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Weekend reflections

October 23rd, 2009

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic.

Categories: Economics - General Tags:
  1. Sea-bass
    October 25th, 2009 at 19:13 | #1

    @SeanG
    One of the remarkable things about people who go on ad nauseum about the failings of markets is that they can place such faith in the political process, when it has an even greater tendency to produce sub-optimal results. A few people even classify it as a mental disorder.

    Then again, social democracy isn’t really about helping the poor or producing optimal outcomes… I think the reasoning of your typical social democrat is summed up nicely by a Ukrainian folk tale:

    A king promised a peasant that he would grant him any wish on condition that his neighbour would get twice as much. The peasant laughed and asked the king to poke him in one eye.

    (A variant of this tale is that of a man who was told he could wish for anything, and so he wished that his neighbour’s cow was dead.)

  2. Michael of Summer Hill
    October 25th, 2009 at 19:21 | #2

    Salient Green, you should be more optimistic for Australia is lucky to have the oncoming resources boom.

  3. gerard
    October 25th, 2009 at 19:36 | #3

    Have you ever lived in a social democratic country? You have the taxes, the waste, the corruption…

    Which countries, exactly, are “social democratic” then? The first place I would look is at the very top of the UN’s human development index. Of course these societies may not be perfect but I don’t think there’s anywhere in the developed world where waste and corruption are anywhere near as vast as in the US, and what America lacks in taxes they make up for in astronomical debt. So you’re choice is really between government spending on health, education and welfare or government spending on military aggression and banking bailouts.

    I don’t know where I can find a “small government” alternative. I think maybe we’d need to go back to the nineteenth century for that. Obviously this doesn’t count.

    Of course the Rightwing is in a bit of ideological disarray at the moment, but I’ve noticed that it seems to be converging on the consensus view that any society that has a central bank and fiat money is essentially “social democratic”, and therefore the big “social democrat” Greenspan can be blamed for the financial crisis.

  4. Sea-bass
    October 25th, 2009 at 20:00 | #4

    @gerard
    “The ultimate problem with the HDI is lack of ambition. It effectively proclaims an “end of history” where Scandinavia is the pinnacle of human achievement… Scandinavia comes out on top according to the HDI because the HDI is basically a measure of how Scandinavian your country is.” – Bryan Caplan, http://econlog.econlib.org/archives/2009/05/against_the_hum.html

  5. gerard
    October 25th, 2009 at 20:31 | #5

    There are, in fact, many valid criticisms of the HDI – or indeed any attempt to reduce human welfare to a single number.

    Thanks for the link Sebastian, because Caplan’s a brilliant man and I might have otherwise missed this breathless post of his:

    A piece in Foreign Policy says that Ayn Rand’s now big in India:

    Not only do Indians perform more Google searches for Rand than citizens of any country in the world except the United States, but Penguin Books India has sold an impressive number of copies — as many as 50,000 of Atlas Shrugged and The Fountainhead each since 2005, a number comparable to sales there by global best-seller John Grisham.

    100,000 books a year in a country of 1,000,000,000 people sounds unimpressive. But it all depends on leverage. Wouldn’t it be amazing if 100,000 Indian bloggers were reading Rand every year

    Wow, that would be amazing.

  6. gerard
    October 25th, 2009 at 20:45 | #6

    sorry, here’s the link

    Randian India?

    one hopes they’re not just reading it for the rape scenes

  7. SeanG
    October 25th, 2009 at 21:51 | #7

    @gerard

    Right-wing ideology or left-wing ideology are problems only that you and others cannot acknowledge that you actually have an ideology that does not stack up to reality.

    Take government stimuli across the world due to the economic crisis that erupted in 2007. Has it worked in the US? No. UK? No. Germany or France? No. Spain? No. In fact it has not worked. What has worked is where the banks have continued to lend out not stimuli. The broad-based solution to every problem is fiscal action. It fails but it leaves one massive debt.

    Sweden is an interesting case. Always held up as a social democratic nation. Did you know that in order to reduce their government spending they allowed private enterprise to run their schools for a profit?

  8. gerard
    October 25th, 2009 at 22:17 | #8

    are you talking about Sweden’s independent schools? I don’t know if this wikipedia article is accurate:

    Independent schools were relatively uncommon in Sweden until 1992, when the government introduced a school voucher system where schools without the municipal as principal, could receive government funding for each student…
    Independent schools are not allowed to receive fees from parents, so there are no true upper-class schools.

    Anyone can start an independent for-profit school in Sweden. Independent schools are funded with public money from the local kommun (or municipality). Independent schools and public schools receive money from the kommun for every pupil they have enrolled.

    so still completely publically funded and egalitarian, but with more choice for alternative pedagogical methods, in theory at least that sounds like an excellent idea. much better than what we have here.

  9. SeanG
    October 25th, 2009 at 22:18 | #9

    I agree that it is an excellent idea and private companies run them for profit. Ends, not means. This is a very good idea but will find problems with the Labor and Green parties and the teachers unions.

  10. Fran Barlow
    October 25th, 2009 at 22:27 | #10

    @Sea-bass

    One of the remarkable things about people who go on ad nauseum about the failings of markets is that they can place such faith in the political process, when it has an even greater tendency to produce sub-optimal results. A few people even classify it as a mental disorder.

    Amusing …

    Rightwingers Mentally ill

    A study funded by the US government has concluded that conservatism can be explained psychologically as a set of neuroses rooted in “fear and aggression, dogmatism and the intolerance of ambiguity”.
    As if that was not enough to get Republican blood boiling, the report’s four authors linked Hitler, Mussolini, Ronald Reagan and the rightwing talkshow host, Rush Limbaugh, arguing they all suffered from the same affliction. All of them “preached a return to an idealised past and condoned inequality”.

    [...]

  11. SeanG
    October 25th, 2009 at 22:31 | #11

    Oddly enough, nuance is something that is intrinsically European Conservative, especially British Tory.

  12. Sea-bass
    October 25th, 2009 at 22:46 | #12

    @Fran Barlow
    I don’t know why people keep lumping fascism in with free-market conservatives – I suspect they don’t fully understand it.

    Basically, it is a collectivist doctrine which posits the state is more important than the individual, and is thoroughly anti-liberal (i.e. classical liberalism, not modern day American “progressive” liberalism). That people now use the word “fascist” to describe individuals who favour free markets and economic freedom is incredibly ironic, given that fascist doctrine stipulates that the economy should be subjugated to the will of the state. It has more in common with the other “third-way” systems such as social democracy than it does with the political ideology of people like Ronald Reagan and Rush Limbaugh. In fact, I would go so far as to say that fascism is on “your” side of the spectrum, given that it is essentially a form of socialism (albeit one that pays lip service to private property).

    I am not defending or condoning the antics of Rush Limbaugh, since I believe he is the cheerleader for a particularly nasty form of US conservatism. But the juxtaposition of fascist dictators with free market conservatives such as Reagan and Limbaugh is absolutely absurd, and indicates a utter lack of understanding of the political economy of fascism.

  13. Fran Barlow
    October 25th, 2009 at 23:03 | #13

    @Sea-bass

    I don’t lump it in with fascism. My point was that when you open this door, frivolous analysis follows.

  14. gerard
    October 25th, 2009 at 23:31 | #14

    This is a very good idea but will find problems with the Labor and Green parties and the teachers unions.

    actually I think a Swedish style system would outrage the tories here much more – since the blue-blood schools would be forced to take the same amount of money per student as every other school, meaning that upper class spawn lose all their educational birth-privileges.

  15. Sea-bass
    October 25th, 2009 at 23:40 | #15

    @Fran Barlow
    Fair enough. Although the original point was that it is irrational to believe in the failures of the market and then deny the greater failures of the political process.

  16. October 26th, 2009 at 01:11 | #16

    Salient G, you can call me a cornucopian if you want, I never said the world is infinite, I only said it could probably sustain hundreds of billions more people.

    If the worlds present population was living in an urban area the density of Singapore, it would only cover a land area the size of South Australias. or about 0.67% of The total land area of the world (148,940,000 km2.)

    Considering a Forecast Sees Halt to Population Growth by End of Century the prospect of us killing ourselves by this means seems slim.

    In fact Rudd’s philosophy could be right and soon we will need as many people as we can get, especially considering the total fertility rates of China (1.6) and India (2.7) have fallen well below their respective replacement fertility rates. Population decline is rapidly approaching and Australia could soon have to compete for immigrants to maintain its economic growth.

  17. SeanG
    October 26th, 2009 at 02:23 | #17

    @gerard

    Well – the Tories in the UK want to introduce it and Labour are against it. The Teachers Union are a very powerful force with Labour in the UK and Labor in Aus.

  18. gerard
    October 26th, 2009 at 03:09 | #18

    @SeanG
    somehow I don’t think that the UK Tories will be telling Eton that they can’t charge private fees anymore, nor giving everybody vouchers to the same value as what Eton charges.

    but if they are, good for them.

  19. SeanG
    October 26th, 2009 at 05:13 | #19

    I don’t think you get the idea.

    There are privately-run schools like Eton which charge fees. No government money goes to them.

    Then there are independent schools that can be run by companies and do not charge fees. Government grants on a per student basis flow to them.

    They are not banning fee-paying schools.

  20. Fran Barlow
    October 26th, 2009 at 05:43 | #20

    @Sea-bass

    Fair enough. Although the original point was that it is irrational to believe in the failures of the market and then deny the greater failures of the political process.

    I rather doubt anyone (with the possible exception of in-powere autocrats) denies the persistent sub-optimal performance of political processes aimed at achieving good policy.

    It’s the persistent but spurious claim that markets are inherently rational allocators of goods and services that is widely held within the ruling classes of the world and thus in need of persistent response.

  21. Salient Green
    October 26th, 2009 at 07:00 | #21

    Tony G, have you no concept of biology and the interdependency of ecosystems and the dependency of Humans on those ecosystems? Have you no concept of the geological vs the ecological footprint of Humans, and how silly your argument is for talking up the space we could be crammed into without consideration for the farming and natural systems required to keep those people not only alive but to have a quality life?

    Are you one of those people who dislikes the natural world, who has no regret for the permanent loss of thousands of other species of amazing creatures to the Human Plague?

    Can you walk through a forest in a national park and appreciate the beauty or do you walk through regreting the loss of saw logs and fertile soil to economic growth?

    Do you understand the concept of ‘everything in moderation’ and that there may just be enough people on this planet, that Humans have slaughtered and destroyed enough of the natural world, that we are wealthy enough and we have enough ‘stuff’?

  22. gerard
    October 26th, 2009 at 14:48 | #22

    @SeanG
    No, I don’t think you get the idea Sean. In Sweden schools are banned from charging fees – all of the money comes from the state – so there are no upper-class schools like Eton. You are singling out the one bit that you like – the fact that independent schools are permitted to make a profit – and ignoring the bigger picture – the total state funding and social egalitarianism. The UK tories might like vouchers but if they are proposing anything like the Swedish system then Megan Fox lives under my desk.

  23. gerard
    October 26th, 2009 at 14:54 | #23

    of course my knowledge of the Swedish school system comes from Wikipedia and google, so maybe I’m wrong. but the government pays for the voucher and forbids any additional fees being charged by private schools. Etons are totally disallowed. Private operators are allowed to try and make a profit but municipalities still operate non-profit schools, which still have more than 90 percent of market share after 17 years.

  24. SeanG
    October 26th, 2009 at 16:38 | #24

    @gerard

    Gerard the UK version as proposed will mean that there are still two tiers. I thought you wouldn’t like for-profit schools.

  25. October 26th, 2009 at 18:01 | #25

    Salient Green said @ 21 above

    “Are you one of those people who dislikes the natural world, who has no regret for the permanent loss of thousands of other species of amazing creatures to the Human Plague? ”

    No, but I dislike promoting the value of the natural world and trees to the point that it exceeds the value of human life, as has recently happened in Victoria.

  26. Sea-bass
    October 26th, 2009 at 18:20 | #26

    @gerard
    Milton Friedman specifically addresses this particular argument, that of parents “topping up” their vouchers with their own money, in “Free to Choose” (I am going to make the bold assumption that this is not on your favourite reading list). It is absurd that parents who truly value their child’s education should not be allowed to spend more on his/her education, yet at the same time putting this money towards a new TV or car should be totally acceptable.

    At the end of the day, I don’t think just throwing money at schools produces any ostensible improvement. The reason private schools out-perform public schools probably stems from the fact that parents who choose this option are more interested in their child’s education, while those parents who don’t are more than happy to dump their child at the nearest state school and abrogate their responsibilities to the Glorious State.

    Perhaps that is an added benefit of the voucher system, in that it improves choice and forces parents to think carefully about where they are going to send their children i.e. pay more attention to their child’s education.

  27. babenco
    October 26th, 2009 at 18:46 | #27

    Hi Tony.

    Did you know that many more people in Victoria actually lost their lives in the late January heatwave, rather than the February bushfires?

    And of course, your view is that such heatwaves are just normal, not caused by human activity, so of course the deaths here were natural and normal as well; just part of the normal healthy cycle.

    So it looks like there’ll be a lot more of these nice healthy heat-deaths to look forward to in the next few years.
    I do so hope the climate skeptics get the full proper credit for this in the years to come.

  28. sdfc
    October 26th, 2009 at 19:06 | #28

    No Seb – A major reason private schools outperform state schools and some state schools outperform others is that the most academically capable parents generally have the most academically capable students. These parents are generally in a better financial position to put their kids in a private school, so we end up with the most academically gifted students concentrated in private education while public schools at the lower end of the scale suffer from a lack of gifted candidates. These better performing schools in turn attract more gifted students because of the perceived advantages of being educated at these schools, in many ways it is a self fulfilling prophecy. This siphoning of the best students is not just restricted to private schools but here in WA at least better public schools cannibalise students from the poorest schools.

    Now I don’t have anything against parents being able to make this choice but your comment that parents who leave their kids at the local public school as somehow meaning they don’t care about their kids does nothing but once again betray your complete lack of life experience.

  29. gerard
    October 26th, 2009 at 19:09 | #29

    Not all parents who care about their childrens’ education can afford to send their kids to private schools. But you’re right – I think most education happens at home, schools are not even designed to educate, they’re designed so socialize people into worker-bots, obedient to authority and accepting of proletarian 9-to-5 drudgery. If anything they’re designed to make people hate learning. In my own personal experience, Australia’s public and private schools are both more-or-less equally sh!t. There needs to be a shift toward alternative and progressive forms of education which are currently available hardly anywhere. I’m not against “vouchers” in theory or even “the profit motive” in theory if it can help achieve this, but how a such a system would work would depend hugely on the details. it’s not a magic bullet and in the hands of the usual suspects it’s actually more of a trojan horse for destroying the very idea of education as a public good. The top-up thing is a matter of the downward pressure that top-ups would inevitably put on the value of the state voucher. After all, the parents who can top-up might not even need a voucher, therefore why should they be coerced into paying taxes to cover the lazy bum parents that do need a voucher (let alone a generous one)? Education is not just a commodity, it is so important to life outcomes the idea that children should receive vastly different qualities of education based on their parents’ class (or even their parents’ character) is anathema to a society with egalitarian and humanist principles. I am of course well aware that “Objectivists” might find these very same principles despicable, so you needn’t point that out.

  30. October 26th, 2009 at 19:12 | #30

    gerard,
    Swedish private schools that participate in the voucher scheme are barred from charging more fees. There is no bar for a non-participating private school from charging whatever fees they believe that the parents are able and willing to pay.
    I would imagine that Eton, Harrow and others would, if this system were to be adopted in the UK, decide not to participate.

  31. Salient Green
    October 26th, 2009 at 20:05 | #31

    Tony G, thanks for replying and I’m really glad that you appreciate the natural world. Unfortunately, some don’t. The evidence is there however that most people love to get out into nature. Many sacrifice a wealthy lifestyle for a less affluent one out in the bush because they love nature. Others spend long hours travelling to their work so that they can live more at one with nature.

    Unfortunately, some pay the ultimate price for those decisions during bush fires. The safe way is to cut down all the trees around ones property. That will keep one safe but you will no longer have your lifestyle in the bush.

    Similarly, population growth will ensure that those who pay the price to have a good lifestyle in the bush will soon have neighboors who need to cut down trees, then you will need some bitumen, some gutters, drainage etc etc and then you have another paved over suburb with no resemblance to the natural world.

    There is no need to be making choices between the natural world and Human life because people unborn are not life. The thing is to not bring so many new people into the world.

    I understand that you are afraid of losing wealth via lack of ‘economic growth’. Perhaps you have wealth to lose and good luck to you if you have. I don’t think a properly constructed steady state economy would cause any real hardship as opposed to some superficial hardship such as loss of income for the very wealthy.

    The main point is that enough is enough. Let’s be satisfied, content and fulfilled by what we have achieved and set about using our skills for making the world better in terms of quality of life rather than quantity of consumption.

  32. gerard
    October 26th, 2009 at 20:19 | #32

    as I said I’m no expert but I haven’t seen any info on private schools that charge fees and don’t participate in the voucher system. Swedish law states that education must be equal regardless of socio-economic background. perhaps if I could google in swedish my knowledge would be more complete but the clearest I can find is unfortunately the UK telegraph: “Unlike in the UK, the country has never had independent, fee-paying schools as we know them thanks to a long-running opposition to any notion of invading the state monopoly on public services. Every child, by and large, has always gone to their neighbourhood school. But a change of Government in the early 1990s heralded a national debate on the issue of “school choice” – a favoured term of both New Labour and David Cameron’s Conservatives – which eventually opened the market to new providers”.

    Maybe one of JQ’s Swedish readers can tell us what the Swedish equivalent of Eton is.

  33. gerard
    October 26th, 2009 at 20:31 | #33

    PS it does seem as if the UK tories have ruled out allowing voucher recipient schools in the UK to cream off a profit, despite all the libertarian salivating that’s going on

  34. Sea-bass
    October 26th, 2009 at 21:01 | #34

    @sdfc
    Yes I realise that not all parents who send their children to the nearest public school are disinterested in their child’s education (although I’ve certainly encountered many). I know many people who have done well through the public school system. Likewise, I know others who went to private schools who haven’t achieved.

    But even the more devoted parents who send their kids to public schools will often “shop around” or find ways of getting around the school enrollment zoning requirements. In a similar vein, those who sent their poorly performing children to private schools basically just expected the school to do the parenting they couldn’t be bothered doing.

    It just tends to be the case that the private-school non-achievers are comparatively rare. And since this is the case, we should perhaps focus on giving every student the means of a good private education, instead of continually trying to make the unworkable work. Unfortunately, the obsession with egalitarianism has led people to pursue a uniform level of mediocrity.

    There needs to be a way of identifying the poorly performing schools and disciplining them, and the best way to do so is via the free market. Note there will always be below-average schools and below-average students, because not everybody can be above average by the very definition of what an average is.

  35. October 26th, 2009 at 21:17 | #35

    gerard,
    You might want to have a look at this on profitability. Here is a school operated outside the voucher system – the fees are on this page.

  36. October 26th, 2009 at 21:26 | #36

    Oops – my mistake. That one does also accept voucher students, but, interestingly, the voucher students must also contribute to the building fund and admission fees, but not the annual fees.

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