Working Papers

Dear Urban Cyclists: Go Play in Traffic

P J O’Rourke on the evil of cities congested by bikes and bike lanes:

The bicycle is a parody of a wheeled vehicle—a donkey cart without the cart, where you do the work of the donkey.

posted on 02 April 2011 by skirchner in Culture & Society

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Rudd and Greed

I have an op-ed in today’s Australian responding to the Prime Minister’s attacks on ‘the culture of greed’:

Scottish Enlightenment philosopher David Hume noted as long ago as 1741: “Avarice, or the desire of gain, is a universal passion which operates at all times, in all places and upon all persons.” One cannot explain episodic phenomena such as financial crises with reference to a constant such as human nature or rationality.

The principal mistake the critics of free markets make is to assume that self-interest, greed and irrationality affect only private sector decision-makers. Politicians and regulators are just as prone to self-interested behaviour and do not become saints by virtue of elected or unelected office. The public sector and regulators are populated by the same species that is found in the private sector and financial markets. We should always be suspicious of claims to superior moral virtue coming from politicians.


posted on 29 October 2008 by skirchner in Culture & Society, Economics, Financial Markets

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posted on 01 February 2008 by skirchner in Culture & Society, Economics, Financial Markets, Foreign Affairs & Defence, Higher Education, Misc, Politics

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Peak Oil Nutters

The WSJ profiles some typical Peak Oilers:

It was around midnight one evening in November when Aaron Wissner shot up in bed, jolted awake by a fear: He wasn’t fully ready for the day when the world starts running low on oil.

Yes, he had tripled the size of the garden in front of the tidy white-clapboard house he shares with his wife and infant son. He had stacked bags of rice in his new pantry, stashed gold valued at $8,000 in his safe-deposit box and doubled the size of the propane tank in his yard.

“But I felt panicky, like I needed more insurance,” he says. So the 38-year-old middle-school computer teacher put on his jacket and drove to an all-night gas station, where he filled three, five-gallon jugs with gasoline.

“It was a feel-good moment,” says his wife, Kimberly Sager. “But he slept better.”

Not sure how a few bags of rice, a propane tank and a few grand in gold is meant to help with TEOCAWKI, but like they say, whatever helps you sleep at night.

At least someone is out there trying to give the peak oilers an education:

Three weeks after their first immersion, the couple drove to a peak-oil conference in Ohio, where lecturers showered them with statistics on demand curves and oil-field depletion rates. Then, at a conference in Denver, a man in a chicken suit called them crazies as he passed our fliers arguing that the world still has plenty of oil.

I’m with chicken suit guy.

posted on 26 January 2008 by skirchner in Culture & Society, Economics, Financial Markets

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The Business Spectator

The Business Spectator has finally launched and promises to provide a welcome alternative to the unreadable Australian Financial Review:

Now you’ll never have to wait (or pay) for the news (or analysis) that counts. Business Spectator has filled the gap, providing Australians with real-time business news and commentary 24 hours a day, seven days a week.

The Business Spectator also includes a moderated, blog-style section called The Conversation:

The Conversation will combine the best elements of a letters-to-the-editor page, a blog, an online forum and a roundtable discussion. We want to create a place where Australia’s business community can exchange views, react to the news or set the agenda.


posted on 30 October 2007 by skirchner in Culture & Society, Economics, Financial Markets

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A Blogger’s Credo

Chris Dillow’s wisdom to blog by:

I don’t blog so I can be judged by any middle-class moron who thinks his opinion matters - that’s what I go to work for.

posted on 01 October 2007 by skirchner in Culture & Society

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UK Conservatives Channel Clive Hamilton

UK Conservatives reach for the Australia Institute playbook:

THE Conservatives will propose banning plasma screens and other energy-guzzling electrical goods in a report to be unveiled next week.

The proposals target white goods like fridges and freezers, as well as TVs, personal computers and DVD players that use too much energy or operate on stand-by.

The ideas come from a Conservative group set up by David Cameron to develop policies to protect the environment and although the measures to make household electrical appliances more energy efficient are not binding on Mr Cameron, they are thought likely to be warmly received by the Tory leader.

The group will also suggest scrapping Gross Domestic Product (GDP) as a measure of the nation’s success in favour of a model that measures people’s happiness drawn up up by Friends of the Earth.

See also Brendan O’Neill on David Cameron’s promotion of carbon bondage.


posted on 11 September 2007 by skirchner in Culture & Society, Economics

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The Use and Abuse of ‘Liquidity’

The notion of ‘liquidity’ is routinely invoked as a driver of the business cycle and asset prices, yet few analysts bother to define what it is they mean by liquidity.  More often than not, ‘liquidity’ is discussed in a way that is simply synonymous with monetary policy.  To that extent, there is nothing remarkable about the idea that monetary policy might be important for business cycle and asset price dynamics.  Many of the analysts who invoke liquidity intend the term to mean something more than monetary policy, defined narrowly as changes in official interest rates.  In particular, the notion of liquidity is often employed to denote growth in monetary and credit aggregates, which may have only a tenuous relationship with monetary policy and may be dominated by private choice. 

Then there are those who conflate liquidity with saving.  The idea of glut of global saving has led some to claim that the world is ‘awash in liquidity.’  But as Alex Pollock notes ‘if liquidity were substantive, there could not have been plenty of it a few weeks ago and a shortage now.’  Pollock argues instead that:

“liquidity” is a figure of speech, describing the following situation:

• A is ready and able to buy an asset from B on short notice
• At a price B considers reasonable
• Which usually means C has to be willing to lend money to A
• Which means C believes A is solvent and the asset is good collateral
• And if A is a dealer, A and C both have to believe that the asset could be readily sold to D
• Which means they both have to believe that there is an E willing to lend money to D.

In short, liquidity is about group belief in the solvency of counterparties and the reliability of prices, reminding us that “credit” and “credo” have the same root. When no one is sure who is broke, and there is high uncertainty about prices, we will discover that liquidity has vanished, however plentiful it may recently have seemed.


posted on 29 August 2007 by skirchner in Culture & Society, Financial Markets

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Australian Economists Repudiate Kyoto

The latest media stunt by the anti-modernist Australia Institute has backfired, with Warwick McKibbin noting on ABC Radio that only 10% of those eligible to sign the economists’ petition in support of Kyoto actually did so.  McKibbin was a particularly notable non-signatory, given his expertise in climate change policy. 

UPDATE:  Damien Eldridge explains his reasons for not signing.

posted on 28 May 2007 by skirchner in Culture & Society, Economics, Politics

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Peter Costello as ‘Old-Fashioned Christian Socialist’

At the same time that Treasurer Peter Costello has been branding opposition leader Kevin Rudd a socialist, Jennifer Hewett finds that Peter Costello is not above a bit of old-fashioned Christian socialist resentment either:

An aggrieved Peter Costello certainly won’t be breaking out the champagne to celebrate with Allan Moss or Nicholas Moore.

Their $30 million-plus salaries will fuel the Treasurer’s anger with what he regards as a culture of greed and arrogance at the multi-multi-millionaires factory.

Costello doesn’t like investment bankers much in general. But the uber-bankers at Macquarie, in particular, represent all that most irritates him.

How, he wonders, can these guys justify earning so much while giving so little back?

Those who know the Treasurer well have learned to expect a private tirade of vitriol about Macquarie whenever the bank’s name comes up.

“He sees people benefiting from his hard work on the economy, enjoying the fruits of the Government’s labour and earning obscene amounts of money that he could never earn,” says one insider.

It’s not so much that Costello wants to earn or spend such vast sums of money himself. His Baptist upbringing in Melbourne has moulded him as much as it has his brother Tim, chief executive of World Vision Australia.

Even if their careers have gone in different directions, Peter Costello still finds personal excess distasteful, rather gross. And it’s not just a matter of disliking Sydney glitz.

What really rankles the Treasurer is what he regards as the sheer and grotesque imbalance in the money equation, given how hard he believes government ministers work. None more so than himself….

Another problem is that the Treasurer sees investment bankers as not actually producing anything.

...unlike politicians.

posted on 16 May 2007 by skirchner in Culture & Society, Economics, Politics

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Throwing the Book at ‘Fair Trade’ Coffee

Tim Wilson and Sinclair Davidson want the ACCC to throw the book at ‘fair trade’ coffee:

TWO Melbourne academics have lodged formal complaints against Oxfam Australia over the sale of Fairtrade coffee, saying it should not be promoted as helping to lift Third World producers out of poverty because growers are paid very little for their beans.

Tim Wilson, a research fellow at the Institute of Public Affairs, and Sinclair Davidson, professor of institutional economics at RMIT University, have asked the Australian Competition and Consumer Commission to investigate Oxfam, saying it is guilty of misleading or deceptive conduct under the Trade Practices Act.

Mr Wilson said there was evidence that Fairtrade products could do more harm than good for coffee producers in undeveloped nations. He cited reports alleging producers had been charged thousands of dollars to become certified Fairtrade providers and some labourers received as little as $3 a day.

In order to lodge the complaint, Mr Wilson purchased a 250g pack of Fairtrade organic decaf ground coffee from the online Oxfam shop.

“We purchased this product in good faith, with the aim of lifting people out of poverty while enjoying our favourite brew,” Mr Wilson said, in his letter to ACCC chairman Graeme Samuel.

Mr Wilson and Professor Davidson have long held doubts about whether Fairtrade products help coffee, tea and cocoa producers in undeveloped nations. Sales of such products in Australia total about $8million.

The complaint to the ACCC refers to an article published in the Financial Times last September, which said Fairtrade coffee beans were “picked by workers paid below minimum wage”. It claimed workers received the equivalent of $3 a day.

The coffee is sold at a premium to people concerned about Third World poverty.

The academics quote an analysis of Fairtrade, published in the US-based Cato journal, which says coffee producers in poor nations are charged $3200 to become certified Fairtrade providers. The producers’ costs are therefore higher than on the open market. The Fairtrade campaign aims to manage the international coffee trade by fixing prices at $US1.26 ($1.64) per pound (454g) and eventually fixing supply.

Cato’s analysis of the international coffee market can be found here.

posted on 28 April 2007 by skirchner in Culture & Society, Economics

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The Failure of Earth Hour

David Solomon of UC GSB estimates the effects of Earth Hour:

On March 31 at 7:30pm, the residents of Sydney, Australia, held an ‘Earth Hour’, where people were urged to turn off their lights and electrical appliances for one hour. According to poll evidence, over 57% of Sydney took part. To estimate the impact of this event, simply measuring the difference between actual consumption and predicted consumption (as media reports did) gives an incorrect inference, because over 67% of the apparent decline was due to factors common throughout the day, not just ‘Earth Hour’. Once this is controlled for, ‘Earth Hour’ shows a decline of only 2.10%, statistically indistinguishable from zero. Declines as large as those during ‘Earth Hour’ were actually observed throughout the day, starting as early as 5am, suggesting that the gap in consumption is due to omitted variables, not the event itself. The size of the drops is also small within the sample – ‘Earth Hour’-sized drops in electricity consumption actually occur on average every four days. In terms of reducing electricity consumption, ‘Earth Hour’ was, statistically speaking, a failure…

Taking the point estimate of the EarthHour Dummy variable in the full specification after controlling for EarthDay fixed effects, the estimated impact of half of Sydney apparently sitting in darkness using no appliances was to reduce statewide electricity use by around 2.1%. This is a useful, albeit rough, example of the potential economic cost of some currently debated policies that seek to reduce Australian greenhouse gas emissions by 60% by the year 2050.

Of course, the opinion poll results probably grossly overstate participation in Earth Hour, given the levels of fear and loathing generated by climate change hysteria.

posted on 18 April 2007 by skirchner in Culture & Society, Economics

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Evil Mind

The SMH’s Lisa Pryor indulges her vindictive streak:

Bring on the recession, my evil mind thinks, see how you feel then, suckers. Then where will you be with your spoilt ways and mobile phone bills and your misplaced optimism?

posted on 06 April 2007 by skirchner in Culture & Society, Economics

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‘Healthy, fat and comfortable on their iceberg’

An Australian graduate student, her polar bear photo and the Disneyfication of politics.

posted on 22 March 2007 by skirchner in Culture & Society, Politics

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‘Carbon Neutral Grannies’: Global Warming Self-Parody Alert

If it were the first of April, I would assume that this was a cruel parody of global warming hysteria.  Unfortunately, it is just self-parody, with front page billing in The Weekend Australian:

All forms of flatulence - from cats, dogs, even from Dad - contain methane, a greenhouse gas thought to contribute to climate change.

If you’ve been feeling guilty about it, help is at hand. For just $8, a Sydney-based company, Easy Being Green, can now make your cat carbon-neutral, so it can “live guilt-free for a year”…

The scheme can be applied to any product, animal or person. For $20, the company made Jenny Cracknell into a “carbon-neutral granny” last year. Her daughter, Emily, gave her a gift certificate to offset two years’ worth of flatulence. “I don’t like to brag, but I actually don’t have much flatulence,” Mrs Cracknell says. “But when I do, I feel OK about it, because the damage to the planet has been offset.”

posted on 17 February 2007 by skirchner in Culture & Society

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