The Welfare State

In most western countries tax payers pay a great deal of money to the government in taxes, much of which comes back to themselves and others in the forms of various kinds of welfare. It seems to me that there are three distinct rationales for paying welfare and that they are often not stated but somehow assumed and I think lead to confusion over what we are trying to achieve. My three rationales are:

1) A social safety net. This is the barest minimum level, and the idea is only to protect those in real hardship from starving etc and ensuring all minors say have the ability to obtain at least a basic level of education.

2) Redistribution of wealth. Welfare (along with progressive taxes) become a way of ensuring a flattening of the income distribution. We are taking from the rich to give to the poor.

3) Social engineering. Can come in various forms but the recent ones we’ve seen in Australia have been with regards encouraging families. eg. Family Tax benefit B and the Maternity payment. In principle though it could be anything but this is not income or poverty based, rather it tries to target various social goals.

It seems that you could divide these three into welfare that would be supported by clasical liberals in the first case. Social Democrats in the second and Conservatives in the third, although Social democrats also do the third rationale. There are no hard lines between the three categories. Obviously what is a bare minimum for a safety net is up for debate, but they do I think underline different ideas behind running welfare.

While I’ve been happy to enjoy the benefits of rationale 3, it seems to me the main purpose of welfare is 1) with an element of 2). I think some form of progressive taxation is a good idea and that the basic level of cover should be better than just avoiding starvation.

Where proposals such as mutual obligation come is also interesting (ie deserving poor tests). Generally it seems that they are an attempt to turn basic insurance into more social engineering. Its not clear to me that we should ever be doing welfare on the basis of 3.

Probably not my greatest post but just wanting to get some ideas down.

Sydney rentals

There has been a bunch of articles in the SMH recently about how tight the sydney rental market is. This was a little disappointing given that we had just started trying to find a place the day the headline proclaiming a 20% increase appeared in the paper the day before we started seriously looking. As usual this was some “research” by one of the various property industry bodies which regularly come out with rosy predictions about sectors of the property market. Typical lazy journalism runs these articles without any scrutiny, indeed they’ve been predicting rebounds in housing prices the entire time its been going down.

The article had the desired effect, overnight some of the advertised properties increased their asking rent 10%, ringing to enquire about another on the following Saturday I was told that “the asking price has gone up because the owner read the article in the paper saying rents were going up 20%”, again they had jacked it up 10%, for a property that already looked a little pricey. Obviously if the prediction is wrong then the market won’t sustain these rises, but at least in the short term it will probably have the desired effect. I do wonder when this research stops being research and starts being market manipulation. Not all of the newspaper articles fall into this category, the discussion of the effect the changes to super rules are having is legitimate, but what I dislike is the hyped up price increase amounts.

My story has a happy ending. We found two places we like on the first weekend of searching, got offered both and took the one we liked best. Further out from the city now, we’ve gone from Glebe to Strathfield, which means I won’t be walking to work in the CBD anymore, but on the upside we now have about 3 times as much space and a yard for the little fella to crawl and soon run around in, but the upside is we are paying a bit less rent.

Update: Another article today but this time about house prices rather than rent. Two different surveys two different answers. Unsuprisingly the mortgage industry research, says

…a contrasting survey of 958 people by the Mortgage Industry Association of Australia (MIAA) and BankWest showed that Australians were becoming increasingly optimistic that house prices would increase in the next year.

The study showed that 42.9 per cent of respondents expected residential property prices to be higher in the next quarter, despite higher rates…

(my emphasis)
where as a more independent poll found

A survey of 1,894 Australians by News.com.au found that 68 per cent of respondents said that higher interest rates would force home sellers to cut prices, while 42 per cent expected house prices to fall in the next quarter.

Long time no post

Its been a while since I’ve added anything, but I do intend to add more material here sometime soon. Although, as I will be moving house over the next month, its likely to be light on for a while.

No exactly a hiatus, but more of a quiet period.

Warne to Retire

Sad news today that Warnie is to retire after the Sydney test. Only twice more will we watch those long overs of him ripping the ball across hapless English batsmen and tail enders, running his fingers through the bleach blonde advanced hair and appealing on almost every ball.

I loved Warne in those early years, a leg spinner a novelty in my life of watching cricket and a damn good one at that. So many memorable events, the seven wickets he took against the Windies in 92/93 at the MCG, his first tour of England 29 wickets and they knew little of what to do about him. The seven wickets he took on the first day at the SCG against South Africa in 93/94. From memory for 5 consecutive overs he came on and took a wicket, including bowling Cullinan for the first time. The best spell of bowling I’ve watched at the ground.

Then there was his off field behaviour culminating in the drugs charge and slowly but surely I came to loathe the man while still admiring his cricket. It was perhaps harsh to place such judgement on him I think back now. The media pack was baying for his blood and it can’t have been easy on him but still Warnie made himself most problems you can’t deny.

I think little of the idea of sports people as role models. We expect them to play hard and fair but must realise that does not make them any more likely to be decent people off the field. He was a cricketer one of the best, and we should admire him for that and expect no more. I can’t condone his behaviour but what he does off the field is his own business.

He turned this all around for me in 2005 and once more I came to love Warnie. As the Ashes was about to begin his private life imploded around him. It was his own doing but Fleet street were also determined to trap him with whatever dirt they could dig up.

In the midst of this with McGrath out suddenly with an injury, Gillespie badly out of form and Lee only good in spells Warne stepped up and shouldered the burden. He took wickets in the first session of the tests and he knocked over openers. When Ponting looked bereft of ideas it was Warne there discussing tactics, and motivating the team, in the end they lost two close matches and the series. Warne with 40 wickets in 5 tests bowled out of his skin in my mind the best series he ever played.

Sure his tally was helped by the inability of the other bowlers to contribute, but his bowling was superb regardless. Twelve years after his first appearance in England, with his bowling scrutinized and his variations well studied he was still there making breakthroughs that others couldn’t.

Since watching that series I’ve thought it was a shame he was never made Captain, due of course to his off field behaviour. When Australia were in trouble in 2005 it was Warne who looked to be keeping them in the game. He had a fine brain for cricket, even if his batting was disappointingly impulsive at times.

There is no question that Warne has bowled well this series, but no where near his best. I had hoped to see him continue on. I’m sure if he was willing to stay fit he could have played till he was 40.

I will miss Warne and those hours of watching him work away, chip away, fizzing balls past stumps and bats, strangled cries of catch and his tentative and regular “how was that one”.

Card Counting

This will probably be a real spam magnet but anyhow….

Some time ago, while I was still at uni, with a few friend I tried card counting blackjack. Like all casino games blackjack is in the house’s favour. However over the course of a deck (or several decks) this is not always the case for every hand. By keeping track of the cards that have come out of the deck, you can determine when the game is in your favour and increase your bet accordingly. Contrary to popular opinion you don’t need to track the actual cards that have been removed but rather keep a running tally on their effect on the game.

Certain cards are good for the player. A deck rich in aces gives more chance of blackjack with its higher pay out and a deck rich in tens gives the dealer who must hit automatically until he gets 17 or more, a much higher chance of going bust. Conversely a deck rich in 4, 5 and 6’s is bad for the player. The dealer will more rarely go bust as these cards will save him from going bust when he gets to totals of 14-16. The basics of such a system of counting and betting were first shown by Edward O. Thorpe and rely on both inferring a proportional measure of the expectation for a single bet and the use of the Kelly Criteria, in essence betting amounts proportional to your expected chance of winning.

In a small deck this is particularly effective as you get towards the end of the cards, but it’s also effective in large decks as well. Particularly if they place the cut card, which determines the point when the decks are reshuffled, near the end. Casinos of course take a dim view of the idea that someone else other than the house could be playing a positive expectation game and so try to stop it typically by banning the players in question. Counting is not illegal, but the casino is free to exclude anyone they don’t like.

The reality of the situation though is that unless you have a large bank roll you are better off working at McDonald’s, and if you are playing alone its pretty easy to detect someone with wild swings in their betting patterns, particularly if they are winning money. Still it was possible for us on many trips to the casino to sit off a table not playing until the deck was “hot” and then jump in and lay some bets. This makes you pretty obvious but if you are serious low rollers like we were when we were uni students then I doubt they are worried particularly.

Successful counters these days work in teams. A reasonably interesting book on the subject is Bringing Down the House, which although it concentrates too much on the glamour of the high-roller lifestyle and not enough on the actual scheme.

As for our little project, it slowly disappeared into nothing more than an occasional drunken trip to the casino where we would attempt to count through the haze. I note though now that the Star City Casino has put in continuous shuffle machines and the whole hope of counting is gone. I wonder whether it is actually a positive revenue deal for them. After all people like me will only play if they have the knowledge that they might just be able to have an edge even though in practice they rarely will. For the casino I guess giving this money away is worth it if it means avoiding serious counters.

Protecting us from ourselves

A friend of mine who has recently become an expectant father, found out that he needed to find out his blood type. For those not aware there can be complications if the mother has an RH negative blood type and the baby has RH positive. The complications can be avoided by some injections, but are also unnecessary if the father is also RH negative as the baby will then always be RH negative as well and there is no risk of reaction. This is the case with my wife and I who are both RH negative.

So anyhow, to avoid unnecessary treatment my friend decided to get his blood type determined only to turn up and discover that they were unable to obtain this simple test without a referral from a doctor, which would of course require an appointment and cash.

Annoyed at this waste of resources he sent off an email to a number of friends, several of whom are medical doctors, complaining bitterly at the waste of his time, his money and the government’s money that was involved in this process.

My immediate (and deliberately provocative) response was that it was due to the closed shop that doctors were running where everything has to be processed by one of the union and I think there is certainly something in that. However I want to explore the response from the doctors.

Did Duncan Fletcher cost England the Ashes?

Any English cricket fan must be wondering right now how different the series might have been if Duncan Fletcher had shown a bit of aggression and picked Monty Panesar over Giles from the first test. It seems obvious to win a cricket match you pick bowlers to take wickets. Bowlers save more runs by taking a couple of wickets than they gain by sticking around to make a hard fought 20 runs.

Giles was a defensive move, and never looked dangerous in two tests. The Australians already had good measure of his limited capabilities. Panesar had the advantage of being good, unknown and attacking. It was a mistake to pick Giles in Brisbane, and a disaster to pick him in Adelaide.

After Panesar’s performance in the first innings in Perth it seems likely that he could have delivered England a large first innings lead in the second test and set them up for a potential victory. We’ll never know of course and judging by the short last session by Australia his contribution might not be enough to turn the Perth test either. However it requires a particularly fertile imagination to think of Giles taking 5 wickets on day one of a test match.

Food politics

An interesting piece in The Economist discussing issues around, organic food, fair trade and ideas about embedded energy, or food miles. Some of these topics I’ve mentioned in earlier posts.

On the claim organic food is better for the environment:

Perhaps the most eminent critic of organic farming is Norman Borlaug, the father of the “green revolution”, winner of the Nobel peace prize and an outspoken advocate of the use of synthetic fertilisers to increase crop yields. He claims the idea that organic farming is better for the environment is “ridiculous” because organic farming produces lower yields and therefore requires more land under cultivation to produce the same amount of food… The more intensively you farm, Mr Borlaug contends, the more room you have left for rainforest.

On fair trade coffee:

The standard economic argument against Fairtrade goes like this: the low price of commodities such as coffee is due to overproduction, and ought to be a signal to producers to switch to growing other crops. Paying a guaranteed Fairtrade premium—in effect, a subsidy—both prevents this signal from getting through and, by raising the average price paid for coffee, encourages more producers to enter the market. This then drives down the price of non-Fairtrade coffee even further, making non-Fairtrade farmers poorer. Fairtrade does not address the basic problem, argues Tim Harford, author of “The Undercover Economist” (2005), which is that too much coffee is being produced in the first place…

But perhaps the most cogent objection to Fairtrade is that it is an inefficient way to get money to poor producers. Retailers add their own enormous mark-ups to Fairtrade products and mislead consumers into thinking that all of the premium they are paying is passed on. Mr Harford calculates that only 10% of the premium paid for Fairtrade coffee in a coffee bar trickles down to the producer. Fairtrade coffee, like the organic produce sold in supermarkets, is used by retailers as a means of identifying price-insensitive consumers who will pay more, he says.

Test Cricket never boring.

It’s not the ankle that’s hurting at the moment.

says Flintoff and I’m sure he’s right.

Well what can I say Australia crushed England today in the cricket. Crushed their batsmen and then cruised to victory on a flat deck.

To go 2-0 down after two tests, and particularly one where England must have thought that after two and a bit days they had set up for a potential victory or at worst a draw, is totally crushing. I remember how Australia reacted when India levelled the series after following on, and I suggest that England will be feeling the same way and do something similar.

I will be very surprised if they can bounce back knowing they have to win at least 2 of three games when they haven’t been able to bowl Australia out for less than 500. Hoggard has been bowling great but Anderson was lucky to get McGrath and Harmison just isn’t dangerous. Giles is a joke, never looks like getting a wicket unless someone gifts him one when they don’t quite slog him over the boundary well, except for the wicket he took off Martyn, which brings me to another topic.

What the hell was Damien Martyn doing? Needing less than 4 runs an over, and he’s already slogged Flintoff first ball so he tries to back away and hits it of course straight to slip in a manner reminiscent of catching practice. If Watson is fit and they want him in the side its Martyn that has to go, he’s old, out of form and cracks under pressure.

If you look at the Average in Games Won/ Average in Games Drawn or Lost, as some measure of how someone performs under difficult circumstances, Gilchrist is the only one of the long term batsmen who has a comparably bad ratio but at least he’s doing the keeper’s job as well.

This doesn’t of course measure the one day games where he comes in takes 5 overs to score 2 runs, runs out an set player down the other end and then gets out in single digits.

Martyn must be dumped. We’ve known he was a choker since this game in 1994. Six runs from 59 balls with McDermott cracking fours down the other end and victory 6 runs away and what does he do? Holes out to cover. Twelve years later little has changed. Fortunately Hussey and Clarke have steadier heads.

Update: Perhaps my blog post, convinced him but anyway I should note that Damien Martyn has retired from cricket.

Safety, risk and nuclear power

It has been pointed out by many people, including on this blog by Sacha (quoting James Lovecock), that nuclear is much safer than pretty much any source of power for electricity. The relevant comparison was that per Terawatt-year of electricity generated there are 342 deaths for coal, 885 deaths for Hydro, 85 deaths from Natural Gas and only 8 for Nuclear. This comparison appears to be using a low figure for the Chernobyl accident as the WHO finds around double that number of deaths directly to the Chernobyl accident, but even so that brings the total to 16 per TWy, still well less than the next most safe method, Natural Gas. Hydro rates poorly due to some severe accidents with dams bursting in India that have killed in the thousands each.

Death of course is not the only risk associated with nuclear. Thousands more have had thyroid cancer directly as a result of Chernobyl although most have been treated and over 99% have recovered it is still a cost to bear. Then there is the contamination of land and the wholesale abandonment of the surrounding area. Also this is not to mention that we don’t really have much historical data to base our estimate of how bad or how frequent a meltdown can be. Still if we look at the total historical human costs and average over all the power that has successfully been generated by nuclear the human cost still comes out as being low, certainly lower than coal power.

If that is the case then isn’t it rational that we should adopt nuclear on the basis of safety? What that kind of comparison misses out is that people regard riskier situations as different to less risky situations for similar expectations. Thus although most nuclear power plants will sit there quite happily not hurting anyone, the rare one that does is potentially extremely hazardous. It is reasonable to treat this volatile outcome as much more serious than the equivalent. We do after all routinely pay away money to insurance companies when we would be better, on an expected outcome basis, to save the money ourselves.

If we believe that nuclear is not just a bit safer (in terms of deaths) than other forms of electricity but significantly safer, then surely this is enough to outweigh our risk aversion? I would say yes, but I could quite easily understand others coming to the no conclusion as well even if they were fairly well informed of the facts and the true risks.

That said I believe it is clear that many people over estimate the risk of nuclear compared with other risks that they don’t even consider or take for granted. On the other hand its also seductively easy to look at nuclear power’s track record in the west and do the reverse. It’s easy to believe there are no black swans if you’ve never seen one. We know catastrophic accidents are rare, but have we been lucky or unlucky seeing as few as we have seen?