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Monday message board

April 17th, 2006

It’s time, once again for the Monday Message Board. As usual, civilised discussion and absolutely no coarse language, please.

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  1. gordon
    April 17th, 2006 at 12:15 | #1

    The address of Nouriel Roubini’s blog has changed to
    http://www.rgemonitor.com/blog/roubini

  2. Terje Petersen
    April 17th, 2006 at 14:48 | #2

    The following article seems to imply that the effects of voluntary student unionism is already biting.

    http://www.theage.com.au/news/national/organisers-rue-lack-of-student-protesters/2006/04/12/1144521401756.html

    My question is when and how will the counter attack arrive? Does an ALP government mean a return to compulsory student unions?

  3. April 17th, 2006 at 15:55 | #3

    Students have little disposable income and wield even less political power. Voluntary Student Unionism will never be overturned.

  4. stoptherubbish
    April 17th, 2006 at 16:00 | #4

    I hope an ALP government will ensure that the services that students need on campus will be properly funded, and that students will be required to pay a compulsory contribution to those services. The same way I am required to contribute council rates to services I don’t use, but which I must pay as my contribution to the general amenity of the area I choose to live in.

    The fee could represent a student contribution to those activities and services that have now ceased as a result of the nerds in the federal government like Costello and Abbott who were young nasties and have never got over the fact that everybody hated them when they were young.Everybody hates them still, but by God they are going pay for it this time!

    The article on Abbott in the Good Weekend was the best job I have ever seen on these creepy types-the more so for being measured and letting us all see him through his own words and deeds. Oh dear. What a sorry and scary spectacle he made of himself. Moral compass indeed! I thought I would die laughing at the comment he made when he left the novitiate that the Church was not serious enough for one his calibre and moral gravitas!
    I think we have seen the last of any realistic hope this creep ever had of being leader of the Liberal party. Less the moral leader of his own imagining, and more the whited sepulchre of New Testament warnings methinks!

  5. April 17th, 2006 at 19:13 | #5

    Stoptherubbish: I agree, students are using lecturers, grounds, classes etc without paying. A compulsory fee for those services would be very good idea.

  6. Steve Edwards
    April 17th, 2006 at 19:59 | #6

    Costello could hardly have been “unpopular” if he won the election to become chairman of the Monash student guild.

  7. observa
    April 17th, 2006 at 21:38 | #7

    Today’s Adelaide Advertiser leads off on the front page with the motor trade bemoaning skilled shortages of mechanics, auto-electricians, panel-beaters and so forth. The MTA wants to access overseas skills where possible. The paper’s editorial takes up the general theme, but then lobs in this comment regarding the industry’s stated push for skilled migration-

    “It’s[the industry] announcement comes barely a fortnight after the revelation that 20 per cent, or 159,000 of Adelaide’s working-age population, is on welfare.”

    Well my question is 2 fold. Firstly do you think Adelaide is any different here to other major cities and secondly if not, do you really think 1 in 5 Austarlians of working age should be on welfare? Personally, I can now see why the govt is moving to add some push to get people off welfare and ditching unfair dismissals to get employers to take a punt on more of them can’t you?

  8. Stephen L
    April 17th, 2006 at 22:03 | #8

    Voluntary Student Unionism will be reversed if evidence emerges that it is eating into Australia’s ability to attract overseas students.

    Universities market themselves not only on the basis of the quality of their formal education but all the things that student unions provide – theatre, music, counselling services, sports facilities etc. Melbourne University’s marketing slogan is “more than just a degree”.

    Some universities have decided to pour money from other sources into the student organisations in order to keep these things running, even at a somewhat lower rate – this will impact on their ability to fund research and teaching, but the wealthier universities can afford it for a while at least.

    Consequently in some cases we won’t actually see what the effects of VSU could be. However, other universities can’t afford this, or won’t prioritise it. This may lead to a shift in local student choice, but the government won’t care. However, if overseas students start avoiding these universities the government will simply have to reverse or modify the policy – the billions of dollars overseas students bring into the country is simply not something even a government that sees Australia’s future as a quarry can afford to lose.

  9. Ong Bak
    April 18th, 2006 at 09:37 | #9

    Stop the rubbish: I have paid my fair share of student union fees at uni, and I must say, I paid it with great reluctance and was sorry to see how it was misused.

    I acknowledge your point in contrasting student contribution and paying council rates. I think you have raised a jolly good one. BUT, I see a huge difference in paying rates and paying for student union. Rates you pay goes toward provision of services and facilities that you or anyone within the community can enjoy and benefit from. Student union, whilst they provide scant general services, they spend majority of thier time (and budget) on activities that are completely unrelated to the provision of services or facilities to the general student population. For example, they engage in rallies (and the associated cost of printing fliers) for human rights, rise of communism/socialism vs capitalism, gay/lesbian rights, enviromental causes, abortion, discrimination etc, etc….do you see a general theme here? Yes, they become self-championing “politicial activists”.

    It is all well and good they are voicing concerns about controversial issues – and I’m by no means advocating a stop, my question is “how does it assist in the facilitation of student services?? Students pay (used to) for provision of services and facilities for thier use within the campus, not to see their student representatives use their contributions to indulge themselves in causes that they think we should adopt!

  10. Dogz
    April 18th, 2006 at 09:49 | #10

    So sucking up to the Indonesians over asylum seekers has backfired. Big surprise.

    “Our position is clear: we must re-examine our co-operation and bilateral relationships with Australia so that they are genuinely fair.”

    Good idea, Dr Yudhoyono. I am thoroughly sick of spineless Australian politicians sucking up to your country every time you get offended by one of the few remaining human rights policies we have.

    It’s time Australia stopped kowtowing to Indonesia and started setting its own agenda. Lets start by setting aside a few billion dollars in the upcoming budget for our own nuclear waepons program.

  11. Terje
    April 18th, 2006 at 10:48 | #11

    Today’s Adelaide Advertiser leads off on the front page with the motor trade bemoaning skilled shortages of mechanics, auto-electricians, panel-beaters and so forth.

    I am always bemused by claims that there are skills shortages. I employ IT professionals and there are frequent claims made that there is a shortage. How do you measure a shortage? I can only guess that claims of a shortage is really code for “we don’t like paying the current price”. So if plumbers are charging $200 per hour then this means there is a plumber shortage. If price is the indicator for shortages then we have a real shortage in Lawyers in Australia. And accountants. And Doctors.

    I would like to know if there is some objective measure of a labour shortage other than price. And if it is price then how is it applied in practice (ie is it price relative to historical price or price relative to lawyers or what?).

  12. Terje
    April 18th, 2006 at 11:16 | #12

    I hope an ALP government will ensure that the services that students need on campus will be properly funded, and that students will be required to pay a compulsory contribution to those services. The same way I am required to contribute council rates to services I don’t use, but which I must pay as my contribution to the general amenity of the area I choose to live in.

    It seems ironic that those that think university should be without tuition fees are usually the most vocally in favour of a compulsory student union fees, whilst those that think tuition fees are okay (ie advocates of user pays) are usually the most vocally against compulsory student union fees.

    If the universities were entirely private institutions offering services to entirely voluntary consumers for a fee in a competitive market then I imagine that there would be some student services paid for out of money raised through student tuition fees. However I doubt that private institution would encourage a buyers co-operative.

    Given that the primary motive for going to university is surely tuition, then it seems so odd to have this free whilst charging for other services that are secondary to the offering.

  13. wilful
    April 18th, 2006 at 11:32 | #13

    Well my question is 2 fold. Firstly do you think Adelaide is any different here to other major cities and secondly if not, do you really think 1 in 5 Austarlians of working age should be on welfare? Personally, I can now see why the govt is moving to add some push to get people off welfare and ditching unfair dismissals to get employers to take a punt on more of them can’t you?

    Observa, your answer is (or ideally should be) here

  14. observa
    April 18th, 2006 at 11:52 | #14

    ‘I am always bemused by claims that there are skills shortages….
    I can only guess that claims of a shortage is really code for “we don’t like paying the current priceâ€?.’

    Classical economics would say you’re right Terje. However it may be that regular bread and butter costs like vehicle maintenance and repairs resist rising prices being passed on more than your occasional use of an accountant or lawyer would allow. In this respect there is a certain fixed quantity of daily vehicle repairs and maintenace demanded, although queuing or high prices may force more owners to neglect their vehicles, which could ultimately feed new car sales. Probably what has happened is more tradesmen retiring or leaving the industry than are being replaced and the squeeze is on. That squeeze is probably felt hardest in the large dealer franchises, which would charge the highest rates and hence afford the highest pay rates. They may like to pay more to attract more trades, but find they are pushing against consumer resistance now. Raising their prices too quickly at the top end may be forcing more of their customers to the smaller self employed tradesmen and the like. Skills shortages may simply be causing a narrowing of returns in the industry, whilst causing queuing at the top end of the market. If the latter is the case, the top end of town would logically be wanting more labour from any source, to satisfy its obvious unmet demand and produce more profit. The small self-employed bloke/partners are probably wondering what all the fuss is about. They’ve never had it so good.

  15. Terje
    April 18th, 2006 at 12:04 | #15

    Observa,

    Thanks for that. It basically confirms what my own thinking. Those that cry “skills shortage” have vested interests. There is no objective means to measure the claim.

    One persons skills shortage is another persons rising real income. As such we should be very cautious about supporting any political fix.

    Regards,
    Terje.

  16. Stephen
    April 18th, 2006 at 12:24 | #16

    A skills shortage can be real when it takes a long time to train people in the relevant skills. I know that in some sciences there is a concern that in a few years time there will be a drastic shortage of people to fill the positions. Since to be able to do these jobs properly people need 7-10 years of education (under grad degree, plus honours plus PhD) it doesn’t matter how much you up the pay, if the people don’t exist you can’t fill all positions (this assumes that the shortage is global, not just Australian).

    However, in areas where training is a year-long apprenticeship I suspect you are right. If the pay was high enough more people would elect to train in the relevant discipline and the market would solve the problem – people are simply not wanting to pay the going rate, and then whinge about the shortage of supply.

  17. Katz
    April 18th, 2006 at 12:41 | #17

    “‘I am always bemused by claims that there are skills shortages….
    I can only guess that claims of a shortage is really code for “we don’t like paying the current priceâ€?.’”

    It’s mendaciously claimed that there is a skill shortage in the supply of GPs.

    Here’s a good test.

    The price of GPs services could be reduced overnight and the shortage of supply of GPs could be obviated almost as quickly if every adult were allowed to write presciptions for medicine.

    Oh, hang about, maybe not everyone has the skill to write the correct prescription.

    Damn reality!

    Hang about again,

    No matter, open slather on prescription writing would constitute a classic application of neo-liberal social darwinism. Idiots would die and smart people would learn to right the correct prescription.

    Excellent! Neo liberalism triumphs again.

  18. Ernestine Gross
    April 18th, 2006 at 13:18 | #18

    “If the universities were entirely private institutions offering services to entirely voluntary consumers for a fee in a competitive market then I imagine that there would be some student services paid for out of money raised through student tuition fees”

    Oh dear oh dear – what a beautiful dream – a ‘competitive market for education’.

    May I ask for a reference to a paper which shows that a model of a competitive market for education has a non-empty solution set?

  19. Terje
    April 18th, 2006 at 13:29 | #19

    Katz,

    I don’t know where you are going with this. My question was a very basic and simple one. How do we objectively define a shortage? Is price the only indicator?

    For instance bananas recently went up in price. Does this mean that there is a shortage? Was there a lesser shortage before the recent price increase?

    Lets say it takes 10 years to train a GP. Given the lead time we would be very interested in knowing as early as possible if there is a shortage of GPs so we can train some more, maybe even subsidies the cost of training to encourage more students in that area. So how do we know when there is a shortage? Is price the only indicator? And is the historical price the only benchmark?

    Perhaps instead of slagging of a liberalism you might address the actual issue.

    Regards,
    Terje.

  20. observa
    April 18th, 2006 at 13:43 | #20

    Actually I think you’d find the idiots would soon learn to pay the smart people to ‘write’ their ‘right’ prescriptions for them Katz ;)

    Seriously though Katz, there is no undersupply of GPs, just an undersupply at current Medicare scheduled fee rates, particularly in certain locations. I’ll give you a tip though. If you doubled this taxpayer subsidy at the stroke of a pen, I’d suggest you’d drastically increase the overall ‘shortage’ of GPs. Well at least the overall screams of consumers would soon indicate that, although they’d be a different mix of consumers.

  21. Terje
    April 18th, 2006 at 13:48 | #21

    May I ask for a reference to a paper which shows that a model of a competitive market for education has a non-empty solution set?

    You can ask. But I don’t know of any such reference.

    I do know that out of the formal qualifications that I have personally the one which is the most marketable is taught by multiple alternate outlets operating in a competetive market. There are four of five private companies within a ten kilometer radius of my office that provide this training. I could do the training in most major cities around the world. The curriculum is defined by a private company. People with these qualifications are sort after by employers around the globe.

    I also know that when I recruit people the key qualifications that I am looking for on their resume are available primarily from privately run institutions operating in a competive education market. I routinely filter applications on this basis. I routinely ask for evidence that people actually have these qualifications as claimed.

    The certification process for these qualifications is rigereous. Certification is run by a private company, seperate to both the training company and the company that defined the curriculum.

    Competive private sector education markets exist so I don’t need a theoretical model to confirm the concept. They don’t just exist but the are in fact prolific, wide spread and well established.

    But let us assume for the moment that there is no such model that has a non-empty solution set. And let us assume that a private education market would never work. Then the core point of my original post is not diminished.

  22. April 18th, 2006 at 13:50 | #22

    Terje might just be on to something here. Measuring a shortage is harder than it sounds.

    Consider your traditional supply/demand diagram for a good (say, bananas). Suppose a unique equilibrium exists for a certain price and a certain quantity. If you are a consumer that purchases bananas, then your benefit exceeds the cost. No big deal.

    If you are a consumer whose benefit does not exceed the cost, all you can observe is that the higher price is not worth it. You can’t observe the supply and demand schedules, only that a certain quantity has been provided at a certain price. From your position, you can’t say for certain that this is the equilibrium result, or a disequilibrium result (from, say a shortage, like a quota set in supply, or some shock that restricts supply).

    Apart from using past price/quantity data, or econometric analysis from such results, another approach might be to use revealed preferences in order to try and discern the actual preferences of consumers/producers to determine if there is a market failiure such as a shortage.

  23. Katz
    April 18th, 2006 at 13:51 | #23

    Terje,

    So you don’t want the right to write your own prescriptions?

    Why not?

    The price would be right.

  24. Terje
    April 18th, 2006 at 13:54 | #24

    Seriously though Katz, there is no undersupply of GPs, just an undersupply at current Medicare scheduled fee rates, particularly in certain locations.

    I know people qualified to work as GPs that don’t because they can make better money doing other things. So if the price did rise then they would no doubt look to sell their relevant skills. There would be no need to wait 5-10 years for new graduates. Although at the extreme there is obviously some limit to the number of people that could come to market in the short term.

  25. observa
    April 18th, 2006 at 14:12 | #25

    It’s an interesting question and goes back to wilful’s reference about training and lead times etc. Are there clear enough cases of market failure here and even if there were, could public servants, econometricians or simply thinkers in residence do any better than the market? The motor trade is perhaps a good example. Why didn’t we pour resources into training more unemployed or potentially enemployed into being mechanics etc in the past? Seems pretty logical at first glance. Consumers as motorists are presumably suffering for ‘our’ collective oversight now. Or are they? What if the higher/rising costs of repairs has been responsible for the push to more reliability in cars, longer service intervals and longer warranties and further that the rising cost of keeping older vehicles on the roads, means we update our leaded fuel/less efficient bangers sooner? Who is to weigh and judge these competing social benefits? I can tell you as a resident of Adelaide with one of the countries oldest car fleets, that’s not an easy one.

  26. Terje
    April 18th, 2006 at 14:13 | #26

    So you don’t want the right to write your own prescriptions?

    Why not?

    The price would be right.

    It would seem that you are determined to change the topic to one about Neo liberalism or some such thing. I won’t be taking the bait at this point in time. Perhaps later.

  27. April 18th, 2006 at 14:16 | #27

    If demand and supply for a specific time period is related to the previous time period(s), then its logical that there is some level of uncertainty in the producer’s mind about the amount of goods he can sell and at what price in future time periods. If this is true: Then there should be some form of insurance market present for it.

  28. Terje
    April 18th, 2006 at 14:16 | #28

    Apart from using past price/quantity data, or econometric analysis from such results, another approach might be to use revealed preferences in order to try and discern the actual preferences of consumers/producers to determine if there is a market failiure such as a shortage.

    This sounds interesting. Can you elaborate?

  29. Chappelli
    April 18th, 2006 at 14:16 | #29

    Terje and alpaca,
    Just note that there is a difference between a shortage caused by a shock to production (e.g. Larry’s effect on bananas in FNQ), a shortage caused by institutional factors (e.g. a doctor’s union restricting supply and earning rents) and a shortage caused by market failure, or information asymmetries. The first can be identified by an abrupt increase in prices above the historical average. The second and third cannot. The second type of shortage is often hard to address for political reasons, including arguments about maintaining quality and the lobbing power of the relevant group (hello AMA). The third type of shortage can give rise to a legitimate case for market intervention.

    Katz,
    If you’re interested in getting that case of the smarms corrected, I’m opening a neurosurgery clinic. Really cheap rates…

  30. observa
    April 18th, 2006 at 14:26 | #30

    Nevertheless, I still choke on the fact that 1 in 5 working age Adelaideans now receives welfare and this when our unemployment rate, around 5%, has aligned with other states these days. You get the feeling some welfare dependency categories have to radically change real soon, with more aged pensioners about to fill this bucket to overflowing.

  31. April 18th, 2006 at 14:34 | #31

    Terje:
    The problem of discerning a “real shortage” is that utility functions are not observed (hence demand and supply functions are also not observed) in practice. All that is observed (through time) is a set of prices and quantities.

    Using revealed preferences it may be possible to determine these demand and supply functions to see if an equilibrium is actually being reached. Hypothetically, if revealed preferences were used and found that the equilibrium is not being reached, then it could be argued that there is a “real” shortage in that there is a market failure.

    Chappelli:
    Agree 100%: There are different ways shortages occur, but using previous data (such as a massive rise in price, or observing the presence of a union/collective) is not always going to answer the question of whether there is a market failure.

  32. Terje
    April 18th, 2006 at 15:05 | #32

    Just note that there is a difference between a shortage caused by a shock to production (e.g. Larry’s effect on bananas in FNQ), a shortage caused by institutional factors (e.g. a doctor’s union restricting supply and earning rents) and a shortage caused by market failure, or information asymmetries.

    How do we know that Larry didn’t merely correct a long standing oversupply of bananas?

    I am not arguing that this is the case just asking how we would know.

  33. April 18th, 2006 at 15:08 | #33

    stoptherubbish, your reasoning relating paying compulsory student union fees to paying compulsory rates, in each cases for unwanted and unused services, is the same reasoning as two wrongs making a right. You should look at each of them to see if there really is any right there, not simply accept a general principle that since there is already some rolling over, there should be no objections to other rolling over.

  34. Chappelli
    April 18th, 2006 at 15:12 | #34

    You’re right, alpaca, all sorts of other factors can give rise to market failure. Most of them relate to the quality (or presence) of information surrounding a trade.

    Katz did have a legitimate point: I could be the greatest neurosurgeon going around, but without some sort of recognisable qualification, I doubt you would trust my scalpel near your miniature poodle, let alone your cerebral cortex. OTOH, even if I were a below average neurosurgeon, with the appropriate piece of paper hanging in the waiting room of my chambers many would be happy to pay for my services.

    However this type of “quality assurance� can be hijacked if all my neurosurgeon buddies had colluded to restrict supply, effectively preventing competition, and keeping our wages suitably high.

  35. Terje
    April 18th, 2006 at 15:13 | #35

    PML,

    If we were to accept the principle pointed to by stoptherubbish (just for the sake of the argument) we could then point to the fact that State governments already regulate local government rates (at least in NSW they do) so it is okay for the federal government to regulate student union fees.

    After all its for the greater good.
    ;)

    Regards,
    Terje.

  36. Chappelli
    April 18th, 2006 at 15:33 | #36

    Terje,
    I guess in the absence of reasons for an oversupply (such as subsidised production) you just assume that a relatively stable long-run price is indicative of a market in equilibrium. So in response to your earlier question, you need to know more than the price of a good (relative or otherwise) to determine whether there is a shotage in a market.

    Ahh, the whole idea of equilibrium is floppy anyway…

  37. Terje
    April 18th, 2006 at 16:21 | #37

    Surely the government would only ever subsidise production in order to correct a shortage due to market failure? It would never do this in an instance where it created an oversupply.
    :)

  38. sdfc
    April 18th, 2006 at 18:56 | #38

    Terje

    BaUnless the suppliers / producers of bananas were running consistent losses due to a lack of pricing power you can safely bet there was no oversupply.

  39. Dogz
    April 18th, 2006 at 20:25 | #39

    Alpaca, having not encountered the term before, I looked up your reference to Revealed Preferences

    From the article:

    “Further theory states that preferences are transitive”

    Hmm, really? I prefer tall, attractive, and intelligent women, with equal weight on each trait. So I’ll prefer Jill over Mary since she is both taller and more attractive than Mary. And I’ll prefer Mary over Jane since Mary is both taller and more intelligent than Jane. But while Jane is clearly rather short, she is in fact more attractive and intelligent than Jill.

    So I prefer Jill over Mary, Mary over Jane, and Jane over Jill. Legitimate non-transitive preferences, no?

  40. Terje Petersen
    April 18th, 2006 at 20:54 | #40

    sdfc,

    So you measure a shortage by how profitable the producer is? In terms of a labour shortage how do you do that calculation?

    Regards,
    Terje.

  41. sdfc
    April 18th, 2006 at 22:12 | #41

    No Terje I didn’t say that. I just suggested that oversupply infers that producers are forced to sell below cost, otherwise wouldn’t low prices just suggest a healthy competitive market.

    If there is a shortage of any vocation wouldn’t this allow those particular labour suppliers to bid up their price? Hence skilled workers are generally in a better bargaining position than unskilled workers.

  42. Fraiser Crane
    April 18th, 2006 at 22:30 | #42

    I would like to address the definition of ‘skills shortage’. This term seems to be poorly understood and infact mis-applied in most cirumstances which invariably complicates subsequent measures of it. Skills shortage encompasses two concepts: skills gap and recruitment difficulties. Whilst skills shortage per se implies interplay of demand and suppy, it is the two latter terms that determine adequacy of measure. Identify what a particular firm faces (whether skills gap or recruitment problems) and then adequate supply/demad responses can be taken.

    Skills shortage facing many industries in Australia, particularly the trades are due because of inadequate supply of ‘appropraitely skilled labour’. That is, employers demand for labour is not met beacuse they require workers with the right type of skills and experience, not mere qualifications alone: skills gap. This demand for skilled-up labour is driven by the exponential technological change taking place in the economy. Employers demand workers that are not only equipped to harness current methods of production but also to adopt to future changes. Here, generic skills play a vital role.

    As for recuitment difficulties, this is where labour market conditions, such as wages, work conditions etc are pertinent.

    For an excellent treatment, see Sue Richardson’s recent article ‘what is a skills shortage?’(Draft 2005 NILS). I’m sure it will go a long way in answering Terje’s question on measuring skills shortage, but in short, no one factor can adequately measure skills shortage.

  43. Terje Petersen
    April 18th, 2006 at 23:41 | #43

    I could only find a draft version of the paper by Sue Richardson.

    http://www.ssn.flinders.edu.au/nils/publications/whatisaSS.PDF

    It is well worth the read. She clearly articulates the problem in measuring shortages and offers a number of useful insights on the topic. She also expresses what I would regard as appropriate reservation about any automatic public policy response to claims of a shortage.

    I also found the section on quality adjustments fascinating. Having done a lot of recruitment I recognise the process immediately. An employer advertises a job and then rather than vary the wage to get an adequate candidate at the lowest price they quality shop to get the best quality for the set wage. In other words the quality of candidate accepted becomes the main variant in the process not the actual wage offered.

    For non-fungible goods/services such as labour this quality adjustment process must significantly conceal inflationary/deflationary processes within an economy. For a fleeting moment I can imagine an episode of inflation in which the nominal price of a loaf of bread remains the same but the quality declines.

    When I was in Tonga in the mid 1990s I visited the local market place to buy vegtables. I was struck by the non-conventional way of selling vegtables. Everybody sold vegetables for one Tongan dollar (which solved the problem of lose change). The haggling involved the number and quality of vegtables in the pile (ie the quality of the pile). Inflation in such a market would be characterised by a decline in pile quality not a change in pile price. It occurs to me that this is in fact very comparable with how we shop in labour markets.

    Thanks to Fraiser Crane for an excellant reference.

  44. April 19th, 2006 at 00:44 | #44

    StephenL: If Australia wishes to attract overseas students, abolishing compulsory student unionism is one of the best moves we could make.

    Overseas students enroll in an Australian University to either:
    a) Study and pass their exams.
    b) Lay the groundwork for Permenant Residency.

    They have no interest in engaging in “protest” or activist causes. They are generally quite conservative, focused on the end result, and opposed to paying student union fees.

    Their parents, who have worked hard to pay the fees, are usually aghast at the waste of money by student unions, and detest seeing money they worked for being squandered by Australian bimbo student activists.

    There are international students who pay their tuition and all other costs from money they earn in small menial jobs in Australia. Those people have to work quite hard waiting tables etc and living like a churchmouse to scrape through uni. They have no respect nor need for student unions at any time.

    A stint of working in such a manner for their education wouldn’t hurt any of the erstwhile student union hierarchy of recent years, not one bit.

  45. April 19th, 2006 at 00:51 | #45

    Shortage of skills? How to measure it? How about when there isn’t anyone to do a job?

    Reality in my town is: I cannot get any builder in town to QUOTE on a set of approved plans for an outdoor smoking garden. I am asking blankly for a figure to complete the work, ANY figure. They can quote as high as they like. I am known for paying over the odds, and showing additional appreciation in liquid form. I have stated that I “want it done” (smart builders can read my meaning into that)

    Nobody can be bothered to quote, they are too busy.

    Would this qualify as a skill shortage? Rather than a matter of price?

  46. Chappelli
    April 19th, 2006 at 08:55 | #46

    Terje,

    You just hit the utility-maximising / cost-minimising duality of standard microeconomic theory on the head. The theory (and it is only a theory) shows that a competitive market will arrive at equilibrium by any combination of people getting what they want for the lowest cost and others getting the most they can for their money.

    Steve,

    Maybe you just need to show them more cash again. That ought to move you up the list.

  47. Dogz
    April 19th, 2006 at 10:29 | #47

    I am getting tired of this government. Now we’re going to get more vote buying tax relief for families. Even though a family of four on median wage pays no tax anyway. No relief at the top-end. No relief for singles. No attempt to reduce tax code complexity. No efforts to reduce the punishing EMTRs across the board. No effort to increase workforce participation. A $16B surplus and the best they can come up with is more of the same. This is one awfully lazy government.

    Bill Leak’s cartoon in The Australian sums it up nicely.

    It seems it no longer matters which side you vote for. Canberra is just one giant, taxpayer-funded, policy vacuum.

    This once-rusted-on Liberal voter plans to register a protest vote at the next election.

  48. Katz
    April 19th, 2006 at 11:15 | #48

    Interesting comments Dogz.

    Does your intended protest vote extend as far as denying the Coalition your effective vote? i.e., do you contemplate preferencing Labor over Coalition?

  49. StephenL
    April 19th, 2006 at 12:32 | #49

    Steve at the Pub, you start from the assumption that all student organisations do is run political activities, and all else follows from there. However, this assumption is completely wrong.

    I am reasonably familiar with the budgets of student organisations on three campuses, and on all of these less than 5% of the student fees goes to the sort of political activity you describe. By contrast roughly 20% goes on sporting facilities. General interest clubs and societies, music, counselling, unsatisfactory progress representation, etc, etc make up the vast bulk of the expenditure.

    International students make little use of some of these, but are over-represented in their use of others. I was passing through one campus recently when the night markets were on – there were several thousand students there, overwhelmingly from overseas, enjoying the music and dance from their home countries. For many students experiencing extreeme culture shock such events are a vital lifeline to home. All paid for out of the Amenities and Services fee which will be abolished next semester.

    It is true that International students are generally more conservative than local students, and many are probably opposed to the political activities, but they’re unlikely to avoid a university because $20 of their fee goes to support such things. On the other hand they may well go elsewhere if there are no such events as the one I witnessed.

  50. Dogz
    April 19th, 2006 at 12:57 | #50

    Does your intended protest vote extend as far as denying the Coalition your effective vote? i.e., do you contemplate preferencing Labor over Coalition?

    Absolutely, Katz. If you’re going to protest you may as well go the whole way. I’ll be voting 1 for Labor if the coalition doesn’t pull their collective fingers out.

    There’s just no excuse for lack of action on tax reform: surpluses approaching 10% of government expenditure and control of both houses of parliament is a once-in-a-lifetime opportunity.

  51. April 19th, 2006 at 13:11 | #51

    StephenL: If international students want to dance at a multicultural fair, then they may well pay the $20 it costs them.

    It is where the other $580 of the extorted student union fee was going which will rightly concern them.

    If so little of student union fees were going into general wankery, why is it this Easter was deviod of the usual screaming hordes of lunatics at some desert detention camp/military base etc? Gee.. let me guess, no student union riches to pay people $50 a day & to bus them there.. … golly, VSU really is BAD isn’t it!

  52. Ernestine Gross
    April 19th, 2006 at 18:06 | #52

    Terje:

    Thank you for your reply on the topic ‘private competitive education market’.

    I would not be surprised if there are companies who provide training for people to behave in a way other companies want it. In this sense I can understand your statement: ” I do know that out of the formal qualifications that I have personally the one which is the most marketable is taught by multiple alternate outlets operating in a competetive market.”

    However, I do not understand what training of this kind has to do with education.

    The advantage of having formal theoretical models is that terminology is defined and this helps clarity of thought. For example, the difference between a ‘privately funded university’ as distinct from an organisation in a ‘competitive education market’ becomes quickly obvious.

    My hypothesis that a ‘competitive market for education is a beautiful (pipe) dream’ remains unchanged.

  53. April 19th, 2006 at 18:32 | #53

    Ernestine,
    It is not hard to imagine a competitive market for children’s education. It exists whereever there is a private school system and a public one in parallel, as in Australia. It is not fully competitive in Australia, as the price for one set is heavily subsidised (down to near zero), the price for the Roman Catholic system is also heavily subsidised (not to quite zero, but not too far) and one set is less subsidised (everyone else).
    I think your hypothesis has therefore been disproven. Do you want to modify it?

  54. Katz
    April 19th, 2006 at 19:11 | #54

    Yet in this so-called competitive market for education:

    1. The state holds the monopoly over accreditation of senior curricula.

    2. The state holds the monopoly over the gateways to higher education.

    3. The state holds the monopoly over accreditation of teachers.

    Thus people who think they are engaging in a free market in education are victims of an illusion.

    Of course, certain schools do promise their enrolees cache and access to contacts. These features of schooling may well be deemed by parents to be worth the money they spend on private schooling.

    But it is a stretch to say that these attributes of the private school experience amount to education, any more than the aperitif in a high-class brothel amounts to sex.

  55. Ernestine Gross
    April 19th, 2006 at 19:16 | #55

    No Andrew, I don’t want to modify my hypothesis. On the contrary, your description of the current schol system brings water to my mills.

    I

  56. Alan
    April 19th, 2006 at 20:35 | #56

    Dogz, the coalition’s tax policies are not the result of laziness. They are the result of wanting to win the next election. We have a very high taxing, high spending government because somehow enough people see taxes as inevitable but largesse as a personal benefit. So the Coalition raises lots of money in order to target spending on every demographic or geographical group it thinks it can tilt over the line.

  57. Ernestine Gross
    April 19th, 2006 at 20:43 | #57

    “How do we know that Larry didn’t merely correct a long standing oversupply of bananas?”

    Good one.

    Would love to hear what the ‘in the long run-economists’ have to say on this one.

  58. April 19th, 2006 at 21:58 | #58

    Dogz,
    In response to your earlier post on revealed preferences, you are entirely correct. You can have a preference fuction defined in such a way that revealed preference may yield an ambiguous result.

    What you’ve left out, though, is who you finally pick. Imagine a situation where all three are available and you pick Jill, then (um) a hurricane comes along and whisks Jill away and I observe you pick Mary. Thus, you prefer Jill to Mary. Thus you prefer Height&Attractiveness over Height&Intelligence, thus you prefer attractiveness over intelligence.

  59. Terje Petersen
    April 19th, 2006 at 22:41 | #59

    However, I do not understand what training of this kind has to do with education.

    Ernestine,

    This leads me to conclude that either you are ignorant about the nature of the types of private sector education I am refering to or else you use the word education in a manner quite different to my understanding of the term.

    Wikipedia offers the following introduction to the term “education”.

    http://en.wikipedia.org/wiki/Education

    Education is a social science that encompasses teaching and learning specific knowledge, beliefs, and skills.

    Is it that you don’t think these course entail education? Or is it that you don’t think it is a competitive market?

    From your vantage point are you able to cast any more light on the nature of our divergence?

    Regards,
    Terje.

  60. Ernestine Gross
    April 19th, 2006 at 22:43 | #60

    ” Alpaca, having not encountered the term before, I looked up your reference to Revealed Preferences
    From the article:

    ‘Further theory states that preferences are transitive’
    Hmm, really? I prefer tall, attractive, and intelligent women, with equal weight on each trait. So I’ll prefer Jill over Mary since she is both taller and more attractive than Mary. And I’ll prefer Mary over Jane since Mary is both taller and more intelligent than Jane. But while Jane is clearly rather short, she is in fact more attractive and intelligent than Jill.
    So I prefer Jill over Mary, Mary over Jane, and Jane over Jill. Legitimate non-transitive preferences, no? ”

    Nice way to illustrate the flaws in the cited reference.

    The stated preferences are ‘lexicographic’, which is sufficient to render the ‘revealed preference theorems’ irrelevant (strictly convex preferences are assumed).

  61. Terje Petersen
    April 19th, 2006 at 22:56 | #61

    So I’ll prefer Jill over Mary since she is both taller and more attractive than Mary. And I’ll prefer Mary over Jane since Mary is both taller and more intelligent than Jane. But while Jane is clearly rather short, she is in fact more attractive and intelligent than Jill.

    So let me try and put some example numbers on that one:-

    Jill is 7ft, IQ=120, 9/10.
    Mary is 6ft, IQ=140, 8/10.
    Jane is 5ft, IQ=130, 10/10.

    Hey presto it actually works. I love the apparent paradox thrown up by that example.

  62. Ernestine Gross
    April 19th, 2006 at 23:09 | #62

    Terje,

    1. “This leads me to conclude that either you are ignorant about the nature of the types of private sector education I am refering to or else you use the word education in a manner quite different to my understanding of the term. “

    Please provide the names of the ‘types of private sector education’.

    2. “Wikipedia offers the following introduction to the term “education�.

    http://en.wikipedia.org/wiki/Education
    Education is a social science that encompasses teaching and learning specific knowledge, beliefs, and skills.
    Is it that you don’t think these course entail education? Or is it that you don’t think it is a competitive market?
    From your vantage point are you able to cast any more light on the nature of our divergence? “

    Please provide your understanding of the term ‘education’.

  63. Terje Petersen
    April 19th, 2006 at 23:16 | #63

    Hey presto it actually works.

    Actually a part of the paradox stems from the way comparisons are made. If you merely compare pairs of women and then count the attributes that are superior in the case of each comparison then you get the paradoxical outcome.

    However if you attribute some type of normalised value to each attribute and then add these up and compare the final “score” you don’t have any such paradox. With the weightings given in the table below the three women are all equally appealing.

    3 1 2 => average 2
    2 3 1 => average 2
    1 2 3 => average 2

    Given a series of facial pictures people can typically order them from most to least beautiful (although the order might be unique to each observer). This is in spite of the fact that there are a vast multitude of factors that go together to create what me might regards as beauty. It would appear that in such an exampe we probably use a “weighted average” approach rather than a “number of superior attributes” approach.

  64. Terje Petersen
    April 19th, 2006 at 23:29 | #64

    Please provide the names of the ‘types of private sector education’.

    Let me start with one. If it does not qualify then please tell me the reasons why it does not qualify and if appropriate I will seek another example.

    Example 1. CompTIA A+ Certification

    For a summary see: http://www.comptia.org/certification/a/

    Please provide your understanding of the term ‘education’.

    My wife is currently finalising a Phd on Knowledge acquisition (at your uni actually) and from exposer to that as well as my own prior experience of the topic I know that “knowledge” can be a very slippery concept. However leaving that to one side and being bold I would define education as any process that fascilitates or causes a person to acquire new knowledge, skills, insights, terminology, ways of thinking etc.

  65. April 19th, 2006 at 23:31 | #65

    It would appear that in such an exampe we probably use a “weighted average� approach rather than a “number of superior attributes� approach.

    And what you have defined is the utility function which you are trying to determine, using revealed preferences.

  66. Ernestine Gross
    April 19th, 2006 at 23:51 | #66

    It is interesting to watch what happens when people start off with a Wikipedia ‘article’ on revealed preferences. Its also a worry.

  67. April 20th, 2006 at 00:30 | #67

    Katz,
    A market does not have to be free to be competitive. I did not say free – neither did Ernestine. My position stands.
    .
    As for my position – a fully unsubsidised market in children’s education is not desirable as the “sins” of the parents should not be visited on the children. However, just because a society believes that children need to be properly educated does not mean that the State needs to own schools, set cirriculum and support a huge bureaucracy. There are better ways.

  68. Ernestine Gross
    April 20th, 2006 at 00:34 | #68

    Terje,

    I’d like to preface my comments by saying that I don’t think we are going to resolve much with this conversation but lets see how far one can go. I am writing on the condition that it is understand that whatever I am writing in the following is part of a process rather than statements that can be quoted, either in full or in part, anywhere.

    1. CompTIA A+ Certification. This is a good example of the formalisation of technical training, the success of which can be measured, at least partially, by observing changes on physical objects as a result of applying skills acquired. I’d say a forerunner of this development was training provided by Siemens and Mercedes Benz many years ago. Technicians with good references (rather than a certificate) from these companies were ‘valued’ in ‘the market’.

    2. “However leaving that to one side and being bold I would define education as any process that fascilitates or causes a person to acquire new knowledge, skills, insights, terminology, ways of thinking etc. ”

    Your description of your notion of ‘education’ makes more sense to me than the ‘stuff’ found on the wiki-site.

    I’d like to make one ‘etc’ specific, namely to inspire people to be inquisitive, to ask questions and to reason. Another ‘etc’ is to inspire people to create new knowledge, develop new skills. Another ‘etc’. is to inspire people to gain insights by anlysing whatever material they are concerned with.

    I would agree with you that the term ‘knowledge’ can be a slippery one. One way to get a little bit of a handle on it is to say that some knowledge is concerned with the question WHY and some knowledge is concerned with the question HOW to do something.

    In my opinion and, given space and time constraints, generalising a bit more than what I would like to, ‘education’ involves both questions but ‘training’ involves primarily only one, namely ‘how to do something’.

  69. Terje Petersen
    April 20th, 2006 at 08:39 | #69

    I am happy to explore this as a process. In other words I am happy for either of us to change our minds or expand our interpretation of the issue or concede that we only have a partial answer.

    I am not entirely sure I agree with your distinction between education and training but lets play with it a little.

    What you seem to be saying is that Education may incorporate training (ie training is a subset of education) but that education in its broadest sence has an added element. A component concerned with asking “why” or as you put it to “inspire people to be inquisitive, to ask questions and to reason”.

    If this is correct then what you would really seem to be saying is that some types of education (ie vocational technical skills training) can be delivered through a competitive market place but other types of education (ie the sort concerned with questions of why and the type that inspire people to be inquisitive and to ask questions and to reason) would not be provided if it was all left to a competitive market place. In other words a competitive market place can deliver education but it would not be sufficient to ensure that the entire enterprise of education was fufilled.

    Is this a fair characterisation? Where does it need refinement?

  70. Dogz
    April 20th, 2006 at 09:46 | #70

    Alan,

    Dogz, the coalition’s tax policies are not the result of laziness. They are the result of wanting to win the next election.

    I’d agree with you except how do you explain the IR laws? They are likely to lose the Coalition votes – so the Coalition are capable of doing something unpopular that they believe is good long-term for the country. I agree with them on the IR laws, but if that’s their one-shot at pushing through unpopular policy this term then it would have been vastly preferable had they chosen tax reform over IR reform.

    Besides, they’ve got such an enormous surplus, this is one time they can reform taxes whilst creating the fewest possible losers.

  71. Dogz
    April 20th, 2006 at 10:43 | #71

    EG, to be fair, I don’t think there’s anything wrong with the wiki article on revealed preferences – my guess is you have to assume transitivity to get anywhere at all with the theory.

    Fundamentally the “paradox” arises because the things for which you’re expressing preferences have incomparable traits. You can get around that as Terje did by assigning scores and hence forcing the different trait’s to be comparable, but that seems artificial to me.

    I think the fundamental weakness is in assuming all information about preferences is contained in pair-wise comparisons. I can imagine many circumstances in which I might choose A over B, B over C, and C over A, if I am only presented with those choices. But if I am presented with A, B, and C simultaneously, I’ll make different choice.

    The reason is that when you compare two things you do so via their common traits. But most things have a large number of traits, and a comparison between A and B will not necessarily involve the same traits as a comparison between A and C. The only way you can make a decision on all relevant traits is to compare the three things simultaneously, which means to “reveal my preferences” you need to inspect more than just my pairwise choices.

    Of course, as IANAE (I Am Not An Economist), this may all be a load of baloney.

  72. Ernestine Gross
    April 20th, 2006 at 11:04 | #72

    The term ‘competitive markets’ has meaning to me. The term ‘competitive market place’ does not (where is the location where internet trade takes place?)

    I am saying that markets work reasonably well for a subset of ‘commodities’ (physical objects) which can be consumed by individuals or used by enterprises as inputs, causing ‘negligible’ externalities.

    ‘Vocational technical training’ consisting of skills that can be acquired quickly (say at most 1 year) and applied by an individual to physical objects in a ‘standardised’ manner (at least for a period of time) would seem to me to be ‘marketable’. To be ‘marketable’ is not quite the same thing as saying vocational technical training can be provided by a ‘competitive market’. But this kind of ‘vocational technical training’ is typically offered to people who are already ‘educated’ to some extent.

    It is not easy to draw a line in the sand. For example, ‘accounting’ consists of skills that are not directly related to physical objects but, up to a point, the skills are so standardised that the term ‘vocational technical training’ seems quite suitable and as such training in accounting could be said to be ‘marketable’.

    In some circles, it was the fashion during the past 10 years to talk about ‘commodification of education’. ‘Standardisation’ became an aim, whether it made sense or not. This is where things get tricky because the mind of teachers and students get ‘boxed in’. Creativity is stifled, questions are suppressed, etc, etc. In a sense ‘learning’ stops. I call this ‘uneducation’ or ‘dumbing down’. The opposite to an ‘open society’, if you like.

    I don’t believe we get much further with our discussion because there is more involved than refinements. However, isn’t it good to have gone some way in terms of ‘free exchange’ of some thoughts on some very complex matter rather than allowing ourselves to be ‘boxed in’ by the wiki-site?

  73. Ernestine Gross
    April 20th, 2006 at 15:58 | #73

    Dogz,

    The wiki article on revealed preferences doesn’t state the theorem(s) on revealed preferences. IMO, this is not helpful. One of theorem might be enough for readers to understand what is going on. I am restricting my comment here to economics (to be on the safe side).

    The methodology is: Under conditions (i) to (n) preferences of indidividuals can be deduced from market prices. Furthermore, the objects over which preferences are defined are characterised (eg pair-wise comparable, measurable).

    If the conditions in the theorem are not ‘good approximation’ to reality then one can’t “use” (apply) empirical methods which rely on the revealed preference theory. So Terje’s approach makes no sense in this framework because he is trying to specify what is to be deduced.

    I thought your example was clever because you picked a choice set of ‘characteristica’, which was not completely spanned by the set of available combinations. Initially I wanted to write on this but decided against it – potentially too difficult for a blog-spot. So, I picked on one condition, which I know is violated by the information you made available.

    You are correct, one of the conditions involves the notion of ‘transitivity’. But this is only one of a list.

  74. StephenL
    April 20th, 2006 at 16:20 | #74

    Steve at the Pub,

    It’s a simple thing called efficiency. It is much more efficient to collect $393 from students once (the fee at this campus, and a fairly typical one, in contrast to your figure of $600) than to have to have set up fencing around an open area every time you hold an event and pay someone to take $20 off everyone who attends. If you run three events a week during term time the costs of putting up and taking down all those barriers, plus paying people to collect add up. The same goes for having to have someone collect a payment everytime someone uses the computer centre or the running track.

    Some of the fees go to places you don’t like. Fair enough. But the fact stands that the overwhelming bulk of those fees go on things that are not controversial in themselves, although one can off course argue if they are value for money. In some cases it is relatively easy to shift to people paying at the time of use (eg the gym, which on most campuses is subsidised but not free – they’ll simply up the charge). In other cases it is highly inefficient or impractical to charge people other than through an upfront payment at the start of the year.

    Supporters of VSU consider the aspects they are opposed to, such as funding of rallies, far more important than the negative consequences of loss of other services. That’s a legitimate position. But it is simply dishonest to pretend that rallies and student politicians’ salaries represent the majority of the fee. Anywhere other than tiny campuses they represent between 2 and 10%, usually less than 5%.

    And BTW, in case you didn’t notice, there was a refugee protest this year. It was intended to be held at Villawood, but the government shut the place down because they were concerned the protesters would disturb nearby asbestos.

  75. Terje Petersen
    April 20th, 2006 at 20:00 | #75

    Ernestine,

    Thanks for the response.

    I don’t think there was ever much risk of us getting boxed in by the wiki article. None the less I am also glad we did not get boxed in.

    You still have not clarified for me whether you regard “Vocational technical training” as a subset of education or if you are implying that such training is somehow a different beast entirely. I am still guessing that it is the former.

    I can understand your concerns about commodification of education. Your point about creativity is I believe a very key issue. However from what I have seen of competitive markets they not only commodify things but they also frequently lead to a lot of differentiation. I would think that the sort of creativity smothering commodification of education that you are refering to was more likely to come from a government education bureaucracy rather than from an education market. It appears to me (although I can’t prove it) that state based primary and secondary education system has worked hard to try and commodify teachers. Across the state we have a uniform curriculum that leaves little scope for innovation or creative education.

    On the issue of creativity I remember in the first year of my engineering degree we did an introductory course that explained how engineering was all about synthesis (ie creativity). They then went on to say that teaching synthesis (ie creativity) was too difficult so they would instead spend the next four years teaching us all about engineering analysis. That seemed like a cop out, but I suppose they were at least being honest about it.

  76. Ernestine Gross
    April 20th, 2006 at 23:15 | #76

    “You still have not clarified for me whether you regard “Vocational technical trainingâ€? as a subset of education or if you are implying that such training is somehow a different beast entirely. I am still guessing that it is the former. ”

    There is a Department of and a Minister for Education and Training and not a Department of and a Minister for Education including Training. This name seems to indicate to a sufficient extent that ‘education’ and ‘training’ are not totally unrelated but are not the same either. I can’t see any benefit of introducing superficial formalism.

  77. steve munn
    April 21st, 2006 at 00:38 | #77

    StephenL says: “International students make little use of some of these, but are over-represented in their use of others. I was passing through one campus recently when the night markets were on – there were several thousand students there, overwhelmingly from overseas, enjoying the music and dance from their home countries. For many students experiencing extreeme culture shock such events are a vital lifeline to home. All paid for out of the Amenities and Services fee which will be abolished next semester.”

    This is tripe, StephenL. Most o/s students are from places like China or Indonesia and there is bugger all “culture shock” because we already have substantial communities from these countries. Also private enterprise services cater to most of their needs. For instance in Melbourne you have several halal Indonesian food restaurants that provide cheap meals to Indonesian students. It costs next to nothing to arrange a gathering and listen to recorded music if you pine for the sounds of your home country. New voluntary groups will arise organically and cater for other needs.

    The student tax is a flat tax, or in other words a regressive tax, on education. I never used student services when I was a poor tertiary student. I would have been much better off if I could have spent the student tax on things like text books.

    Compulsory student taxes are dead. Stop flogging a dead horse.

  78. Ernestine Gross
    April 21st, 2006 at 11:07 | #78

    “If demand and supply for a specific time period is related to the previous time period(s), then its logical that there is some level of uncertainty in the producer’s mind about the amount of goods he can sell and at what price in future time periods. If this is true: Then there should be some form of insurance market present for it. ”

    Exactly. If there would be ‘complete future (not futures) markets for commodities and all physical things which are of interest to humans would be marketable’ then producers would make decisions in a complete insurance market and one could say that resources are allocated by prices. It is the absence of such markets which is observable and it is the non-marketability of some physical things which is empirically observable.

    A related question is whether financial securities markets contain the information. This question has been investigated too. The theoretical conditions are known as ‘spanning conditions’. In the absence of ‘spanning’ (ie if this assumption is empirically not true) then ‘the value of excess supply’ is minimised (Radner, 1972). Empirical examples of excess supply of office space (eg in Sydney not all too long ago), is inconsistent with the ‘spanning condition’. Unless it can be shown that all business failures are due to significant incompetence, business failures are evidence that the insurance market is incomplete. And, where can a student who is facing student fees in the range of $[40,000 to 100,000], depending on his or her choice of course insure (ie get a contract today for employment in the future)?

    The following reference books contain theoretical results and references to the mile-stone literature in this area:
    D. Duffie, Security Markets: Stochastic Models, Boston: Academic Press, 1988.
    D. Duffie, Futures Markets, Englewood Cliffs, New Jersey: Prentice-Hall, 1989. Japanese translation, Kinzai Publishing Company, 1994.

    Incidentally, the corporate phrase ‘maximise shareholders’ wealth’ (ie share market value) entails that corporations are not ‘competitive’ (price takers) in the financial markets.

    In practice it has become the fashion for publicly listed corporations to maximise ‘earnings per share’ (as calculated by accountants). But, consider what happens if corporate managers’ focus on ‘earnings per share’ and they have debt on their books. Further, the technology of many corporations entails ‘fixed’ investments (and multi-period contracts with managers). The ‘price flexibility’ left in a company are wages – no?

  79. Stephen L
    April 21st, 2006 at 17:11 | #79

    Steve Munn. Strange that your position is not endorsed by a single one of Australia’s Vice Chancellors or any of the representative bodies for overseas students. Granted the latter have a conflict of interest, as they get a share of the funds, but I have yet to hear of a single overseas student endorsing the VSU legislation, and know plenty who are opposed, even from the right.

    Some of the universities are so worried about the loss of services for overseas students they are taking millions of dollars out of other things and putting them into the student organisations.

    I’m not aware of a single country that does not have guaranteed funding for its student organisations – either from the taxpayer or through a compulsory fee. No doubt some universities in the US do not charge a compulsory fee for student services, but the major ones, with which Australia competes for overseas students, do.

    VSU will certainly remain in force for a while, and in that sense I am flogging a dead horse, but I’m willing to bet that within ten years it will either be repealed or (more likely) will be drastically amended so that some of the services are funded again. I’ll back that up with cash if we can agree on a suitable person to hold the money (perhaps our host would like to volunteer).

  80. steve munn
    April 22nd, 2006 at 00:15 | #80

    StephenL, if universities want to introduce a service fee for o/s students that is not my problem.

    My problem is poorer working class students having to pay a prohibitive tax which is largely frittered away on things like political grandstanding, the womyn’s room, student radio, a crap newspaper that hardly anyone reads and silly clubs like the “chocolate club”. At least that was the impression I gained during my undergraduate days, when I had to account for every single dollar in order to make it through. I doubt things got any better over the succeeding 10 years.

    Ending compulsory anti-working class regressive taxes on students is one of the few things the Howard Government has got right.

  81. Terje Petersen
    April 22nd, 2006 at 01:08 | #81

    At least that was the impression I gained during my undergraduate days, when I had to account for every single dollar in order to make it through. I doubt things got any better over the succeeding 10 years.

    My own views on VSU were formed when at university for pretty much exactly the same reasons that Steve Munn outlines above.

  82. Stephen L
    April 23rd, 2006 at 13:58 | #82

    There’s no question there is waste in all student organisations, and a lot of waste in some – I spent a fair amount of my time at university trying to get rid of some of this waste, and saved my student organisation tens of thousands of dollars in the process. (Whether all the things you refer to are waste is a matter for another time).

    However, my initial point was this: Most of the money collected in student fees do not go on these things. Most universities would spend more on student health than all the things you refer to combined.

    A flat tax is certainly regressive, and there are many better ways to fund facilities like student health. I believe that dental and mental health services should be available under medicare, but the fact is that they are not (at least not in an adequate form) and the government has absolutely no intention of rectifying this.

    Some universities will keep funding for these things going, but others won’t, and the consequences will be disasterous – if it is a problem for poorer students to be forced to pay $400, what do you think of poorer students being unable to get their teeth fixed or get psychiatric counselling?

    As to having overseas students pay – universities will do this (indeed a seriously bizarre piece of legislation appears to require them to do so, passed shortly before the government forced them NOT to make local students pay). The problem is that many of these facilities rely on economies of scale. For example a health service available only to 10% of the student body can’t be run full time.

    There will also be outrage if a student counselling service – now only open to overseas students – turns away a local student who then kills themselves. This debate is far from over.

  83. steve munn
    April 23rd, 2006 at 20:28 | #83

    StephenL says: “I believe that dental and mental health services should be available under medicare, but the fact is that they are not (at least not in an adequate form) and the government has absolutely no intention of rectifying this.”

    The fact that dental and psychiatric services are not adequately provided under Medicare is a travesty. It is certainly an issue that I feel very strongly about. However I do not support piecemeal social programs when there is a better alternative, which in this case is to have psychiatric care and at least basic dental services funded under Medicare. This is considerd affordable in other equally affluent western nations, such as Sweden, so there is no reason why it should be dismissed as unaffordable here.

    As an aside, some psychiatrists do charge the Medicare rebate fee. Students could be referred to such psychiatrists, or a deal could be struck with other psychiatrists who are willing to be altruistic and reduce their usual fee. There is no reason for stand alone service providers at each tertiary insitution, so the “economies of scale” argument is bunk.

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