Sunday, September 30, 2007

Optus makes me out of touch

I've been lying low for the past week as I have been travelling and trying to catch up with that thing I call 'work' which pays me an income.

To complicate things, with respect to my blogging, my Optus supplied home broadband service has been 'slowed' because I have exceeded my monthly allowance of 12GB. On checking I find I am paying considerably more for this than for other newer Optus deals which provide a larger 15GB allowance for less. I will have to deal with this.

I had originally switched from Telstra to Optus because Telstra didn't know that I could be given a cable connection - their automated service determining accessibility said no cable connection was possible. Yes, and of course Telstra provided expensive and terrible service.

The change to Optus was a switch from one expensive, lousy monopolist to another. When the 12GB limit is hit with the Optus plan the service is supposed to 'slow' to that of a dialup service. My distant memories of dialup however are that it was much faster than the slowed Optus service - today it took up to 5 minutes to download my home page.

In my view the option to pay more to get increased capacity is better than the 'slow' option.

It is frustrating. When you seek to make price comparisons across plans with Optus you are not provided with information about your own service relative to others. Indeed you are asked to upgrade without being told precisely what you will get. When you call their service personnel you are deliberately deceived - I assume the unfortunate call centre staff are told to pour smoke on situations of customer dissatisfaction.

The economic device Optus is relying on (as with the banks) is lock-in. It is very inconvenient to reconfigure an email address (or automatic bill paying facilities) so there is the propensity to plod on with a poor, expensive service.

If readers know of good broadband cable deals out there I'd be interested.

Friday, September 28, 2007

Do women work harder?

At the recent ACE meetings I attended, a prominent economist (Christopher Pissarides) asserted in one session that he had found that in developed countries (other than Denmark) women work harder in total (in the paid workforce and in the home) than men. It was a claim that interested me so I have been checking it out. At least one prominent NBER study refutes it overall. There are in fact quite a few countries where men work harder – notably the US – where everyone tends to work quite hard. Women do more work in the home but men make up for it in the paid workforce.

Women might feel they have less free time but when they are not working they tend to sleep whereas men watch TV or do other things. This may change the perception that women have less free time.

An interesting observation is that the richer the country the smaller the gap between hours worked by men and women.

Mark Richardson at Oz Conservative cites the Australian evidence – except for women with children aged less than 5 years men work harder. The attached comments to Mark's post contains data sources.

Thursday, September 27, 2007

The Labor Party & child-sex

Labor’s ex-NSW Aboriginal affairs minister Milton Orkopoulos has denied committing child sex offenses. He is facing 37 charges of child sex and of supplying drugs to children for sex. Premier Morris Lemma denies knowing anything in advance about these alleged offenses which justified his retention as a Minister until he was formally charged though his good friend David Tierney apparently knew as did others.

Labor’s ex-Federal Minister for Aboriginal Affairs has now died just a few days before he faced 21 charges all relating to child sex offences. NT police allegedly found child porn on his computer’s hard drive in July 2004 and several aboriginal kids record sexual attacks. Police believe that the car crash where he injured himself was a suicide attempt and Paul Toohey in The Bulletin this week (subscription required) states that he was believed to have attempted suicide in hospital soon afterwards. Collins is claimed to have died because of cancer but he weighed over 200 km at death – he didn’t 'fade away'. Pity - he should have faced his accusers.

Collins was a smart man – a Minister in both Hawke and Keating Governments. A leading light in the ALP intelligensia. According to Toohey he was also a very nasty man. Abusing kids - aboriginal or other - is real nasty.

Labor’s ex speaker in Queensland Bill D’Arcy was charged with 41 child sex crimes in January 2000. He is now serving a 10 year prison term – pretty light given the scale of the devastation he unleashed and the lives he ruined.

And of course former Queensland Labor Leader (and Baptist lay-minister!) Keith Wright was jailed for eight years in 1993 for indecently dealing with and raping and molesting underage girls while a couple of years back former Labor Party official Neville Hilton ran a child brothel in Albion Park NSW and was sentenced to 4 years jail. As Tim Blair remarked - at least Hilton was doing his bit for youth unemployment. No, that is a cheap quip. I cannot imagine anything more despicable than selling young kids into prostitution.

I don't see any left-wing blogs discussing these issues or their persistent tendency to recur within the ALP's highest ranks. The Labor Party needs to look at itself and ask why the comradely culture of union hacks, hypocrites and bleeding-heart liars produces these outcomes.

Update: Phillip Adams farewells his old mate Collins here. I wonder how broadminded Phillip would have reacted if the claims of child- sex abuse had been directed to someone on the other side of politics. Sympathy for the alleged victims?

Investing to enhance happiness by constraining demands

There were some good papers at the Australian Conference of Economists that I have just returned from – I enjoyed a session on water resource economics - but overall my impression of the Conference was one of slight disappointment. The venue in Hobart was great – the seafood restaurants were outstanding and the local economics group displayed great hospitality – but some of the papers presented didn’t move me.

An exception was a paper in one of the final sessions by Professor Yew-Kwang Ng of Monash University on ‘happiness’ research. In my view Kwang is one of the most innovative and interesting contemporary Australian economists. He is a profoundly original thinker and a fun person to discuss economics with. I have been a friend of Kwang for close to 20 years.

Kwang started researching ideas on happiness in the 1970s before the field became main-stream and continues to contribute in a major way. The present paper pursued a ruthlessly logical line of seeking to maximise happiness (not income) in contemporary societies when the social value of marginal consumption was low. Pursuing this approach one might, for example, want to spend a great deal on protecting workers from risk, or even from the threat of unemployment, following a tariff cut. The idea is always that lost consumption as a consequence might not have a lot of social value given positional good issues and environmental externalities. It is a boldly provocative line of argument that has the advantage of explaining why governments act as they do.

The exact content of Kwang’s address was, as usual, interesting but, as he was talking, as is so often the case when a good paper is being presented, a number of ideas formed in my head that were only distantly related to his presentation. In particular I keep returning to the question of what we can learn from this happiness research for the personal issues we face in making our own individual lives happier? For example we study behavioural economics partly to pick up quirks in behaviour that make us less than rational. Accounting for these quirks can improve our decision-making skills.

I’ll set the provisional ideas here. They are fairly obvious and not fully thought through.
Economists usually take consumer preferences – their tastes - as given, perhaps by their genes cor upbringings, and to depend on the quantities of goods and services that consumers themselves enjoy. Of course we know that in reality preferences are not given in this sense – they are triggered by external events such as behavioural and chemical addictions and by other-regarding behaviour such relative reward effects.

Addictions can be good things - such as cultivating an appreciation of classical music, great wine or good novels - or bad things that impose long-term costs such as cigarette smoking or compulsive behavioural disorders.

Likewise ‘other-regarding behaviour’ - paying attention to the consumption choices of others - can be a positive if it encourages a sympathetic regard for the plight of those much less fortunate than ourselves. But it can also be a negative if it takes the form of covetous envy. A colleague of mine in a beautiful home in a reasonably attractive Melbourne suburb takes little pleasure in his good fortune because his workmates (including me) bought much less attractive homes in more beautiful surroundings. He cannot put it down – the grass is always greener and he just cannot be happy with his beautiful new home.

Clearly if we are smart enough we can train ourselves, or perhaps our children, to avoid negative interdependencies that foolishly influence our preferences. Working to free up associations so as to prevent negative addictions and seeing the illogic of buying certain goods simply to ‘keep up with the Jones’ can help to enrich us by making us enjoy the things we do have. For given incomes we can enjoy greater standards of happiness simply by constraining our desires in ways that make sense. This seems to me to be one of the sensible ideas of atheistic Buddhism – optimising preferences (as well as incomes) to optimise overall happiness.

This optimisation of preferences is not costless. Learning Buddhist meditation and learning to detach yourself from materialist obsessions involves as lot of work. Restricting your consumption of alcohol and coffee so that pleasures of life do not become compulsions also involves formulating personal rules that involve effort in implementation. Even drinking and appreciating a great bottle of wine or accessing the beauty in a great poem or novel requires the acquisition of skills which, in turn, requires effort. Acquiring a sense of discrimination rather than pursuing the very human, though mindless, accumulation of material goods is not a costless activity. In a sense it is something like exerting greater discrimination in a search activity and this does involve real costs.

Vaguely I think one might model things this way. Our environmentally given preferences on a set of goods X might lead to utility U(X) which falls short of our bliss (‘blissed out’) maximum achievable level of utility B* by B*-U(X). Here no investment in happiness is made and the optimal consumption bundle is X*. Expending contemplative effort e might reduce this gap to V(e,X) which is less than B*-U(X). Given goods prices p and a cost of effort q (one could regard this as a cost of time employed or just a reduction in income M that follows an increased allocation of time to contemplation. Then when allowing for optimally determined endogenous preferences on the basis of an effort choice one would seek to select a bundle of goods X**,e** which minimises V(e,X) subject to pX+qe being less than M. The resulting optimisation would yield demands for goods X** (less than X*) and introspection effort e** that depend on all prices, the cost of meditative effort and income and would produce a level of happiness B**-V(X*) that exceeded the utility obtained by optimising over the level of goods alone and not making any introspective effort.

I put this together in a few minutes. I am sure there are better ways of setting out the same idea. The budget constraint you might won't to define might be on time rather than income and it is by no means clear that expending contemplative effort in a source of disutility.

Wednesday, September 26, 2007

Foreign exchange & derivative activity Australia 2004-2007

Maybe the level of foreign exchange and derivative activity makes sense given Australia’s expanded role in the world economy but the numbers look large and the growth rates are huge.

Total turnover has more than doubled, and has increased across all instruments, counterparties and currencies. In terms of global turnover, the Australian foreign exchange market is the sixth largest in the world and the AUD/USD is the fourth most traded currency pair. These rankings are unchanged from the previous survey. The combined volume of transactions in foreign exchange and derivatives markets was $200billion per day in April 2007 with our foreign exchange market constituting 4.2% of the world’s market.

Sufficient reason I guess for training thousands of finance undergraduate finance students each year in the Australian universities. Students who know very little economics but are expert on hedging and speculating. Has anyone calculated the net contribution to national output of this activity? Is it summarised by the value of the incomes of the dealers?

The RBA Report that:

1. Foreign Exchange

Turnover in the foreign exchange market covers all transactions in spot, outright foreign exchange forwards and foreign exchange swaps.

In April 2007, foreign exchange turnover averaged US$170 billion per day, compared with US$81 billion per day in April 2004. This is a 90% increase at constant exchange rates.

Transactions in the spot market grew by 74%. Activity in the outright forwards market increased by 190% and in the foreign exchange swaps market by 120%. Foreign exchange swaps continue to represent the highest share of foreign exchange turnover, comprising 65% of the Australian market.

The AUD/USD is the most traded currency pair in the Australian market, accounting for 45% of total foreign exchange turnover, a similar proportion as at the time of the previous survey.

Transactions between local financial institutions increased by 387% and now account for around 30% of all turnover. Transactions with overseas financial institutions, which account for over 60% of turnover, rose by 69%. Transactions with non-financial institutions rose 93%.

2. OTC Currency and Interest Rate Derivatives

Turnover in derivatives covers all transactions in OTC options and cross-currency interest rate swaps.

In April 2007, total derivatives turnover in Australia averaged US$30 billion per day, compared with US$18 billion in 2004. This is an increase of 52% at constant exchange rates.

Transactions in interest rate derivatives, which account for the bulk of total derivatives turnover, grew by 77%. Within this category, turnover in interest rate swaps grew by 166% while turnover in forward rate agreements fell by 36%.

Transactions in foreign exchange derivatives grew by 39%. Within this category, transactions with both currency swaps and options contributed to the increase.

Derivative transactions with overseas financial institutions increased by 83% to US$20 billion per day, and account for 70% of all derivatives turnover. Transactions with non-financial institutions increased by 87% to US$4 billion per day, while transactions with local financial institutions increased by just 9%.

Sunday, September 23, 2007

ACE Hobart 2007

I am in Hobart for the next few days attending the Australian Conference of Economists. I am giving a paper, Policies for Reducing the Costs of Cigarette Smoking. If you are reading this and attending this Conference please make yourself known to me and try to come to my session on Tuesday.

Hobart is an attractive, old city. It was first settled by the British in 1803 and was used as a particularly dreaded penal colony. Last night it lost some of its valuable historical heritage when the old Myer Building in the centre of the city was gutted by fire. The building was constructed in 1836.

Apart from loss of heritage, retailers at the centre of the city will take a financial pounding from this fire. There was a lot of incidental and water damage from the fire and commercial activity will be restricted for months.

This afternoon off to try to see the last of the remaining Tasmanian endemic bird species I have yet to see – the Scrubtit. In fact I saw the other nine endemic species in a single day about 10 years back but this one has eluded me. I’ll try on Mount Wellington today.

Saturday, September 22, 2007

Encourage don't discourage efficient land speculation

The Age today is bemoaning the fact that monopoly control of large tracts of land on the borders of our big cities is driving up land and therefore house prices. The claim is that developers are ‘sitting on’ enough land to house 100,000 people. A Professor Steven Keen is complaining that ‘land banking’ is driving up prices. Academics from RMIT and the ANU have backed these stupid claims and the land-developers have implicitly accepted the force of these arguments by arguing that land development delays are to blame for the substantial holdings.

These arguments are populist nonsense that fails to recognise the most basic arguments validating speculation in land and holding some land back from full development in housing or industrial real estate. Land in city areas is an exhaustible, finite resource and demands for it can be expected to increase through time as population grows. The Hotelling principle states that, in competitive land markets, the price of land should increase at the rate of interest – just as for any other non-depleting capital asset.

Speculation as in other markets will help to achieve this since purchases will be sold at the point where developers are realising maximum capital gains – thus land will be released when it is increasing most rapidly in price thereby slowing and stabilising such price increases. Speculation helps to ensure inter-temporal efficiency in land markets. It is not in itself a source of high land prices.

A further fact in land development decisions that lead to urban or industrial land uses is that they involve high degrees of irreversibility. There are high costs of demolition so that land should often not be developed into its final use until as real estate economists put it, it has ‘ripened’ into its higher value. This increases the case for holding land back and for not fostering low valued urban developments that society will wish to undo a few years down the track. It also explains why it is rational to see blocks of vacant land or land used in low valued agricultural activities close to high valued real estate in large cities. The owners of such land are keeping the land undeveloped until it is the right time to move it into its final high value use.

The Age’s leftwing editors argue that it is time to force developers to sell off their land holdings.

They argue that the market imperfection is suggested by the small number of developers holding such a large amount of land. This suggests no such thing. The notion that 5 or 6 Australian land developers can get together to peg land prices below their competitively determined rate of release needs to be demonstrated – it cannot just be claimed.

By the way everything I have written above is standard in the urban land economics literature. The comments of the so-called economics commentators and The Age show nothing but a stark ignorance of this literature. Some of the basic work in this field was completed in 1970 by Donald Shoup with later work in 1979 by Richard Arnott and Frank Lewis. I wrote a paper with Bill Reed in 1988 where we extended this analysis into a setting with uncertainty and irreversibility. With irreversibility of the type mentioned and uncertainty surrounding the costs and returns of land development decisions the benefits from development must exceed the costs by a quasi-option value that slows down the rate of land release below the rate that would be appropriate were investments reversible and outcomes certain.

There are many other subsequent papers looking at issues such as whether vacant land should be taxed to encourage early development. I think the consensus answer is no, it should not be.

Friday, September 21, 2007

Blood tests for early lung cancer detection

In searching for possible harm-minimisation policies with respect to the lung cancer consequences of smoking I recently posted on the possibility of using CAT scans as an earlier way of detecting tumours. The difficulty of such testing is the problem of too many false positives and the possibility that malignant tumours are likely to develop between such tests even if carried out regularly.

Steven W sent me this interesting link on testing blood for lung cancer. The report is based, in turn, on a report provided by the American Association for Cancer Research on work done by Panacea Pharmaceuticals. It is based on detecting a protein in blood (HAAA) that is linked to lung cancer but which seldom shows up in the blood of people without the disease. Presence of HAAA does not prove the existence of lung cancer but it does suggest a case for further diagnostic procedures.
"A positive test for this protein marker, followed by CT scanning, may help identify individuals with lung cancer at a stage in which treatment is more effective, possibly even curative," said research scientist Mark Semenuk, who is presenting results of a study testing the specificity and sensitivity of the blood test".
Lest someone foolishly suggest that I am proposing that people continue smoking but take such tests to guard against cancer risks I should affirm that I am not. The best way to improve the health of your lungs is to stop smoking and smoking causes many healthy problems other than lung cancer. But for people unable to quit – there are lots of them - and for ex smokers - there are lots of them too - this research is interesting.

Hat tip to Stephen W.

Thursday, September 20, 2007

Kevin Rudd on 'trainer wheels'

Tuesday last week I praised Kevin Rudd for his principled opposition to the pokies and for his claim that alternative sources of state revenue will need to be found to replace pokie taxes. His opposition, a week later, seems to have softened a bit – the states really need the revenues he stated yesterday and it is difficult to find revenue alternatives – anyway, it is all a matter for the states who decide these things.

One wonders if pressures have been brought to bear on Rudd by ex Labor pollies and political hacks taking backhanders and lucrative consultancies from the pokie and pub industry. There are plenty of them - come to Victoria! The Commonwealth could fill any revenue gap with predicted budget surpluses. The difficulty is, of course, that the pokie industry and the pubs won't like this.

In other news Rudd has refused to announce the Labor Party’s tax policy which is just as well – he needs to learn first what our tax scales are.

A Federal Labor Government with a ‘me too’ Prime Minister, a lacklustre policy team of ex entertainers and union hacks - and particularly with Wayne Swann as Treasurer - will not be something that provides quality government for Australia. Would they just devolve government to 500 hack-stacked committees?

Tuesday, September 18, 2007

Nest Egg

I spent today around Albury-Wodonga getting informed about an interesting trial of a new auction system for purchasing conservation land from farmers. It is called Nest Egg.

The idea is that conservation scientists do a careful tabulation of the conservation benefits achievable from sites nominated by farmers (the farmer is not told this value) and farmers then bid, via a sealed bid auction, to supply conservation services. Sites are selected according to the highest ratio of benefits/bid subject to the conservation authority budget. In this latter respect the approach is similar to the BushTender scheme practised in Victoria. Both schemes are largely based on encouraging the provision of conservation inputs (e.g. fencing, feral proofing) but Nest Egg alone provides bonuses if conservation objectives and species appearances are achieved. It thus targets outputs as well as inputs.

Although I was sceptical of the scheme initially I came away impressed with its possibilities. Farmers with land that is highly biodiversity productive effectively get paid a stewardship payment for maintaining that biodiversity. Those areas which have with land that can be converted to becoming a biodiversity rich resource at low opportunity cost are also supported. Conservation programs that maintain or enhance biodiversity at minimum cost are thereby realised.

I was particularly interested in variants of the scheme which emphasise connectedness and developing corridors for species to relocate in response to climate change. Locally these can assist attitudinal relocations as temperatures increase. In an interesting two-stage auction design, farmers are initially asked to bid to supply land areas. Once these bids are made, a map of candidate areas is re-presented to the farmers who are then encouraged to form connected habitat corridors and the bid process begins anew. It is very neat.

The species being targeted in NSW are the Plains Wanderer, the Bush Stone Curlew (above) and the Brolga. The Plains Wanderer is a unique species that faces very severe threats. A nice touch to the afternoon was seeing a Bush Stone Curlew in a remnant patch of vegetation north of Albury. These are quite common birds in north eastern Australia but very rare down south. These are flagship species but the intention is to conserve environmental systems as a whole using these as indicators and as a means of gaining publicity and public acceptance.

There are questions about the application of these auctioning systems. Does putting a price on conservation reduce supply by cutting into ‘good citizenship’ motives for conservation? This is analogous to the argument that pricing blood supplies can reduce not increase such supplies because benevolent motivations for donating are destroyed. Also the contracts awarded to farmers last only three years – what happens when they end? Will farmers fail to exercise care of resources they are used to being paid to maintain? Do payments corrupt moral incentives?
My guess is that these problems are minor and that the auction systems developed will play a small, though important, part in maintaining Australia’s threatened biodiversity. I think we still need to drastically expand our public reserve system.

I am in the process of getting informed about these sorts of auction systems – in Victoria they are almost old hat so I am a bit behind the times – and I will post again when I am better informed.

Monday, September 17, 2007

Pursuing a rational death

I have been reading about death. It is something that interests me. I am not concerned with those unfortunates associated with a death – doe-eyed friends and relatives who might love you and even mentally put you in your coffin before you are ready to expire. Nor am I concerned with those who will grieve for you when you are gone. There is plenty of literature for such people, such as Kubler-Ross. Nor am I concerned with those suffering terrible pain who might welcome death, perhaps in the form of euthanasia, as a release.

Nor am I concerned with those who hold the religious view that we will go into a glorious afterlife. After all, I am an atheist.

No I am simply concerned for the fairly non-religious, intelligent person whose time is up and who knows it but who wants to live. Those who will cop it. To distinguish the particular situation I have in mind – trivially we all face the fact that eventually out time will be up – I want to suppose that an individual is told by a medical expert who has perfect foresight of their imminent demise that will occur in exactly one-hundred days. What is the individual’s best response to this information?

When the announcement of approaching death is made to lung cancer victims the first reaction is often denial – see Johnson (2001). It won’t be me! It can’t be me! This can be followed by anger that the person is being taken too soon or being taken unfairly. This might in turn be following by a period where the person bargains with God or physicians for more time. When the bargaining fails this might be followed by depression and sadness because bargaining has failed. Finally, the person might just accept that death will occur. Of course all these things might overlap and possibly repeat – it will not be a simple linear emotional experience. These five stages comprise the Kubler-Ross death-stages model.

Economists assume that rational agents maximise the (possibly discounted) aggregate value of joys over their lifetime which seems to me about as sensible a criterion as I have seen. This suggests that the move to passively accept the inevitability of death – rather than worrying about imminent death – is a rational way of dying. This is easier said than done in a society where the reality of death is a seldom discussed taboo. But accepting the inevitability of an inevitable death is a reality-based view of things and seems better than applying one’s energies to grieving about the prospects of dying.

Being quick to accept the reality of death might be thwarted by well-intentioned dishonesty from friends or doctors who themselves feel discomfit about a departure. This can be countered by pointing out the residual benefits of honesty in this situation for the residual optimiser.

Indeed, as the final stage of life approaches making sense of death might become an imperative one wishes to share with friends. It is an important experience and one seeks to understand it.

This will be difficult if friends and loved-ones have lower acceptance of death than you do. Again you can thwart this by stating – perhaps falsely – that you have had enough and want to die.

Talking to children is difficult since children may transform their love for you into anger on the grounds that you are leaving. Of course you need to affirm that you do love them and would not leave them if you had the choice. The dilemma here is a particular case of the general issue that many facing death need the permission of those they have left behind to die. A gesture of letting go by the family can, in fact, induce a welcome death.

Dying people often withdraw from the living as physical weakening occurs or because of changed spiritual or emotional needs. People sense that those who have died are seeking to communicate with them. They may also dream of those who have died.

Many facing death are curious about the process of death itself. I have observed the death of a dearly-loved one and it seemed to me unpleasant for the person dying. The person concerned drifted in and out of consciousness and seemed distressed. But those who have experienced near-death experiences do not remember great distress at this stage. It is an unknown.

Just before death – the ‘agonal’ (death rattle) stage – muscle spasms might occur with large gasps for breath, breathing that starts and stops, heaving of chest and shoulders, a single deep exhalation, various vocalisations and noisy breathing. All muscles relax – including the bladder and bowel – though waste will only be discharged if food has recently been eaten. And then that is it.

Accepting the inevitability of death by the person facing it and by those surrounding this person seems to me to provide the basis for a rational exit. You enjoy the time that is left and then when death approaches closely you experience what is a unique set of experiences.

I’d be interested if others think otherwise and am also interested in other non-religious discussions of this topic. The thoughts above are provisional and likely to be revised.

Motives fallacy #3097: US intervention in Iraq was all about oil

I discussed earlier this year the notion of a motives fallacy – namely the idea that exposing the motives behind an opinion shows that the opinion is false. Allen Greenspan has claimed in a new book that the ‘prime motive for the war’ in Iraq was oil.

So what? I guess as economic history this is interesting information and such a motive can scarcely be irrelevant given that the Middle East has 66% of the world’s oil reserves. Of course Western countries would not wish to see this vital resource in the hands of Islamic terrorists.

But in terms of current events the motives for entering Iraq have no more relevance for the moral case for continuing to seek to secure the situation there than do the sunk costs of failed aspects of military strategy there.

There is a legitimate debate concerning current strategies being employed in Iraq but the reasons for the initial intervention are irrelevant to this debate.

Sunday, September 16, 2007

Bronwyn Bishop gets tough on harm minimisers

The Coalition’s ‘tough on drugs’ policy has been, in fact, a de facto harm-minimisation policy with a tough, external public persona. The years of being tough on drug users in Australia are, in fact, long since finished. With respect to heroin addictions, emphasis for a long time has been on treatment of the addiction by switching addicts to the use of commercially-acceptable opiates such as methadone or buprenorphine that are just as addictive as heroin. It is primarily a pessimistic viewpoint - the assumption is that we cannot eradicate illicit opiate use so let us learn to live with illicit drug use by 'medicalising' the problem.

A safe injecting room, use of needle exchanges and an increasing reluctance to use the force of the law against drug users, have all acted in unison to reduce the user costs of being a ‘dope fiend’ thereby encouraging use. So-called ‘harm-minimisation’ policies reduce the user costs of drug use creating more users.

With respect to heroin, usage fell in Australia after years of growing strongly (due partly to the support of our local harm-minimisation industry) because of the successful attack on heroin supplies by the Australian police in 2000/2001. This led to Australia’s so-called ‘heroin drought’. This has greatly reduced the number of new drug users and vastly reduced the number of heroin overdose deaths. I am completing a study of the 2001 drought, with Lee Smith, which I will release later this year, but the main conclusions are clear. Heroin demands and initiation rates are relatively price elastic (this is known from a myriad of studies including many not relating at all to the drought) so a reduction in supply will reduce demand. This, in simple terms, is what happened in Australia in 2001.

The industry of drug treatment officers and doctors with the thousands of their clients who they keep addicted to commercial-acceptable opiates have not contributed to reducing usage. They have transferred large numbers of users from illicit to licit opiates but have not primarily targeted the ending of drug addictions.

Partly I suspect the medicos hate the idea that supply restrictions and consequent price increases can reduce heroin demanded simply because they are ignorant of economics and fairly ignorant of anything outside their specific disciplines of study.

Doctors do very specific vocational degrees and don’t study social science disciplines. They don't have breadth in their approach to issues - you either support their line or you are a heartless fool who understands nothing. Their objective, as they see it, is simply to reduce harm to the patient in front of them and that is it. The notion that this might encourage costly continued usage by that patient or 'spill-over' effects on broader society does not cross their minds. The subversive notion that, by coming to the aid of junkies and making their life easier on every account, one might increase demand for the use of drugs is simply preposterous to them. It is preposterous because they are so ignorant of basic social science research.

At drug conferences, like the annual APSAD meetings, those addicted to drugs are keynote speakers and treated with hushed tones of reverence. I take a different view of these social parasites.

Partly too, any suggestion along the lines of an expanded role for the law cuts into the extent to which the addiction issue can be 'medicalised' and thereby limits the ability of 'harm-minimisation' oriented institutions to get more money and to ‘empire build’ on the basis of the expanded demands that their so-called harm-minimisation policies bring about.

The research groups like NDARC that draw in millions in research grants each year do really low standard work. If I marked most of it as an honours thesis it would get a fail grade. The researchers clearly don’t understand basic statistics or economics – most of their so-called analyses are based on bi-variate graphs where some sort of confused causality is asserted between two variables. Their Commonwealth Government-funded forecasts of current drug use trends are an absolute joke and an embarrassment to even others in their own professional groupings.

Senator Bronwyn Bishop’s Senate Committee report, The Impact of Illicit Drug Use on Families, is designed to challenge the harm-minimisation paradigm that we have de facto come to rely on by seeking to re-promote the virtues of drug use abstinence. The report involves a recommitment to a 'zero tolerance' approach to illicit drugs.

The Bishop Report has already aroused ire among the medical community and the spiteful army of ‘harm-minimisers’. This is hardly surprising as it is the most radical critique of the harm-minimisation policy for years. Of course, whether it will ever be translated into policy is doubtful given the Government’s current problems. A group of Labor Party pollies on the Committee did puit forward a minority report but they did agree with most of the core committee recommendations which is hopeful.

By throwing the ‘cat among the pigeons’ the report should provoke a community rethink. It is primarily an optimistic report that suggests we can reduce illicit drug usage to low levels. While it has been strongly criticised it has also gained support from groups such as Drug Free Australia.

Some of the main ideas in the Bishop Report:

· Constrain treatment options to be those that seek drug use abstinence rather than living with an addiction.

· Maintain a continued emphasis on policing for addressing drug issues.

· Minimise harm with respect to the children of addicts by removing children them from parents who are drug addicted into adoption. Expend increased resources for detecting illicit drug use by parents and promote contraception among addicts and manage the social security income of users to promote the provision of basic needs for kids.

· Fund only agencies promoting drug use abstinence. The primary objective of pharmacotherapy should be the cessation of an individual’s opioid use so Naltrexone implants – designed to end heroin addiction – are proposed to be listed on the PBS.

· Reassess the role of needle and syringe exchange programs to determine whether they are supported by the local communities and examine whether they direct users to treatment enabling them to be drug free.

· Have random testing for drivers affected by illicit drugs concurrently with random breath testing for alcohol and random workplace drug testing regime to improve safety for patients and other staff.

· Place child users aged up to 18 years in mandatory treatment for illicit drug addiction with an organisation seeking to make them drug free.

It is a ‘tough love’ approach to the issue of illicit drug use. But, in combination with policies that make heroin and other drugs expensive, these sorts of policies will help to minimise the extent of addiction and the harm that addicts inflict on communities.

Saturday, September 15, 2007

God lives in the Coonawarra

One of the great wine makers of Australia is Brian Croser of Petaluma. He makes lovely chardonnays and a Riesling you would die for but one of the wines of his that I really like is the Cabernet-Merlot. I drank my sole (sob!) remaining bottle of the 1990 vintage this evening.

It is 88% cabernet and 12% merlot and, in terms of viticultural conditions, this wine came from one of the best-ever years in The Coonawarra.

Jamie Oliver’s review of this wine (consumed 2007):

‘Complex and statuesque, with a dusty, smoky and floral perfume whose beautifully developed fruit, cedary oak and undergrowth-like complexity overlie classic cabernet dried herb influences.

Sumptuous and powerful, yet superbly structured and elegant, its rich layers of dark fruit knit tightly with firm, fine-gained tannins, finishing with a lingering core of vibrant flavour.

Message: Even at 17 years of age, top-level Australian cabernet can appear backward, in need of additional cellaring time, and plenty of it’

I certainly agree with the word ‘elegant’ although it seems to me very drinkable now - yum.

The Petaluma wines are never jaw-breaking 'big' wines - they are elegant, understated and delicious. This wine does have a slight herbaceous ‘greenness’ about it that was not, at all, a wine-making fault. A seriously good wine that makes me seriously unhappy as I look at that depleted bottle.

Rejoining ranks of the golfing greats

I have started playing golf again and have even invested in a new set of clubs and buggy. It is amazing how golf clubs and golf gear generally are so much cheaper – in nominal not only real terms - than when I last played seriously a decade ago. The good economic reasons for this are, of course, that China has become the world’s centre for golf club and golf gear manufacture – producing 60% of all gear. The resources boom which has helped to keep the Aussi dollar strong has helped to get me back on the golf course. Praise be to our mineral extractors and to flexible exchange rates!

Apart from cost the technology of golf has changed drastically with different clubs and even different balls. It turns out that a golf ball can potentially be hit further the more dimples there are in its exterior by enhancing its Magnus lift. According to the AFR this morning (subscription required) this technological innovation has shortened the effective length of the older golf courses so that for professional golf players even long par 4s are a drive and a pitching wedge. Top golf courses have been lengthening their golf holes each time an innovation occurs to keep the courses challenging.

According to the AFR the course managers have probably now run into Ricardian land availability limits that have pressed them into urging a forced reduction in the number of dimples in a golf ball to reduce the distance it can reach by 50 metres. The claim is that golf ball dimples and course lengths are substitutes in delivering the golfing challengesome disagree.

So I will stock up on enough heavily-dimpled Chinese golf balls to keep me going until my expected expiry date in 2049. I’ve got new clubs, gloves, buggy, instructional DVD and I have booked in for lessons with the local professional. It would have been nice to have more youth on my size and a smaller gut but I am determined to get my handicap down to about 15 which is almost as pointlessly ambitious as my letters confirming romantic interest to Britney Spears.

Friday, September 14, 2007

Technological fixes address problem gambling

Joshua Gans has an interesting post on technological fixes for dealing with problem gamblers. Essentially Joshua advocates technology to enable gamblers to pre-commit to limiting the extent of their gambling per week. This limits the propensity to get involved in ‘within session’ gambling excesses – running off to use the ATM when you have exhausted your cash – and also, on reflection it helps deal with, ‘between session’ excesses – simply going to play the pokies too often.

A fascinating paper by the psychologist Mark Dickerson (thanks to reader Kymbos ) examines things from this perspective of achieving reasonable pre-commitments in gambling:

‘The marketing of gaming could … guarantee that players could purchase currently available forms of gaming and yet never over-spend. The gaming industry could choose to prioritise informed choice of all players, thereby echoing the value placed on this throughout the community. It could claim that all consumers were protected from excessive expenditure by the safeguards that were in place.

This could be achieved ‘tomorrow’ by the change to the use of player cards for all EGM play. Player cards would be issued on the usual 100 point ID requirements of other significant cash cards, accounts etc. Such cards can be made desirable to players depending on a variety of attractive loyalty and reward schemes.

The limits to the amounts of money and time that an individual could pre-commit to his/her card would be transparently computed along the same sort of lines by which mortgage and other credit/loan levels are currently established. There would be the opportunity for individuals to make a special case that they had greater levels of discretionary monies than the standard levels but such claims, would be open to verification. For the majority of players it is likely that their preferred expenditure would be well within the regulated limits.

The environment in which the player made these pre-purchase decisions would be the proper place in which to provide player warnings and information about the potential harmful impacts that can arise from gambling and the availability of professional help should harmful impacts arise. This setting could include a simulated EGM so that buyers could explore how long a particular level of staking might last on a particular machine and what were the probabilities of winning.

The venues would then need have no notices and warning labels on machines but return to the pre- “responsible gambling” days of being purely escape and fantasy, never a window or a clock in view. The player could go and play and ‘lose control’ within the previously set safety constraints.

There would be additional positive corollaries for the providers of gaming; by using a process of consumer protection for all players that guaranteed informed choice gaming could be advertised as ‘safe’, the industry would be seen to have set standards that transparently abided by a core social value and their status would rise accordingly, new products could be tested against the same standard before being legalized. Above all the industry would have a coherent approach derived from a social value and with the whole policy and process couched in their core language and expertise of business management and marketing.

If the marketing process ensured that only by criminal activity such as fraud could a player spend excessive and uncontrolled amounts of cash on gambling, then the industry takes charge of the agenda and can be proactive rather than reactive to each research finding about the harmful impacts of gambling etc.

If such consumer protection was demonstrated to significantly reduce the harmful impacts of gambling, the nexus between convenience availability of gaming, regularity of play and the higher risk of harmful impacts would have been loosened if not broken. Extending the regular player base and increasing the availability of gaming then may become socially acceptable options.

The above argument can be replicated for all forms of gambling (currently available and those in the future) that permit continuous sequences of stake, play and determination, whether casino table games or off-course betting (56% of regular bettors report “sometimes, often or always” “ I feel an uncontrollable urge to continue gambling once I have started.”).

There are a number of good reasons why all forms of gambling should be included in such a regulated, player card system of purchasing gambling: 1) it would at a stroke stop all under-age gambling; 2) some rare players have been known to develop harmful levels of gambling using only lottery type products; 3) some players gambling to their limit using EGMs etc might then reach harmful levels of expenditure purchasing unregulated quantities of lottery products and; 4) future gambling products may be developed that blurr the line between continuous forms and other current non-continuous forms such as the daily/weekly draw of a lottery.

The use of a player card would have almost no impact on the convenience of most people as they purchased gambling. Introduced with player points and bonus schemes as a loyalty card but with the added social impact of stopping the harmful impacts of gambling it could be a highly attractive option politically in jurisdictions wanting to maintain the taxation/revenue stream from gambling but aware of the growing community backlash against the levels of harm arising and the escalating costs of preventing and treating individuals and families adversely affected.

The argument makes logical sense and good business sense without any mention of problem gambling. In retrospect it may be seen that industry’s preoccupation with problem and pathological gambling has been one of reaction to the evidence, concepts and theories of psychology and psychiatry rather than proactive policy and strategy driven by sound business and marketing ethics and practice. The latter approach has been shown to result in a strong consumer protection approach which ‘at a stroke’ has the potential to prevent excessive consumption of gambling: i.e. to prevent problem gambling?

If the consumer protection approach is taken all jurisdictions where gambling is legalized can now choose to prevent problem gambling’.

Thursday, September 13, 2007

Monopoly casino profits belong to governments disbursing monopoly power

Continuing the gambling posts of recent days it is interesting to observe the punch-up currently going on between Tabcorp and the government of the 'poker machine state', NSW.

Tabcorp has a licence to operate the Star City Casino as the only casino in the state. This licence expired last night.

The likelihood of the NSW government awarding a second casino licence is low but plans to extend the Star City lease have stalled because the NSW government wishes to increase the tax take on pokies from 24.5% to 30% which would strip $35 million from Tabcorp’s bottom line.

Currently NSW’s biggest clubs pay a tax of 39.99% on pokies.

Star City is claimed to be a big tourism drawcard and Tabcorp is threatening to take its gambling investments to Queensland where the pokie tax is the lowest in Australia at 21%.

Competition between the states for the tourist dollar is being used to limit the ability of the State governments to recoup as taxes the revenues they create in providing monopoly power by means of exclusive casino contracts. The state governments should get together and do a deal to provide uniform taxes across the industry to prevent this happening.

The huge profits the parasitic casinos generate are a product of the monopoly power assigned to them by the state. Casino operators should earn at most a normal rate of return on capital invested with all other profits going to the governments which provide this power. This having happened, additional charges should be levied on the casinos for the social damage they inflict as externalities on society through problem gambling.

Tabcorp has been hit in recent times by the horse flu virus which will impact on its gambling revenues from racing and over recent years has been hit by the effect of smoking bans in its casinos. I have no sympathy at all for these social parasites – they are feeding off government monopoly regulations and harming the community through their impacts on problem gambling primarily through the pokies.

The greed here is not only private sector greed. The greed of state governments in allowing themselves to be held over a barrel by firms like Tabcorp also deserve criticism.

Wednesday, September 12, 2007

A brutal business, politics

John Howard is a great Prime Minister and deserves to be re-elected but it looks like he will not be. The question is whether Howard will lead the Liberal Party going into the election or whether he will be replaced today by Peter Costello. Given Paul Kelly’s account in The Australian today Howard has serious problems, if not immediately, then in the lead-up to the election. Kelly’s claim is that Howard has lost the support of most members of his cabinet.

I think Howard should be retained as he offers a faint chance of drawing things back for the Coalition versus none at all from Peter Costello. If the primary vote polls are driving opposition to Howard then the personal approval polls should provide support for Howard.

I disagree that Howard is holding the party to ransom by not resigning. Howard is simply being consistent with his long-held view that he has the best chance of winning. I think he is correct.

I also disagree that Peter Costello - a man I admire - is displaying cowardice by not challenging. At this stage he cannot challenge and history is, well, history - yes it might have been better in retrospect if he had done in last year. If there is an electoral rout of the Liberals Costello will have attractive options outside politics anyway. Good luck to him!

The rat-left press (particularly Australia's worst newspaper The Age) have pursued an unrelenting campaign against Howard that was based purely on their intention of driving the last coffin nail into the Coalition. Their campaign may now turn into a self-fulfilling prophecy.

It will be an interesting Liberal Party meeting this morning. I’ll update then

Update: Nothing happened. Costello will back Howard. Watch the gutter media work hard to turn this nothing into something.

Tuesday, September 11, 2007

Hokey Pokey & the Labor Party

The Four Corners show ‘Hokey Pokie’ dealing with the NSW poker machine industry did not teach me much that was new about the economic impacts of gambling – the full video is online here. Most problem gambling (around 85%) centres on the pokies which in turn comprise about 80% of total gambling. Pokies are overwhelmingly concentrated in poor areas – in Sydney in the South and South West with almost none on the prosperous north shore.

As in Victoria the pokies are concentrated among working people who least can afford gambling losses. It is a scandal for such an industry to be promoted so strongly around Australia by a political party that calls itself ‘Labor’.

I was interested in the politics of the spread of the machines. They were initially given to the clubs to help them raise money for sporting and cultural activities. The pubs then claimed that the clubs were providing subsidised food and booze to patrons which would drive the pubs into bankruptcy unless they were also given pokies. Hence Labor gave them to the pubs turning every suburban pub into a mini-casino which anyone could patronise. The emergent epidemic of problem gambling then forced the NSW government into putting a cap – at around 100,000 – on the total number of machines in NSW. This still gave NSW about the world’s highest incidence of machines – in aggregate greater than in the rest of Australia combined.

The pubs and clubs complained about constraints on growth so the government introduced a trading scheme whereby machines could be sold from low-use locations in the country to high-use locations in city-based working class suburbs. The machines could be traded three at a time but one out of the three had to be returned to the government for each two sold. This has led to a reduction in 3000 in machine numbers but growth in total amounts gambled has risen strongly because of greater machine use efficiency. Having sold off their low-patronage machines the country pubs are dying. It is a total mess.

I also learnt from the show about the existence of a ‘new’ (it was in fact 2006!) NSW Government Report on gambling which adds to the Productivity Commission’s work on gambling in Australia. Charles Livingstone critiques this NSW report and makes interesting observations on the psychology of poker machine gambling. The NSW study was a low budget survey of 2010 people that screened for problem gambling using the Canadian Problem Gambling Index (CPGI). To summarise the key conclusions:

  • 69% of NSW people aged 18+ gambled at least once over the past year. 0.8% were problem gamblers (gamble at least once a week and have experienced real problems), 1.6% were moderate risk gamblers (once a week and may have experienced problems) and 2.1% were low risk gamblers (once a week and at risk of experiencing problems but currently not). Therefore, in aggregate, 5% of the gambling population were ‘at risk’.
  • Pokies pose most gambling risks with 95% of problem gamblers and 85% of moderate risk gamblers using pokies.
  • There are significant gambling problems with young male gamblers with 18-24 year olds constituting 34.3% of all ‘at risk’ gamblers compared to 4.5% of the total population. I noticed the same myself during my reconnoitring of Crown Casino in Melbourne.
The NSW Labor Government seems to take gambling issues lightly – the club and pub industry seems to drive the views of politicians. And what a weasel the Minister for Gaming & Racing in NSW, Graham West seems to be.

In the show he seemed lacking in conviction and unappreciative of the dimensions of the problem. The epitome of an aspiring young Laborite politician! He will go far!

West seemed to want to do all he could to delay action on the industry. He sees the 2006 NSW study as the start of a series of scientific studies. What about the 1999 Productivity Commission study and the flood of studies over the years? This is a move to procrastinate, at low cost, not to get the facts as he suggests.

The machines were introduced in NSW in 1957, Mr. West, not last year!

I was pleased to see that Labor’s Kevin Rudd has strong views on the pokies. Rudd looks like being our next Australian Prime Minister and will face 6 State and 2 Territory governments (all Labor) and all to a greater or less extent addicted to revenue from the pokies. Rudd is in a unique position to take action against the pokie evil. It is smart politics too – most Australians do not like pokies – see here for evidence of public support in Victoria for cutting pokie numbers and national polling data here .

According to The Australian this morning:

‘KEVIN Rudd has criticised state Labor governments for hurting Australian families with their over-reliance on poker machine taxes, vowing to come up with solutions to wean states off the addiction if he wins the federal election….

Mr Rudd, who as chief of staff to former Queensland premier Wayne Goss oversaw the introduction of poker machines in Queensland clubs from 1989, said he was concerned states were now over-dependent on the revenue.

"I hate poker machines and I know something of their impact on families," Mr Rudd said. "I have spoken at length with (World Vision chief executive and welfare
activist) Tim Costello on this."

A study by the Australian National University's Centre for Gambling Research found the states collected about $4 billion in gaming taxes in 2005. It found gaming taxes contributed about 12% of state revenue collection. In Mr Rudd's home state of Queensland, revenue from gaming machines has increased 47 per cent from $375 million in 2002-03 to $550 million in 2006-07.

He said he had no magic solution but if elected would enlist Mr Costello - the brother of federal Treasurer Peter Costello - and others to work on measuring the real social impact of gaming addiction. He would then work on policy solutions to help states overcome their addiction to poker machines’.

"This is a matter of continued policy interest to me," Mr Rudd said. "I think the social impact is significant, hard to quantify but it's significant. It's of sufficient concern to me for this not to just drop off the radar."

Promising signs as Rudd at least (implicitly) admits his past actions in Queensland were wrong. But no more studies please Kevin as there have already been plenty already. We already know 'the real social costs' of gambling.

If Rudd is elected I will remind him of the statements above.

Monday, September 10, 2007

Gambling in Australia & the pokies

This is an expanded repost of an earlier post. Four Corners has a show on gambling in Australia tonight and I thought I would gather my thoughts and knowledge together before it goes to air. This show mainly targets the pokies and presumably mainly NSW where there are 100,000 of them - more than all other states combined.

Australian Gambling Statistics 2006 (not available online, why!) is prepared by the Queensland Treasury and provides the most comprehensive aggregate picture of gambling in Australia. It provides consistent time series data covering the period 1979-80 to 2004-o5. Gambling expenditure measures total losses while gambling turnover measures the total amount wagered. The figures for 2004-05 are surprising:

1. In 2004-05 Australians overall gambled $142 billion in turnover of which 72% was on gambling machines (pokies). In NSW gambling on pokies is about 88% of total wagering of around $61 billion ,in Victoria it is around 64.5% of total gambling of $37 billion and in Queensland it is 62% of total gambling of $23 billion.

2. The biggest gamblers on average in terms of turnover are in NSW ($11,880 per head), Victoria ($9,627) and Queensland ($7,846). But never fear Queenslanders - your gambling turnover is increasing faster than any state at 10.4% with 18% growth in pokie turnover.

3. Total gambling expenditure in Australia is about $16 billion with the average NSW citizen losing about $1336 annually, average Victorian losing $1133 and average Queenslander $1003. The majority of losses are on pokies - in NSW these comprise 71% of all losses and in Victoria and Queensland about 55%. Again Queensland, take heart, your losses are growing strongly - again mainly from pokies.

4. Racing, Lotto and Casinos are fairly static or declining markets. They are small fry. The big area and the big growth area is pokies. Gambling expenditure on racing in 2004-05 was $2.2 billion or about 12.7% of total gambling expenditure. Gambling in casinos was $2.6 billion or about 15.6%. Gambling on Lotto, Keno, Pools and Instant lotteries were around $4.4 billion or around 24.7 % of total gambling expenditure.

5. There is an interesting situation in Western Australia where pokies are restricted to the Burswood Casino or to non-coin dispensing non-profit machines in hotels. As I wrote in an earlier post:

'According to the WA Government the number of machines in WA is 1 for 1000 of population which is 12X lower than the national average. The level of gambling expenditure relative to income is also claimed to be the lowest in Australia.

.…WA has the lowest per capita expenditure on gambling of any Australian state. In 2004-05 it was $520 per head compared to the national average of $1097. That there is not widespread of availability of pokies has not lead to a substitution towards other forms of gambling. For example total expenditure on horse race betting per head in WA is $145 which is lower than the figure for NSW and Victoria.

This seems to me powerful evidence for restricting the supply of poker machines if you believe they cause social damage. Restricting supply reduces losses overall as people do not substitute alternative forms of gambling and do not seem to search out distant machines.

The same point has been mooted in Melbourne and elsewhere and is the basis for restricting the supply of pokies in poorer areas of Melbourne – further restrictions of this type are mooted in today’s Age.

People tend not to drive across town to play the pokies – an explanation could be that playing them is partly cue-related - so if they are not around you are more likely to forget about them or don't think about playing them. So you can deal with pokie –induced social problems in a particular area of social disadvantage by limiting the supply of pokies in that area.

The pokies offer low expected loss gambles but provide the basis for rapidly-repeating plays and therefore a rapid accumulation of losses. Playing the pokies has a hypnotic effect on gamblers that creates ‘within session’ self-control problems.'

BTW, other posts I have made on gambling recently include a primer on the industrial economics of gambling regulation, a piece arguing that the psychological responses to gambling losses may be more muted than we think because of rationalization propensities, a piece showing the huge profits remaining for machine owners even after government taxes, evidence of strong public support in Victoria for cutting pokie numbers and some national polling here, a number of posts on the very dubious politics being played out in Victoria in awarding gambling deals to monopolists with friends in the Labor Party (also see here), a critique of the Becker-Posner proposal to liberalise on line gambling and some exaggerated claims on problem pokie players. Also a post on the ‘libertarian-conservative’ defence of the case for policy interventions in this setting.

Sunday, September 09, 2007

Polygamy & the unwanted males

I got a fair bit of adverse comment for a post I made on how gender-balanced Muslim societies could deal with the sexual frustration that must affect those males that miss out on a partner where polygamy is practiced.

I suggested this frustration might spill over into aberrant social attitudes, a preference for religious stupidity and even a leakage of young men into the ranks of the terrorists. They might even then delude themselves by believing they can eventually ‘get it off’ with the 72 virgins in heaven if they do their duty on earth by massacring some innocent civilians and non-believers.

The standard argument by Robert Frank is that polygamy advances the interests of women by increasing their scarcity value. I don't buy this in Muslim societies where a female is initially the property of her father which is, on marriage, transferred to her husband. Indeed one might argue that these oppressive institutional arrangements that treat women badly are endogenously determined by the demand for polygamy which would otherwise give them enhanced scarcity value.

Oppression is then a mechanism for reducing what would otherwise be increased bargaining power. Women just lose out big and are treated badly as Ayaan Hirsi Ali (and others) point out.

No-one could possibly say that women in Muslim societies enjoy enhanced status as a consequence of polygamy. That is not so anywhere.

The Mormons in the United States have an interesting way of dealing with induced gender imbalances in their polygamous societies. The old guys just kick all the young men out and keep all the nubile young women for themselves. At my age it sounds like a conjugally ideal type of arrangement although I doubt I would have enjoyed it as a rootless young man. And my own daughters doubtless would dislike this way of organising their future marriages. I wonder if these ugly Mormons have any respect for their own daughters!

According to the New York Times:

Over the last six years, hundreds of teenage boys have been expelled or felt compelled to leave the polygamous settlement that straddles Colorado City, Ariz., and Hildale, Utah.

Disobedience is usually the reason given for expulsion, but former sect members and state legal officials say the exodus of males — the expulsion of girls is rarer — also remedies a huge imbalance in the marriage market. Members of the sect believe that to reach eternal salvation, men are supposed to have at least three wives.

It is amazing how grown men can delude themselves and, indeed, how whole societies can come to fool themselves with non-functional religious beliefs.

Health Nazis got it right

One of the best reads I have enjoyed this year is Robert Proctor’s, The Nazi War on Cancer, Princeton University Press, Princeton, 1999. It s the provocative story of how valuable science and public policy thrived under an anti-democratic, despicable regime.

I had been scouting around in the area of the early history of the anti-smoking movement – an entertaining diversion - and noticed, in an article by pioneering cancer researcher Sir Richard Doll, reference to a number of scientific papers published in German prior to the really famous papers published in Britain and the US in 1950. It turns out that there is a substantial literature on this German effort. With respect to smoking, and the ‘healthy living’ movement generally, fascism in Germany ended up being intertwined with science – Nazism took root in a powerful scientific culture and exploited it.

Researchers in pre-war Germany made many major health (and other) discoveries. The Third Reich involved discovery of television, jet aircraft, guided missiles, computers, electron microscopes, atomic fission and data processing. It also involved industrial murder factories and racial research. Germany was the centre of the world in many areas of science.

The Germans had long been particularly strong in the area of cancer research. In the 1830s Mϋller identified tumors as being composed of cells and Virchow in the 1860s developed a theory of cancer as caused by ‘local irritations’. The Germans were among the first to recognise the role of hormones in carcinogenesis. In the 1870s they had showed that skin cancers could be caused by coal tar distillates and that uranium mining could cause lung cancer. In 1895 they identified that aniline dye caused bladder cancer and in 1911 showed that lung cancer could also be induced by chromate manufacture. In 1984 they showed that skin cancer could be caused by exposure to the sun. In 1902 they were the first to diagnose an x-ray induced cancer and showed in 1906, using animal experiments, that x-rays could cause leukaemia. In 1907 they were the first to suggest that indoor radon might prove to be a health hazard – radon is identified as a cause of lung cancer in the home today.

For a time the language of international cancer research was German. In the 10 years after 1933 more than 1,000 medical doctoral theses explored cancer. This interest reflected, in part, the fact that Germany was a prosperous industrialised country where such issues were inevitably important and where labour unions and socialist parties emphasised occupational health issues. Moreover, Germany was experiencing rapidly increasing cancer rates in the 1920sThe fascists hopped onto this health research bandwagon. German cancer institutions became ‘Nazified’ and Jewish cancer researchers were persecuted. The Fϋhrer even suggested that Nazism might never have been established in Germany had he not given up smoking!
The Nazis forced through many progressive reforms such as checking women for early signs of uterine cancer and, in 1936, encouraging self-examination for breast cancer – campaigns did not develop along these lines in America for 20 years. Men were also encouraged to be regularly checked for cancer of the colon.

On issues other than smoking they formulated public health campaigns that would today also be seen as progressive. They stressed the importance of preservative-free diets and argued against the use of petrochemical dyes. They stressed the value of whole-grain breads and foods high in vitamins and fibre. They understood that asbestos, x-rays and radon caused cancers.

Generally, the Germans were very aware of health hazards in the workforce.

My main interests are in smoking and this is dealt with in the longest chapter of Proctor’s book. The main startling fact is that German work on the connection between smoking and cancer predated the major English language research (the papers by Levin, Doll/Hill and Wynder/Graham, published in 1950) by more than a decade. It was in Germany in the late 1930s that the addictive character of cigarettes was first recognised and the connection with lung cancer recognised. Indeed in the late 1930s the Nazis launched the world’s most aggressive anti-smoking campaign with public health campaigns, bans on certain forms of advertising and restrictions on smoking in many public places.

These discoveries were driven partly by Nazism with its ethics of racial hygiene and bodily purity. Good science was pursued in the interests of antidemocratic ideals.

Cigarettes had not even been produced in Germany until 1860 though it grew massively after 1900 to peak in 1942. The shift from pipes and cigars is of major consequence – as Henner Hess nicely put it we are talking about a ‘a revolutionary development in the history of drug consumption, roughly comparable to the invention of the hypodermic needle for opiate addiction’ (cited in Proctor, p. 183). Cigarettes got tars and other noxious chemicals into bronchial passageways.

The physician Fritz Lickint wrote a number of papers beginning in 1920 pointing out the connection between smoking and cancer and a monumental survey on smoking and cancer in 1939. He pointed to the fact that women then had much lower cancer rates because they then smoked much less. He identified nicotine as an addictive agent in tobacco comparable in its addictiveness to morphine and identified clearly the dangers of passive smoking. By 1940,anti-smoking activists even initiated much more recent compensation arguments by arguing the low-nicotine cigarettes might cause smokers to increase their smoking to maintain nicotine levels (Proctor p. 202). Lickint was not a Nazi but was heavily involved in Nazi tobacco policies.
In the early 1940s German physicians were aware that smoking caused heart disease and accurately observed that smoking reduced female fertility.

Roffo of Argentina (who published in German) had shown by 1930 that tars derived from cigarette smoking could induce cancer in experimental animals. He shifted the emphasis away from nicotine toward tars as the guilty party. Lickint by 1935 suggested nicotine was probably not a carcinogen and that benzpyrene was the cause (it is a certain carcinogen). He and a number of others had confirmed that most lung cancer sufferers were smokers.

In 1939 the ‘forgotten father of experimental epidemiology’ Franz Mϋller, and in 1943 Eberhard Schairer and Erich SchÖniger published the most sophisticated proofs to date that smoking caused lung cancer. The 1943 paper is particularly interesting as it would never have been published without the intervention of Hitler in the anti-tobacco movement.

The Mϋller study was a scientific epidemiological piece that compared cancer outcomes among smokers to outcomes among non-smokers. His findings were stronger and more accurate than the subsequent English language studies – smoking was the single most important cause of the rising smoking epidemic. Mϋller was a Nazi although his pioneering study was free of Nazi rhetoric.

The Schairer/ SchÖniger work was done at University of Jena under arch-Nazi Karl Astel who suicided in April 1945. It was a very careful statistical study of the connection between cancer and smoking. These investigators were Nazis.

The Nazi political groups reacted to these messages with a strong anti-tobacco campaign.

Smoking was banned in many workplaces and ‘no-smoking’ cars were established on trains. Smoking was banned in air raid shelters during the war. Various restrictions on cigarette advertising were introduced. Tobacco use was rationed and, although cigarettes were provided to German troops, they were very restricted.

The Nazis hated smoking because it damaged the survival potential of the German race. There was particular emphasis on women and girls not smoking – they were seen as more vulnerable to smoking and had a reproductive role. Hitler hated smoking but public health was a primary concern.

Germany also had not been through the US prohibition experience and was more likely to pay attention to anti-smoking messages than to ignore them as the ravings of Puritanism.

Proctor’s book has inevitably been misinterpreted to justify the labelling of those opposed to smoking and those supporting improved public health as ‘health fascists’. That is nonsense – smoking does cause 80-90% of all First World lung cancers and this is not altered by the fact that Nazi-era scientists were the first to point it out. Elements of this fallacious view are contained in the otherwise excellent review of this book by Pierre LemieuxProctor did retaliate. It is a stupid argument but I will be surprised if someone does not evoke it in response to this post.

Thursday, September 06, 2007

Luciano Pavarotti dies aged 71

Luciano was a personality with a magnificent voice. He will be missed by millions. Nessun Dorma almost became his signature performance. Look & listen.....and the same piece in with Zubin Mehta and the Three Tenors. Here is a clip from La Traviata with our Joan at the Sydney Opera House in 1983 and in a trio with Marilyn Horne that continues here.

Californian condor

Its mainly just a great photo. There are only 300 left in the wild. A number recently died after feeding on the carcasses of animals that had been shot using lead bullets. The Californian senate has responded by banning the use of lead bullets in hunting. Good.

Wednesday, September 05, 2007

Early screening for lung cancer

A major risk that occurs in smokers and ex smokers is lung cancer. Are there steps that smokers or ex smokers can take to offset the effects of this terrible disease? The difficulty is that a disease like lung cancer can emerge in otherwise healthy people without early warning signs at all. Once it is diagnosed on the basis of symptoms the five-year survival rate is only 14% - it is a terrible prognosis and the leading cancer killer by a wide margin.

When a lung cancer is detected the tumour is ordinarily the size of a small orange and the cancer has usually already spread. An x-ray can reveal a cancer the size of a grape but a CAT scan can reveal a cancer tumour no bigger than a grain of rice. When such small cancers are detected the five-year survival rate jumps from 14 to 70%. Henschke et al. in an article in The Lancet in 1999 report on checks of 1000 smokers and ex smokers aged 60+ who showed no cancer symptoms using CAT scans and found 27 tumours of which 23 were early cancers. X-rays identified only 4 of these cancers.

This type of early diagnosis seems a possible way of significantly reducing mortality among those who have ever smoked. I would be interested in comments from those with a medical background - I don't have one - on this idea and particularly on the economics of such screening. Some useful websites I found are here and here. An excellent article with an extensive list of technical medical followup studies is here.

The literature is mixed with some sources claiming no beneficial effects and others stating that much can be achieved. Recent studies have suggested that 5-year survival rates of those identified using CAT scan procedures as suffering from early-identified cancers that are then surgically removed increases to 92% with the cost of a scan being between $200-$300US. There was one cancer victim detected for every 65 individuals tested in this sample of adults aged 40+ so the cost per cancer victim identified is over $16,000 although this could be reduced if the sample could be more effectively pre-screened by age and perhaps smoking history but even without this qualification the cost does not seem prohibitive.

The case for seeking to early screen for lung cancer is controversial. One claim is that there is over-diagnosis of cancers (many false positives) as a result of their procedures. In defence of the screening procedures however almost all of those identified as having small cancers who did not have them removed subsequently died within 5 years.

I have been trying to learn a bit about lung cancer. A useful guide to those suffering from this affliction – and those interested in dispelling myths - is C.I. Henschke, P. McCarthy and S. Wernick’s, Lung Cancer. It is full of interesting facts. It explains how lung cancers occur and how sufferers should seek treatment and perhaps how they should deal with the prospect of imminent death. It is a direct though very compassionate book.

I was interested in the argument that low tar cigarettes might be causing the adenocarcinomas in the smaller airways and alveoli in the lungs because people draw on these cigarettes more deeply.

To answer the question I posed initially – if you do smoke how should you act to reduce your risk of dying of lung cancer? The authors suggest that you make every attempt to quit smoking but otherwise take a low dose CAT scan annually.

What about ex smokers? The authors themselves only screen patients who are aged 40+ with at least a 10 pack-year smoking history. (Your pack-year history is the average number of packets you have smoked * number of years you have smoked). Quitting at any age increases your longevity – it is never too late to quit - but if you have ever smoked your risk of eventually suffering from lung cancer is permanently raised. About half of those suffering lung cancers in the US are ex smokers so the ideal response to the lung cancer issue is simple: If you don’t smoke don’t start and if you do smoke quit!

Update: The references Francis Xavier Holden provides in his comment, and the summary comments he makes, suggest it is too early to conclude that CAT scans are useful for the early detection of lung cancers. This seems a fair summary to me. The scans often identify slow-growing tumors not associated with cancer deaths. Faster growing malignancies are likely to occur between scans. Further research underway using very large scale surveys will report results in 2010. Interestingly, regular x-rays seem to increase lung cancer risks presumably through adverse effects of the x-rays themselves. Ex-smokers and current smokers in their 50s might not reduce their mortality by having regular CAT scans and regular, high-frequency x-rays may prove counterproductive.

APEC: a stunning event for Australia

What an amazing event the APEC meeting is for Australia to host – a meeting of world leaders including US President George Bush, China’s President Hu Jintao and Russian President Vladimir Putin. As a child of the Cold War who saw immutable communism as the long-trerm enemy I was also taught at school that developing countries would never develop because they were trapped in a ‘vicious cycle of poverty’. How my perceptions have had to change!

Hu Jintao has made a reasonably extended stay in Australia and -interestingly - started his visit in Perth where he met the executives of BHP-Billiton and Rio Tinto and sought to pressure the WA government to accept Chinese rather than Japanese proposals to develop resource-related infrastructure proposals in the State. China also signed a $7.2 billion gas purchase deal with Gorgon on the coat-tails of the Hu Jintao visit. Putin’s visit is historic as Paul Keating points out in a thoughtful piece in The Australian today – it is the first ever visit by a Russian leader. Russia is a rapidly growing economy which has growing trade and investment with Australia and is also clamouring to buy into our resource stocks.

Commentators will predictably decry failures to make substantive progress on US agricultural subsidies and climate change but I cannot believe this meeting is not of enormous importance for Australia.

And today in the press it was announced that growth in the June quarter was 4.3% annual as Australia goes into its 16th year of strong growth on the back of strong growth in these developing countries and despite fears of a faltering US economy. The non-farm economy grew at 5.2% which is the highest growth since 1994. Total employee compensation grew 9% for the year and wages grew 5.5%. It is a stunning economic achievement that not purely coincidentally occurs with this most important international meeting.

Tuesday, September 04, 2007

2000 Chinese lives go up in smoke each day

I was interested to read last week that the world’s biggest national consumer of cigarettes – China has 350 million smokers - will totally ban the advertising of tobacco products from 2011.

I am pursuing a limited study of the incidence of smoking in China and three other developing countries - India, Pakistan and Bangladesh. On the face of it cigarette consumption is one of the most serious public (and perhaps general) health issues in the world today. In global terms it is primarily a developing country problem.

China signed the Framework Convention on Tobacco Control of the World Health Organization (WHO) in March 2003, ratified the convention in October 2005 with the convention coming into effect on January 9. 2006. China however still lacks a law prohibiting smoking in all public places though smoking is banned in cinemas, libraries, song and dance halls, and conference rooms in the country. Only 28 cities on the Chinese mainland are free of advertising of tobacco.

The Chinese smoking situation is dire. China is the biggest source of smoking-related deaths in the world – around 2000 die per day. Some estimate this will increase to 8,000 per day or 3 million per year by 2050. In the West deaths are often due to heart disease whereas in China the deaths are often associated with tuberculosis, emphysema, stomach and liver cancer. Press reports commonly cite statistics saying that ¾ of Chinese men smoke – this seems an exaggeration - and that smoking is killing half of such men. Chinese women generally do not smoke.

An interesting WHO publication, Tobacco Control Country Profiles 2003 has interesting data on China. The figures provided contrast with some presented in the press and provide a possible glimmer of optimism but an overall picture of despair.

This source suggested that in 1998 about 53.4% of men smoked but only 4% of
women. Thus 29% of the overall adult (aged 15+) population smoke – about twice the prevalence of Australia.

Rates of youth smoking seem 'low' – 11.1% of male youth and 6.4% of female youth. While the women are becoming more represented in the population of smokers, men are becoming less so.These rates of youth smoking are comparable to the ‘ low’ levels now being experienced in Australia.

Putting these two bits of information together the bulge in smoking deaths in China looks like being a once-off. But the low youth rates and high adult rates of male smoking are partly due to the fact that initiation rates in China seem to be concentrated in the 20-25 age group among men.

Nevertheless per capita consumption of cigarettes has declined in China since 1990.
A smoking prevalence study of China was conducted in 1996 and seems to be about the best recently available information. A difficult feature of the Chinese problem is that the population of ex smokers is so small at only 2.3% of the population – in Australia it is larger than the population of current smokers. Nevertheless even in 1996 most Chinese were well aware of the risks of secondary and primary tobacco smoke.

I’ll post again on developing country smoking issues when I feel more confident about dealing with differences in data from different sources.