I don’t care who wins the federal election …

ppolls-inlineFor mainstream and social media partisans the current prolonged election campaign is an essential life or death struggle for premiership victory by one’s chosen team. But to my way of thinking it doesn’t really matter very much which team wins.  The two major parties are Tweedledee and Tweedledum on asylum seekers, defence and national security issues. Both subscribe to eclectic versions of standard neoliberal economics that differ only marginally from each other, albeit somewhat skewed in favor of their primary sponsors (corporate Australia and the trade unions respectively).

As for second order political issues, a royal commission into banking is likely to prove just as much a waste of time and money as the trade union royal commission turned out to be, producing very little real reform, only occasionally entertaining courtroom theatre and a generous bread and butter income for a posse of Sydney and Melbourne barristers.  Sadly, the Royal Commission into Institutional Responses to Child Sexual Abuse will probably end up the same way, although at least it has provided a forum for some useful catharsis for victims.  It might also lead to a non-litigious redress scheme, though present indications suggest it will be woefully underfunded.

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Posted in Political theory, Politics - national, Uncategorized | 16 Comments

Realism about high-speed rail

Super-high-speed version: Australia has better things to do with $100 billion than building a high-speed rail line. It’s all summed up in this exchange from the ABC TV series Utopia:

The fundamental point made in this clip is exactly right: the engineers, economists, and transport and logistics experts who study this issue – in Rhonda’s words, the lunatic fringe – all tend to wind up finding that Australian HSR doesn’t make sense.

Now here’s the non-express version …

In looking at high-speed rail (HSR) at various times since the Hawke years, you can make a few fairly defensible conclusions:

  • High-speed rail is economical for certain routes, but right now Australia is probably not one of them. The “sweet spot” for HSR trips is between two and three hours. (The fastest Tokyo-Osaka bullet train takes just over two-and-a-half hours; a Paris to Lyon HSR takes just under two. These are the ideal HSR routes.)
  • Benefit-cost calculations for Australian high-speed rail almost always show a Sydney-Melbourne or Brisbane-Sydney-Melbourne high-speed line would struggle to deliver net economic benefits.
  • That may change in the future, if you can get Sydney-Melbourne travel times below three hours.
  • You should assume these routes would actually cost more than currently projected; research by people like Danish economic geographer Bent Flyjberg shows this is the norm for such projects.
  • The proposed Australian HSR would probably bring about a net increase in emissions. This is counter-intuitive until you consider the knock-on effects. For instance, Sydney Airport’s limitations currently mean there’s pent-up demand for Sydney flights; a new train connection will not mean less flights out of Sydney Airport, but rather will mean different flights. Building the line would also use a lot of emissions-intensive concrete and steel.
  • There is not a huge obvious inherent value in a decentralisation project that effectively makes Albury-Wodonga or Canberra or Shepparton into an outer suburb of Melbourne or Sydney. On the contrary, in many ways, crowded is good and decentralisation is bad.
  • To quote Spanish high-speed rail expert Daniel Albalate, the opportunity costs of building uneconomic high-speed rail can be huge, because the projects cost so much. That’s what happened in Spain,where the high-speed rail network cost an estimated €40 billion. $100 billion on HSR is $100 billion you can’t spend on other things.

If you’re not bored yet, here’s even more analysis:

  • My original 2013 criticisms of high-speed rail, eagerly greeted by Club Troppo commenters with plaudits such as “very unconvincing”, “I reckon you’re on weak ground” and “how about fast inter-urban type trains?”
  • INTHEBLACK magazine’s global survey of high-speed rail, written by the admirable Susan Muldowney and including comments from Daniel Albalate and David Hensher and much other insight besides.
  • INTHEBLACK’s survey of megaproject costs and benefits, also by Susan Muldowney and including Bent Flyjberg’s comments.

The Australian high-speed rail proposal comes up every few years and the reasons why it’s currently a bad idea haven’t changed that much.

But the latest proposal is accompanied by a bunch of talk about a new thing – “value capture”. The Prime Minister is quoted as saying this week that “that’s how railways were financed in the 19th century, actually”.

The PM is right: value capture is a real thing. However, Continue reading

Posted in Uncategorized | 11 Comments

Is destroying illegal ivory a really bad idea?

Governments around the world have in recent years destroyed their seized stockpiles of illegal ivory, egged on by the World Wildlife Federation which believes it sends a signal to gangs that kill Elephants and Rhinos for their tusks. In January, Sri Lanka reportedly crushed 350 tusks, and in 2015 several tonnes were crushed in the US and China alone.

ivory burn in Gabon

Now, don’t get me wrong, of course I condemn the killing of elephants and rhinos for their tusks and wish the end of the hunting gangs that kill these magnificent animals. But, but, but ….. crushing the seized ivory really does seem to me a bad idea because it drives up the price of illegal ivory and hence makes it more lucrative to kill more animals. Rather, the seized ivory should be sold to the end users by an independent international organisation, with the proceeds spent on something that helps elephants and rhinos, like a large nature reserve or a breeding program.

Think about it: selling the ivory to the end-users on the black market will reduce the prices and hence the incentives for gangs to kill more elephants and rhinos. So selling it to drive down the price and using the proceeds to help the animals has a double-benefit. All it needs is a two-track approach of selling to the same black-market users that other enforcement agencies will be trying to close down, ie we should sell to the users that the police can’t find. And in order to be able to do that, the entity selling it should be completely separate from the police.

Have things like this been done before? Certainly. A good example is a gun amnesty, whereby we pay for the illegal guns still owned by the general public, no questions asked: they have gotten away with it and rather than lose ourselves in moralizing, we pragmatically pay them for their guns so as to minimize the impact of their illegal activity on our society. Amnesties for previously undeclared taxes follow the same principle.

The current practice violates basic economics: by crushing the seized ivory, the authorities are driving up the price and condemning more elephants and rhinos to a horrible death. The moral crusaders of the World Wildlife Federation of course don’t mean to do this, but I do think their actions will have that unintended effect. A bit more pragmatism would help their cause.

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Posted in Economics and public policy, Environment, Miscellaneous, Politics - international, Social, Society, Uncategorized | 4 Comments

The need for Internet speed

high-speed-internet-660x370Apparently Labor doesn’t intend reverting to the full Fibre to the Premises (“FTP”) version of the National Broadband Network it previously championed if returned to government later this year:

The opposition leader admitted that he would not unpick all of the Coalition’s changes to the NBN, which include the introduction of mixed technologies like copper wire to keep the costs of the project down.

Instead it appears Labor would somehow put greater emphasis on FTP and less on Fibre to the Node (“FTN”) (which relies on old copper wires to bridge the last 400 metres from the “node” to the premises). Exactly how and to what extent Labor would do this isn’t made clear by Shorten, but it really needs to be spelled out given the importance of genuinely high speed broadband to Australia’s future.

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Posted in IT and Internet, Politics - national | 38 Comments

Forecasting: the (Open) Road Ahead

Below the introduction to a piece in The Mandarin today.

We shoot the breeze about who’ll win the next election or footy match. Virtually none of it helps predict the future. But we’re driven on … as if somehow it will.

We do it with the economy. People ask economists how they see the future and most role-play the expert when the honest, indeed expert answer would usually be the answer Treasurer John Kerin gave to journalists when they asked when economic recovery would take hold. “Your guess is as good as mine”. Still, refusing to play the role is no way to hang onto it. Kerin was relieved of his duties as Treasurer shortly after this outbreak of candour.

Even so, myriad decisions are predicated on specific views of the likely future. And skilful effort can improve economic foresight. If only a little. That’s why Treasury asked Warren Tease, veteran econocrat fresh from a lengthy mid-career in the private sector, and now principal adviser in Treasury, to report on its forecasting.

The rest of the article on the link above.

Posted in Economics and public policy, Innovation, Web and Government 2.0 | 4 Comments

From the High Court: We decide who comes here and if not, by the number they are known

From the High Court, 2002

Barrister Geoffrey Johnson: Well, your Honour, if it is of assistance, the practice in the Federal Court…has been to call the applicant by the assigned name.

Guadron, J.: The assigned name?

Johnson: Well, there is an assigned, I think probably randomly allocated, set of letters in the Federal Court.

Gaudron, J.  That is ridiculous.  That is ridiculous

…. You repeat that it is valid and that I am to treat this person as if he had no name.  Do you assert that?  I am to sufficiently ignore the man’s humanity as to deny him a name in these court proceedings and to deny him the ordinary courtesies that I would extend to anyone at the Bar table?

… Well, it is not. I would not do it.  I would not do it because it is discourteous.

Johnson: Well, your Honour, could I respectfully suggest to your Honour that if it is explained to the applicant that…

Gaudron, J: No, no, explain it to me.  It is my problem; not the applicant.  It is my problem. I was brought up understanding that there were certain courtesies and considerations to be extended to all fellow creatures.  I was brought up at the Bar to believe that you treated people at the Bar table with respect.  My time on the Bench has reinforced that learning; that one is to treat them with respect.

Posted in History | 6 Comments

Evidence-based policy making – Part One: The problems

A stupid diagram – the kind of thing we can’t get enough of here at ClubTroppo. And remember “Reflect, revise and Improve”. That’s RRI – capiche?. In short, you can’t get enough RRI. In fact you should be doing it now! Reflect, Revise Improve!

As I’ve suggested before, a key to the development of the modern world was the evolution of new public goods (the other key was the development of new private goods. Capiche? The world is an ecology of both at every level of society and the economy – about which I’ll write more). The grand, progressive project of the nineteenth century saw public sanitation and health, public education, public security (the police) and merit-based public service all come of age. All made a huge contribution – economically, socially, politically.

One core of governance is the flow of information. That’s why weights and measures are a key part of governance – appearing in the role of the sovereign in Magna Carta and (I think) right back to the age of Hammurabi. Likewise the need for integrity. The office of the Auditor General goes back into the dim dark past too. As the UK National Audit Office informs us “The earliest surviving mention of a public official charged with auditing government expenditure is a reference to the Auditor of the Exchequer in 1314.”

However, like so many other things, the role of Auditor General came into its own in the nineteenth century with the emergence of the Exchequer and Audit Department in 1866. As Wikipedia tells us:

The existence and work of the NAO are underpinned by three fundamental principles of public audit:

  • Independence of auditors from the audited (executives and Parliament)
  • Auditing for: regularity, propriety and value for money
  • Public reporting that enables democratic and managerial accountability

But if the professionalisation of audit was brought on by the increasing complexity and professionalisation of government functions itself, surely what’s developed since requires us to go beyond the basic idea of audit for integrity – we want to do more than catch the misappropriation of money or even rank incompetence. As the three principles set out above make clear, the aspirations of the Auditor General function have risen well above this.

But though an external body might make a reasonable fist of auditing ‘regularity and propriety’, it can only provide a pretty rudimentary review of value for money. If one goes to the trouble of trying to find out, it turns out that, notwithstanding various short-lived crazes for ‘evidence-based policy’ (rather like the current craze-ette for government ‘agility’) very little government activity is guided by evidence. According to one study of US government program expenditure “less than $1 of every $100 the federal government spends is backed by even the most basic evidence”. I doubt things would be much different here.

As ever, policy development and even a lot of policy thinking hasn’t got far beyond these high-level slogans. 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. Continue reading

Posted in Economics and public policy, Innovation, Philosophy, Political theory | 3 Comments