I don’t suppose this blog will ever be responsible for one of those Internet marriages we’re always reading about. But it can claim at least some credit for introducing Hayek fans, Jason Soon and Jack Strocchi, although their first encounter was scarcely promising. That was all sorted out, and now Jack is adding to the formidable intellectual firepower at Catallaxy.

As I see it, I’ve not so much lost a commentator as gained a fellow-blogger.

Jason Soon at Catallaxy Files writes

A new paper with a completely different spin on things can be found on the excellent AEI-Brookings Joint Centre for Reg. Studies website. The paper, by Mark Nadel, argues that there is little economic justification for laws against unauthorised copying because the higher revenues this generates for popular creations, are in ‘winner take all’ entertainment markets, generally used for promotional efforts and that such efforts crowds out many borderline creations.

In one of my first forays into this debate, in the AFR in 1998, I took an almost identical line, arguing

Turning to the intellectual property arguments, the key difficulty here is the failure to recognise the network externalities associated with fashion-driven markets like that for poular music. The popularity of, say, the Spice Girls, is not due to the fact that they are more talented than the next-best group or that their songs are better written, or even that their marketing is cleverer. Rather, the Spice Girls are popular primarily because they are popular. People, especially teenagers, want to listen to the same music their friends are listening to. Allowing record companies to extract the maximum possible rent through discriminatory pricing will not lead to the greater support for new and innovative music. Rather, it will encourage the dissipation of yet more resources in attempts to capture control of the next big hit.

I will read Nadel’s piece more carefully and perhaps post some comments.

One of the debates that’s been raging in the US, and that I haven’t had time to mention here has arisen from the claim by the Wall Street Journal that the poor and working class are ‘lucky duckies’, who don’t pay their share of the tax burden (some ambiguity has arisen over whether the WSJ actually wants the poor to pay more taxes, or merely to exclude them from tax cuts until the WSJ constituency has had its tax burden driven as close to zero as possible). Among others, CalPundit has done a good job of demolishing this nonsense, which relies on an exclusive focus on Federal income taxes, excluding not only indirect taxes and state and local taxes, but even payroll taxes.

The only point I want to add is that all of this has long been known to anyone with even the slightest knowledge of tax policy. Looking at my not-so-best-seller Taxing Times, from 1998, for example, I find on p21

In Australia, and most other OECD countries, the tax system as a whole is roughly proportional. The progressivity of income taxes is offset by the regressivity of most other taxes, and by the fact that high-income earners have more extensive opportunities for tax avoidance than low-income earners.
The redistributive effect of taxation and expenditure in Australia arises from the fact that, while taxation payments are roughly proportional to income, the benefits of public expenditure are about the same for all members of the community.

. I am not, of course, claiming any originality for this observation – it’s so well-known that I didn’t even bother to source it.

All of this underlines the point that the WSJ and those who have supported them on this issue are either incompetent or dishonest. No-one qualified to write on tax policy could be unaware of the facts in this question.

I’ve argued already that recriminations about the Canberra bushfires are premature. However, the recriminations have started and the leading fingerpointer has been Commonwealth Regional Services Minister Wilson Tuckey. It’s with some interest, therefore, that I read the headline on the front page of today’s AFR, “Fires: Tuckey ignored his own advice”, above a story that establishes pretty clearly that Tuckey has failed in his responsibilities as badly as, or worse than, any other participant in the policy process, and bears a fair share of the blame for the disaster at the weekend. He should resign immediately, but of course he won’t. Failing that, Howard should sack him, but of course he won’t.

My last AFR piece on unemployment has been reproduced at australian policy online. And today’s SMH has a piece, at least partly in response from John Edwards. The argument has also attracted some criticism from Stephen Kirchner . Stay tuned for a summary and response.

With the continuous uproar about academic dishonesty, it’s nice to report some good news, even if it concerns someone with whose views I disagree. Pro-gun Chicago academic John Lott has been widely suspected of fabricating a survey he claimed to have undertaken in 1997, concerning defensive uses of guns. He has now produced someone who claims to have been a respondent to the survey, and whose story appears credible. You can get the full story here, from Tim Lambert, an Australian critic of Lott’s work.CalPundit has more comments. In my view, unless there are new developments, the ‘case’ of fabrication against Lott must be dropped.

On the other hand, Lott’s own account shows the 1997 survey to have been slipshod in every respect, from survey design to documentation to statistical analysis. All Lott’s records of the survey were apparently wiped in a crash on his personal computer shortly after the survey had been undertaken, at a time when standard practice would call, not only for backups, but for the preservation of original interview records. And the sample size was clearly far too small to justify the conclusions Lott claimed to draw.

This survey is not of course, Lott’s most important work. The study by Lott and Mustard, purporting to show that laws allowing ‘concealed carry’ of firearms lead to a reduction in crime is much more important, and the data set for this study is publicly available. But as I pointed out in my post on data mining, with modern computer methods it’s easy to discover spurious correlations, either accidentally or deliberately. Only if you take painstaking care to record and justify your hypothesis testing procedure can the associated significance tests be taken seriously.

Given Lott’s own account of his methods, it is clear that he does not take the kind of care needed to avoid the pitfalls of data mining. Thus, his result must be regarded as suggesting a hypothesis for further testing, rather than providing substantive evidence in support of that hypothesis. The obvious further test is ‘out of sample’ testing using the same model with similar data, not used in the original estimation.

According to Tim Lambert , the work of Lott and Mustard fails this test.

In the case of Lott’s model we are in the fortunate position of being able to test its predictive power. Lott’s original data set ended in 1992. Between 1992 and 1996, 14 more jurisdictions (13 states and Philadelphia) adopted carry laws. We can test the predictive power of Lott’s model by seeing if it finds less crime in those jurisdictions. Ayres and Donahue?[2] have done this test. They found that, using Lott’s model, in those jurisdictions carry laws were associated with more crime in all crime categories . Lott’s model fails the predictive test.

Ayres and Donahue go on to examine all the states adopting carry laws using data up to 1997 and found that carry laws were associated with crime increases in more states than they were associated with decreases. They rather pointedly observe that

Those who were swayed by the statistical evidence previously offered by Lott and Mustard to believe the more guns, less crime hypothesis should now be more strongly inclined to accept the even stronger statistical evidence suggesting the crime- inducing effect of shall issue laws.

I haven’t checked these references myself, but unless Lambert has something badly wrong in his summary, I think it’s safe to disregard both the results Lott claims for his lost survey in 1997 and the statistical results of the Lott and Mustard study.

Because of the fires, I didn’t open up the message board as usual on Monday. So rather than put up my own “Thursday thoughts”, I’m asking for your comments (civilised discussion and no coarse language) on any topic. I’d particularly like further ideas on blame, chance and Fate, which has been the subject of some valuable discussion in earlier comments threads this week.

As usually seems to be the case, it’s the first day of surprise when the fires do their worst. The latest news seems to indicate that, barring an unexpected change in the weather, the fires threatening Canberra have been kept behind their containment lines, and cool weather should also improve the situation further south. Like everyone else, I’ve focused first on the loss of life and the destruction of so many homes, but the destruction in the Alpine National Parks is also a huge blow.

Of course, fire is a natural phenomenon in Australia, as is the drought that sets the stage for it, and it’s very hard to distinguish random fluctuations from an underlying trend. Still, I think the evidence supports the view that the severity of the current drought reflects the impact of long-term global warming as well as shorter-term cycles such as El Nino. If so, we can expect more of the same in the future. I’ll post on this point in more detail in future.

Another issue that has been raised is the reliance of our culture on blame when things go wrong. This may be compared with other cultures which focus on a notion of Fate. I’d like to explore the question of chance, fate and blame in more detail in the future.

As all of this indicates, in the absence of further disasters, I’m planning a return to normal blogging on a range of issues, probably starting tomorrow.

As you might expect, it hasn’t taken long for the recriminations to start – not enough firebreaks, too many trees, disorganisation at the scene etc. No doubt some of this will prove justified, but there’s plenty of time to sort this out later. Given the kind of test provided by the worst drought in 100 years, and extreme weather conditions, it’s inevitable that mistakes will have been made.

Among the print media, PP McGuinness is predictably nasty and ill-informed. But as in many other things, the blog world outdoes the established media in nastiness. The prize goes to this piece from “Strawman” reproduced in full by Australian Libertarian Society* (summary: tree-huggers deserved all they got). I don’t know if this is meant as a joke and I don’t particularly care. Tim Dunlop has more.

A lot of the discussion has given a quite misleading impression of what the western edge of Canberra is actually like – you get the impression of a city built in a national park. Actually most suburbs are bordered by open grassland used for grazing cattle and horses. Judging by the media reports and the experience of the past, the big fuel source has been pine plantations that were set up (I think) during the Depression and have been part of the Canberra landscape ever since, though presumably no longer. Pines are more even flammable than eucalypts which, after all, evolved to be fire-tolerant.

* The ALS is based largely in Canberra – make of that what you will

Update In the comments thread, Jason Soon points out that the ALS site is organised as an unmoderated collective blog, and that “Strawman” is a member of the collective who can choose to repost his own thoughts freely. I had incorrectly assumed that some sort of conscious decision to reproduce this piece had been made by someone other than the author. As Jason says, his Catallaxy Files site is organised in the same way and he often ends up contradicting his own guest bloggers.

It was therefore, premature of me to suggest that the viewpoint of one ALS member, posted on their site, is representative of the group as a whole. I’ll be interested to see whether anyone chooses to put a different viewpoint.

Further update John Humphreys of ALS has posted a personal account of his bushfire experience in the Forum section of ALS (links are still not very good, but it’s not hard to find). This isn’t a response to “Strawman” and doesn’t seek to draw any political conclusions, but it certainly suggests that the post I referred to reflects on the character of its pseudonymous author rather than on ALS as a whole.

Bloggers come and bloggers go, and at the moment departures seem to be outnumbering arrivals. I’m particularly disappointed to see the end of bertramonline a Danish blog I only recently discovered. As with many others, Henning Bertram decided that the time required to do a decent job of blogging is too much.