Catallaxy Files

polymathic pontification, bleeding heart economic rationalism and liberal secularist contrarianism

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    Saturday, April 27, 2002
    Conservatives: Fairweather friends of the free market: John Howard offers more feeble excuses for corporate welfare:

    The Prime Minister, John Howard, was forced yesterday to defend the Government's decision to give Mitsubishi Motors Australia $35 million in assistance while suspending its support for a small business innovation program.

    It was in the "nation's interest" to throw the $35 million lifeline to Mitsubishi - which has been threatening to pull out of Australia since last year - as it would secure Australia's place in a global industry, Mr Howard said.

    "We have to decide whether we want some of the action in Australia or whether we're allowed to be scattered to the four winds and go elsewhere," he said. "Now, that is a vastly different thing from bailing out a company that needs a financial lifeline from the Commonwealth in order to survive."

    It is the second time this week that the Federal Government has financially supported Japan's Mitsubishi Corporation - via Mitsubishi Motors Australia, in which it has an indirect interest through the car maker's Japanese parent and directly via its mining and gas arm, Mitsubishi Australia.

    What more can you say about double standards like this? How much does the professed economic reformist John Howard really believe in economic liberalism? This is the same man who tried to make political capital out of posing with the Chesty Bonds mascot while propping up tariffs for the Australian textiles industry. How much have Howard's supposed 'small government' beliefs such as his lifelong commitment to radical labour market reform (an agenda I certainly support unreservedly) been based on a principled stand on freedom of contract and an understanding of that wages regulation is the worst way to help the poor; and how much of it is based simply on a cultural antipathy to groups associated with the Labor Party? How much of his pro-market beliefs are really pro-business? Why has Howard squandered so much political capital on the hugely unpopular GST which in the wrong hands will only expand the size of government in Australia when its efforts could have been better directed towards curing our number one ailment - unemployment? Why does it increasingly seem that the Keating government did more for sensible free market policies in Australia than Howard even though given its voter base Labor had more to lose?

    The grating thing about all this is that the conservative Right seems at least superficially to understand the economic arguments for reform better than the muddle-headed Lefty types like Adele Horin. So what does it say for them that despite all this they cravenly cave in to special interests? At least the likes of Adele Horin can be excused because of their ignorance of the fundamentals of economic reasoning and their lack of understanding of the dynamics of rent-seeking in a political economy context.

    The Cold War is over and the Communist threat is gone. It is long overdue for genuine supporters of limited government, individual liberty and free market capitalism to re-examine their unholy alliance with the conservative Right and realise first of all that it is a genuinely unholy alliance, that perhaps it is better to educate and conduct outreach towards the sensible members of the Centre Left.

    Tuesday, April 23, 2002
    Short rejoinder to Rob Corr: Rob Corr thinks that I've dropped my standards in my post on separatist movements because:

    it's the oppression, not the land, that's important Jason.

    Fair enough in some respects I guess. I was guilty of a hyperbolical over-generalisation to all separatist movements. The Tamils in Sri Lanka for instance were getting a pretty rough deal, as were the East Timorese. However I had in mind Northern Ireland and the Israel/Palestine conflict and in particular the latter. Could you call checkpoints set up by Israel oppression when it was set up by Israelis to protect against suicide attacks? If there's one country with a right to 'defend its borders' it's Israel. Is it oppression - which came first, the suicide bombers or the checkpoints which were gradually beefed up because of terrorist attacks? Seems to be a chicken and egg problem to me.

    And I know for Israel we get back to the 'stolen land' issue which is unusually complicated because there are two 'stolen land' issues.

    Firstly the Palestinians who fled their homes at the beck and call of their leaders so they could come back and push the Jews into the sea, lost and now want a right of return. They've been deprived of their homes, partly through a miscalculation of theirs, partly through invasion, though no doubt they would have a case for compensation in a court of law. For the record I think they should get fair compensation for the property they've lost but that's a different issue. My comments about the disproportionality of terrorist attacks on people holding bar mitzvahs in synagogues holds.

    Secondly the settlements in the Occupied Terrorities being embarked on by the religious nuts. Sure it's pissing a lot of their Palestinian neighbours off but how does it qualify as oppression especially when many Palestinians are more than happy to be employed as builders' labourers for the Jewish settlers? There are non-violent methods available of frustrating these settlements. Again, I agree for a lasting peace the settlements have to stop and the sane secular Israeli Left should tell the ultra- Zionist religious nutcases that if they keep building in the occupied territories, they should look after themselves, and that their children aren't going to be conscription fodder anymore. But again my complaint about the disproportionality of terrorism holds.

    PS: I should add that the issue here is about the general pattern of terrorist attacks before the recent incursions. I would add terrorist attacks after the recent incursions would also fail any disproportionality test though no doubt Rob would argue they constitute a form of oppression. My response would be that they constitute the preemptive self defence I referred to though whether they are the most prudent means is an open question.
    The best rejects you'll ever find: A valued reader and correspondent points me in the direction of this NY Times article that summarises some recent intriguing economic research:

    Recent research by Alan B. Krueger, an economics professor at Princeton University (can't get much more selective than that) and Stacey B. Dale, a senior researcher at Mathematica Policy Research, a consulting firm, suggests that it does not. They found that students who chose a school with lower admissions standards over a more competitive school earned incomes just as high as those who attended the elite college.

    A fat paycheck isn't everything — far from it. But what that means, Mr. Krueger explained, is that a student accepted at the University of Pennsylvania, a prestigious member of the Ivy League, would be just as well off going to Penn State, which some people know more for its football team than its academics. Most intriguing, the research found that even students rejected by a highly selective college did as well as those who attended it.

    As the author of the article slyly observes, this suggests a clever marketing strategy for 2nd tier universities:

    And it suggests a cunning strategy: Apply to Harvard or Yale but then go to the college that offers the best deal. That's partly a joke, but I wouldn't be surprised to see a lot of second-tier colleges — the kind that offer generous merit aid to talented students — using Mr. Krueger's theory to persuade high-school graduates to choose, say, Denison or Lewis & Clark, over Williams or Stanford.
    An absolute travesty: I watched Lateline last night and I was completely appalled and disgusted by what I saw. So were these people (Dr Louise Newman, chairman of the Royal College of Psychiatrists of NSW; Neville Roach, who recently resigned as the chairman of the Council for Multicultural Australia; Professor Richard Harding, the Inspector of Custodial Services in Western Australia). Go to the Lateline site and watch the interview for yourself.

    Hysterical Afghan refugees put in solitary confinement and hurling themselves against windows, unconscious refugees who had collapsed from nervous exhaustion having their limp bodies dragged on the ground by callous security guards; bystanding refugees who thought that one of their comrades had died being left alone without any explanation or calming words to shriek with grief and then erupt with anger; and subsequently Department of Immigration people blaming the ensuing riots on 'troublemakers' and criminals when it was quite clear that the riots were caused by gross negligence in dealing with clearly psychologically traumatised people that would have gotten jail wardens fired and disgraced for life. Sure, the interview I just linked to made no pains to be neutral and the interviewer asked a lot of Dorothy Dixers - but in this case I think it was justiifed. Serious journalism requires one to be as balanced as possible but not morally relativistic - not that this was solely a matter of morals. This was a clear stuff up on the part of the government to let conditions stew to such a breaking point.

    Contrary to claims of anti-government bias hurled around by people with clearly vested interests, there are lots of John Howard ass-wipers in the media. No matter how many turds Howard produces, they keep wiping and wiping and wiping away. But no amount of wiping can hide this outrageous breach of duty and humanity.

    Monday, April 22, 2002
    Jewish rally in Sydney denounces media bias: This is the SMH's report from the pro-Israeli rally in Wynyard Park. Will the self-same media 'get it' now?:

    Sydney's Jewish community rallied yesterday and criticised the Australian media for its "biased" coverage of the Israeli conflict at a noisy rally in the city centre.

    Several thousand people crammed Wynyard Park where the Israeli Consul-General, Effi Ben-Matityahu described international condemnation of the Israeli army 's most recent occupation of Palestinian territory as ill-informed and one-sided.

    "We have unfortunately seen a new brand of journalism arise and their reality is not based on a knowledge of history," he said.

    "When you look in the context of history, people tend to forget where this conflict comes from.

    "The result is that a democratic nation with an open society accessible by anyone is being put on an equal footing with the most brutal regimes in the Middle East.

    Quote of the day: "To discuss evil in a manner implying neutrality, is to sanction it.' ~Ayn Rand

    Sunday, April 21, 2002
    A terrorist is a terrorist is a terrorist ...: 'Bellicose' Kathy Kinsley makes an interesting observation about moral equivalence:

    Will someone please explain to me why there is so much outrage at Saddam and the Saudis for giving money to families of terrorists, but it's ok for Americans to donate to Sinn Fein so it can do the exact same thing?

    She's right.

    Australian socialist Rob Corr complains that the ABC is biased because it implies that the IRA are terrorists but he doesn't think that the IRA does terrorism anymore:

    In the BBC report, the information is not described as a "hit list" but rather as "intelligence files". According to the ABC, Cramphorn said the "hit list" was compiled by the IRA. According to the BBC, "The acting chief constable, Colin Cramphorn, said he had no information to suggest that the IRA intended to resume violence." Some hit list, if you're not going to act on it.

    The ABC implies that the IRA is responsible for the Castlereigh theft, but the BBC reveals that for all the talk of IRA involvement, there is no evidence. Furthermore, the IRA has denied all involvement. (The IRA is an organisation that likes to claim responsibility -- particularly for achievements as big as stealing every Northern Ireland security file.)

    However the link that Kathy Kinsley provides does have the BBC using the term 'hit list':

    Unionists are expected to press for sanctions against Sinn Fein over the seizure of an apparent IRA hit list containing details of senior Conservative politicians and British army bases.
    The files were discovered during raids by police investigating the theft of sensitive security force documents from Special Branch offices in Belfast last month.

    and based on the IRA's past history I don't think it's safe to assume they've suddently gotten squeamish about killing.

    However Corr is right too - the ABC is biased too. They have their favourite terrorists. It's no longer the IRA but the Palestinian suicide bombers.

    I don't care how much land the government of country X steals. You simply do not kill innocent citizens of country X over a fucking piece of land. I don't give a damned about how oppressed you feel - you don't kill innocent bystanders over fucking real estate, over a fucking piece of dirt. Please don't give me any of this mystical bullshit about how you remember your childhood spent fondling grass as a sufficient justification, or how being oppressed by a government of your own people actually makes you feel more whole than depending on trade with your neighbour to feed your children. The idea feels me with revulsion. The idea that all there are all these separatist movements killing people all over the world not so they can have constitutional liberties (when did you last hear any separatist movement talk about freedom proper? All they want is a dictatorship by members of the same race) but over FUCKING PIECES OF DIRT fills me with revulsion. However I grant you that you can kill for self defence, even preemptive self defence. That I grant. Call me a rootless cosmopolitan, call me a bloodless rationalist urban dweller. There are worse things to be.
    Anti-discrimination idiocy: Believe it or not price discrimination can generally be efficient and mutually beneficial for all parties. If a business can clearly divide its customers into two groups - A and B - where A has a higher willingness to pay (and also perhaps higher associated costs of service) than B then if it charges A a higher price than B, the business's 'output' of its service is maximised and everyone 'consumes' as much as of this service as their preferences dictates. On the other hand if the business is forced to charge the same price to A and B, then the business may end up charging a price to B that is higher than what a lot of people from group B would prefer to pay since the uniform price has to take account of both A and B.

    As a consequence some people from B either go to a business that charges a cheaper price or they have to fork out more than they want to (assuming all businesses who serve customers of type A and B are prevented from price discriminating and it's a service no one can go without, the latter may be likely). I should qualify this of course by saying that if the rule on which the business bases its price discrimination isn't perfect than there may be welfare losses from allowing it to price discriminate - for instance because some people it classifies as A under the rule really have preferences closer to B, in which case they are being charged a lot more than they would be willing to pay. However how are regulators to say that they know the business's customers better than the business? In this case a rule preventing price discrimination clearly ends up with what economists call the more demand elastic party (the one with less willingness to pay) being worse off - paying more or going without.

    An obvious area where price discrimination makes a lot of sense is in hair cuts. When I was living in the Western suburbs I used to have my hair cut at an old fashioned Italian barber - you know, the politically incorrect sort who stops for a break to puff at his cigar (luckily no one reported him to the social engineers - I didn't mind, why should the sticky beak government?) I recently moved to Neutral Bay and haven't been able to find a similar cheap barber thus far. Thus I was forced to visit one of those wanky overpriced unisex 'hair dressers'. I was asked how I wanted my hair cut and made my usual reply of 'short' - but apparently this place has one of those bewildering numbers of styles offered. I had no idea how the system worked and merely described generally that I wanted my hair short at the back, sides and front.

    The point of this anecdote is that men are generally less fussy about how their hair is cut than women. It also costs a lot more to please women customers than men. Men are less willing to fork out money for a hair cut then women. Given these factors, price discrimination generally makes a lot of sense and even wanky unisex hairdressers recognise this, thus they have been price discriminating but it seems the days of price discrimination are numbered:

    The fight for equality has entered the hairdressers, with a leading salon group making men's and women's haircuts the same price.

    Toni & Guy salons have done away with pricing on a gender basis and introduced a flat rate fee for basic styling services.

    Men and women pay $72 for a stylist cut and blow dry and $89 for an art director cut and blow dry.

    The move follows a similar trend among salons in Victoria, brought about by a case lodged with the Victorian Civil and Administrative Tribunal against leading Melbourne hairdresser Edward Beale.

    The case, in August 2000, began after travel consultant Amanda Atkins claimed she was charged $56 for a haircut while a man was charged $38 for a similar cut. ..
    Toni & Guy marketing manager Anne-Maree Fitzgerald said the case had played a role in her salon group's decision to restructure its fees, but was not the sole reason.

    "The case certainly brought equality issues to our attention," Ms Fitzgerald said.

    "We've decided simply to take a more equal approach, which is more appropriate today.

    "The community demands that we have equality and that extends to the price of a haircut."

    Fortunately all is not lost. There are ways to route around this such as offering alternative 'packages' where presumably people like me could pick the 'no frills package'. The hair dresser in that report made the following valid point however:

    Ms Fitzgerald said that as men became more fashion conscious, they demanded a greater level of service - and a hairstyle rather than just a haircut.

    "Blokes in the old days would simply walk in and walk out but these days they enjoy the same service as a female customer, which [involves] a lot more pampering," she said.

    "There are a lot more men interested in looking for a fashion-led solution for their hair rather than function-led."

    Sure, this is true and if businesses think their price discrimination rule is costing them customers and that given current trends, price discrimination via self selection of 'packages' is going to win them more customers than price discrimination via gender then it's in their interests anyway to go with the first strategy - but the point is that the pressures of the marketplace should lead them in that direction. Government regulation (well it's not so much regulation as litigation-led regulation via one of these worthless quasi governmental agencies) should not be playing a part in this area. Another way the market can route around this problem is as long as those old fashioned Italian barbers which serve exclusively men (and therefore can charge a cheap price) are still around - hopefully they will be as long as government regulation doesn't force them to become one of those wanky unisex operations that charge $38 for a hair cut ($38! imagine!). I better start looking around.

    More pork for the housing industry: The housing industry gets enough freebies as it is at taxpayers' expense such as capital gains tax exemptions for residences (if we're going to have a capital gains tax at all then why should this important source of capital gains be exempted)? The Howard government introduced a first home buyers grant as an election bribe and is now looking at extending it after the usual whinge from industry lobbyists:

    The $900 million first home buyers grant scheme may be changed to save the housing industry and the economy from a damaging mid-year slump.

    Under a plan being considered by Prime Minister John Howard, the $10,000 grant to first home buyers who chose to build a home would be extended beyond the July 1 cut-off.

    But as a trade-off, the grant to other first home buyers would be cut from $7,000 to $5,000.

    The plan would save $200 million a year from the cost of the scheme ...

    The housing industry is desperately lobbying the Federal and State governments to adopt the plan to head off a crash after July. The industry fears that, with interest rates likely to rise, removing the extra grant for newly-built homes will turn buyers back to existing dwellings.

    Yes, Mr Spiv Lobbyist, it's called 'letting the market work'. How can principled advocates of economic liberalisation carry the public along with them if they cave in to every call for corporate welfare? Oh! I forgot! The Howard government has *never* been a principled advocate of economic liberalisation.




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