in both evaluation and in the service delivery area who were formally officers of the Office of the Evaluator-General. They would report to both the portfolio agency delivering the program and to the evaluator-general with the EG being the senior partner in the event of irreconcilable disagreement. All data and information gathered would travel to the centre of both the EG’s and the departmental systems. Meanwhile, the portfolio agency would report to their minister but the EG would report to Parliament — as the auditor-general does.

The monitoring and evaluation system would be built from the start to maximise the extent to which its outputs can be made public and the public could be given access to query the system, though the system itself would only provide public information outputs that met strict privacy safeguards.

Good intentions versus good outcomes

So does this ameliorate the problems enumerated above?

  • Expertise in evaluation has a home which is independent, has some teeth and offers career progression (a critical thing in addressing what I call problems of irreducibility which I have not elaborated in this post).
  • Soft secrecy and euphemism finds it difficult to contaminate the evaluation system. It won’t be the case, as it is now, that “everyone gets a prize” — that virtually all programs are publicly reported as a success. The EG has their ‘man on the ground’ in the bowels of the system — measuring its efficacy. Officers of the EG will make sure there’s an auditable chain of accountability to resist pressures to game the system. The information emerges in the ordinary course of the EG’s reporting — without pressures to suppress information and gild the lily. As with the auditor-general, there are minimal incentives to make the government or the wider executive look good — or bad.
  • The involvement of EG officers in the system, in system design and at the ‘coalface’ of delivery, should help reduce the tendency of the top of hierarchies to dictate terms to those at the coalface which is necessary if an organic relationship of mutual accommodation is to be built. The whole monitoring and evaluation system only has an interest in generating accurate information. The intrinsic motivation of EG officers should generally lead EG officers to help the agencies they work with to improve their performance. At least they should have minimal incentives to degrade the information system, which is itself, a huge de-motivator.

This is also a development of the principles of Westminster government which I’d argue is constructed from two separate systems. Both systems aim at public good, but the former (which delivers government services and assists the political executive decide what should be done) does it on the presumption that public good is best done via a competition between political representatives from which the public can choose.  The latter (which one might suggest provides the informational superstructure on which the former operates) reports on what is being done and guards basic integrity. It aims directly at public good outputs that are owned by all.

A credible, accountable hand

Departments of state serve the public not directly, but as agents of its elected representatives — the government of the day. This sub-system — the politically “contestable” part of the Westminster system — and it extends to the system of delivery of government services and deliberation about how that should be best done. On the other hand, the reporting on what is being done is delivered through a system that reports directly to the parliament and through it to the public.

This offers some scope to reconfigure the vexed idea of civil service independence along the is/ought positive/normative distinction. Reporting on what is should, in principle be independent – ie constituted as a direct public good reporting through the Parliament. Advising and doing what the government judges ought to be done is done is a ‘contestable’ public good and occurs at the direction of the government of the day. This is also the principle appealed to in a recently published Mandarinpiece of mine and Nick Kamper’s arguing for the release of analytical models and their movement to “neutral territory” under the aegis of the Parliamentary Budget Office.

In proselytising the case, piggybacking a proposal onto an existing institution usually helps to squeeze it through the Overton Window. One could make the EG an office within the auditor-general’s function. After all program evaluation is already one of the auditor’s functions. This might be worth trying in the short term, but I doubt it’s a good idea even to that extent. Despite auditor-generals’ fondest endeavours their involvement is often seen as inimical to innovation. By contrast a central purpose of the EG would be to grow the intelligence for the system to successfully innovate.

Finally I’m not much of a fan of widely rolling ambitious new approaches even my own — before we’ve figured out if they work. So I think this approach should be trialled, initially perhaps with just a few programs perhaps in several different portfolios and adapted, expanded or abandoned on its merits over time.

Posted in Economics and public policy, Information, Innovation | Leave a comment

Evidence based policy: Part One (a second time!)

evidenceHere’s the first of a two part essay on evidence based policy published today in the Mandarin. This part is a slightly gussied up version of a Troppo post from a month ago. The long-awaited second part will follow.

Calling for policy to be more ‘‘evidence-based” rolls off the tongue with beguiling ease. What’s there not to like?

Yet a closer look reveals that policy has always been, and remains today, a largely evidence-free zone. In this essay I want to explore the forces that bring this about with my next piece proposing some steps toward a solution.

The flow of information is central to governance. That’s why specifying standard weights and measures turns up as part of the sovereign’s role in Magna Carta. The integrity of the information flow is, if you’ll pardon the tautology, integral to the package. So it’s not surprising vouchsafing the integrity of accounts also goes back centuries. The UK National Audit Office traces its lineage to the auditor of the exchequer in 1314.

Integrity institutions like the auditor-general came into their own in the nineteenth century. But if the professionalisation of audit arose from the increasing complexity of government, what’s developed since draws us well beyond the basic idea of audit for integrity.

Indeed today, auditor-general’s performance audits deliberate on efficiency and effectiveness. But if an organisation lacks the right information systems, an audit from outside cannot determine with any accuracy its effectiveness or efficiency. Of course auditors-general can critique an agency’s monitoring and evaluation system. Yet, many years of routine performance auditing notwithstanding, one study found “less than $1 of every $100 the [US] federal government spends is backed by even the most basic evidence”. Would things be much different here?

Of course we want government activities to be evidence-based. And yes, there really are lots of ways in which governments could take advantage of “big data”. But that’s the TED talk. Back in the world of actual experience, policy development and even a lot of policy thinking hasn’t got far beyond high-level slogans. In 2007, Allen Schick’s review of performance budgeting and accrual budgeting offered this observation: “Australia’s ambitious strategy to thoroughly evaluate all programmes was accorded much publicity, but no announcement was made when the strategy was terminated”.[1]

In fact it had been the Hawke/Keating governments that had launched more the high-level evaluation strategy identified by Schick and substantial work was done and capability was built under the program. The Howard government wound it back. But for all new prime minister Kevin Rudd’s talking up his own wonkish commitment to evidence-based policymaking, little was done to build public sector capability or practice in the area.[2]

The NSW Centre for Program Evaluation was a product of the NSW Commission of Audit in 2012. Active for three years now, it has not released any publication on any NSW policy initiative. In fact, a review of the NSW liquor and lock-out laws was completed last year, but in a sensitive political climate it has not been released. Continue reading

Posted in Economics and public policy, Information, Innovation | 1 Comment