Thursday, November 30, 2006

Gong gong & gong for ex-VC

Yesterday I went to a ceremony honouring La Trobe University’s former President and Vice-Chancellor Professor Michael Osborne. He was given (i) an honorary doctorate, (ii) had the former Institute for Advanced Studies renamed after him and (iii) was given a large painting.

I had mixed feelings at this ceremony. Anyone who works in a job for 16 years deserves some ceremony on exiting. But the circumstances surrounding Professor Osborne’s departure were ambiguous. And I am always wary of exaggerated sentimentality towards the powerful and famous.

Vice-Chancellors these days are paid the salaries of corporate executives, have chauffer-driven cars and luxury housing provided as well as unlimited expense accounts. Their travel entitlements tally hundreds of thousands of dollars annually. Given these inputs we have the right to expect a lot from them in terms of delivering quality academic outputs and promoting universities.

Professor Osborne has been a tireless critic of government red tape and regulation of the universities. He has also criticised the vocational emphasis of modern syllabi. At his speech yesterday he emphasis the phoniness of most university planning exercises. I agree with most of these points – they dominate modern academic life.

But I am not sure that Professor Osborne did as much as he could have in a constructive sense. Perhaps he could have done more to advance core academic values at La Trobe University. Certainly the physical facilities are woefully inadequate. But maybe I do not fully appreciate all of the financial and political constraints he faced.

It is a tough job that, if well done, calls for large rewards. We await Professor Osborne’s replacement.

Wednesday, November 29, 2006

A prosperous & strengthening Australian economy

The just released OECD Economic Outlook provides a positive assessment of the Australian economy. Interest rates should ease mid-2007 when inflation will fall. With recovery from the drought and given the effects of interest rate increases in stabilising demand growth in GDP, while slumping in 2007, will increase to 3.4% in 2008. Exports will grow faster than imports leading to a narrowing current account.

The Treasurer Peter Costello, yesterday, released the following statement:

‘The OECD’s latest Economic Outlook presents a positive outlook for the Australian economy, with economic growth over the next two years expected to accelerate.

The OECD forecasts Australia’s real GDP to grow by 2.6% in 2006, before picking up to 3.0% in 2007 and 3.4% in 2008. The OECD notes that GDP growth in 2007 will be ‘held back’ by the effect of the drought. The forecasts incorporate some rebalancing of growth with increasing export volumes offsetting an expected easing in domestic demand. In line with strengthening exports and strong foreign demand, the OECD expects the current account deficit to narrow.

The OECD expects Australia’s strong labour market performance to continue, with the unemployment rate forecast to remain well below the OECD average. Reflecting the impact of high energy prices and fruit prices, the OECD predicts that inflation will peak in 2006, before easing in 2007 to average around 2.8%, within the Reserve Bank’s inflation band.

In the OECD’s recent Economic Survey of the Australian Economy the OECD noted that Australia’s ‘recent macroeconomic performance continues to be impressive’ and that ‘living standards have steadily improved since the beginning of the 1990s and now surpass all G7 countries except the United States’.

In terms of economic activity across the OECD area more broadly, the Economic Outlook notes that while there will be some rebalancing, growth is expected to remain robust in the near-term, aided by falling oil prices, buoyant emerging economies and supportive financial conditions. After growing by 2.7% in 2005, growth across the OECD area is projected to increase to 3.2% in 2006 before easing to 2.5% in 2007. The positive outlook is expected to be supported by growth in the euro area, which is showing signs of an increasingly stable recovery, and growth in Japan where the economy’s expansion is set to continue in 2007, albeit at a slightly slower pace. Although growth in the US has slowed due to a weakening housing market, the OECD expects this will be temporary and predicts healthy growth will soon resume’.

Its an amazingly positive view that, if confirmed, almost guarantees John Howard's re-election at the next Federal poll.

Tuesday, November 28, 2006

Heidelberg Road - An early instance of road pricing in Australia

In trying to dig out some facts on how Melbourne developed its road system I came across Max Lay’s, Melbourne Miles, The Story of Melbourne’s Roads, Australian Scholarly Publishing 2003.

This is not my idea of light reading though Dr Lay obviously loves this stuff. My main finds in this book were parochial. I live north-east of Melbourne city in the suburb of Ivanhoe not far from the Yarra River which runs into the city of Melbourne.

In 1841 Melbourne had a total population of only about 4,500. But even by this time the population had spread well out into Melbourne’s hinterland in the direction of my home. Adjacent areas of Bulleen, Templestowe and the river flats in Heidelberg were surveyed in 1837 by Robert Hoddle – the Surveyor General who was responsible for Melbourne’s initial road layouts. The Heidelberg land was sold in 1838 and sheep stations were installed on it by year’s end. It was an important early area of rural settlement though these days it is almost entirely urbanised.

The first local road body in Melbourne was the Heidelberg Road Trust (HRT) established in 1840 to develop a rough track into the first arterial road leading out of Melbourne. To fund this HRT levied rates on land within 5 km of the road and could apply to levy tolls from users. In fact Heidelberg Road was the first major road out of Melbourne and the first road in Melbourne to levy tolls – they commenced in 1847. Tolls were common in England in the 1830s and had been levied in Sydney since 1811. In Victoria as a whole, from 1853-1856, road costs were half covered by tolls.

By 1854 there are measures of average weekly road usage along Heidelberg Rd – 341 two-wheeled carts, 165 four-wheeled carts and 50 bullock carts! Tolls varied from ¼ pence for passage of a pig or a sheep up to 18 pence for 2 or 4-wheel carts. Exemptions were offered to those attending funerals or for those going to or from church! Toll evasion was a major problem – unscrupulous travellers diverted around toll gates by travelling along footpaths – a practise soon stopped by law.

Heidelberg Road was also the first road in Melbourne used by locals for pleasant Sunday drives in their ‘carriages and gigs’. Heidelberg itself became of interest in the 1880s because the Heidelberg school of art founded itself there – Ill try to get around to discussing this in a future post but the link gives a good brief picture. Heidelberg Road was eventually sealed with bitumen in 1938 and declared a main road in 1960.

Monday, November 27, 2006

The truth demolishes illusion

The Cole Inquiry has completely cleared the Federal Government and its civil service (including DFAT) of any role in AWB deceptions. These groups were not corrupt and did not 'turn a blind eye' to the illegalities AWB was claimed to be engaged in.

A quick search around the blogs that have been severly critical of the government on this account this evening suggested that these commentators have been too busy to send their apologies to John Howard, his government and those affected civil servants. But maybe an apology is called for given the unwarranted accusations– see e.g. here and here and here.

So I’ll suggest the following apology for them. That tireless accuser, Kevin Rudd can use it too if he wants and doesn't even need to thank me.

The blogosphere (and Kevin Rudd) apologize to Australian Coalition politicians and Australian civil servants for the unwarranted accusation that they had prior knowledge of, and ‘turned a blind eye’ to, AWB’s attempts to secure wheat sales to Iraq by offering bribes to a corrupt regime. We are sad to say we were wrong, had no evidence to back up our claims and were really only clutching at straws because we dislike the Howard Government.

Maybe that apology won’t appeal too all those mentioned. There is, alternatively, the opportunity to attack the conclusions of the Cole Inquiry or its terms of reference – Cole however had the opportunity to expand or change these terms of reference but didn’t seek to do so. Or perhaps you could follow this unusually stupid line and claim that the whole Cole inquiry was a lie. Or perhaps critics could wait for evidence from executives within AWB who might seek to discredit members of the Government. But evidence from executives, who face potential criminal prosecution, suffers from obvious credibility problems - they might pursue the 'take you with us if we go down fellas' line.

I suggest that those disappointed with the prosaic truths yielded by the Cole inquiry move onto the next implausible, leftwing conspiracy story. It will keep them off the streets. Perhaps: The Australia Government had planned back into 2002 to join the US in invading Iraq. They discussed this at that time with our ambassador to the UN who then, in turn, discussed it with the AWB. But it wasn't until next year that this policy became public.

Hah-hah hah-hah hah-hah…..its a great yarn.


Sunday, November 26, 2006

Neighbors

We had our street-based annual Xmas Party today. Like many who live in the suburbs these days we don’t see that much of our neighbors. We are often busy motoring kids around, working nights and so on. To use a bit of jargon our urban lives contain rather little ‘unstructured time’.

Most people of my generation recognize the situation described and nostalgically look back to the better urban lives they claim prevailed in their youth. Most can recall neighbors who regularly just ‘called-in’ or who borrowed cups of sugar as well as gangs of kids who treated the gardens in a street as a common property resource where they played cricket or football. Friendships among kids led to friendships among parents as well.

This nostalgia is selective – in most respects we live much better off these days by being better supplied with public and private goods. But most of us agree there is some sort of loss of community spirit in modern suburbia.

Good community interactions do happen but seem less common and more formalised. Indeed I think that overall families are often more inward-looking. At one extreme a few people have told me they don’t want to get close to their neighbors lest they become a nuisance. More typically though there are standard fears of rejection, changed demographics and commercial intrusion into the management of our leisure. Houses can become capital assets not homes where families live - a view that is fostered by greater job market mobility and to less permanence in social interactions.

Today’s street party was good. It was a mild sunny Melbourne day and the tug-of-war that operated in my driveway (between odd and even house numbers) was won by the odd street numbers (my side) for the first time in several years. Cricket was played on the footpath and we all got to meet seldom-encountered neighbors. The good vibes were pervasive and made it clear that most people want a sense of community as well as a bit of fun. That this community is sometimes lacking suggests a sense of frustration about modern urban life.

Labor retains power in Victoria

The State Labor Government was yesterday returned to office in Victoria. The Liberal Nationals will hold about 32 seats in the new parliament while Labor will hold about 55. There are a few seats in doubts but the Liberal-Nationals seem likely to pick up between 3-7 seats with a two-party preferred swing to them of about 2%. The Liberal primary vote fell by half a point. Swings of 7-10% that the Liberals needed in the eastern metropolitan areas of Melbourne did not eventuate – the swings there were only 2-3%.

There is no gloss one can put on it from the viewpoint of the Liberals – it is a comprehensive defeat which, as numerous commentators pointed out, leaves them out of comfortable striking distance at Labor at the next election in 2010.

I thought Ted Baillieu put up a reasonable campaign given limited campaign funding – Labor had more to spend. But going into the campaign few Victorians knew of him. There isn’t that much community interest in state politics and new opposition leaders – Baillieu had only been opposition leader for 6 months - find it difficult to be visible.

Some of the Liberal campaign promises - the new dam, the desalination plant and the extension to the rail network - looked like policy-making on the run. There are good policy analysts on the Liberal team - Shadow Treasurer Robert Clark is one – but the Liberal campaign seemed mainly like a one-man show based on Ted. The Age showed its biases throughout the campaign – on the final Friday it showed front page a photo of Bracks eating with his family and Baillieu sitting alone in a cheap looking motel room (I cannot locate these pics). The postings in Age-sponsored blogs about Baillieu’s wealth reflected foolish preoccupation in the media generally – most of the rest of the media can spell better than Jonathon Green!

The Greens didn't make the expected big slash. They didn't either, in Victoria, at the previous Federal election. The Nationals on the other hand did well - gaining Mildura.

Barring a momentous scandal Labor should enjoy at least another 2 terms in office. The ‘jewel in the crown’ of the Liberal Party is a solidly Labor-voting state.

Friday, November 24, 2006

Transport Victoria

It interests me that Melbourne’s urban transport problems have become an election issue in the current Victorian State elections. Like Sydney, Melbourne’s population is expected to grow strongly over the next 20 years and, while the city is expecting much higher levels of car travel, and hence much higher congestion, the public transport system has already come under pressure as motorists switch to train and bus to avoid high petrol costs.

Thus both public and private transportation systems are now under pressure.

The centrepiece of Liberal Party policies is the proposal to introduce free bus travel for students but there are other policies as well – most notably to extend the rail network. The Labor Party also have a comprehensive policy focussed on bus rather than train travel. They are right in emphasising the better economics of buses over rail and their proposal to institute cross town bus services is an astute one. Interestingly, however the Public Transport Users Association rank the Liberals marginally ahead on public transport issues.

One can hardly expect the parties to promote logically consistent policies such as pricing congestion – the political-economy costs are too high. But the long-term need in Melbourne is to divert people from cars to using public transport. Building extra roads won’t help much with this. The key is to induce people to drive their cars less and to use public transport more. It seems to me that neither political grouping has embraced this problem adequately although both parties go some of the way. But maybe such solutions come after, rather than before, elections.

Thursday, November 23, 2006

Nice try Ted

Labor Premier Steve Bracks should be comfortably returned to office this Saturday in the Victorian State Elections although his Opposition challenger, Ted Baillieu, has performed well.

On primary votes an ACNeilson poll sees the Labor Party with a narrow lead on primary votes of 41% compared to the Opposition's 40%. The Greens should gain about 12% of the vote and, despite their selective deals with some Liberal candidates, Green preferences will favor Labor. This would lead to a two-party preferred vote of about 54% to Labor and 46% to the Opposition.

In the 2002 election Labor scored 62 of the 88 seats in the lower house. On current trends the swing against Labor at 4% or about half that needed to gain office. The Liberals and Nationals have improved their position but not by enough to regain power.

Update: One small, recent poll might make me eat my words. The McNair Gallup poll of 609 voters tips that the election might be close. A significant 46% said they would vote for the Liberals or Nationals and only 39% supported Labor. The poll showed, on a two-party preferred basis, Labor on 50.5% and the Liberal-National coalition on 49.5% - representing a 7% swing from Labor. But at the close of betting 25th November Centrebet were offering $1-06 for a $1 bet on a Labor victory and $7-00 for a Liberal-National Victory. The money is backing a near certain Labor win.

Wednesday, November 22, 2006

Robert Altman RIP

American film director Robert Altman has died. I reviewed his A Prairie Home Companion a few weeks back and have followed Altman's films for more than 30 years - a more complete review of some of his best films is here. Tributes to the cantankerous old man are here, here and here.

Altman is one of the greats of modern cinema. II'll miss those waits until his next movie is released. Who in America could ever replace him?

Tuesday, November 21, 2006

Huge copper discovery?

I've been inactive in terms of stock-market activity for months - but this story from this morning's SMH partly humoured, partly annoyed me. It spurred me to post at my lazy stockmarket blog.

Monday, November 20, 2006

Greed & avarice in the blogosphere

I am surprised at surging acceleration of my blog’s ‘popularity’ over the past 8 days – I have advanced to a mere 87,998th on Technorati’s ranking of visitation strength among the world’s 57 million blogs. Traffic to my site has doubled over its sustained levels of the past 6 months. Where’s the Bollinger?

Many of the visits are Google or other search engine activity-related activity – many visitors take one look and shoot through - reminds me of my teenage mating failures. I suspect my ranking in the way such searches are organized has gone up a notch. Whatever the reason it does not seem related to recent postings since many of the searches are to posts that are months old. I’d be interested if a knowledgeable reader-cum-techie had any explanation for sudden sustained increases in my traffic.

Can I turn my blog into a commercial venture? The answer is no – even if I could get my traffic up about 10,000X what it is now I have a lifetime aversion to advertising that would be difficult to shake. But many people are making money blogging according to The Economist this week.

ON HER blog, called Dooce, Heather Armstrong chronicles her life as a disenchanted Mormon in Salt Lake City, her former career as a high-flying web designer in Los Angeles, her pregnancy and postpartum depression, and so on. A year ago, her blog started generating enough advertising revenue to become the main source of income for her family. She is not alone. There are now just enough people like Ms Armstrong to signify a new trend: blogging as a small business.

Until recently, there were two main kinds of blogs. Most of the 57m blogs in existence are personal diaries that happen to be online. These blogs have tiny audiences and make no effort to sell advertising. Services such as Google's AdSense,
which places text advertisements on blogs and generates a few cents per mouse click, might bring in some spare change. But according to Pew, an American research organisation, only 7% of bloggers say their main motivation is to make money.

The second main kind of blogs are, in effect, niche magazines that choose to publish in a blog format. These blogs are explicitly run as businesses, with paid staff doing the writing and sales departments selling advertising. The best example is Gawker Media, a stable of blogs that includes Gawker, a New York gossip site, and Gizmodo, a blog devoted to gadgets. Collectively its 14 blogs get 60m page views a month.

Such blogs are “the most profitable media business today,” says Jason Calacanis, who runs Weblogs Inc, another stable of popular blogs that he sold to AOL, the web arm of Time Warner, a year ago. His sites, including Engadget, another gadget blog, are “an eight-figure-a-year business” with negligible distribution costs compared with the huge printing and shipping bills of traditional magazines.

Now, however, a third category is emerging: the mom-and-pop blog. “In the old days, we used to be called newsletter publishers,” says Om Malik, a technology writer who quit his job at Business 2.0 magazine in June to work full-time on his blog, GigaOm. He has hired two other writers, and his blog now attracts about 50,000 readers a day, generating “tens of thousands” in monthly revenues. Costs, including salaries, are around $20,000 a month.

One big reason why his blog works as a small business, says Mr Malik, is that an ecosystem of support is appearing. Like Ms Armstrong, he farms out advertising sales and administration to a firm called FM, launched last year by John Battelle, who once ran magazines such as Wired and the Industry Standard. In his old business of magazines, says Mr Battelle, the cost of acquiring an audience was “stupendous”—at Wired it was about $100 per subscriber. The cost of building a readership for a blog, by contrast, is nil. Once you have a lot of readers, however, the bandwidth costs become significant, and most medium-sized blogs cannot afford to hire the sales people needed to generate sufficient revenue. So FM's 15 sales people negotiate with advertisers on behalf of blogs they represent, keeping 40% of the resulting revenues.

For people like Ms Armstrong, who has about 1m visitors to her site a month, this makes blogging worthwhile. But it is not for everybody, she notes. She works about 7 hours a day on her site, and continues to work while on holiday. Mr Malik concurs. “It's not easy,” he says. Building his audience has “taken me five years, and a lot of sleepless nights.”

Dooce didn’t appeal to me at all. After reading it I didn’t feel too bad about posting on bird-watching. The Gawker blog seemed like a bland celebrity magazine. Maybe there is scope for the Great Harry Blog yet!

One local to make the transition to commerciality is Tim Dunlop’s Blogocracy which operates within News Ltd. It will be interesting to see how Tim’s left wing politics co-exist within the Murdoch press machine. Tim’s blog does, so far, seem independent.

Sunday, November 19, 2006

Melbourne's oedipal revolt

Freedom of speech and assembly are vital in a democracy and must be guaranteed even if they involve some irrationality and infringement of rights of non-participating citizens. But the scenes in Melbourne yesterday, engineered by a tiny group of militant thugs, in assaulting police and journalists and in destroying property, create the basis for non-reflective, repressive policies that threaten these basic rights of dissent. Thuggish actions are intrinsically unethical.

Those who carried out these attacks may be from dysfunctional families and revolting against mum or dad – there is no coherent message in their claims and, in the main, they just seem to want to let off steam. They are apparently 'rehearsing for a revolution' against capitalism’s tyrannies by voicing oedipal concerns – ‘mommy I won’t eat my broccoli’. In practical terms they comprise a disparate group of greens and the socialist left.

The protests were irrationally directed against the globalization summit. But greater international economic integration via globalization is the best chance the world has for prosperity and peace. Developing countries need developed country know-how and capital. Developed countries need the cheap labour and enormous markets offered by newly-emerging economies. The rapid economic development of the Asian region is proof of that and the best way of addressing Africa’s serious economic difficulties is by reducing trade barriers that restrict export of the agricultural products African countries produce. Even issues of climate change will mainly harm poor countries and can in part be addressed by negotiation with developed countries – these were precisely the concerns being discussed at yesterday’s G20 meet.

Furthermore, we are less likely to have global wars if most countries are prosperous – the problems that confront the world’s civilized nations from Islam stem basically from the fact that Islamic countries contain millions of miserable, resentful losers.

The morons at yesterday’s demonstration (look here to see if the term ‘moron’ is appropriate) are hardly likely to appreciate such arguments. As much as anything their unfocused efforts seemed to be mainly a Saturday afternoon’s bout of shouting and cop-bashing. Only 7 thugs were arrested yesterday – ‘for biting police’ amoong other things. Arresting them probably won’t change much – indeed these riffraff treat an arrest as a badge of honour. But those who assault anyone should be charged with assault and those who damage property should be provided with a comprehensive bill. The police in fact turned a blind eye to much of their violence (here, here) though, tonight on the TV news, it seems they are finally going after the worst of these thugs.

The protest flopped almost totally today. Even Labor Premier Steve Bracks came out and called them cowards. Their only minor victory was that The Age, as usual, gave these creeps front page coverage two days in a row.

Brain food

I have previously posted on the idea that religious need might stem from something hardwired into the human brain. In my view religion is a widely-practiced irrational blind faith that has some beneficial social outcomes (‘trust’ reduces transactions costs in a market economy) and also has outcomes beneficial for the individual (religion has evolutionary advantages in delivering endogenous opioids). My own rejection of religion is individually costly (in gross if not net terms) and socially counterproductive.

The August edition of Neuroscience Letters included work by Mario Beauregard and Vincent Paquette examining whether a ‘God Spot’ can be found in the brain. This created a big controversy in the neuroscientific literature. Dave Chavanne at Neuroeconomics reviews this research in a comprehensive way. He argues there is not much evidence of a particular spot but some evidence for a network of spots.

Overall Chavanne’s view is skeptical – religious experiences need to be separated out from other intense experiences and this is difficult. Maybe so but what would you expect – the key issue to me is that people get dragged into accepting goofy religions for reasons that make individual and social sense. The role of religion can therefore be objectively analyzed without getting bogged down in the myths.

Saturday, November 18, 2006

Drought

It is worthwhile to look at the Australian Bureau of Meterology website for its discussions of the current drought.

The map above shows rainfall for the 10 months to 30 October relative to historical experience. The dark red areas are areas where rainfall over this period is the lowest it has been in the period back to 1900, the fairly dark red areas show areas where rainfall falls in the lowest 5% of recorded levels over this period and the pink areas show areas falling into the lowest 10%. There is a serious drought situation over much of south-east Australia, the south-east corner of Queensland, the coastal strip in south western Western Australia and the north east part of Tasmania. Its a grim picture, particularly for Victoria.

There are other similar figures sjhowing the general drought picture for periods going back from 3 months to 3 years here.

The following shows the Bureau's estimated probabilities of rainfall exceeding median rainfall over the next 3 months. A figure less than 50% shows that there is more likely than not to be less than median rainfall.

For the most part these figures - based for the most part on trends in ocean temperatures - are not very encouraging. The worst drought affected parts of Queensland, NSW and Victoria have a relatively poor expectation of short-term drought relief.

Friday, November 17, 2006

What makes us fat?

The standard answer, consistent with the first law of thermodynamics, is that we intake too many calories as food or we expend insufficient calories because of our sedentary lifestyle. We either eat too much or are slobs. There’s evidence that these factors alone however cannot explain it all – see here. New Scientist sets out 10 possible reasons for the obesity epidemic - the following is a summary of their discussion.

1. Not enough sleep. Several studies suggest people who sleep less than 7 hours a night have a higher body mass index (BMI) than people who sleep more. Obesity impairs sleep, so perhaps people get fat first and sleep less afterwards but it is also known that sleep loss may cause weight gain. Sleep deprivation alters metabolism because leptin, the hormone that signals satiety, falls while ghrelin, which signals hunger, rises.

We really are sleeping less. In 1960 people in the US slept an average of 8.5 hours per night. A 2002 poll by the National Sleep Foundation suggests that the average has fallen to under 7 hours.

2. Climate control. Humans like to keep our core body temperatures pretty constant regardless of what's going on in the world. We do this by shivering or sweating. Keeping warm and staying cool take energy unless we are in the ‘thermoneutral zone’ of around 27 °C for a naked body - increasingly where we choose to live and work.

Ambient temperatures have changed in the past few decades. Between 1970 and 2000, the average British home warmed from a chilly 13 °C to 18 °C. In the US, the changes have been at the other end of the thermometer as the proportion of homes with air conditioning rose from 23 to 47% from 1978 to 1997. In the southern states - where obesity is highest - the houses with air con has shot up to 70% from 37% in 1978.

Studies of people in respiration chambers show that, in comfortable temperatures, we use less energy. In one study of women exposed to 27 °C versus 22 °C, it amounted to a difference of about a megajoule (239 kilocalories) a day. That's the amount of energy in 27 grams of body fat.
Sweating burns up energy, however, and there's good evidence that high temperatures reduce the amount people eat. Whether these factors significantly alter energy balance is not clear, but it's got to be worth investigating.

3. Less smoking. Smokers are thinner than the rest of us, and quitting packs on the pounds probably because nicotine is an appetite suppressant that ups your metabolic rate.
Between 1978 and 1990, the prevalence of obesity in the US increased by 9% . About a fifth of this increase can be attributed to people giving up smoking. That's not to say that quitting smoking is a threat to public health - far from it. Smoking is so dangerous that you'd have to gain about 45 kilograms to justify continuing.

4. Prenatal effects. Your chances of becoming fat may be set before you are even born. Children of obese mothers - especially those who develop gestational diabetes - are much more likely to become obese themselves. While this may be partly down to genetics, there is also some ‘intrauterine programming’.

Offspring of mice fed a high-fat diet during pregnancy are much more likely to become fat than the offspring of identical mice fed a normal diet. Intriguingly, the effect persists for two or three generations. Grandchildren of mice fed a high-fat diet grow up fat even if their own mother is fed normally - so your fate may have been sealed even before you were conceived.
At the other extreme, energy restriction in the womb can lead to obesity later in life. This is likely if there is a period of rapid catch-up growth in the first 2 years of life. In the prosperous west, that might seem of little relevance, yet in the US the incidence of low birth-weight is now at its highest level for 30 years.

5 Fat equals fecund. Heavier people have more children. One study suggests women of normal weight or below had 3.2 children, while overweight or obese women had 3.5 children.
Does having more children make women gain weight, or does being overweight cause women to have more children? Having lots of kids can increase the chances of getting fat - if for no other reason than poor sleep as above. But people's BMI before they become parents is associated with the number of children they eventually have.

Explanations vary. Extreme thinness impairs fertility. Extreme obesity does too, but the effect is probably stronger at the thin end. Also, obesity can lower socioeconomic status, which in turn is associated with having more children.

This is relevant to the epidemic because obesity is heritable - twin studies indicate it's about 65% genetic so a tendency for this to be associated with having a large family will cause the proportion of overweight people to go up.

6. Aging. Adults aged 40 to 79 are around 3X as likely to be obese as younger people. Non-white females fall at the plumper end of the spectrum: Mexican-American women are 30% more likely than white women to be obese, and black women have twice the risk. In the US, these groups account for an increasing percentage of the population. Between 1970 and 2000 the chunk of the US population aged 35 to 44 grew by 43%. The proportion of Hispanic-Americans also grew, from under 5 to 12.5% of the population, while the proportion of black Americans increased from 11 to 12.3%. These demographic shifts may account in part for the increased prevalence of obesity.

7. More drugs. In the 1970s new antipsychotic medications (neuroleptics) came on the market, and millions of people worldwide now take these drugs. Alongside their undoubted success in treating psychosis, neuroleptics have a drawback: users typically gain 4 kilograms in the first 10 weeks, and another 4 or 5 kg in the year that follows. Furthermore, anticonvulsants to treat epilepsy, antihypertensives for high blood pressure, protease inhibitors to treat HIV and diabetes medications, including insulin, are associated with weight gain. Beta blockers add 1.2 kg to people using them, and taking contraceptive pills for 2 years will add an extra 5 kg. Even antihistamines can fatten you.

8. Pollution. People are exposed to thousands of industrial chemicals: pesticides, dyes, flavorings, perfumes, plastics, resins and solvents, to name but a few. There is evidence low levels of these chemicals can lead to weight gain. Mice given small amounts of the dieldrin, more than doubled their body fat. Hexachlorobenzene, another pesticide, caused rats to gain significantly more than controls, despite eating half as much. Studies of humans exposed to PCBs by eating fish caught in North America's Great Lakes have found similar associations: the more the toxic load, the greater the body weight.

Some of these chemicals interfere with hormones such as oestrogen. Numerous animal and human studies suggest that when oestrogen is not functioning properly, adiposity increases. Our exposure to such chemicals is on the rise: one study found that the concentration of PBDE (polybrominated diphenyl ether, a now-banned fire retardant) in breast milk doubled every 5 years between 1972 and 1998.

9. Mature mums. Mothers are getting older. Mean age at first birth in the US has increased from 21.4 in 1970 to 24.9 in 2000. But having an older mother is an independent risk factor for obesity. The odds of a child being obese increase 14% for every 5 years of their mother's age.

Also first-born offspring have more fat than younger siblings. As family size decreases, firstborns account for a greater share of the population. In 1964, the British woman had 2.95 children; by 2005 that figure had fallen to 1.79. In the US in 1976, 9.6% of women in their 40s had had only one child; in 2004 it was 17.4%. This combination of older mothers and more single children could contribute to obesity.

10. Like marrying like. Just as people pair off according to looks, so they do for size. Lean people marry lean and fat marry fat. Hence there is a correlation between spouses of both BMI and ‘skinfold’ measures of flabbiness that can’t be accounted for by the fact that they live together.

On its own, this cannot account for increased obesity. But combined with the fact that obesity is partly genetic and that heavier people have more children - it amplifies the increase from other causes.

RIP Milton Friedman

I have just read on Andrew Leigh's blog of the death, at age 94, of Milton Friedman.

There are tributes here and here. I don't have much to add - I feel a lot of emotion regarding this remarkable man. Certainly Friedman was one of the great economic liberal thinkers of the twentieth century, Friedman changed the way the world of economics thought about capitalism. He was also a fine economic theorist - his work with Leonard Savage on 'The utility analysis of choices involving risk', for example, was a masterpiece that has become part of the language of modern economics. His major work however was in monetary economics and monetary history and, with his work on the consumption function, these studies drove a new area of inquiry in macroeconomics. Friedman was a consistent liberal - although identified with the conservative side of politics in opposing minimum wages, discretionary fiscal policies and so on, Friedman also opposed conscription for the military and supported the legalisation of what are illicit drugs.


Friedman was one of genuinely great thinkers of twentieth century economics - his passing is a major event and a source of sadness for all of us who have followed and been influenced by his thinking over the decades.

Thursday, November 16, 2006

Carcinogens in cars not for kids

I posted just a few days ago on the possibility of banning cigarette smoking in cars where children are present. It happened today in South Australia - a bill was introduced to fine those who smoke in cars with children.

Supporters of the bill claim smoking in a car is 20X as dangerous as smoking in a house and that an hour's time spent sitting in a smoke-filled car is equivalent to smoking 3 cigarettes.

These fines are a sound policy move. Market-based approaches to dealing with such external costs are impractical in this situation and protecting children from carcinogens and asthma-causing tars is as sensible as protecting them from harm generally. Adults might come to appreciate the spillover effects of smoking on children and change their behavior elsewhere as well - particularly if this is boosted by a 'moral suasion' campaign which emphasises the particular dangers of passive smoking for young children.

A faction-based theory of Labor sleaze

The Australian’s Mike Steketee supports my claim that it is the factional system in the Labor Party that hands out favors to career-length membership of strong factions that leads to the problems the state Labor Governments are having with sleaze.

Steketee claims that Milton Orkopoulos who was sacked last week as NSW minister for Aboriginal affairs after being charged with 30 offences related to child sex and drugs:

‘…is a product of the Labor Party's internal breeding program. Although he worked briefly in some menial and unskilled jobs after leaving university, most of his working life until he entered parliament in 1999 was spent as a political staff member for other Labor MPs in the Hunter Valley.

If they had come up through a trade or profession, the way Labor MPs used to, their character would have been tested and any flaws exposed in the light of the outside world. Labor's Borgia-like internal councils and processes do not lend themselves to the same kind of assessment.

Orkopoulos was catapulted into the ministry after only 6 years in parliament, not on the basis of experience or perceived sagacity but simply because of Labor's arcane
factional geometry. He was the candidate put forward by the "soft Left" sub-faction, for which he was the official numbers man.

With the Labor caucus factions and sub-factions dividing the spoils in a way that ensures they all receive representation and with the caucus formally endorsing the choices through a vote, Morris Iemma as Premier has limited say.

…….Another former minister says Orkopoulos was one of those in caucus who opposed every tough decision while supporting all those calculated to make
Labor's core supporters feel warm and cosy’.

Not too many Ben Chifley (ex railway engine driver) or John Curtin (long-term political activist but also newspaper editor for a decade) figures in today’s ALP although these were exceptional men. There are efficiency arguments for claiming that people need a specialised education to be successful politicians. But I am not sure the rabble running the State Labor parties have the sort of education we want.

Wednesday, November 15, 2006

Balance of power

The High Court’s decision yesterday to reject challenges by the states and unions to the Commonwealth’s workplace relations laws has momentous implications for Australian federalism. The Commonwealth has the legal power to override state industrial legislation.

But more than that the ruling gives the Commonwealth the right to regulate almost all aspects of corporations in our society including private schools, health care (public and private hospitals and many other service providers are becoming incorporated), the media, power, utilities (including water), occupational health/safety and the universities/tertiary colleges. Justice Kirby’s (informative) dissenting judgement is here.

Employers will increase their use of individual agreements under Work Choices now that legal uncertainty about the new laws has gone.

In an interesting comment Patrick Keyzer said the outcomre could be predicted as far back as 1920 when the High Court ruled that there were no law-making powers that could be reserved by the state governments.

The Prime Minister welcomed the outcome saying that Australia was a nation before it was a collection of states. He also stated that he wouldn’t move quickly to claim the new powers that had now become apparent. Some see the move however as a dangerous socialist intrusion, particularly when Labor regains Federal power. I have already voiced my concern with centralised high school educational curricula and the idea so I have some sympathy for such views. Could Labor move to reregulate the economy and the workplace? It probably could but, as the AFR editorial remarks today (subscription required), recent history suggests it probably will not.

Tony Abbott gets stuck into Coke

In view of his past 'weak-knees' this broadside from Health Minister Tony Abbott directed at the most sacred institution of Western capitalism has pleasantly shocked me.

It is an extraordinary reversal of his position that childhood obesity issues are a problem for parents not for food and drink manufactures.

Tuesday, November 14, 2006

Max Corden

The Economic Record is I suppose Australia's major academic economics outlet. I have subscribed to it since 1968 and have a reasonable collection of issues back to the 1940s. It has underperformed in recent years and has fallen down journal ranking lists. It can be boring. The current issue does have one paper that entertains. This is 'A Conversation with Max Corden' where the questioner/co-conversationalist is the ANU's William Coleman.

It is a fascinating account. Max Corden is a recognised figure in international economics and an obviously important Australian economist. He is a great conversationalist who is realistic rather than modest about his own abilities. He enjoys talking about economics, politics, the universities (this paper is a gem) and, indeed, the history of Melbourne. Max has the capacity to be both insightful and simple - his views are well-balanced. He is a very good writer and a wonderful teacher.

Max was a German who happened to be Jewish and who, fortunately, escaped Nazism and ended up settling in Australia. He initially studied at the University of Melbourne (Dr Jim Cairns taught him) and ended up doing a PhD with James Meade. If you read Meade's writings the influence on Max is obvious - his 1955 paper on population in the Economic Record (well worth reading) shows this clearly. In 1958 Max returned to Melbourne and then the ANU where he established his eminence in the area of trade and protection economics. In 1967 he left Australia to take up a position at Oxford where he wrote two of his major books. He returned to the ANU in 1976 and then went to Harvard in 1985. From there he spent time with the IMF and developed an increasing emphasis on macroeconomics. Max now resides at Melbourne University.

Max's observations on teaching and researching economics interest me as do the wide range of colleagues he has befriended. If you can access the December 2006 Economic Record, do yourself a favour and read this remarkable 'conversation'.

Withdrawing from Iraq

The Democrats are pushing for a definite withdrawal from Iraq within 4-6 months. Rabee argues, in a carefully written piece, that this is fine and will not leave the situation any worse than it was before the war. In particular he argues the Iraqis will not permit al-Qa’ida to operate once the US leaves.

The ‘neocons’ however argue that withdrawing abruptly will produce a bloodbath – and that al-Qa’ida, which is currently operating with Sunni insurgents, will continue to do so making Iraq a base for terrorist operations against the West. Quoting Robert Kagan and William Kristal:

‘Some seem to believe that things are already as bad as they can get in Iraq. This is wilful self-deception. Were the US to withdraw from Iraq prematurely, the sectarian violence we are seeing today would seem minor compared with the bloodshed of a genuine civil war. There would be no decent interval, no moment when the Iraqi people peacefully separated themselves into their respective sectarian quarters. They would battle for control of cities and towns and resources across most of the country.

The result would be real, bloody ethnic cleansing of the kind that the US twice intervened in the Balkans to prevent, of the kind we failed to prevent in Rwanda and of the kind we are shamefully failing to prevent in Sudan. The difference in Iraq would be that this time the US would be more directly responsible for bringing about this humanitarian nightmare’.
Kagan and Kristal suggest instead boosting US forces in Iraq by 50,000. Such a strategy would do what previous strategies have not done: provide the number of US forces necessary to achieve even minimal political objectives in Iraq. Such an effort would begin by increasing US force levels in Iraq by at least 50,000 to clear and hold Baghdad, without shifting troops from other contested areas of Iraq.

I hope those supporting withdrawal have a clearer view of the future than I do and that they understand this is not the occasion for academic anti-American parlor games. I can’t see how one can assess that things would be no worse than before the war. For one thing there is now no authoritarian dictator in charge and there is widespread civil strife with a host of recently established grudges and hatreds. On the other hand increasing US forces in Iraq by 50,000 does not seem plausible – more of the same does not seem a viable option given the difficulties experienced so far.

Monday, November 13, 2006

Traffic accident externalities

In preparing classes on traffic congestion externalities in recent years I have touched on some other important externalities associated with driving. One very expensive externality is provision of free parking which is equivalent to a subsidy of 22 cents per mile for a US motorist taking the average journey to work. Another important cost is The Accident Externality from Driving, nicely analyzed by Aaron Edlin and Pinar Karaca-Mandic (EM), for US drivers, in the October 2006 Journal of Political Economy.

When two cars crash, although only one party may be negligent in causing the accident, the accident would not have occurred if either driver had not traveled. In this latter sense therefore both cause the accident. Motorists however pay (on average) only the average cost of the accident not the marginal cost so there is a substantial auto accident externality when one drives. Motorists pay too little for driving and hence drive too far.

EM estimate auto accident externalities using panel data on state average insurance premiums and loss costs. These external costs are substantial in traffic dense states – not immediately obvious since one might expect accident rates to be more serious under non-congested conditions where speeds are higher. Well, that seems not to be so – in low traffic density states the accident externality is low.

In California an increase in traffic density due to a single extra driver raises total statewide insurance costs by $1725-$3239 depending on the car model. A Pigovian tax to internalize this externality would raise $66 billion annually in California - more than all state taxes combined. A national corrective tax would raise $220 billion.

While building more roads to reduce congestion would reduce the externality this proves to be cost ineffective because of the vast expenditures involved - even with moderate congestion the external costs are quite high. While various Pigovian tax bases might deal with the problem the most sensible base would be to tax car insurance premiums – this is heterogeneous reflecting the accident and skill experience of drivers. EM estimate the required Californian tax would be 200-400% of the premium which the authors recognize will not work politically. Their suggestion instead is to leave overall driving costs the same but to increase the marginal cost of driving with insurance premiums rising with distance traveled as ‘per-mile’ premiums. People would then have an incentive to cut their insurance costs by reducing their driving which is the outcome sought. Per-mile premiums are fair since they impose lower charges on those (like women) who drive less.

The proposal is discussed over at Marginal Revolution. One difficulty is that the chance of having an accident dependents on when you travel as well as how far you travel. If I drive across Melbourne at 3-00 am I will encounter few cars and the probability of an accident is low. The best solution then is to seek congestion pricing of travel in a city and to add to tolls a charge that reflects the contemporaneous accident externality. This modifies a position I have long held in an inessential way.

The important point is to note that such a charge would be quite high. To put things differently we are all making far too many journeys by car because we are paying far too little to travel.

Indigenous diabetes epidemic

In an earlier post I pointed out the problems indigenous Australians have with licit drugs like alcohol and tobacco. If aborigines do drink (and most don't) they tend to drink at destructive levels. The incidence of smoking among indigenous Australians is about twice that of others. Aboriginals also suffer an extremely high incidence – roughly twice again of Type 2 diabetes. This is directly related to obesity and indirectly related to excessive intake of carbohydrates in the form of sugary foods and alcohol as well as due to to lack of exercise. About 1 in 5 aboriginals suffer from this disease. Diabetes leads to higher probabilities of heart attack and stroke and can lead to catastrophic complications such as renal failure, blindness and limb amputation. In the alarmist headlines of this morning's press Type 2 diabetes is claimed to threaten the very survival of the aboriginal race.

High rates of cigarette smoking and excessive drinking compound the health risks caused by diabetes.

As Health Minister Tony Abbott points out Australia spends 18% more on aboriginal health than on the health of others but, on by any objective standard, their health is worse.

According to The Age on the indigenous diabetes issue:
‘The so-called ‘Cocacolanisation’ of traditional cultures, with communities adopting Western lifestyles and fast-food diets, has been blamed for a rapid rise in type 2 diabetes’……'

There are an estimated 350 million indigenous people worldwide. The diabetes epidemic is mirrored in Asia, the Pacific, Canada, New Zealand and North and South America. Up to half the adults on the Pacific island of Nauru and 45% of Sioux and Pima Indians in the US have type 2 diabetes. In Canada and the Torres Strait Islands, 30% cent of the indigenous populations have the disease. In the Torres Strait, children as young as six are being diagnosed and some are suffering heart attacks and renal failure in their early teens’.There does seem to be a genetic basis for obesity and hence a propensity to develop diabetes because people living in these cultures are likely to have ‘thrifty genes’.
To quote my earlier argument:
‘Thrifty genotypes were constellations of genetic factors that encourage the conversion of calories into body fat and which decreased the sensitivity of the body to insulin to ensure adequate blood glucose levels in the brain during famine. This mechanism was essential for people to survive 'bottleneck' periods of extreme stress and food scarcity. ‘Thrifty genes’ became essential for survival given the ebb and flow of food availability.Westernisation of such societies and their transition to stable, reliable food supplies means that the genes which once protected now condemn people to early deaths through obesity and diabetes illnesses. It is not what such people eat – those among them who have white ancestry, because of interbreeding of locals with randy early European settlers, have much lower incidence of such diseases though they share a common diet’.
A conference to keep track of indigenous diabetes issues is being held in Melbourne over the next few days. I’ll keep track of this if I can – there are a few preliminary papers on the topic here.

Sunday, November 12, 2006

Curious clearance rates

Auction clearance rates are commonly used to signal the state of real estate and other markets. High clearance rates are used to suggest that the market is strong and that prices are holding or increasing. Similarly properties that are ‘keenly sought’ are sold quickly while those not so desirable take longer to sell. Every week in the press these types of statements abound.

On the face of it that notion is inconsistent with what I understand about free markets and auctions. Vendors set a reserve price for properties and purchasers bid on the properties. If price exceeds the reserve price the property is sold and otherwise it is passed in. The clearance rate is the percentage of properties sold relative to the number offered for sale. Thus a clearance rate of 75% means ¾ of properties offered for sale were in fact sold.

If the clearance rate is high it can mean that buyers are offering prices that are high relative to those sought by the seller - so demand is strong - or it can mean that sellers are asking for relatively low prices because they see demand as weak. I don’t think you can infer much about the state of the market from clearance rates without reference to actual price trends since the clearance rate reflects thinking of both buyers and sellers.

It is true that keenly sought properties, like apartments with a great view, often tend to sell very quickly which does surprise me. Indeed there are sometimes reports of units selling in a few hours and of failed buyers being unable to secure a unit. My thoughts in this situation centre on why the vendor did not ask for more. Maybe the story is that, in markets with valuable assets, excess demands resolve quickly because buyers and sellers have increased desire and ability to settle. It is probably something very simple but a good explanation for why particularly desirable assets of any type should sell especially quickly does not occur to me.

Beauty & economics

A valuable posting from a new economics blog. I couldn't think of a more politically correct rationale that was less fantastic than that just offered so I'll just have to be implausible.

Vaccines for nicotine addiction & lung cancer

An interesting range of vaccines are being developed to deal with nicotine addiction. They prevent nicotine from activating pleasure centers in the brain.

If you are a smoker but don’t get to use this vaccine all is not lost. Scientists are also developing a vaccine for preventing smoking-induced lung cancer. So far experiments have been carried out on mice.

One wonders if the latter innovation will increase the demand for cigarettes by reducing the user costs of smoking. An earlier post that I made on the related issue of advertising cigarette cures suggests it might.

Passive smoking causes harm

Most people know that smoking is the largest preventable cause of death in the world today. Smoking is the only legal product which kills people when it is consumed as intended. A recent report claims smoking kills half the people who regularly smoke.

Defenders of smoking and opponents of smoking bans however claim that, if smokers internalize the risks of smoking, and are fully informed of its effects, that it unnecessary to target smoking with public policy. They argue the externalities caused by the effects of secondary smoke are so small that they can be ignored. The specific claim is that only 1% of the toxins in cigarette smoke are inhaled by passive smokers an amount so small that it is irrelevant.

But there are plenty of US studies that refute this optimistic picture. Indeed the earliest study (in 1981) of Japanese non-smoking women married to smokers found their lung cancer risks were raised 20-30% and their risk of heart disease by 23%. Recently, I found this interesting excerpt from a recent ABS publication. It further buries the myth that passive smoking is a beat-up by the moral police:

  • The breathing in of tobacco smoke by non-smokers can lead to harmful health effects in the unborn child, and middle ear infections and bronchitis, pneumonia, asthma and other chest conditions in children. It is also linked to sudden infant death syndrome (SIDS).
  • In adults, passive smoking can increase the risk of heart disease, lung cancer and other chronic lung diseases (Queensland Health 2006).
  • 37% of children aged 0-14 years live in households with one or more regular smokers, while 10% of children 0-14 years live in households where there is at least one regular smoker who smokes indoors.
The Queensland Health report cited is of interest. It states that passive smoking is a proven health hazard. Over 600 medical reports have been published linking passive smoking to diseases. In 1999-2001, in Queensland, exposure to passive smoking caused an estimated 21 deaths per year in children aged newborn to 4 years.

Libertarians who see smoking only as a ‘freedom of choice’ issue and who suppress the role of smoking’s health costs on both smokers and non-smokers alike are missing these points. There are significant external costs of smoking that need to be considered by those adopting the daft position of supporting smoking on the grounds that people have the right to kill themselves.

If you do choose to kill yourself you probably do have that right - though the death will inflict misery on your friends and family. But you definitely have no right to inflict smoke-induced health costs on co-workers, bar attendants and your children. As high taxes on cigarettes are regressive in their income-distributional impact, have low impacts on those hhighly addicted and because most people initiate smoking as immature youth, smoking bans as well as high cigarette taxes make good sense.

Non-smoking wives of smokers can of course walk-out of the marriage or force their spouse to smoke outside and should be encouraged to do so should they value their health.

But a good question is how to stop parents breathing carcinogens over 'their' children. Do they have the 'right' to do this in their 'own home' or their 'own car'? Smoking could be made illegal in cars with non-smoking passengers with hefty fines on those offending but in the home I can't think of a practical policy for limiting smoking that goes beyond providing information about its health consequences. The hope then is that idiot parents will act with consideration towards other non-smoking residents. Of course in schools children should be warned at a young age against inhaling secondary cigarette smoke, to encourage parents who must smoke to do so in a way that prevents secondary smoke from being inhaled by them. The suggestion of giving children the right to sue parents for health damages that can be attributed to passive smoking is an inviting one but there are manifest practical issues of establishing causation.

The main secondary consequence of being a child in a family that does smoke is that there is an increased probability of acquiring the smoking habit yourself.

Saturday, November 11, 2006

Aboriginal substance abuse

One of the most provocative papers at the recent APSAD (Australian Professional Society on Alcohol and Other Drugs) Conference was given by Don Weatherburn, director of the NSW Bureau of Crime Statistics and Research. In it he argued that the high arrest rates of Australian aboriginals were not due to their social disadvantage but primarily directly to substance abuse. Most aboriginal arrests are for drunkenness.

Weatherburn argued particularly for the need to control alcohol intake not by denying the blackfella access to booze but by encouraging local communities who sought to control supply. The paper was obviously influenced by Noel Pearson’s thinking on this issue – Pearson has written a broadly favourable response here.

A couple of points about substance abuse among aboriginals: While there are rising levels of illicit drug consumption (mainly marijuana but also heroin and amphetamines) there are very significant problems with licit drug abuse. Cigarette smoking and alcohol consumption are responsible for much higher mortality than among non-aboriginal populations. Many aboriginals, particularly women, do not drink at all but those who do drink tend to consume at hazardous levels. Rates of cigarette smoking among aboriginals are about twice those of non-aboriginals.

Volumetric tax reforms on alcohol that target alcohol content rather than product value are likely to fall heavily on poor aboriginals for whom cheap cask wine is a major source of alcohol. They may also create incentives to switch toward the use of more damaging illicit drug substitutes such as solvents. This limits the usefulness of general tax measures.

That alcohol is a neurotoxin and that it poses serious health risks might be a difficult message to sell to people who have lost their lands and have been left in an extremely difficult situation. But the effort needs to be made.

Health workers have often stated that cigarette smoking is a relatively minor concern in aboriginal communities given other pressing concerns but this isn’t true. Cigarettes are an expensive habit that impoverishes poor people on a daily basis. But more importantly it reduces life span and this is an important consideration given the persistent major health inequalities that exist between indigenous populations and the non-indigenous – aborigines born after 1996 are expected to live about 20 years less. Reducing smoking to even non-indigenous levels would make inroads into this disparity.

Some form of community-generated restrictions on consumption of licit drugs like nicotine and alcohol are one of the most direct ways of improving aboriginal health. They might have greater impact than targeting more nebulous issues of social disadvantage. Of course, in addition, the full range of legal and other policies for controlling consumption of illicit drugs makes sense. Its an issue I’ll try to look into further.

Friday, November 10, 2006

Cairns then home

This little critter (or more plausibly a distant relative) I encountered in a pocket of rainforest near Atherton in Queensland while travelling for the second time through some of the most interesting countryside in Australia. In a group of four we were mainly looking for birds in a group led by Ben Bluett of Cassowary Tours but we did see Eastern waterdragons and Spectacled flying fox - the latter being abundant around Cairns.

The interesting thing about this countryside around Cairns is the way it shifts from coastal rainforest with mangroves to savanna country in a matter of a few kilometres. The close proximity of such a variety of habitat types creates a rich biodiversity.

We saw 107 bird species over about 10 hours birding - actually I saw 108 since I got a final Jabiru in the wetland next to Cairns airport as I drove in - I left the tour (and 33 degree C temperatures) directly for a flight back to Melbourne (and 8 degrees C). Hot is better don't believe lies to the contrary!

Among the interesting bird species I saw were Squatter pigeon, Mountain thornbill, Chowchilla, Victoria's rifebird, Spotted catbird, Tooth-billed bowerbird, Bower's shrike-thrush and what what certain the sighting of the day, a pair of Painted snipe at Hasties Swamp. All in all it was a great final day in Cairns. The APSAD Conference I had attended was very useful and I had also managed to enjoy the local environment.

I could very easily settle and live in the Cairns area and one-day I might. The locals are easy going. There is certainly enough of a town to provide the personmade creature comfits and the natural landscapes (and waterscapes) are astoundingly diverse.

It was back to work today and my heart was not entirely in it.

Baillieu's share holdings

The most foolish campaign of the week is that of the Victorian Labor Party, actively fostered by its numerous leftwing supporters at The Age, to force Opposition Leader Ted Baillieu to sell off, into a blind trust, his $3.8 million worth of equity in companies such as as BHP-Billiton, News Corp and Telstra.

Ted's total holding is quite small and the impact that Victorian Government decisions could have on the value of his holdings in a firm such as BHP-Billiton - perhaps the world's biggest mining company - is negligible. The potential for conflict of interest is low if Ted observes current disclosure policy.

If he declares his holding, as he has, and does not trade his holding during his term in office that is more than enough. There is nothing wrong at all with a politician being economically successful and with holding equity in Australian or overseas firms. This is grubby populist politics that feeds on envy generated by even grubbier Laborite politicians.

Labor sleaze?

I assume we will wait in vain for left-leaning blogs to acknowledge the depth of the sleaze currently being revealed in Australia’s governing State Labor parties – the newsletter Crikey at least mentions the issues.

In Victoria ex Labor politicians and party hacks are in bed with the gambling companies that impose huge costs primarily on disadvantaged, working class Labor voters. Bracks’ Labor Government seem to have paid hundreds of millions of dollars in what can be at best be described as dubious PPP-arrangements – Kenneth Davison, hardly a supporter of the political right, has called for an inquiry into Victorian PPPs with the powers of a royal commission. It may only be economic illiteracy but there is a stench of something worse about some of these deals. Mr. Bracks has lost his youthful, honest-looking appeal and looks increasingly the greaser politician – ‘the well-drilled schtick’.

In NSW the Labor Premier Di-Lemma has sacked his Aboriginal Affairs Minister Milton Orkopoulos, and asked that he resign from parliament, over claims he sexually abused 2 underage boys and supplied them with drugs. Mr Orkopoulos has previously spoken out against child sexual abuse in aboriginal communities. Well said Orky, I think? The sacking story was significant enough to make the Washington Post and, in further claims, it is asserted that Di-Lemma knew about the allegations before they became public. NSW is currently the worst-performing regional economy in Australia and with only 20 weeks to go Di-Lemma must be worried – a party close to facing disintegration facing perhaps the most serious scandal in a decade.

Don’t underestimate the implications of this event – it is potentially the biggest scandal to hit the Labor Party since former ALP Opposition Leader Keith Wright was jailed for raping a young girl. I also recall that Senator Bob Collins faces charges in a Northern Territory Court shortly on child sex charges relating to a 12 year old boy. All the bad news seems to be hitting Labor simultaneously and, yes, I know, only charges have been made at this time, and all these Labor luminaries may be declared innocent.

Mr. Di-Lemma has had other recent problems with Minister Scully sacked last week for 'misleading' parliament twice while Minister Hickey revealed a series of speeding fines on his taxpayer funded car. And what should Di-Lemma do about backbencher Gibson who NSW rural fireboss Koperberg has accused of spreading dirt about him after having an affair with his wife – Gibson is an important ALP man who channels donations into the party machine from the pubs and who is widely feared in the party.

In WA Premier Carpenter has had to sack Minister Marlborough after setting up a secret phone line to take instructions from jailed ex Premier Labor crook Brian Burke. Burke is acting for property developers and carpenter could not guarantee that secret information had not been passed on to Bouke. The tapes recording the Marlborough- Bourke conversations are apparently explosive.

Finally, this morning the Australian this morning records that businessman Ken Talbot gave a $300,000 loan to senior Beattie Government cabinet minister, Gordon Nuttall. Small bikkies perhaps but the obvious question: Why not borrow from a bank and why are the parties shy about discussing precise terms of the loan and such mundane issues as repayment. I guess this scandal is at least well-timed given that the state election has just been held.

As Mark Latham noted, in his recent book, the Labor Party at all levels is increasingly the party of machine politics and party hacks. What has happened to honesty and honour in public life? And where is critical commentary from the left on this mess of issues?

Monday, November 06, 2006

Australian illicit drug consumption data

Much of the illicit drug consumption data that you read about in the national press is constructed by the University of New South Wales’ group NDARC (National Drug and Alcohol Research Centre). This is the sort of data you see in newspaper headlines about methamphetamines like ‘ice’ or the number of illicit drug users in Australia.

For the most part this data is derived from NDARC’s IDRS (Illicit Drug Reporting System) or EDRS (Ecstasy and Related Drugs System). This is a very expensive data collection operation costing millions of dollars and funded by the Australian Government Department of Health and Ageing.

It is poor quality data. In my view it is not only subject to error – it is positively misleading and is very likely to be a poor guide to drug policy.

It is very difficult to determine what this data actually represents but it probably does not represent illicit drug consumption in Australia despite the name of the session I attended on Sunday, at the current APSAD Conference, titled ‘Australian Drug Trends 2006’ which is based on the most recent compilation of annual reporting by NDARC.

This session was opened by a mild-mannered critic of the NDARC data, Professor Jake Najman, from the University of Queensland. Using reference household survey data Professor Najman found that illicit drug users in Australia have a lower unemployment rate than the general community and earn more. By way of contrast NDARC in surveying Australian drug users select a sample of 914 intravenous drug users from around Australia of whom 77% are unemployed, 51% had a prior prison history and 44% were in treatment for their addiction. This sample seems to have almost nothing in common with the patterns of illicit drug consumption as they actually are in Australia.

The sample NDARC looks at is a ‘sentinel group of users’ who distinguish themselves by requiring treatment of some sort, a group of key experts (such as nightclub workers close to the drug scene) and ‘indicator data’ from other sources that represent measures of harm and use. These disparate sources of data input are collated in some unspecified way (they are ‘triangulated’ to use the jargon of NDARC).

Professor Najman recommended that NDARC get more information about the characteristics of the users it interviews and to compare them with national drug survey estimates in order to make the estimates they do obtain more representative. Otherwise the NDARC data will substantially overstate the dimensions of illicit drug problems simply because it is based at the problem end of drug use markets – those unemployed, with gaol records or significant involvement with the criminal justice system. My own view is that, because the NDARC data is so unrepresentative, this is unlikely to yield significant improvements to try to relate it to broader population data. The issue of statistical error is paramount – this will mask any advantage gained from a mapping onto such unrepresentative users

A better suggestion would be for the Department of Health and Ageing to prod NDARC to hire some statisticians who know how to derive a sample that represents what it should be representing - the population of illicit drug users in Australia.

NDARC’s response to these sorts of criticisms is to say that they know the data is unrepresentative but representativeness is not the intention. What is sought is a quick measure of newly emerging trends. But you do want representativeness – how do you know that the biased sample selected by NDARC gives any useful information at all about emerging trends.

An interesting dimension of the NDARC approach is that national estimates are seemingly a simple arithmetic average of usage data in each state without any weighting to reflect the dominance of drug users in high population states such as NSW and Victoria. It is trivial to weight the various state measures by state population but even this is not done.

If workers in a non-health field produced this type of work they would be exposed to strong criticism. My advise to drug researchers concerned with illicit drug consumption data is to use the triennial National Health Survey data which is a mile ahead of NDARC’s work in terms of quality.

Cairns

Enjoyed an afternoon off from the Conference I am attending to look around Cairns. I haven’t been here for 5 years so was surprised at the extent to which the town has grown.

Yes, Cairns is acquiring some unpleasant touristy aspects – groups of grinning Japanese who laugh inanely at the same time, lots of crappy tourist shops selling nicnacks etc. But still one of the most pleasant places to reside in Australia – warm, tropical and very scenic. I walked the length of the Esplanade this afternoon. This is one of the great conservation zones in Australia with mud flats that head out to sea, at low tide, for hundreds of meters. The mudflats and the narrow band of hinterland are a fantastic place to look at native birds and migratory waders. Previously under threat from the pro-development zombies it is now hopefully secure.

In about four hours of wandering along the shoreline, and around clumps of mangrove, the bird species I saw were: Australian pelican, Eastern reef egret, Great egret, Intermediate egret, Straw necked ibis, White ibis, Royal spoonbill, Black-tailed godwit, Eastern curlew, Whimbrel, Common greenshank, Marsh sandpiper, Grey-tailed tattler, Red knot, Red-necked stint, Sharp-tailed sandpiper, Curlew sandpiper, Red-capped plover, Lesser sand plover, Masked lapwing, Silver gull, Whiskered tern, Spotted turtle dove, Rock dove, Peaceful dove, Bar-shouldered dove, Pied imperial pigeon, Rainbow lorikeet, Double-eyed fig-parrot, Crimson rosella, Rainbow bee-eater, Little friarbird, Noisy friarbird, Yellow honeyeater, Honeyeater species several (?), Willie wagtail, White-bellied cuckoo shrike, Figbird, White-breasted woodswallow, Magpie lark, Australian magpie, Spangled drongo, House sparrow, Mistletoe bird, Welcome swallow, Clamorous reed-warbler and Common myna. On the way home in the evening I found a Stone Curlew in the park outside the Cairns Casino which further blew me away.

And I didn’t start to keep a list until I realized I was seeing quite a lot. To celebrate I went to Barnacle Bills at 103 the Esplanade and devoured a dozen oysters Kilpatrick, a 1 kilogram mud crab in chili and ginger source, a passion fruit pavlova, 2 crown lagers and a few moderately reasonable glasses of South Australian sauvignon blanc. I would have had more but always watch my diet when I am traveling.

It is hard battling through life in the tropics particularly when you are making key scientific advances at an important international conference at the same time. The heat and the humidity just sap you. But someone has to do it and, yes, its my turn.

Saturday, November 04, 2006

Dope doctors head for the sunshine

Today off to the Australian Professional Society on Alcohol and Other Drugs (APSAD) Conference in Cairns from 5-8th November where I am presenting a paper on alcohol policies. This is mainly a medical conference with a small amount of economics thrown in - hence I am very much a consumer of information rather than a producer at such meetings.

Tomorrow I will go to NDARC’s National Drug Trends Conference and the Reckitt Benckiser Buprenorphine Symposium which run with the Conference.

Reckitt Benckiser make Suboxone which is a legal substitute for heroin and, if last year’s symposium is any guide, this meeting will involve a group of doctors and scientists telling us all how much better it is for junkies to be addicted to Suboxone than heroin. As Suboxone is often provided as a maintenance treatment for which demand is very inelastic it’s a great commercial proposition. I’ve always been tempted to ask the speakers whether they receive any financial rewards or other inducements to participate in this meeting but, at heart, I am a rather shy Victorian who hates to focus on issues of naked self-interest. But I do admit a twinge of curiosity and interest.

Posts for the few days might be sparse but I’ll certainly let my readers know if it is gloriously sunny in Cairns but cold and rainy with high winds in Melbourne.

Friday, November 03, 2006

Making the boom pay

I have been at the ‘Making the Boom Pay, Securing the Next Generation of Prosperity’, The Economic and Social Outlook Conference organized by the Melbourne Institute and The Australian newspaper. This is an agenda-setting conference rather than a meeting that presents detailed or theoretical economic research. The standard of the contributions varied but was generally very good. I will urge my fellow economists to take a more active interest in these meetings. They were additionally an excellent resource for postgraduate students seeking a research or thesis topic.

Access Economics’, Chris Richardson, set the scene with a valuable paper ‘Making the boom pay’ outlining the nature of the current boom – it is only a copy of his slides but valuable nonetheless. I particularly liked Secretary of The Treasury, Ken Henry’s Speech (available in full here) which deals with the same theme. Henry is a compassionate hard-head – I was very impressed. All the available papers (including mine) are here.

Kim Beazley and Tony Abbott both gave speeches which they read from notes (again, here). Abbot’s speech showed his intelligent, conservatism applied to the health area while Beazley was much more lively, interesting and thoughtful (rather than clich├ęd) during the question time that followed his presentation. The Bomber showed he is a skilled politician and cracked a few good jokes!

Julia Gillard impressed me greatly with a speech on health reform that emphasized a case for preventative care that I strongly agree with (unfortunately not available). I was also very impressed with journalist Paul Kelly’s remarks (unavailable but presumably forthcoming in The Australian soon).

I am still digesting the output of this Conference but the following things stuck in my head. Is the Government’s mix of expansionary fiscal policy and increasingly tight monetary policy sensible? Should we go on a consumption spree when we know that (if not when) the boom will end? When will the boom end and how might it end – this is equivalent to asking when will the Chinese expansion take a dive? But the main impression was just the drama of the ‘boom’ event – it has proved already to be a turning point in the development of contemporary Australia.

I counted only one academic based in the University of Melbourne, Department of Economics at this conference. I asked someone about this and the respondent replied that Department members were not interested in economies! This was a sarcastic response but I suspect there is some truth in it - the Department does have a theoretical orientation. I was the only person from my own Department so I should be careful not to be critical. But it does seem unfortunate to me that economists generally don’t take the opportunity to interact with policy-makers and journalists. It will improve our focus on what are the keys issues and provides a mine of researchable topics.

Wednesday, November 01, 2006

Birdwatching at Puckapunyal

This afternoon I headed off to the Australian Army base at Puckapunyal in central Victoria. I met up with biologist Dr Bob Anderson to look at the reforested box ironbark forests in this 400 square kilometre military area. Its an interesting and active army base with firearms, tank and other military training.

I wasn't there particularly to look at the military side but did notice the extent to which the Australian Army outsources various activities in such facilities to private firms such as Transfield and Spotless. I wonder if it would be feasible to get one of my business students to study the efficiencies of outsourcing in this context!

My main objective was to look at flora and fauna and particularly to go birdwatching. We had a bit of luck during the afternoon spotting a trio of Powerful owls (Ninox strenua), comprising 1 female and 2 juveniles, in a redbox. Later in the afternoon we pursued, without success, a single Barking owl (Ninox connivens) near a lakeside close to the entrance. Other good birds seen during the afternoon were Painted button quail (Turix varia) whose oval signatures in the leaf litter appeared everywhere and White-bellied cuckoo shrike (Coracina papuensis) which are uncommon this far south in Australia.

I noticed several Grey kangeroos taking a dip in dams around the site which I have not seen before. We also found a Echidna, a very large Rd-belly black snake in a dry creek bed and plenty of Black wallabies and Emus in the grassy areas.

This is some of the best woodland country I have seen in Victoria and it is highly commendable that the Australian army have done such a great job of maintaining and enriching biodiversity values on the site. Unfortunately it is not open to the general public.

It was a memorable afternoon. In the New Year I'll try again for a Barking Owl.