The fastest milk cart in the west?

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Readers as geriatric as me will probably remember British comedian Benny Hill’s famous spoof song Ernie (He drove the fastest milk cart in the west). It topped the UK Singles Chart in 1971, reaching the Christmas number one spot, and also reached no. 1 in Australia. But you probably didn’t know (or at least I certainly didn’t) that there was a very similar real life case in western New South Wales in the early 1970s, which was recounted in the latest edition of Bar News, the journal of the NSW Bar Association. Below are the reasons for decision of Cross J on appeal after a wronged husband was sentenced to one month’s imprisonment by a magistrate. Hat-tip Law Geek Down Under:

It has been said that revenge is a kind of wild justice. And, though the courts may not approve the infliction of deliberate injury, still one’s heart goes out in sympathy to all those who are moved to violence in defence of their family. Circumstances, which understandably give rise to a degree of passion may properly be regarded as mitigating factors on the question of sentence for violent conduct.

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Is political cynicism poison for the left?

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I offered this comment in a Linked In discussion, and thought I might ‘put it out there’ as my daughter says. In the process I edited and played around with it a little.

One of the things that the last few years have shown I think is that rank cynicism plays much worse for the left than the right of centre. Cynicism isn’t such a problem for a right of centre government because one of the reasons you’d vote for one is that you think the world is a pretty average kind of place and that any grand ambitions to make it better are naive or – well an even higher form of cynicism dressed up as altruism, or perhaps a bit of both. Just writing it down makes it rather compelling actually ;)

In any event, when Howard wheels out a carbon pricing system having said he wouldn’t, when he ‘clears the decks’ of potential policy losers before an election, gets rid of petrol excise indexing for instance, it works for him. I remember thinking that ‘clearing the decks’ of an easily exploited policy promise – to price carbon – may not have been good policy, but it was probably good politics. How wrong I was. Julia has made one mistake after another of that kind. The way she shafted Wilkie was simply shabby and seen to be so.

Hawke would have done the same, but would have telegraphed a whole narrative for some time beforehand about how he was wrestling with the moral issue of whether to pursue quixotic policy or shaft Wilkie, and how hard it all was but . . . “Well thanks for your question Alan/Kerry/Maxine/Leigh. It’s been a tough time for me. On the one hand I had an obligation to Alan and I’m not the only person in this country who admires his courage and integrity, and on the other, I realised that it couldn’t be got through the Parliament. So I had to make a tough call. Some people will disagree with me. I don’t blame Andrew for being mad at me. If I were him I’d be mad too, but as PM I have higher responsibilities etc etc”.

Julia’s basic message was “Andrew had outlived his usefulness and so you can find his body somewhere over there.” Likewise the ‘carbon tax’ which is actually more or less what was on the table, even if it came with a community assembly first – carbon pricing with an introductory period of fixed price permits. When challenged about her breaking a promise Julia showed a remarkably ill judged mix of candour and dissembling. She needn’t have admitted it was a carbon tax, but she did need to say that the policy had changed and she needed to justify it in all the circumstances. She did the opposite.

She came out and told us how honest she was being and admitted it was a carbon tax (when neither she nor Rudd, IIRC, had admitted the previous temporary permit system was a carbon tax) and then when she was challenged on breaking her promise not to introduce one said aggressively “look at all the words I used”. Well Julia you’re responsible for all of them and you’ve broken a promise. You had good reason to, so admit it and explain it. Alas that happened weeks later when her minders explained that she’d never actually put the case for breaking the promise, and eventually she did so – when it was way too late.

She did the same over grabbing the leadership. She’d managed to be a loyal deputy and then grabbed the job – which I thought at the time was the right thing to do in all senses. But all she could say was via a cagey euphemism “the government had lost its way”. She failed to challenge the obvious narrative of ambition and treachery. Yet it would have been easy to do – Hawkie or Peter Beattie would have lapped it up. See my proposed words for Hawkie above and remix as appropriate.

‘Julia’ and the denial of history

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First it was David Brooks’ Harold and Erica. Now it’s the Obama campaign’s Julia. Harold, Erica and Julia are all fictitious characters born into a perpetual present. They live and grow old in a world that doesn’t change. As Michael Shear at the New York Times writes:

At age 3, Julia is enrolled in Head Start programs, thanks to Mr. Obama. By 22, she’s covered by her parents’ health care because of Mr. Obama’s health reforms. At 42, she’s getting a small-business loan from the government. When she reaches 67, she’s retired and drawing Social Security benefits.

In Julia’s world, demographic, technological and environmental change are on pause. She doesn’t need to worry about waiting for the new Intel chip to come out before she buys a new laptop. The new chip never comes. And in the same way, the government doesn’t need to worry about the effect of unforeseen new medical technologies on the cost of health care. The policies that work today will work equally well tomorrow.

There’s no ageing population problem. There’s no demographic bulge threatening Social Security or Medicare. The labour market goes on as it does now with undisrupted by technological or trade induced change. And while climate change is a constant source of anxiety, it remains lodged in a future that never comes.

Are Americans in denial about history? And if they are, how would that warp their decision making?

Unpublished letter to the Editor, Politics of envy edition

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Your editorial (Politics of envy threatens our economy and ethos, 2 May) claims that “Research by the National Centre for Social and Economic Modelling has shown that all income levels prospered in the Howard years and that under the Rudd-Gillard governments the gap between rich and poor has widened.”  This is close to the exact opposite of the facts. While it is true that all income groups benefited from real income increases in the Howard years, the gains for high income groups were much greater than for low income groups, and the gap between rich and poor widened.  In contrast, ABS statistics show that income inequality fell slightly under the Rudd-Gillard government, partly due to the impact of the GFC, but also because the very large increase in pensions in 2009 helped some of the poorest by the most. I have not been able to find any NATSEM document that actually says what the editorial claims.

Peter Whiteford, University of New South Wales

Corporate Sovereignty

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At the Lowy Interpreter Sam Roggeveen speculates about the possibility of a company (particularly Apple) buying a country.

There has been at least on fictional treatment of a corporation taking over a country in John Brunner’s wonderful 1968 novel Stand on Zanzibar. It is based in 2010 and the corporation is transparently based on General Electric, and the country based on what would become Benin. Like much science fiction, it tends to tell us a great deal from what change it didn’t anticipate. In particular it didn’t anticipate how corporations (at least in the US) would change, and why the idea of a corporation taking over a country is less plausible than it once was.

It made sense in the 1960s to think of Corporations as great sprawling organisations that could possibly marshall the array of skills involved in running a country. Companies did have wide ranges of businesses and were more relaxed. But attitudes changed in the 1980s – maximizing return on capital meant that companies would shrink down to core products with the greatest returns, and jettisoning or spinning off other projects. In many ways I suspect this had alot to do with the movement from internally fostered management to a floating class of specialists in exploiting the principal agent problem in corporate governance. Shuffling projects between companies and identities meant an apparent increase in return on capital became the basis for bonuses – even though in aggregate there was no improvement.

Nowadays only a few companies still dominated by the shareholdings of a few (like Microsoft, News Ltd or Google) are prepared to fritter away money on unprofitable side projects. Even zaibatsu are less keen to expand the range of what they do now, and the chaebol were forcibly shrunk in the late 90s.

So we end up with a company like Apple, with a handful of very successful products that make a great deal of money it can’t do anything with. It has no other divisions to cross subsidize subsidize, or research to undertake (the company’s success has always been in packaging end products and not developing technology. They either cop the tax when they repatriate the money and pay larger dividends, or they let it sit in a bank account. They certainly wouldn’t pursue something outside their core – unless there was a tax dodge in it.

To be sure, owning a country would free the company from tax obligations were they to incorporate there and pay dividends there. But do they pay them in Apple dollars, get another country to let them use their currency or make sure the country they buy already has an easily currency? Think about what would be needed to support a new currency. They’d either start taxing, issuing debt, or make Apple dollars backable by Apple products – all of which seem foolish and still unlikely to make it a tradable currency (assuming shareholders want to buy things other than consumer electronics). But whom would let them use their currency, and countries that already have hard currencies are likely to be too large.

And of course, if shareholders remain in other countries, they’d be reliant on their resident states continuing to recognise Appledonia as a sovereign state in a way that prevents them taxing those same dividends. Maybe they’d also pay to join the WTO?

Consumer medicine information: a short course of parody

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A while back I blogged about the spate of mandated product information when one buys medicine.  I just got a scrip from the chemist with a new format consumer information in it and I’m afraid I’m pretty pissed off with what an organised piece of stupidity it really is.

Previously I wrote this.

What depresses me is that this is not hard. All it takes is to try seriously to be useful, rather than to follow a procedure. If governments can’t do this kind of thing – or rather bugger this kind of thing up – it is depressing to think of how much more limited their usefulness is than it might otherwise be.

This one reads as a kind of send up of usefulness. Virtually everything it says is a kind of joke. Some of my favourite passages.

Do not take NAPROSYN if you have
an allergy to:
• NAPROSYN or any ingredients
listed at the end of this leaflet . . .

Ask your doctor if you have any
questions why NAPROSYN has
been prescribed for you. [Now there's an idea!]

If you take this medicine after the
expiry date has passed, it may not
work as well.

If you are not sure if you should
start taking NAPROSYN, talk to
your doctor.

Follow all directions given to you by
your doctor or pharmacist carefully.

Giving to the wealthy

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I’m not much of a fan of giving to wealthy causes. Like private schools for the well healed. I was asked to attend an interview to see if I’d go on the Council of my daughter’s private school – which I said I would. I was then asked if I was Jewish (it’s an Anglican School) and said that I wasn’t but that I was a bit shocked to be asked. I didn’t bore the Principal with the details of my religious status as a lapsed atheist. Anyway with that apparently smoothed over I was invited to an evening which turned out to be hard core fund raising.

A donation of 20K seemed in order, but was not forthcoming. And for whatever reason my candidature didn’t proceed any further. (I also opined on a tour of the campus that I thought it would be a pity if they ripped out the only remaining grass covered oval and replaced it with synthetic grass, no matter how much truer it made they hockey balls travel.)

Today I got an invitation to give money to Ormond College where I spent a year. It was cleverly crafted – written to me by someone in my year with a personal note to me. This was my chance to make a difference for the next generation. I could contribute to allowing someone hard of means to attend the College. Well that’s better than contributing to someone easy of means I guess. Anyway it transpired that to qualify, this person who was hard of means had to be someone whose parents had attended Ormond. And yes, they might have been hard of means, but then they might just have been good at minimising their income. I decided to pass.

Hope keeps people happy and healthy so dont always tell the truth

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Interest rates in Australia have just been reduced by 0.5% in the hope that this will stimulate the economy. Will it work? Uncertain. But will politicians say it will work in the coming federal budget? Almost undoubtedly.

Perhaps displays of optimism are not such a bad thing, even if they are unwarranted.

In a study that just came out, we (myself, David Johnston at Monash and Gigi Foster at UNSW) found that optimistic expectations are key to making  people happy with their lot in life. People are much less affected by regret than previously thought, nor do they tell themselves things will be bad in the future so that the present will be a pleasant surprise: people systematically over-estimate how rosy the future should be and this is crucial for their well-being.

Our study, of which the working paper version is here and the on-line article is here (for those with access) has the following highlights:

  1. In a sample of over 10,000 Australians followed for 9 years (the HILDA), it turns out that people’s expected future health has about 1/6th the effect on current happiness as their actual current health, with any difference between the health that was expected and that eventuated having very little effect.
  2. Future imagined health was more important to Australians over 35 and to women than to men and those under 35, for whom future imagined health was not important for happiness.
  3. As a result, we concur with the medical literature that has long argued that hope is important in itself for health, as witnessed by the strong placebo effect. In the medical literature hope has now become the default standard for new medicines in that new medicines have to be better than placebos if they are deemed to be of real use. Our advise is also to err on the side of optimism whenever possible.

Now, to classically trained economists, the fact that hope itself is a consumption good quite apart from realised consumption may be surprising, but in the reality of economic policy the big lesson from this kind of finding has been incorporated long ago: always pretend the economy will keep going strong or will soon improve unless there are really strong indications to the contrary. Hang on to see many an overly optimistic statement in the Federal budget next week …. and rightly so.

For more information on the study, see here.