Category Archives: Policy

308 – Vote yes for marriage equality

Australians currently have a chance to vote for marriage equality by postal ballot. I know this is a bit off the usual topics for this blog, but it’s something I feel strongly about. If you have the right to vote, here are six reasons to vote yes.

1. Because it’s the kind and decent thing to do. It would create joy for many thousands of people without hurting anybody.

2. Because gay people still face prejudice in many forms, and still attempt suicide at higher rates than their peers. Voting yes would be one small step towards turning this around.

3. Because we should not let the religious beliefs of a minority dictate how the rest of us live our lives. There is and should be a separation of church and state in Australia. Nobody should be required to follow the dictates of a religion to which they do not voluntarily subscribe. That is the real issue of religious freedom here – quite the opposite of what some “no” advocates are claiming.

4. Because the position of some Christians against same-sex marriage is not supported by the Bible anyway (Whitaker, 2017). The Bible has vastly more to say about being kind and generous than the few vague fragments it includes on homosexuality. Nowhere does it actually proscribe same-sex marriage. In the Old Testament, it does say that a man lying with another man instead of his wife is an “abomination”. But (a) this is about adulterous sex, not marriage between a loving couple, and (b) there is an interesting list of other things that the Old Testament also describes as abominations, including wearing mixed-fabric clothing, tattoos, mocking the blind by putting obstacles in their way, and trimming your beard. Why are we not having a postal plebiscite on the trimming of beards? The highly selective focus of some Christians on homosexuality is hypocritical. Neither testament of the Bible says anything whatsoever against lesbians.

5. Because Australia is lagging behind the rest of the civilised world. Same-sex marriage is already legal in The Netherlands, Belgium, Spain, Canada, South Africa, Norway, Sweden, Portugal, Iceland, Argentina, Denmark, France, Brazil, Uruguay, New Zealand, the UK, Ireland, the US, Luxemburg, Colombia, Greenland, Finland, Slovenia, Germany and Taiwan.

6. Because this change is inevitable, and saying no now would needlessly delay us doing the right thing. It prolongs the debate and increases the number of public expressions of anti-gay prejudices.

Post your completed survey form back by 31 October to be sure of meeting the deadline.

Further reading

Whitaker, R.J. (2017). Same-sex marriage: What does the Bible really have to say? Here

307 – John Kerin’s memoirs

John Kerin was Minister for Primary Industries in the Australian Government between 1983 and 1991. His memoirs are now available as a free download. Having seen him speak several times since he ceased being a minister, I think his memoirs should be fascinating and very informative. Agriculture was very lucky to have him as minister during this period of great change and disruption. 

John Kerin was unusual as a minister in that he knew a lot about the issues he was responsible for. Not only was he experienced as an agricultural producer, but he was also trained as an agricultural economist, and worked for a while in the Bureau of Agricultural Economics.

Apparently, his expertise was not always appreciated by his department. In the last part of the book he says “the ethos of some government departments was that they preferred ministers who knew nothing – the better to manage or control them. However, I thought that it was not necessarily an impediment to know something about your portfolio areas. The constant rotation of ministers is not good for policy making.”

Not only did he know a lot, he was clearly very thoughtful and remarkably frank. “Nor … do I want to give the impression that I was always sure about what I was doing, what the outcome of some policy options may be or where the changes and reforms we were introducing may lead. … By nature I am a pessimist, slow to come to decisions and generally believe that I am wrong until convinced of the path to take.”

A landmark event during his term as minister was the wool crisis. His eventual decisions for the industry were critically important and rather heroic as they faced fierce opposition from the whole industry, which seemed determined to do itself almost unlimited damage.

Some of his perspectives are all too relevant in our current political climate. “I have always been terrified by people in politics who are absolutely sure they are right, have God on their side or tell me they are ‘men of principle’. Such people seem able to blind themselves to their own hypocrisy and humbuggery – and are dangerous.”

I’m really looking forward to reading the book.

Further reading

Kerin, J.C. (2017). The Way I Saw It; The Way It Was: The Making of National Agricultural and Natural Resource Management Policy, Analysis and Policy Observatory, Melbourne. Available here: http://apo.org.au/node/76216

Pannell, D. (2014). Supply and demand: the wool crisis, Pannell Discussions no. 266.

302 – India impressions

In February I spent two weeks on holiday in the north of India, visiting Delhi, Agra, Jaipur and Jodhpur. For many years, I had been reluctant to go there, afraid of being overwhelmed by the culture shock and the poverty. In the end, there was plenty of both, but perhaps less than I expected, and I really enjoyed the visit.

Here are some quick impressions about some of the main things that stood out to me.

Poverty and prosperity

There is plenty of evidence that India is developing rapidly. Between 1980 and 2014 its Human Development Index increased by 68 percent, and its Gross National Income per capita (in constant dollar terms) increased from $1255 to $5497. Their economy is continuing to grow rapidly: at 7.6% (real) in 2016.

Still, there are many people doing it very tough – e.g. sleeping under overpasses or in train stations. There was more begging on the street or at traffic lights than I had previously encountered elsewhere.

On the other hand, there was less of that than I expected. We were able to give to many of the beggars we encountered without feeling like it was overwhelming.

The huge majority of people look like they are doing OK. And there are plenty of people who are clearly doing very well indeed.

Traffic and crowds

The population of India is 1.27 billion, and it’s growing at 1.19% (15 million people) per year. It will overtake China as the world’s most populous country in about 2022.

Sometimes in Delhi it feels like they are all on the streets! Indian traffic is like nothing else I’ve ever encountered. Countless millions of cars, tuk tuks, motorbikes, trishaws, and sometimes buses and trucks. Not to mention cows and pedestrians.

The congestion is absolutely terrible of course, but just as remarkable is the way the traffic works. It feels like one is in a school of fish rather than a flow of traffic. Lanes are completely ignored. One moves forward into any available gap, seemingly no matter how narrow it is. When roads intersect, the cars just sort of inter-mesh and weave their ways through. You can’t wait for a break in the traffic before you cross, because there will never be one. I never got used to the alarming way that our drivers turned left onto roads or into roundabouts – they just drive on, seemingly without even looking whether there is room for them. The traffic just has to make room.

People are also quite relaxed about driving into oncoming traffic if doing so would be convenient. Our own drivers did it several times, and we once encountered a large truck coming straight at us in our lane: the inside lane of a dual carriageway road! Pauline screamed, but our driver was quite unruffled. He just shuffled to the left as if it wasn’t surprising. Because it wasn’t.

Apart from the traffic, it can be pretty crowded for people as well. Walking through the market area in Old Delhi it sometimes seemed about as crowded as being inside a bus in peak hour in Perth, but we were in the open.

Crowding was most intense inside some of the vehicles. I was part of a group of three, and we felt quite packed in in the back of a tuk tuk, but I saw plenty of tuk tuks with about eight passengers and one that surely had more than 10. It was common to see three passengers in the front with the driver, and he only has a single seat. One person would often be sitting under the driver, the other two teetering on a few inches of seat on each side.

On the other hand, we did manage to find plenty of relatively uncrowded places too, particularly some nice parks. The crowds are intense but not continuous.

Animals in the street

I’ve never seen so many different types of animals in urban areas: cows (of course), dogs, camels, horses, donkeys and monkeys are commonplace, and in Jaipur there are elephants. I witnessed a pitched battle between rival monkey gangs near the Taj Mahal.

 Environment

Delhi is famous for its poor air quality. According to the World Health Organisation, Delhi has the worst air quality of any major city in the world.  I had previously visited Beijing and experienced its appalling air quality, but Delhi is 43% worse (in terms of fine particles, which are the most damaging to health).

Fortunately it wasn’t too terrible while we were there, but on average air pollution kills about 1.5 million Indians per year – their fifth highest cause of death.  There is increasing awareness of the problem, but they’ve got a long way to go. For example, burning rubbish (including plastics) in the streets is still common.

The other local environmental issue that stood out was garbage in the streets. Particularly in Delhi and Agra, the garbage situation is absolutely woeful. Jaipur and Jodhpur were much better, apparently due to official efforts to raise awareness and clean things up. They are also much better for air pollution. Hopefully, rising incomes will result in people in other cities wanting to follow the examples of those two.

With so many people to fit in, you have to go looking for relatively natural areas. We went to Keoladeo National Park south of Agra, and it was absolutely fantastic. The range of birds, especially water birds, was just amazing, and there are plenty of other animals as well. We saw jackals, mongooses, deer, antelopes and bats. Highly recommended.

Selling

I’m completely hopeless at haggling. When buying small items, my heart is not in it, because fundamentally I am quite happy not to pay the lowest possible price, on the basis that it is still cheaper than I’d be happy to pay in Australia, and these people need the money more than I do. Add to that the fact that Indian sellers are masterful and incredibly persistent persuaders, and you can see the risks I faced. Oh well, it was an experience. I’ve always wanted 12 crudely hand painted plastic elephant key rings.

Food

I love Indian food. There were lots of great dishes you never see at an Indian restaurant in Australia.

Health

I used to always get really sick in developing countries, but over time I’ve developed a relatively effective strategy: carry hand wash and use it regularly, be cautious when choosing where to eat, and take Travelan before each meal. (And of course only drink bottled water.) I’ve now used this approach in Indonesia, Vietnam and India without getting a single serious stomach problem. In India I added another element to the strategy: only eat cooked vegetarian food. This was no hardship at all, given how good their vege food is.

Crime

We read a bunch of horror stories about the dangers before we went there, but never felt in any danger (apart from on the roads). Our guides warned us a lot about pickpockets, but we kept our valuables in pickpocket-proof bags, with metal reinforcing, so felt safe.

Overall, it was a great experience. Despite the various challenges, I’m really glad I went.

301 – Inequality in the USA

Following the catastrophic result of the US unpopularity contest last week, one of the many suggested explanations was the level of economic inequality in the country. This made me think of the graph below, which I saw last year. It shows that, when it comes to inequality, the US is truly exceptional.

The graph shows the Gini coefficient (a measure of inequality) for 115 countries, plotted against their GDP per capita (a measure of their average income). There is a very clear pattern. Above a certain level of inequality (Gini coefficient of about 37), almost all countries have really low average income levels, while above a certain level of average income (GDP per capita of $12,000), almost all countries have fairly low inequality.

 

gini

Source: http://visualizingeconomics.com/blog/2006/01/04/gdp-per-capital-vs-gini-index

 

The exception is the US, which has both high average income and high inequality. There is a lot of wealth in the US but it is concentrated into a minority of hands. As one illustration, between 2009 and 2012, 95% of income gains in the US accrued to the top 1% of income earners. Other data seems to show that their inability to share around the wealth has become worse over time. Other countries with a similar level of inequality have about one eighth as much average income.

If it is true that inequality is behind this incredible electoral result, we can perhaps draw some solace from the fact that inequality is so much less in all other wealthy countries.

On the other hand, inequality was clearly not the only factor. Already, like-minded politicians around the world are feeling empowered and emboldened to spread their noxious views throughout their societies. We can see that happening in Australia, France and The Netherlands, for example.

And there seems plenty to worry about from what could now happen in the US. The world’s most powerful country will soon be led by a deeply ignorant man of appalling values and character. Even by the low standards of politicians, he tells obvious lies to an extraordinary extent. I feel angry that so many Americans were taken in by this conman, and now the whole world will have to suffer the consequences.

The other thing I can’t stop thinking about is a certain historical parallel. Can you think of another prominent national leader from the 20th century who was elected on a promise of making his country great again? This other leader also used an ethnic minority group as a scapegoat for his society’s problems, and found a sympathetic ear from countrymen who felt they had been badly treated. He had notable authoritarian tendencies, fomented hatred and resentment, was not averse to jailing his political opponents, did not respect the rule of law or democratic institutions, and was unable ever to admit that he had made an error. He excited mobs with messages that were simple and bold but facile and dangerous. He was friendly with other authoritarian leaders (although that didn’t last). And he had a distinctive hair style.

I’m not expecting that the US will now proceed to annex Alberta as a prelude to invading all of the countries they can practically get to, but I do think there is a serious risk that voices of reason, balance, kindness and openness within the country will be repressed and perhaps even persecuted. We have to hope that good Americans will be able to moderate or even prevent the barrage of stupid and repugnant policies that will now come forth.

299 – Are higher house prices a benefit or a problem?

In the research reported in PD298, we used the impact on house prices as an indicator of the benefits of an investment in a public amenity. This is a well-established approach, but twice in recent times I’ve encountered an attitude that higher house prices are more of a cost than a benefit. Could that be right?

The issue that people have in mind when they raise this concern is housing affordability. This certainly is something that is worthy of attention. House prices in many parts of Australia (and other developed countries) are often so high that they place great financial stress on buyers with relatively low incomes or they result in too many people being excluded from the housing market.

However, talking to a former government minister last year, she said that measuring improved local amenity by the resulting rise in house prices was not acceptable because rising house prices are a problem for housing affordability.

housingAlthough I applaud her concerns for the welfare of low-income groups, her rejection of rising house prices as a measure of community benefits is not sound at all.

For one thing, it implies that rising house prices are a bad thing regardless of the cause of the rise. The logical extension of that thinking is that we would prefer completely impoverished suburbs with no amenities or services for residents. Let’s encourage crime, leave road potholes unrepaired, remove all street trees and encourage toxic industries to set up in urban areas. That would certainly result in affordable housing! This is obviously not the solution to the housing-affordability problem.

The second flaw in the politician’s logic was that it confused measurement with objectives. Improving the amenity of a suburb does result in benefits for the residents, and these benefits are reflected in the prices that people are willing to pay to become residents in that area. So the change in house prices that is attributable to the improved amenity is a sound quantitative measure of the benefits. There may also be spillover effects that are viewed as being negative, but the requirement then is to measure those negatives as well, not to reject the valid measurement of the benefits.

Thirdly, the politician is implicitly suggesting we should aim to achieve two different policy objectives (affordable housing and improved urban amenity) using only one policy mechanism, the decision about whether to invest in urban amenity. An important economic insight, known at Tinbergen’s Rule, says that you need at least one policy mechanism for each policy objective – in this case, one related to urban amenity (e.g. investment in drain restoration) and a different one related to affordable housing (e.g. increased land releases). If you try to achieve two objectives with only one mechanism, the community will end up worse off overall than it might have been.

I was completely unprepared for the ex-minister’s comment at the time, and so dazzled by its many problems that I wasn’t able to quickly provide a very coherent counter-argument. I’ll be better prepared if it comes up again.

Further reading

Borrowman, L. Kazakevitch, G. and Frost, L. (2014). Measuring Housing Affordability: What Types of Australian Households are in Stress? Discussion Paper 42/14, Department of Economics, Monash University. Full paper ♦ IDEAS page

Polyakov, M., Fogarty, J., Zhang, F., Pandit, R. and Pannell, D. (2016). The value of restoring urban drains to living streams, Water Resources and Economics Journal web site ♦ IDEAS page