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Archive for August, 2002

Integrity and the lack of it

August 21st, 2002 Comments off

Mark Harrison is quick to impugn the integrity of signatories of the pro-Kyoto petition, and particularly mine (see (4) below). In particular, he asserts that the statement, “policy options are available that would slow climate change without harming employment or living standards in Australia” is “completely false”

I have a few questions for Mark:
(1) Since you’ve linked to my blog, you’ve presumably read my observation that one such measure would be the removal of subsidies to the aluminium industry. If you disagree with this observation, why don’t you print your argument? If you agree, will you apologise to those you’ve accused of lying?

I’ll observe that there are a number of others including:
(a) a more rational approach to land clearing
(b) appropriate pricing of urban road use
(c) changing the structure of electricity markets to reduce incentives for heavy use of baseload power

(2) If the statement is false, why was an almost identical statement signed by over 2000 US economists including eight Nobel prize winners and William Nordhaus, the main expert cited in your counterpetition?

(3) The anti-Kyoto counterpetition puts a lot of stress on alternative proposals for international agreements to reduce CO2 emissions, such as that put forward by Warwick McKibbin. Do you actually support any of these proposals, and if so which?

(4)As you’re aware, I’m a senior colleague of Alex Robson’s, and the only sponsor of the pro-Kyoto petition who’s in his department. Do you have the guts to spell out the imputation in your statement

“It seems that Australian academia hasn’t changed – integrity is in short supply and disagreeing with the left is not the easiest way to get ahead. Be prepared for a higher teaching load next year Alex!”

or do you prefer to stick to slimy innuendo?

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Petition and counterpetition

August 21st, 2002 Comments off

In an earlier post, I noted that Alex Robson and John Humphreys, lead sponsors of the Kyoto counter-petition hadn’t mentioned their association with the Australian Libertarian Society.
On the comments pages of this blog Jason Soon made the reasonable argument that it was the content of the petition, not its provenance that mattered. I demurred, noting that although I agree with One Nation about Telstra, I wouldn’t like to sign a petition they’d organised.

Alex Robson has now settled the dispute. In an opinion piece in yesterday’s Canberra Times he referred, in the opening para, to the original petition as being sponsored by “the Australia Institute (a Canberra left-wing think tank)”. So he obviously thinks that it’s important to know who’s behind a petition.

[ The statement isn't exactly correct - of the four sponsors of the petition, only Clive is formally affiliated with the Institute, I've done work for them and Glenn Withers and Peter Dixon have no association. But the organisational support of the Institute was openly acknowledged].

The counterpetition now seems to have become a joint project of the Australian hardline right. Both the Institute of Public Affairs and Gerry Jackson’s New Australian, normally bitter enemies, are promoting it. Despite what’s said in the counterpetition, these groups are opposed to any governmental action or international agreement to reduce carbon emissions, not just the specifics of Kyoto.

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Alleged and real economists

August 21st, 2002 Comments off

Scott Wickstein weighs in the economics of Kyoto, and on who is and isn’t an economist, demonstrating once again that he isn’t one. Scott’s argument is that signing Kyoto would kill the gas export deal to China, costing the economy the $25 billion in sale proceeds. Assuming the claim that the deal would be killed is right (it’s drawing a long bow to put it mildly), let’s look at the economics. The economic value of the deal is not the $25 billion sale price but the difference between this price and the value of the gas in its next-best use. It could, for example, be used in gas-fired power stations, displacing coal and therefore reducing our net emissions of carbon. Given that gas is a commodity, it’s rare for the price to vary more than 10 per cent or so from one potential buyer to the next. So the net benefit of the deal might be $2.5 billion over the life of the contract – it certainly isn’t $25 billion. Of course, given the high political profile of this deal, there’s every prospect that we haven’t in fact got the best possible price, and that we are worse, not better off.
Scott also objects to my ‘gratuitous swipe’ at the self-styled ‘Anti-Idiotarian Rottweiler’, whose entire blog, starting with the title, consists of gratuitous abuse. This is another instance of a point I’m increasingly noticing – the right can dish it out, but they can’t take it.

Categories: General Tags:

Manne on Iraq

August 20th, 2002 Comments off

Robert Manne asks Will this war work?.

Perhaps the most relevant para is:

“Few principles are more fundamental to the conduct of international relations than the idea of non-interference in the internal affairs of sovereign states. Such a principle precluded international military action against even fouler tyrannies than Saddam’s – like Stalin’s or Pol Pot’s. If such a principle were ever to be revoked, it would certainly require general agreement between countries and strict provision for collective action through the United Nations. The international order would be thrown into chaos if individual countries came to believe that they possessed the right to take unilateral military action against what they judged to be an unacceptably tyrannical regime.”

I think the doctrine of non-interference has had its day. But Manne is right to point to the chaos that will arise if individual countries decide to appoint themselves as judge, jury and executioner in the affairs of others.

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It's not April 1, is it?

August 19th, 2002 Comments off

Is this “defence” of telecom shill Jack Grubman from Forbes.com an inspired parody of bubble-era thinking, or a perfect example of the real thing. I’ve quoted it in part, with the best bits italicised. You decide!

Jack’s praise was not based on nothing. It was based on research! But many people misunderstand the nature of research. Jack didn’t ask whether the company was likely to be profitable. He asked whether the share price was likely to rise. And to know that, he had to know the thinking of the very same institutional investors who so admired him.

Nowadays, everyone is all over Jack because he had friends in the industry, especially Bernard Ebbers, who invited Jack to WorldCom board meetings. A few years ago having friends was a good thing. They called it being connected.

Now they’re calling the same thing a conflict of interest. But as Jack himself once said, “What used to be a conflict is now a synergy. …Objective? The other word for it is uninformed.”

Jack caused synergies for his employer, too. He didn’t just stand to the side and predict where stocks would go. He helped make it happen by encouraging telecom companies to sign up to have Salomon sell their IPOs. Some estimates say Salomon earned $1 billion in investment banking fees from the industry.

If Salomon paid Jack $20 million a year, it wasn’t because he predicted well. Nor was it because he had the good looks or the winning personality of other bankers. It was because the bank believed he helped generate those fees. His ability to generate fees was a direct result of investors’ belief in him. Somewhere along the way–around the same time that the telecom industry lost perhaps $2 trillion in market value–people stopped believing.

So let’s not blame Jack for causing the fall of telecom. If they still believed in Jack the way they once did, the fall never would have happened.

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Libertarians against Kyoto

August 19th, 2002 Comments off

I hadn’t heard of John Humphreys, who is organising the Kyoto counterpetition with Alex Robson, but, in the era of Google, no-one is truly obscure. It turns out he’s the President and founder of the the Australian Libertarian Society, and Alex is part of the Honorary Executive.
Not, as Seinfeld would say, that there’s anything wrong with that. Still, it’s my view that, if you’re asking people to sign a petition you’ve written, it’s best to be upfront about your organizational affiliations.

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Some Good News

August 19th, 2002 Comments off

Judging by the tagline, I imagine this guy thinks Democracy’s Quiet Victory is also a victory for free-market capitalism. Regardless, this is a well-reasoned article supporting an optimistic view of world events.

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More on Kyoto

August 19th, 2002 Comments off

Tim Blair refers to me and other signatories of the Kyoto petition as “alleged economists”. This is an interesting epithet to be applied to, among others 30 professors of economics. If Tim wants to say we are bad or mediocre economists, let him say so, but terms like “alleged” are silly, just like the use of “pseudo-intellectual” as a derogatory term for “intellectual”. The implication is, of course, that somewhere out there are “real’ economists and intellectuals, whose rigorous analysis invariably agrees with the uninformed prejudices of people like Tim. Or should I say- the uninformed prejudices of “people” like “Tim”?

For those interested in following up this issue, I’ve linked to a counterpetition being organised by my colleague Alex Robson, a letter from Alan Moran of the IPA supporting the counterpetition, and an article on approaches that would permit us to meet our Kyoto commitments at low cost and in some cases with a net benefit. Moran and Robson take great exception to the suggestion that there are policies that would both reduce emissions and improve the economy. As I’ve already pointed out, reducing subsidies to the aluminium industry is a case in point. Since Moran is a professional advocate for fossil-fuel intensive industry, he’s unlikely to be impressed by this argument, but other economists thinking of signing the counterpetition might want to ponder it.

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Working for the man

August 19th, 2002 Comments off

Thanks to Tex, I found this interesting piece entitled Rich people work, too. As far as I can tell it was published on the very day that Salomon telecom shill Jack Grubman retired with a payout of $US32 million (on top of millions already received in salary). I suppose putting out ludicrously inaccurate forecasts does constitute “work” in some sense, but I could have done better (in fact, did) in my spare time.

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The Free-Trade Fix

August 19th, 2002 Comments off

A fascinating piece from the NYT magazine.

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Update on proportionality in sentencing

August 18th, 2002 Comments off

Here’s a cached report from the SMH in which President of the NSW Law Society John North denounces mandatory sentencing laws which are, of course, the ultimate method of ensuring proportionality. He’s right about mandatory sentencing, but this contradicts his criticism of the sentence imposed on gang rapist X.

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What I'm reading this week

August 18th, 2002 Comments off

At the Crossroads by Jane Kelsey. Jane has been one of the most prominent critics of free-market ‘reform’ in NZ. I’m reviewing her latest books (which echoes the titles of at least three Australian books taking radically different views) for New Zealand Economic Papers. I’ll post the review on my website in due course.

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Welcome back

August 18th, 2002 Comments off

David Morgan is back from paternity leave

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55 years

August 18th, 2002 Comments off

Everyone and their dog has piled on to the predictable handful of critics of the 55-year jail term handed down to gang-rapist X. I just want to make one more observation on this. The people who have protested about the ‘disproportionate’ nature of the sentence are precisely those who in normal circumstances (that is, community outrage over a light sentence) would be stressing the importance of the judge’s discretion to take account of all the circumstances in a particular case, rather than following some sort of mechanical rule of proportionality. For example, I don’t remember any of them protesting about the disproportionately light sentences (later doubled on appeal) that were handed down in the first of the trials. These guys appear to have no consistent legal philosophy, unless you call always siding with criminals a philosophy.

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Right-wing political correctness

August 18th, 2002 Comments off

Peasons I’m glad to be a leftwinger these days is that I don’t have to be nearly as embarrassed about the people on my side. It used to be, for example, that a lot of leftwingers were whiny complainers. There are still some, but whining is now far more prevalent on the right. Worst of all are ex-lefties like David Horowitz, who’ve kept their whining style even as they’ve reversed their political views. But there are plenty of others
The big whine is, of course, the continuous complaints about media bias. But lately there has been added a form of right-wing political correctness, in which rightwingers try to silence critics by crying religious persecution. An example I saw recently was the head of the ,
Australian Family Association, writing in the Age. He said ” Today, when moral and ethical debates are being waged, we constantly hear voices telling us that the church, or religious people, should keep their personal convictions to themselves.
The latest example is Terry Monagle’s article, The new Catholic ascendancy”,

And here’s what Monagleactually wrote about the new Catholic ascendancy
“Admirably, and unlike Catholic conservatives of a previous era, they are unafraid of debate and of staking their political careers around a set of ideas they care about. They draw connections between areas of private morality and public policy that have been ignored.”
Monagle went on to argue that the Catholic right was wrong and dangerous, but he made no suggestion they should keep

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The rewards of wealth destruction

August 17th, 2002 Comments off

According to these numbers in NYT, Jack Grubman (former telecom shill at Salomon) collected a commission of about 0.001 per cent ($30 million) for his role in the greatest wealth destruction in history.

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What's Exceptional about the US – part 2

August 16th, 2002 Comments off

The obvious parallel for the current situation of the US is that of Japan a decade ago. As Paul Krugman notes, the factors that once appeared to distinguish the US from Japan (better corporate governance, more scope for fiscal and monetary policy, the absence of a real estate bubble) have disappeared. The prospect of a decade-long period of slow growth now appears plausible.
But, as I’ve observed in the past, Japan’s performance over the 1990s isn’t quite as bad as it looks . The average growth rate has been about 1 per cent, against a sustainable rate of around 2.5 per cent. Over this decade, annual average working hours have fallen by about 200 per year, from 2100 to 1900. The increase in leisure is approximately equivalent to additional growth of 1 percentage point per year. This is why a decade of slow growth has produced only a modest increase in unemployment.
It is now the US, and not Japan that has the longest working hours in the developed world. There is every prospect that, over the next decade,working hours will fall back to more reasonable levels. This will be good for American workers, whose working hours are difficult to rationalise as sensible choices. But it will be bad for advocates of American hyperpower, just as Japan’s lost decade has been bad for advocates of a resurgent Imperial Japan. Neither group has reacted well. As I pointed out here, the bursting of the bubble is already releasing some noxious gases.

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Post and Repost (apologies to the Atlantic).

August 15th, 2002 Comments off

For those who can’t get enough of my rants , some pieces of mine have recently been reposted at On Line Opinion (an essay on mandates originally posted here) and at australian policy online ( a review essay on Ken Loach’s film The Navigators, originally published in the Canberra Times.

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Peaceblogging at the UK Telegraph

August 15th, 2002 Comments off

Boris Johnson, Tory MP writing for the UK Telegraph OK, so it’s war on Iraq: now please tell us why

“Yes, it’s war, war, war; and yet politicians and public have never seemed foggier about how or exactly why we are going to achieve our ends. One day, we are told the proposed war is justified by Saddam’s role in September 11, a shady Prague meeting between one of his Ba’ath party members and Mohammed Atta, the lead hijacker. The next day, we are told that may be a load of bunk.

One day, we’re told the war requires an American army of 250,00 men. The next day, it’s going to be an aerial blitz, which will hardly require any ground forces. One day, Tony Blair assures the Commons he will provide a dossier explaining why military action is necessary against Saddam. Yesterday, John Prescott was evasive not only about the whereabouts of this dossier, but about whether Parliament would be consulted at all.

No wonder the polls show that the public is leery. People of goodwill, people who want Saddam gone, are scratching their heads and wondering whether they can really support this war at all.”

It’s not often I agree with the Telegraph, but this is spot-on. I’d love to see a democratic government in Iraq, and Saddam Hussein on trial in The Hague, but I don’t see this as a likely outcome of what currently looks more like a family feud.

By the way, “peaceblogger” seems to be one of these mysterious “memes”. I made the obvious riff on “warblogger” to describe Jason Soon, he picked it up and now it’s in Slate. My first thought was that this had been around for ages, and I was just guilty of unconscious plagiarism. But a Google search reveals only 9 instances, nearly all in the last month or two.

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More on Kyoto

August 15th, 2002 Comments off

Scott Wickstein raises a bunch of issues about the economists’ statement in support of Kyoto. First, is the question of cost-benefit ratios. There are a lot of measures (e.g. withdrawing subsidies from the aluminium industry) that would both reduce emissions and reduce national income. A full implementation of Kyoto based on tradeable emissions quotas would cost less than 0.5 per cent of GDP ($3 billion per year) on most estimates.
Admittedly, this is, essentially a first installment. A serious response to global warming will require much deeper cuts in emissions and the involvement of developing countries. But the alternative of doing nothing is too awful to contemplate, which is why opponents of Kyoto try to divert attention away from this point. At a minimum, the costs would include the loss of most or all of the world’s coral reefs the complete disappearance of many Pacific nations and large-scale flooding in low-lying countries. Vast numbers of species with limited range would become extinct.

In this context, the fact that the current government of the United States (2.5 years left in office) is opposed to any form of international treaty, is an unfortunate obstacle, but scarcely decisive. The US, is after all, a debtor nation with a massive trade deficit. When Kyoto is ratified, it will be possible to impose tariffs on exports of non-complying countries if those exports embody substantial untaxed use of carbon. And. among the many treaties the US is currently repudiating, Kyoto is the one with the strongest domestic political support.

Of course, the complying countries would not be in a hurry to pick a fight with the US. It would be much easier to start by making an example of a US lapdog with big dependence on energy-intensive exports and no real capacity for retaliation – any guesses as to who will be the first target?

Update: Scott also endorses the rantings of the ironically self-styled Anti-Idiotarian Rottweiler. If you want to see why the US is overstretching its capacities in all respects, you only have to observe that stuff like this is taken seriously there.

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RATIFY KYOTO: ECONOMISTS

August 14th, 2002 Comments off

14th August 2002
News release
Contact Dr Clive Hamilton 02 6249 6221 0413 993 223
Professor John Quiggin 0417 744 614
RATIFY KYOTO – ECONOMISTS
More than 250 of Australia’s academic economists today called on Prime Minister John Howard to ratify the Kyoto Protocol without delay.
The 254 economists, including 39 Professors, are signatories to a statement calling on the Prime Minister to ratify the Protocol in Australia’s economic and environmental interests.
“As economists, we believe that global climate change carries with it serious environmental, economic and social risks and that preventive steps are justified,” the statement says.
“Policy options are available that would slow climate change without harming employment or living standards in Australia, and these may in fact improve productivity in the long term.”
The economists’ statement follows warnings from 2000 international scientists under the auspices of the Intergovernmental Panel on Climate Change of new and stronger evidence that global warming is attributable to human activities, and warnings from the CSIRO that climate change has the potential to seriously disrupt agricultural output, water flows and natural systems in Australia.
The statement and the list of signatories will be delivered to the Prime Minister’s office at 11 am today.
The statement and full list of signatories may be viewed under What’s New on the Australia Institute website.
www.tai.org.au

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The media titans still don't get it

August 13th, 2002 Comments off

A nice piece from Scott Rosenberg at Salon. He doesn’t mention blogging specifically (being Salon’s Chief of Blogging, it might have looked too much like a plug) but it’s a perfect example of what he’s talking about – the fact that the Internet is stronger than ever, even as the dreams that powered dotcom domain spiral ever downward into financial oblivion.

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What is exceptional about the US economy?

August 13th, 2002 Comments off

Now that the triumphalist rhetoric has died down a bit, it’s interesting to look at what is still special about the US economy. The answer is not, as might be imagined, productivity. In terms of both output per hour and total factor productivity, this comparative study of US and European productivity shows that the US is near the top of the world league table, but is outperformed by several European countries – in fact, it’s almost even with Italy on both counts.
The US is above average in terms of participation rates – the proportion of the adult population that’s in the labour force – and a little bit better-than-average in terms of unemployment. Again though, there are lots of European countries that do better on these scores.
The really outstanding feature of the US economy is the incredibly long average working hours. Annual working hours in the US are above 2000 per person, whereas the European average is around 1600. It is this fact that accounts for the big gap in income per person between the US and the rest of the world.
From an economic viewpoint, there’s nothing much to be said about the optimal choice between income and leisure.. If Americans just like working more than Europeans, then both economies are doing a good job. On the other hand, if labor market institutions force Americans to work more than they want to, or Europeans to work less, there’s a welfare loss.
One point in favour of the Europeans is that working hours have generally declined with rising incomes. So the converse trend in the US in the last twenty years suggests either unusual preferences or malfunctioning institutions.

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Jason Soon responds to my

August 13th, 2002 Comments off

Jason Soon responds to my post on Theodore Dalrymple, but gets his logic confused. As he observes, Dalrymple and some libertarians have argued for an intellectually consistent libertarian policy, namely allowing free immigration while cutting off all welfare services to immigrants. I made the point that most Australian free-marketeers take an intellectually inconsistent line, attacking government intervention the welfare state and barriers to cross-border flows in general, while supporting extreme ‘border protection’ measures in relation to asylum-seekers.
Jason writes ” If Quiggin is prepared to endorse this most radical experiment [the Dalrymple line] he should speak up. Otherwise he should stop accusing people of hypocrisy. ”
It should be obvious to Jason that my support or lack of it for the Dalrymple line can make no difference to the question of whether the IPA, CIS and so on are intellectually inconsistent. Jason suggests I am accusing them of “hypocrisy”, which implies conscious dishonesty rather than inconsistency. I don’t have the evidence to make a judgement on this.
For the record, my view, which I expressed in the Fin before the election is that neither ‘border protection’ on the Howard model nor open slather is a good policy. I favor an increase in the total refugee intake, and attempts to make more orderly arrangements with source countries. (Among other things, this would bring into reality the fictional ‘queue’, that asylum-seekers are regularly accused of jumping). This should be combined with an approach to ‘boat people’ which is based on humanity and good sense rather than scaremongering. This would include detention of those at high risk of absconding, but would not use detention without trial in desert camps as a method of deterrence. We manage a reasonable balance in relation to bail for those accused of crimes considerably worse than breaches of immigration laws. If it weren’t for the racial/religious panic that has been deliberately whipped up, we could do the same in relation to this issue.

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Hailing Dead Cats

August 12th, 2002 Comments off

Don Arthur joins the fray on Theo Dalrymple (real name = Anthony Daniels?, real nationality = ?, real occupation = ?). As Don points out, although the Australian right loves Dalrymple’s claim that most (British) asylum seekers are bogus, they are in something of a bind. Unlike the genuine refugees, who are merely fleeing persecution, Dalrymple observes that the “illegals” are entrepreneurs willing to risk life, limb and liberty in the search for economic opportunity for themselves and their families – just the sort of people the CIS, IPA and the rest of the alphabet soup of right wing think tanks ought to love. But as far as I can tell, every notable organisational manifestation of the free-market right, with the exception of Gerard Henderson’s Sydney Institute has line up behind Pauline Hanson (and her more successful imitator, John Howard) on this issue.

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More on competition in the universities

August 12th, 2002 Comments off

Alan Anderson writes
“there is little better evidence of the ivory tower disposition of academics than their unwillingness to accept that they do not have a God-given right to enormous public subsidies, and their reluctance to open the education market to competitive forces which might reveal the actual levels of consumer satisfaction with their services.”

As I pointed out a week or so ago, opening the education market to competitive forces has been a recipe for duplication and inefficiency – 39 different MBA programs being a case in point.] Alan rightly deplored this and called for more central planning.

Alan should get out of his own ivory tower occasionally and take a look at the facts. If he did, he’s be less prone to slogans like those quoted above.

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New links added

August 12th, 2002 Comments off

Look to your left! New links to Alan Anderson, Rob Schaap, Tex’s Pre-whacked snakes and Tom Vogelgesang.

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This is just like the old days!

August 12th, 2002 Comments off

For me, the old days means:
(1) The days when I first got to use a terminal instead of punch cards
(2) The first two years of Macintosh
(3) The Web circa 1995

Anyway, having reverse-engineered Tim Dunlop’s site, I’ve figured out how to add comments to my blog (so much more satisfying than just asking!). Please send comments, remembering that this is a PG site.

While I’m talking about Tim, I have one (hyphenated) word for him — Control-Click. (If Tim can get his archive working under Windoze, I’ll link to the relevant post)

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Speculation or gambling?

August 12th, 2002 Comments off

The Australian: IG Index betting stoush spreads [August 12, 2002]
These guys are offering stock market bets as an untaxed substitute for pokies and ponies. It will be interesting to see how all this pans out.

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What I'm reading this week

August 11th, 2002 Comments off

Mainly, a lot of issues of Scientific American and Prospect that all arrived at once. SciAm discusses the great SETI problem “If there’s life elsewhere in the galaxy, why aren’t they talking to us”. More on this soon.
I also picked up the latest Peter Corris, #25 in the adventures of Cliff Hardy, but I was a bit disappointed – maybe it’s time for Cliff to retire. Not that there’s anything wrong with this one, but there’s not much new to be said after 25 novels.

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