Category Archives: Politics

The European Commission just doesn’t get it

From the BBC, in its latest attempt to drag the EU into the fiery depths of Socialism, the European Commission has decided that the best way tackle high international mobile phone costs is to implement enforced EU-wide price caps. Apparently, the Commission estimates its changes would wipe £3.5bn off of the earnings of mobile phone operators.

Yeah, way to go European Commission. This is going to do wonders to help an already stagnant EU economy and massive unemployment rates, isn’t it? In reality, there are precisely three effects this policy will have on the mobile communications sector. First, by intentionally undermining the profits of telecommunications companies, so too will be investment into future development of telecommunications infrastructure. In the long term this will result in EU consumers having access to sub-standard services and higher costs. Second, it will cause loss of jobs. Every dollar a company doesn’t have, is a dollar it can’t spend on employing someone. Third, it will reduce competition by undermining the manoeuvrability of companies and the incentive for new operators to enter the market.

I’m not arguing against regulation per se. By all means regulation is necessary under any system. However, in a market economy (assuming that’s what the EU actually wants, which isn’t quite clear) regulatory bodies should aim to achieve their goals through regulations which enhance competition, rather than undermine it. In my opinion, many of the hostilities against market economics can be attributed to insufficient competition, giving the perception that capitalism has little to offer the average pleb. If the EU wants to overcome its deep-rooted moral objections to capitalism it should aim to create a more competitive system, rather than a more heavily regulated and less competitive one which only deepens the hostilities.

As an example, in this particular instance, rather than introducing price caps, what I would regard as being a ‘good’ regulatory response would be as follows. Mandate that all mobile services companies provide a ‘price sheet’ which describes all costs in a standardized manner. This would enable the consumer to directly compare different operators and make more informed decisions, and, as we all know from ECON101, information is the key to efficient markets. The big problem with mobile phone charges, the reason they are so high, is because there are often hidden charges and costs. Regulation of the type I just described would directly counteract this problem.

There has also been a bit of chatter lately about implementing fee caps on banks, in response to countless hidden fees and charges. I think regulation of the form I just described would also be a good option in this case.

The cost of higher education

This post follows up on Joel Gilmore’s recent post on the Australian HECS (Higher Education Contribution Scheme) system, posted at Illuminating Science.

For those unfamiliar with the Australian higher education system, we have a system called HECS by which the cost of higher education is split between the government and students themselves. To pay their contribution, students have two choices. They may either pay for it up-front, in which case they receive a discount, or they may defer payment (effectively taking up debt) and repay it via a higher tax rate when they enter the workforce. This ensures that higher education is accessible to people who would otherwise be unable to afford it. In the later case, HECS repayment only kicks in once the salary reaches a certain threshold.

Recently the Federal Government (Liberal Party) increases the student contribution under HECS, a move which was, and still is, vehemently opposed by the Federal Opposition (Australian Labour Party).

In my opinion the student-to-state contribution ratio should be further increased. The central argument for this is that this creates a user-pays system, which simultaneously ensures universal accessibility. My arguments follow.

  • Incentive to make sensible long term decisions – If students are paying for their education they are more likely to make sensible long decisions regarding what they study. If we look at Western European nations which offer free higher education, we find a disproportionate number of students taking courses with very little chance of scoring them a job upon graduation. For this reason, higher education is doing little to contribute to overcoming high unemployment. I know numerous people in Germany who, despite having a university education, are unable to find jobs for this reason.
  • Incentive to complete studies, and to study full time – When higher education is free (in combination with government student living allowances), students have reduced incentive to study, and to complete their studies in a timely manner. Again using Western Europe as an example, as a result of free higher education in combination with state sponsored living allowances, it is not uncommon for students to take a couple of subjects per semester, and drag a standard undergraduate degree out over a five or six year period. Additionally, there is a sub-culture of career-students, who simply study one degree after another, with no intention of ever entering the work force. This is not the sort of culture a productive society needs to encourage.
  • Financial fairness – At the end of the day, there is no such thing as ‘free education’. Someone has to pay for it. The question is simply who. If the state pays for it, then it is payed for by all tax-payers. Whereas under a user-pays system only the person who receives the education pays for it. On average, people with a university education have significantly higher incomes than the average. Thus, higher education is a financial investment. It therefore seems to stand to reason that the ones receiving the dividends from this investment be the ones who pay for it. If tax payers were paying for my personal stock portfolio, to which only I was entitled to the returns, I’m sure everyone would agree that this would be very unfair. Frankly I see education in the same light. Why should the butchers, backers and candle-stick makers of society be the ones paying for my higher education, so that I can go and get a job earning twice as much as them.
  • Competition – If students are paying for their education themselves, this injects competitive forces into the education sector. Under the present system there is very little competition. Firstly this arises because the HECS system regulates the pricing of university courses. Second, what little variation in pricing there is between universities is almost invisible to the consumer (i.e. students) because the contribution they make towards this cost is comparatively small. If the HECS pricing structure were deregulated and the student contribution increased, the cost of courses would enter the decision making process, thereby driving competition.

In addition to these, I believe several other reforms of the higher education system are in order. Currently, the HECS debt system is government run, uses below market interest rates, and is based on your income tax statement. This means that it does not follow you overseas. The flaw with this is very clear. Every student with a HECS debt has an incentive on the order of tens of thousands of dollars to leave the country upon graduation. In my case, I have a roughly $40,000 incentive, which, needless to say, is very significant. And yes, it is an influencing factor in my current career plans. Frankly, I think its pretty catastrophic policy, to effectively offer every university educated person in the country a one off payment of this order to go overseas. I can’t imagine that this helps retention of intellectual capital, the so-called brain drain. The solution is to shift this system of debt to the private sector, such that it follows you wherever you go, as per any other debt. Then, if a person chooses to work overseas, make repayments mandatory. Alternately, if they remain in Australia, and their income is below the threshold, then the government kicks in with the repayments.

Additionally, I believe, as Joel also argues in his post, that we should eliminate the multi-tiered system of full fee paying positions and HECS positions. I propose to do this by making all places full fee paying, aided by the reformed debt system I just proposed.

A balanced response?

“…voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.” – Hermann Goering, 1946

Beirut, 2006

The Happy Planet Index

Major international news sources (Reuters, BBC, SMH) have been running numerous stories about recent ‘research’ quantifying how happy people are in different countries. The result is the so-called Happy Planet Index (HPI), a vast load of crap if ever I’ve seen one. The index is allegedly designed to quantify peoples’ quality of life in such a way that accounts for life satisfaction, life expectancy and environmental footprint. In practise it is designed to give credence to the idea that the less environmental impact you have, the happier you will be. Based on their results they find that Vanuatu is top-of-the-list, trailed closely by a host of other South Pacific Islands. As one might expect from an index of this nature, most of the industrialized countries end up somewhere down the bottom of the list. Oh, what a surprise.

So, how is this ‘index’ calculated. According to their web-site,

Life satisfaction x Life expectancy

Ecological Footprint

where the ‘ecological footprint’ parameter is related to how much land it takes to sustain one person.

Let’s see now. As ‘ecological footprint’ becomes small, the HPI asymptotically approaches infinity, up to an overall multiplicative factor of ‘life satisfaction x life expectancy’. God I wish people would stop publishing crap like this.

Having said this, I do believe that measures of well-being do need to be fundamentally re-evaluated. Obviously economic indicators are insufficient for this purpose. However, designing essentially rigged indicators, which are intended to blatantly promote a political agenda, is not the sort of approach that should be receiving widespread attention by the press.

A tax story with a lesson

The following story has been circulating inboxes for years now. But, since I enjoy it so much, I’ll reproduce it here for those who haven’t seen it before. Full credit goes to the anonymous author.

I was having lunch with one of my favourite friends last week and the conversation turned to the government’s recent round of tax cuts. “I’m opposed to those tax cuts,” the retired West coast college instructor declared, “because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and me and that’s not fair”. “But the rich pay more in the first place,” I argued, “so it stands to reason that they’d get more money back.” I could tell that my friend was unimpressed by this meagre argument.

So I said to him, let’s put tax cuts in terms everyone can understand. Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.

The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. “Since you are all such good customers”, he said, “I’m going to reduce the cost of your daily meal by $20”. Now dinner for the 10 only costs $80. The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody’s share, then the fifth man and the sixth man would end up being paid to eat their meal.

The restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same percentage, being sure to give each a break, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” complained the sixth man, pointing to the tenth, “and he got $7!”. “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got seven times more than me!”. “That’s true,” shouted the seventh man, “why should he get $7 back when I got only $2? The wealthy get all the breaks!”. “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth man and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short! And that, boys, girls and college instructors, is how our tax system works. The people who pay the highest taxes should get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more.

Germany’s economic woes

Every time I come to Germany I become increasingly disgruntled at the economic incompetence of its leaders. Mind you, many of my criticisms apply not only to Germany, but to most of Western Europe excluding the UK. Of particular concern to me at the moment is a series of reforms of the German health system being proposed, which will require a massive injection of federal funding, with estimates ranging from 20 billion to 45 billion Euros. To finance this a multitude of different tax hikes are being promoted, including income, company and capital gains tax increases. At a time when Germany is running large budget deficits (to the point where it is violating EU budgetary requirements), unemployment rates are in the vicinity of 11% on average and 17% in the former East, economic growth is almost flat (around 1-1.5% and amongst the weakest in the EU), and taxes have already recently been raised (via a 3% VAT increase), is increasing government spending and hiking taxes really an even mildly sensible thing to do? It seems that even Germany’s leaders acknowledge how bad things have become with Chancellor Angela Merkel recently controversially proclaiming that Germany is “an economic basket case”. My question then is “Why the hell don’t you bloody well do something about it you so-called conservative? You’re the Chancellor aren’t you?”. Of course, it’s not completely fair for me to blame poor old ex-fellow-physicist Angela for all this. Politicians sometimes inevitably have to give in to social pressures, and in Germany there are immense social pressures against free-market reforms and in favour of the traditional European welfare state. Society would prefer ‘social justice’ over economic progress. My view on this differs somewhat. In my mind there’s nothing more socially unjust than having 11% of the working-age population out of work, and next to no economic growth, regardless of how much social security you pay them. All this does is deprive people of future prosperity, job prospects and social services. It’s all very well to spend money on social services, but one mustn’t forget that, in the long term, such spending cannot be funded without a strong economy.

China, the next world superpower?

In recent years, since China began its unprecedented economic boom and its transition to a market-style economy, there has been absolutely momentous admiration for the Chinese economic miracle and countries have been all but jumping over the moon to embrace China politically and economically. Everyone has been rushing to sign trade agreements with China and invest in China, and both political leaders and the media are obsessed with their praise of booming China. Declarations that China will be the next world superpower are routine, and to a large extent these predictions come with a sense of optimism and elation.

While I won’t deny for a second that China’s economic growth in recent years has been quite incredible, I find all this admiration completely over-the-top and unwarranted. Behind the façade of the ‘new China’ is the cold reality that China is one of the most organized and repressive totalitarian dictatorships in recent world history, a country which flagrantly dismisses even the most primitive human rights and democratic standards. Among my criticisms are following:

  • China is a dictatorship
  • China operates large scale ‘reeducation through labour’ camps, where petty criminals and political dissidents perform slave labour for the government.
  • China does not have an independent judiciary.
  • The Chinese political and economic systems are riddled with obscene levels of corruption and lack of transparency.
  • Lack of transparency is the Chinese financial system continues to make investment in China, and therefore the long-term sustainability of economic growth, uncertain.
  • There is no freedom of expression in China, be it at the personal or mass-media levels. All forms of mass-media are government censored, the internet is filtered via the so-called ‘Great Firewall of China’, as is personal expression of political views.
  • China actively oppresses certain religious group, the most well-known of course being the Falun Gong movement.
  • China continues to occupy Tibet, where it continues to systematically destroy Tibetan culture and the Tibetan race, which, many argue, amounts to genocide.
  • China facilitates a massive black-market in human organs and body parts, fuelled by the world-topping number of executions it carries out.
  • China routinely appropriates private land for development purposes, without compensation.

My question to world political leaders, the mass media, and everyone else who has jumped on the ‘praise China’ bandwagon, is “aren’t there countries more worthy of praise than China?”. Obviously world political leaders and the mass media are not going to comment on this blog, so I’ll answer the question myself. The answer, of course, is yes, and in particular I’d like to use the example of India because it’s a country in a very comparable situation.

India is a country with a population on the same order as China, is equally well posed to become a world superpower, and in much the same timeframe. India’s economy has been experiencing the same levels of unprecedented economic growth as China – on the order of 10% per annum. India, unlike China, has fully embraced democratic values and is a fully functioning parliamentary democracy, with an independent judicial system. None of the above criticisms of the Chinese regime apply to India.

In summary, there are two points I’d like to make. Firstly, the incessant praise that China receives is completely over-the-top. There’s really only one overwhelming point worthy of praise, and that is the level of economic growth. Secondly, is the Chinese government really the type that we should all be rushing to appease, praise, and promote as the next world superpower, the overdue response to American economic and political supremacy? For all it’s worth, despite my severe misgiving about American politics and current world leadership, I for one am not looking forward to the day when a government such as the present Chinese one reigns supreme.

Oh so tolerant Catholics

Our good Catholic friend, Archbishop of Sydney, Cardinal George Pell, is at it once again and publicly declaring that “Islam is more warlike than Christianity” and that “the Koran is riddled with invocations to violence”.

To put things into context, today I have undertaken the “5 minute challenge”, where I search the Bible for 5 minutes to see what I can come up with. Here’s what I found…

  • Numbers 25:17
    “Treat the Midianites as enemies and kill them”
  • Exodus 32:12
    The LORD said to Moses, “Take all the leaders of these people, kill them and expose them in broad daylight before the LORD, so that the LORD’s fierce anger may turn away from Israel.”
  • Numbers 14:12
    I will strike them down with a plague and destroy them, but I will make you into a nation greater and stronger than they.”
  • Deuteronomy 7:2
    and when the LORD your God has delivered them over to you and you have defeated them, then you must destroy them totally. Make no treaty with them, and show them no mercy.
  • Joshua 11:20
    For it was the LORD himself who hardened their hearts to wage war against Israel, so that he might destroy them totally, exterminating them without mercy, as the LORD had commanded Moses.
  • Jeremiah 14:12
    Although they fast, I will not listen to their cry; though they offer burnt offerings and grain offerings, I will not accept them. Instead, I will destroy them with the sword, famine and plague.”
  • Lamentations 3:66
    Pursue them in anger and destroy them from under the heavens of the LORD.
  • Leviticus 20:15
    ” ‘If a man has sexual relations with an animal, he must be put to death, and you must kill the animal.

Yep, I agree Dr. Pell, Christianity is definately a tolerant religion and not in the slightest “riddled with invocations to violence”. How do I convert?

The paranoid society

From the Sydney Morning Herald, apparently a school eisteddfod in Australia recently banned all photography and filming, for fear that the photos could be misused by paedophiles. Somehow this doesn’t surprise me. It seems that year by year society becomes progressively more paranoid about paedophiles, to increasingly more disproportionate extents. I agree that paedophilia is something that needs to be stopped. But at this rate it won’t be long before kids can’t enter public places in case a paedophile happens to be watching and takes pleasure in it.

It’s all very well to be concerned about paedophilia, or any other crime for that matter. But realistically now, is it really worth completely destroying our civil liberties and way of life as a precautionary measure against someone getting-off on a picture of a child playing a violin?

People need to chill out.

From one totalitarianism to the next

Today the infamous British historian David Irving was sentenced to three years prison in Austria for the crime of holocaust denial. While I don’t in any way lend support to Irving’s views I’m shocked that in a democratic Western nation it still possible to be jailed for thought crime. On one hand the lawmakers of Europe are beating their chests at their democratic credentials and lambasting other nations for their lack thereof, while simultaneously jailing people for expressing a point of view. To quote the BBC, “[Europe is] ready to cite freedom of expression when it comes to printing cartoons offensive to Muslims, while incarcerating those who insult Jews”. It seems to me that since the end of World War II many Western European nations have adopted an anti-fascist ideology so strong that it is practically fascist in itself.

When the judge in Ivring’s case presented his judgment he stated “the court did not consider the defendant to have genuinely changed his mind”. Where the hell was this judge educated? The Soviet Union? Maoist China perhaps? This is a courtroom quote that could have come straight from a commie show trial.

It’s very clear that holocaust denial is a completely misled view. However, do these people really represent the same threat to society as violent criminals? To quote Christian Fleck “Are we really afraid of someone whose views on the past are palpable nonsense, at a time when every schoolchild knows of the horrors of the Holocaust? Are we saying his ideas are so powerful we can’t argue with him?”.

So long as European nations recognize thought crime they completely undermine their own democratic credentials at a time when it is strongly needed in the world arena.