12 thoughts on “Weekend reflections

  1. Whaling is in the news again. Now, from an economic view and an energy expenditure view, I fail to see how it can make sense to hunt, recover and market whale meat. What must it cost to fit out a fleet and a mother ship and send them half way round the world to hunt whales?

    I suspect if the various subsidies governments like those of Japan, Norway and Iceland put towards fossil fuels and the actual whale hunts were removed (the subsidies that is) then whale hunting would not be economic in any shape or form.

    Surely there there are more economic ways to procure protein. Is anyone aware of any studies done on the (un)economic nature of whale hunting in the modern world?

  2. There are a lot of inexplicable actions in the world unless you ask the right question Ikonoclast. You have phrased your question in terms of efficiency and productivity whereas much that happens has other motivating factors. For those countries you mention the question is around cultural identity, rights to ancient practices and food preferences.

    I was pondering the same kind of question about Australia because of the Productivity Commission’s findings in relation to sport on free to air TV. The current practice where free to air TV has first choice to sporting events has been found to be anti competitive. This may well be so but there are many people who are happy to live with advertisements as the price they pay to have the choice of watching sports rather than incur an additional cost of pay TV. If the viewer has to pay for watching sport, which is one of the greatest value programs, then there is likely to be a political backlash. I base this on the totally unsubstantiated point of view that Australians take sport more seriously than the machinations of politicians.

    The trouble with this analysis by the Productivity Commission is that free to air TV is inherently anti competitive because of the limited number of licences available and the restrictions on new entrants to broadcasting. No government has been brave enough to tackle this issue.

    We have a similar clash of values in the current discussion about the price of books where the proposal to reduce the cost of books has been ascribed greater value than the fostering of ideas in books. In other words little value has been put on the creation of content by those interested only in cost of production and competition. Those who are looking at the cultural value of books such as Tim Winton are saying that the cultural aspects and return to the author should be in the equation.

    So in answer to your question, governments are often happy to make non voters unhappy, in order to placate a majority of voters who are likely to place a higher value on non economic reasons rather than productivity or efficiency. It is of interest to see how the Australian government will respond to the different numbers of people who like to watch sport and read versus the producers of content and cultural expression and shich element of productivity is valued in each field.

  3. Yes Jill, you are right. It is governments appealing and pandering to sectional and parochial interests. I guess my somewhat rhetorical question had a wider set of implications. What I’m really asking is this. Should we, as part of a global civilization, continue to make local self-interested decisions which will clearly lead to global disaster? The answer plainly, is no.

    The key issue is sustainability. Our production and consumption habits are not sustainable. We have actually hit or just passed the “peak everything” point. Food, resources and energy will all now become progressively more difficult to obtain and will be available in declining quantities.

    Until and unless both governments and the greater mass of citizens change their viewpoints on these issue we are headed for disaster. When these great shortages become manifest then viewpoints will change. Frugality and sustainability will become key values and promotion of excess consumption (advertising and unfettered capitalism) will be recognised as the eco-crimes that they are and heavily proscribed.

  4. I don’t think there is much doubt that hunting whales is economically a dumb idea.
    And Japanese “scientific” whaling is pointless.
    The difficulty is that the IWC was set up to prevent over exploitation so that when numbers of a species reached a sustainable level it was assumed that catching could continue. This has happened with minke whales.
    So, legally Japan and everyone else have a right to catch and kill whales.
    That the rest of the world wants whaling to stop entirely does not matter to them.

  5. I would really liked to have been a fly on the wall when the grocery executives met with the minister. That was an easy cave in on grocery watch. Why? – the grocery execs wouldnt play ball and release their price data. Of course they have it – its electronic in most stores and continuously updated. Thats why you get your groceries scanned at checkout. They just bullied their way out of it is my guess. Another reason we need more teeth in competition regulations. Fels knew exactly what changes to TPA were needed and he recommended them specifically (section by section – if only to bring us in line with the minimum in many other advanced nations) – so why hasnt it been done here yet?.

  6. Corporate capitalist power wins every time in our system. Hence the grocery cartel, the banking cartel, the fossil fuel cartel and so on. Is there any hope of this power being broken? Politically, the answer now is no.

    In terms of real world econo-physics the answer is yes. The reason is that late stage capitalist corporate behaviour is maladaptive on a grand scale. The global corporate capitalist system will wreck the world’s carrying capacity, strip all its resources and then go extinct. That’s the good news. The bad news is that about 5 billion of us will die with it.

  7. Nice post Ikonoclast,
    question is what can we as citizens do about it except to maintain she’ll be right attitude? Not many people are ready or willing for a lifestyle change and who is to convince them of otherwise, until is too late?

  8. Grocery Watch was always a bad policy idea. Far better to have unit cost on the shelves when goods are selected and this is very possible to install.

  9. If it is beyond us to ban whaling outright, perhaps it is possible to call Japan’s bluff on its “scientific whaling”. If the whaling is purely scientific, Japan has no grounds to pass the “disected” carcass on to the market. We should press for the meat to be destroyed as soon as the scientific analysis is complete. Monitoring and compliance checking could be put in place.

    How would Japan react to that?

    Back in the real world though, it’s unlikely that we can stop whaling by Japan or anybody else; those countries will change when their citizens make it a big enough issue. Perhaps we would do better by working on bringing citizens around to the realisation that whaling is not a noble pursuit.

  10. The UK government is about to update their Banking Regulations in the most radical change since the start of the credit crunch or “GFC” using Rudd’s vernacular.

    Prudential and systemic risk will be given to the failure known as the Financial Services Authority (UK equivalent of the FSA) which is meant to monitor the build up of risk and bubbles.

    But how does the regulators know what is a bubble compared to what is a normal secular trend? Are they meant to look at bubbles across the entire financial system? If so, how can one determine a housing market bubble if house prices is part demand for new and existing housing, supply of houses on the street and supply of credit. This is larger than just that – demand is cultural eg. different ownership rates between Anglosphere countries and the Continent, demographic and in housing exceptionally local. How can we spot a bubble compared to something which is secular? Should we do so?

    This bodes ill for regulatory reform across the financial system. As we have seen in the US, political power can demand the housing market be pumped up with Fannie and Freddie covering 40% of the subprime market while the lack of political power can see complex products proliferate due to tax and other treatments and ignorance can allow structural trends to go ignored eg. lower real interest rates from capital coming in from Asia and the Mid East.

    Modern-day advocates of regulation (I view it as excessive but people like Alice and ProfQ will view it as necessary) make the mistake of viewing the marketplace as ceteris paribus rather than being dynamic and multifaceted. There is a massive amount of existing regulation in banking but not the right regulation. This increases costs of compliance but failed to stop banks collapsing. By viewing any regulation as being inherently good then the modern equivalents of the old-fashioned advocates of “planned” economies make the mistake of putting together a restrictive series of financial regulations which do not resolve the central problems of finance and banking, create new problems in terms of access to capital and ignores the dynamic of the marketplace to properly allocate capital.

  11. Jill – I do agree re unit costs on shelves – I use them all the time now and Im astonished at the differences but it takes me twice as long because I cant help myself standing there comparing them all and doing mental arithmetic (they shouldnt let obsessives shop)…. However, I avoid buying 90% from the large supermarkets entirely now…it wasnt always that way but Ive walked (its either not fresh, high in sugar, high in unknown scientific and possibly cytotoxic ingredients, overpackaged and / or underweight). My cat is the only one left who needs me to shop there.

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