Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

17 thoughts on “Weekend reflections

  1. Here is a program for political economy, put up on Catallaxy for discussion last week. http://catallaxyfiles.com/?p=2064

    An extract:

    d. Programs that are barred by the action frame of reference.

    Ths is the negative heuristic of the program – the kind of work that should not be done because it does not illuminate the way that people act in real situations and real time.

    Keynesian macro

    A great deal of model building and econometrics.

    Marxist economics.

    Theories of Third World Development that call for aid to governments.

    General Equilibrium Theory.

    Mathematical welfare economics.

    Would anyone dare to calculate (a) the actual cost of the person-hours and other resources devoted to research and scholarshi that has zero relevance to actual market processes; and (b) the opportunity cost if those resources had been devoted to studies that illuminate market processes.

  2. Rafe,

    Would you please tell me
    (a) The relevancy of your post for actual market processes?
    (b) How much you are prepared to pay for each reply?

  3. In Slate e-zine there is a review of abook by Richard Posner addressing the boundary between liberty and safety (my words not POsner’s).

    From the review it appears to be an interesting book anyone read a got any views?

    Link to review

    Ernestine down that road we will meet Rafe charging us for his views. While I value Rafe’s views I will express a preference for recieving them free. I am a believer in the myth that poor struggling artists produce the best work and see no reason why the same myth should not be true for other creative people.

  4. taust, lets see what happens ‘down the road’, after Rafe has answered my questions. My questions to Rafe are context specific (his “negative heuristic”).

  5. Ernestine, market processes involve decisions by people, hence the importance of methodological individualism. I am not sure if that answers your question, so feel free to be more specific, with some indication that you have read the full post and the draft paper on Talcott Parsons that it refers to.

    I am prepared to pay as much as you and other people are prepared to pay for my answers to your comments.

  6. The Federal Australian Government politicians’ argument as to why they should all be paid the same rate of superannuation sounds a great deal like the arguments put forward by the Trade Union Movement as to why individual AWAs are not reasonable.

    It is because new staff can be paid a lower rate and differentials occur which are entrenched over time. Remuneration is lowered.

    In future if these differentials stayed a great deal of discontent would result in the workplace – in this case Parliament. Look at the amount of discontent when even a small difference is introduced such as lower superannutaion – which is in line with community standards.

    Why do politicians who support the Worst Choices legislation think it is a different set of circumstances for those who earn far less and have less security as well?

    An industrial relations system has been devised that means people are subjected to capricious decisions. However the politicians themselves don’t even like the smallest whiff of differential treatment and their job is secure for a three year term at least.

    There is little doubt that if performance bonuses work well to motivate individual employees then it will also work for individual politicians.

    The Worst Choices legislation has set a benchmark at the lowest level. The five minimum standards could apply to politicians. This would be equitable. Then every four years we could vote for the politician of our choice and vote to pay them according to their value.

    There are other aspects of the Worst Choices legislation that could be applied to politicians who want a consistent approach to remuneration.

    The three major disputes between employers and unions at the moment are all about penalties far in excess of the crime deemed to have been committed. Workers who won’t work compulsory overtime punished by losing all of their pay for a week, workers in a dangerous industry wanting their own Occupational Health and Safety Officers as they are safer and can trust that they will be protected better and a month long lock out for striking lawfully ( which is legal in very limited circumstances). Coalition politicians have introduced a system which has created enormous differentials between workers and employers.

    To make it equitable for politicians they should also be subjected to a punishment regime for infractions that is on an equal scale to that imposed on the wider workforce. The people could vote for $million dollar fines for politicians who have broken the law for a start.

    The faults of the current Industrial Relations legislation are all too apparent when the politicians themselves can’t tolerate even a minor version of their unfair laws applied to them. Australians have never liked one law for the powerful and another for them – that is why the Prime Minister acted so promptly to reduce the superannuation entitlements when Mark Latham raised it as an issue.

    It is much more emotive in this year when unfair legislation was forced on workers.This issue wasn’t taken to the people during the last election whilst the rules for politicians were. However we have the unpromised legislation and the changes to superannuation are to go. A mandate is about doing as you promised – not the opposite.

    There is the first fine due and it applies to all of the Coalition members. The decision this week on superannuation shows that this will never happen. We saw the politicians insulate themselves from rules in line with their own policies.

  7. Some people think profit motivated companies are subject to failure to address the public interest;
    some people think that government owned services are subject to failure to address the public interest;

    now even non-profit services appear to be subject to failure


    Is there no organisation that can achieve the public interest when human beings are involved?

  8. Some people think profit motivated companies are subject to failure to address the public interest;
    some people think that government owned services are subject to failure to address the public interest;

    now even non-profit services appear to be subject to failure


    Is there no organisation that can achieve the public interest when human beings are involved?

  9. taust: The “public interest”? spare us such claptrap.

    Rush: If it’s an injection of LCD populism that parliamentary remuneration needs then how about this: candidates get to choose any salary they like. It gets printed on the ballot paper and it’s entirely up to the electors to decide whether they think the candidate is worth it. I’m sure if this would lead to pollies’ salaries crashing to zero in the sort-term.

  10. Rafe, I assume you agree that the ‘market process’ experiment entailed in our exchange of posts has resulted in evidence that the market for ideas consists of an empty set. (Not surprising in the light of post-1950 general equilibrium theory results. Incidentally, while the associated welfare theory results involve a condition on wealth distribution, it is a condition that is not as strong as that implied by your requirement of ‘equal income’ per unit of time [tit-for-tat does not help here]. Incidentally, I did read your reference. It seems to me to be a very learned piece of writing. However, I don’t understand any of the many ‘ism’ words – always had trouble with those. Not sure your usage of the term ‘general equilibrium theory’ means the same thing as what it means in the contemporary – post 1950 – literature).

    taust, hope your topic will be taken up.

    QM: How about putting your suggestion to the test for CEOs? And, surely, Jill’s comparisons are more interesting then listening to a visitor who is comparing the prices of toilet paper on special at various supermarkets in New Orleans.

    Terje, you are being charming. May I anticipate that the ‘free market solution’ to road traffic is to have ‘spot exchange markets’ on all intersections. The highest bidder gets the right of way. (Just thinking of the chaos this will cause for the ‘productivity policies’ seems to provide enough material for a comedy series). I suppose it all depends on how one defines ‘public interest’.

  11. I use public transport for many good reasons. Somewhere on my journey I am often treated to the hilarious announcement, “Thank you for travelling with Connex!”

    Now when the public transport system was first flogged off, there was more than one company involved– Connex, Hillside Trains and I think there was another one, but I’m not sure.

    Anyway, if I didn’t like the service provided by Hillside, then according to neoliberal economic theory, I was free to choose the “competitor”, Connex. But.. they ran different train routes! So if I wanted to show Hillside who was boss, I’d have to take the train to Cranbourne or somewhere like that instead of going home to my own suburb. Clearly nonsensical.

    Unfortunately they were both about as bad as each other, but now Connex is the only operator. So, neoliberals, where is my “choice” (except for choosing a different mode of transport, which might not suit me?)

    “Thank you for travelling with Connex…” At least it gets a laugh from the passengers. If a slightly mirthless one.

  12. Jill Rush – the super changes for politicians wouldn’t have got up for consideration without the support of the ALP. And it was they who instituted the changes in the first place, well before Work Choices appeared on the scene.

    I think that all our politicians are significantly under-rewarded for what they do. The fact that the top public servants earn significantly more than the PM is a joke, and the same applies at all levels of government.

    If we want the brightest, most talented and hard working people to lead the country then they need to be adequately rewarded. Until such times we will continue to be plagued by the mediocrity that exists in all parties.

    Ministerial positions should be rewarded using a formula taking into account private sector executive pay and the budget of their portfolios. The PM and Treasurer should earn at least as much as the CEOs of the largest Australian Companies.

  13. The renumeration is totally out of whack. We certainly aren’t attracting our best and brightest on either side of politics.Most cabinets don’t bat very far down the order.

  14. Razor,
    I wasn’t arguing that the differentials were a good thing – only that those who support them for the bulk of the population show a disinclination to be subjected to the same kind of rules. The equity argument is broader than that applying to politicians. The Labor Party introduced equity when the superannuation rules were changed in the first place – the Liberal Coalition has restored the additional benefits equitably for politicians but out of kilter with the rest of society. Why would Labor demure – after all they don’t have the numbers. The Greens and Democrats stuck out for principle but it is the Liberal Coalition which should be most condemned as they introduced it in the first place and they have since introduced the Worst Choices legislation.

    If the Worst Choices legislation was so good for productivity then it would apply equally to politicians. I heard no productivity arguments as justification for the increase in entitlement. Workers are told that if the conditions are not good then they should find another job. That the pay isn’t so awful for politicians can be seen by the numbers who stand for re-election and try desperately to keep their jobs.

    The inconsistency of the Liberal Coalition MPs who want equity, productivity and a dog eat dog society for others but not for themselves is unreasonable. If it is such a good system then they would be happy to see it in operation at every level of society. Of course it is a poor system which is why the politicians have rejected even a whiff of differential pay in their ranks.

  15. the major problem with superannuation for politicians was that it wasn’t superannuation.
    They were the ONLY people who could cash it in before retirement or 55 years of age to be more accurate.

    The only thing that needed to be done was that politicians should have only been able to access their superannuation when everyone else can.

    In essence we Australians are complete hypocrites. We don’t want to pay politicians what they deserve so we agree to smudge it by allowing very generous superannuation.

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