Culture and language as public goods

Posted on May 30, 2020 by Nicholas Gruen

Herewith a weekend half-hour read. Comments and corrections appreciated.

A culture survives principally, I think, by the power of its institutions to bind and loose men in the conduct of their affairs with reasons that sink so deep into the self that they become commonly and implicitly understood – with that understanding of which explicit belief and precise knowledge of externals would show outwardly like the tip of an iceberg.
Philip Rieff, 1966. The Triumph of the Therapeutic.1

Did any social scientist know that roughly “half of all species on earth are parasitic on the other half”
Jeroen Bruggeman, Review of Robert Trivers’ Deceit and Self‐Deception.2

I Introduction 

It’s uncontroversial that culture is a public good. What other kind of good would it be? It were mostly ignored in contemporary economics until, noticed by its absence it was rebranded ‘social capital’. Language too is a public good. The computer age has given us an excellent metaphor for them. They constitute the operating system for our lives together. But they appear very rarely in economics textbooks as public goods. They don’t really fit the economist’s way of thinking about public goods. 

Economists think of public goods is posing a particular kind of social dilemma which has since been refined as ‘the free-rider problem’. David Hume takes up the story in 1739:

Two neighbours may agree to drain a meadow, which they possess in common; because it is easy for them to know each others mind; and each must perceive, that the immediate consequence of his failing in his part, is, the abandoning the whole project. But it is very difficult, and indeed impossible, that a thousand persons should agree in any such action; it being difficult for them to concert so complicated a design, and still more difficult for them to execute it; while each seeks a pretext to free himself of the trouble and expence, and would lay the whole burden on others. Political society easily remedies both these inconveniences. … Thus bridges are built; harbours opened; ramparts raised; canals formed; fleets equipped; and armies disciplined every where, by the care of government.

This received its neoclassical formalisation in 1954 from from Paul Samuelson and, where he defined public goods as ‘collectively consumed’ the contemporary treatment of public goods is well summarised in the canonical quadrant first presented by Richard Musgrave in 1973.3  Continue reading →

  1. Philip Rieff, 1966. The Triumph of the Theraputic, New York, pp. 2-3. ↩
  2. Sociological Forum, Volume 30, Issue1, March 2015, pages 243-248. ↩
  3. If you’re interested in the development of the concept of public goods, Maxime Desmarais-Tremblay has written some excellent recent articles on it. ↩
Posted in Cultural Critique, Economics and public policy, Public and Private Goods | 5 Comments

How can the University of Queensland recover from the Drew Pavlou affair?

Posted on May 30, 2020 by Paul Frijters

This Will Reflect Well On Me,' Says Cartoon Villain Peter Hoj ...The management of the University of Queensland, and in particular Peter Hoj and Peter Varghese, stand condemned today by the international media, by both Labor and Liberal politicians, by both left-wing and right-wing Australians, by its own students, and by the powerful pro-American lobby. That management unleashed a shit-storm on itself today by its decision (via a kangaroo court) to suspend Drew Pavlou for 2 years and thus oust him as student representative on the UQ Senate, as well as make it impossible for him to finish his studies.

I have talked about the intricacies and wider politics of this case before, and in a recent comment I analysed the particulars of the shit-storm and how UQ management has effectively already admitted defeat. They’ll back-track on Drew.

Here I want to talk about how the University of Queensland, where I worked for more than 6 years and where I still have friends and colleagues, can truly recover from its current shame. Let’s first scope the full extent of the scandal and then the two paths the university can now take: a cosmetic make-over that will leave the corrupted structures in place and will hence just mean another scandal in 5 to 10 years time, or a radical clean-up that would restore UQ as a place of learning and debate. Obviously the cosmetic make-over is the far more likely course of action, but the radical clean-up is the better course of action in the longer run, so I want to sketch that one too.

Let’s first think about the scope of the scandal. Being condemned by the whole of the Western world, exposed as a place that has totally lost its values and its way, is no small matter.

The current condemnation is much bigger than the one around the corruption scandal with the previous vice-chancellor, Greenfield, who secured his daughter an undeserved place in the medical school. That scandal opened the way for Peter Hoj who promised to clean the place up but, instead, joined in with all the shenanigans. Continue reading →

Posted in Cultural Critique, Democracy, Humour, Journalism, Politics - national, Review, Science, Social, Social Policy | 29 Comments

The Evaluator General

Posted on May 29, 2020 by Nicholas Gruen

I recently sent a couple of emails explaining the Evaluator General and also did an extended interview explaining the ideas in the context of Matt Jones’ Public Policy class at Melbourne Uni. The first email below is the one I sent him proposing that we explain the Evaluator General in terms of the course of my own thinking in developing it.

oooOOOooo

Given the subtlety of the idea of the Evaluator General – most people think of it as one idea when it’s several – one way to understand it is to go through the way in which it was the product of my own history in thinking about certain problems.

Steven Jobs talked about how life is like joining the dots backwards to go forwards and the Evaluator General is a response to these points.

  • In 1983 working for John Button as Industry Minister encountering of the Toyota production system and its extraordinary radicalism – the kind of thing for which (for once) it’s not an exaggeration to describe as a paradigm shift). For some of the flavour of this check out the productivity chart below and this video by an American Toyota engineer.
  • Narrated back to myself through a few decades of thinking, I see this as standing for
    • The importance of building accountability from the ground up from the perspective of those who are being held accountable, not those holding them to account.
    • The gravitational force of the latter (wrong) way of doing it being almost of black hole magnitude – we are close to the event horizon. Warren Buffett has a term for it from his point of view which is “the institutional imperative”. He’s talking about the institutional imperative to grow – to aggrandise the business and its managers, rather than to husband capital to the advantage of its owner. In government the institutional imperatives are different – but they contain an institutional imperative common to business and government which is the institutional imperatives of bureaucracy. This is summarised in my little aphorism “if truth is the first casualty of war, candour is the first casualty of bureaucracies”.
    • The resulting tendency for systems of accountability to become systems of accountability theatre. In that regard, this essay is intended as a practical ‘prequel’ to the idea of the Evaluator General with this speech to the Australian Evaluation Society being the philosophical prequel though reading that one is only optional :)
    • Be that as it may, there are some miraculous cases where the institutional imperative has been avoided (as Warren Buffett has avoided it). They include
      • Open-source software;
      • The Toyota production system

Not coincidentally, in both the profound, subtle and pervasive problem of truth-telling from the bottom to the top of the hierarchy appears to have been solved.

Continue reading →

Posted in Economics and public policy, Ethics, Isegoria | 1 Comment

Covid strategies for Australia: herd immunity or quarantine land?

Posted on May 28, 2020 by Paul Frijters

Let’s talk about some of the covid policy options facing Australia in the coming months and years. It seems to me we can either grasp the nettle and accept we will get a wave of highly visible covid-19 deaths before life returns to normal, or we can try and defend ourselves against any further wave and infections by quarantine rules, State border controls, immunity passports, tracer apps, and the like. The main cost of the latter is in the total collapse of several industries, as well as longer-term but less visible loss of life. The main political cost of the former is admitting we f*cked up first time round and needlessly damaged the economy and society for no benefit.

Let’s talk about the quarantine path first.

Stuck In Quarantine – Zombie Guide Magazine

If one only wanted to prevent a up flare of covid cases in Australia one should continue the current restrictions.

One would have strong quarantine rules regarding visitors from any country with a high number of active cases. Even with countries with few identified active cases, one would want a strict quarantine policy: there is a 2-week delay between the unseen spread of the virus via asymptomatic cases and visible deaths, so you don’t know whether a country is experiencing an unseen flare up of the virus. Hence even visitors from “clean” countries pose a risk. This means one should not expect too much of the idea of some large group of countries that declare themselves a covid-free zone and have free travel between them. One little wave of infections in one of them and such a system would already break down.

The economic costs of quarantine rules is that it kills off some of the tourism, a lot of the international student business, quite a bit of temporary migration, and most business travel. This is exactly why in the UK over 70 big travel operators and hotel businesses have called on the UK government to ditch its plans for quarantine rules. Those businesses are very afraid that the summer holiday season (mid June to August), in which they make a lot of their yearly revenue, is lost, so they are making a huge noise right now. It would mean the end of their business and hence the jobs they provide if the quarantine rules are kept in place. They claim to be close to 10% of the UK economy.

If you count all the ancillary business associated with tourism and business travel, like catering, this industry is somewhat similar in size in Australia. So quarantine rules come with a big economic impact, which is why right now the Gold Coast operators are strongly lobbying the Queensland government against border controls and quarantine rules. They claim 40,000 jobs are in danger. And the Gold Coast is just one small part of the Australian tourism and business travel industry.

And don’t forget, jobs and the economy are about lives. That’s why a job is called someone’s “livelihood”. Jobs support individuals and their families. As I have calculated before, a million jobs lost for just one year equates to over 100,000 life-years lost in terms of direct misery to the unemployed, and another couple of hundred thousand life-years via reduced public services and (health) consumption for the whole community.

Now, of course, things are not quite as bleak as saying quarantining arrivals from outside of Australia kills all tourism and hospitality: Continue reading →

Posted in Coronavirus crisis, Death and taxes, Democracy, Economics and public policy, Education, Employment, Health, History, Journalism, Libertarian Musings, Life, Politics - international, Politics - national | 14 Comments

Against decentralising: why crowded is good

Posted on May 20, 2020 by David Walker

Note: This post was original published on 6 July 2015; I’ve updated it several times because both parties keep revisiting a decentralisation agenda.

Once again we’re hearing the argument that Australia would be a much better place if only we could actively “decentralise” population. The argument is we should encourage people out of our big cities – notably Sydney and Melbourne – and into smaller cities, like Wollongong and Ballarat. One recent claim comes from the Liberal Party’s Tim Smith, the member for Kew and Victorian Shadow Parliamentary Secretary to the Leader (Population Policy and Housing Affordability). In an article in The Australian, he argues:

Opposition Leader Matthew Guy’s vision is to decentralise Victoria and develop its regional cities, to take the pressure off Melbourne and grow country Victoria.

The state desperately needs a government that is committed to decreasing the percentage of newcomers who make their home in Melbourne. Our state needs a government that will ­engage in a mature debate about how to incentivise newcomers to move to country Victoria, or give them the confidence that if they move to a regional centre they can commute to Melbourne with reliability and ease …

… An effective decentralisation agenda is key to improving capital city liveability and the economic wellbeing of the regions.

In pursuit of this, various governments over the years have tried to move departments out to regional cities. Smith implies that Labor doesn’t want decentralisation, but the evidence suggests Labor is just as keen on the idea as Smith is. The Victorian government under John Brumby even ran an advertising campaign in Melbourne encouraging people to move out and resettle in regional Victoria.

This sort of argument has often been based on the idea that these regional areas have lots of existing infrastructure that we can exploit at little cost. It has been encouraged by talk of the “Death of Distance” and “The Flat World” – the idea that globalisation and modern telecommunications are making location obsolete, so you might as well live in the countryside. It’s particularly popular wherever there are plenty of marginal regional electorates.

And this argument seem to be spreading. So here’s the case against spending government resources to actively encourage decentralisation.

Continue reading →

Posted in Economics and public policy, Innovation, Politics - national | 49 Comments

The corona cost-benefit analyses of Richard Holden, Bruce Preston and Neil Bailey: ooops!

Posted on May 18, 2020 by Paul Frijters

The economic and social damage of lock downs in Australia is starting to get noticed so much that even academic economists are paying attention. After months of resisting actual data, some Australian economists who previously refused to even contemplate the idea that an economic collapse would also cost lives are finally trying their hands at data and have produced cost-benefit analyses for the corona crisis. Unfortunately, it is clearly novel territory for them and they have made basic, yet grave mistakes. Let me dissect their writings.

First off, Richard Holden and Bruce Preston, previously active in that “infamous letter by economists” which Sinclair Davidson rightfully has termed bizarre, tried their hands at a cost-benefit calculation in the Conversation. Their calculation is of great simplicity: they say the economic collapse will cost Australia at least 180 billion AUS and then they look for how much the lives saved by the lock downs would be worth. To do that they use the “statistical value of life” estimate used in some government calculations, ie 5 million dollars. I have used the same number in some of my writings here on Troppo, so though I would argue it is not the most appropriate number, it at least is defensible to say that one thinks it will eventually cost one whole life if GDP is reduced by 5 million.

Then they claim 1% of Australia would have died without the lockdowns, which is around 220,000 Australians. They multiply that 220,000 by 5 million and say the lock downs saved Australia 1.1 trillion dollars. That “estimated benefit” is bigger than their claimed “cost” so they conclude the lock downs are worth it.

Mountain Out of Molehill Images, Stock Photos & Vectors | Shutterstock

They make three big mistakes. One is a rookie mistake, two are less serious but still bad mistakes.

The rookie mistake is that they use the statistical value of life for someone who dies of corona. Yet, the statistical value of life holds for a whole life, ie 80 years of life. By contrast, the corona victims would have expected to live only 3-5 years more. So one should only count 5% of the 5 million as the appropriate value of those years, ie 4 years out of the 80 in a full life. That, after all, is how the statistical value of life estimates are used in government allocation decisions. Holden and Preston seem just not to know this, thus confusing their molehill for a mountain. Using the statistical value of life properly would get them a “saving” of only 45 billion Australian dollars of the lock downs, which is 4 times less than they themselves claim is the economic loss.

So if Richard Holden and Bruce Preston are scientifically honest they should immediately update their own figures and own up to the fact that using their own methodology they themselves now think the economic collapse costs at least 4 times more than the lock downs saved.

They make 2 more mistakes, less serious, but still grave. Continue reading →

Posted in Uncategorized | 66 Comments

On Corona/Covid-19, herd immunity and WELLBY tradeoffs: key predictions and numbers

Posted on May 14, 2020 by Paul Frijters

[in progress: will add more references, links and latest numbers when I get the time]

In this note, I want to deal with three related issues: the main lessons on the corona virus from the reported deaths across countries with different policies; the feasibility of different “end games” relevant to this pandemic, including vaccines and herd immunity; and some key WELLBY numbers relating to loneliness, unemployment, and how government expenditures link to lives saved. Armed with these numbers you can generate your own estimates for how various policy scenarios change the numbers of happy lives lived by the population.

The take-away message is that I think most European countries will end up with a “Sweden, perhaps on steroids” strategy, openly adopt a not-much-to-truly-fear narrative, and that the key wellbeing consideration for the next two years will be jobs and social closeness. We will then also hopefully acknowledge as Westerners what the awful and totally predictable costs have been in the rest of the world of our attitudes and policies in dealing with this virus.

The dangers of the corona virus: on New York, Sweden, South Korea, and herd immunity.

In February / March, when many key policy decisions had to be made, it was still possible for a reasonable person to think more than 1% of the whole world would die if one didn’t lock down the majority of the population. With the benefit of all the research and information of the last 2 months, we now know much better what the risks are and what matters in terms of policies. The key information that is new is how many victims the corona virus has made in different countries following different strategies and with different circumstances. Though there are huge statistical issues with this data, including the fact that some countries are more strict than others when counting a death as covid related, and the large differences in just what part of the population was exposed, we can nevertheless turn to this data to help see the main contours. Continue reading →

Posted in Coronavirus crisis, Cultural Critique, Death and taxes, Democracy, Economics and public policy, Education, Employment, Health, IT and Internet, Libertarian Musings, Life, Politics - international, Politics - national, Science, Social, Social Policy, Society | 51 Comments