218 thoughts on “Monday Message Board (on Tuesday)”

  1. The insulation batts fiasco contains a number of important lessons.

    1. Rudd’s government seems short of good ideas re climate policy.
    2. Rudd’s govt and the current politicised public service are poor at implementation of policy.
    3. A narrow market segment should not be swamped with easy subsidy money.
    4. Poorly regulated private enterprise cannot be trusted said easy money.

    In short, nobody comes out looking any good with this one.

    The batts subsidy was never a good idea. I predicted from the outset that this initiative would end in problems. I’m not sure if I predicted it on this blog so you will have to take me on trust. In fact, the prediction was not hard to make. This was an easy and enormous government subsidy rushed in to distort the market for a single product and its installation. This would would ring alarm bells for most students of economics, public administration and human behaviour. The resulting debacle was predictable. Incidentally, a well known insulation manufacturer built and commissioned a new batts plant in Brendale industrial estate shortly before this policy was publicly announced. Coincidence?

    I wonder if anyone has checked whether there has been any appreciable power saving (hence CO2 emission saving) attributable to this initiative?

    Is the Rudd government really so short of ideas that the foolish batts initiative, the failed carbon trading legislation, continued massive subsidies to fossil fuels and laughable help for renewables are the best they can do?

  2. What nonsense.

    The purpose of the roll out was to stimulate the economy. That it satisfied climate policy objective is secondary.

    The policy could have been implemented better but, the problem can also be laid fairly at the door of the lack of regulation through out Australia that allow shonks to florish. AS for the current politicised public service, they are the way that Howard made them, very politicised and very dodgy. Unfortunately Rudd has been softly, softly, and not thrown all these liberal hacks, like Gordon Gresch out. Remember he was one of those highly politicised hacks implementing government policy, and we found out just how politicised he was. Point three yes, anyone who isn’t a market worshiper knows that ramping up a sector like that is going to have problems. Unfortunately the public service is full of market worshipers. Yes we will have to take you and Nostradamus on trust and I am sure our trust in you is almost as great as our trust in Nostradamus.

    Unless, you are into magical thinking which you do appear to be, the idea that it would not have reduced the need for power is quite reasonable to assume. Even if it didn’t, obviously people would be warmer in their homes in winter and cooler in summer, as that is what insulation is all about.

    Ikonoclast, Shouldn’t it be Iclownatlast. If it was, at least you have reached your objective.

  3. @Ikonoclast

    I wouldn’t blame the Rudd government so much for this one.

    Garrett was the problem. He ruined the Nuclear Disarmament Party, so naturally he will damage the ALP. Its his ego which runs riot in arena after arena. If he joins the Greens, he will create similar problems.

  4. Bloody hell freelander, what’s got up your nose about our Ikonoclast? As far as I can see, you have said nothing much different to what he said except he makes more sense. He’s one of us mate. You’re firing on your own troops.

    Chris Warren. Julia Gillard, one of the most senior and skilled ministers, headed the education side of the stimulous did she not? Look at the mess that has turned into and just lucky that there was not the same opportunity/traps for fatal accidents as the insulation scheme. I’m not refuting your judgement of Garrett but it still goes back to the Rudd Government’s frantic, desperate attempts to look good on the economy.

  5. @Ikonoclast
    I always thought it was a “batty” idea from the start – but lets face it…how does a government with a long history of underinvestment in infrastructure suddenly up the ante when it needs to? Are the skills still there? ie public engineers, public construction teams or have they been so pared down under the influence of neo-liberalism, the skills have been lost? Recall that once upon a time with a smaller population and a smaller tax base, our public schools were probably fully funded and constructed from the public purse with public employees from labourer to building manager.

    Now of course, when all government construction is mostly “tendered out” to the oh so efficient private sector…I could suggest the private sector has demonstrated unremarkable efficiency in rorting public tender processes and avoiding any semblance of safety standards – nothing was inspected on the job of these bat installations and nothing was inspected after it would appear. Further, untrained labour was used.

    The government asked for it. They swallowed neoliberalism and pursued privatisation (and private sector tendering) right up to the highest levels.

  7. Ikonoklast,
    I would agree with your 1 to 4. Any idiot should see that if you put a huge amount of money in front of most people they may well act unethically if the customer is willingly blind. In this case the customer (the Feds) were willingly blind.
    Expecting anything else is a triumph of hope over experience.

  8. @Andrew Reynolds

    Yes you are quite right. You can’t expect the market to do the right thing without strong regulation. And of course customers, those who hired the people to put batts in their attics, can’t be trusted to choose reliable installers, that is why, again, you need strong regulation to keep the shonks out.

    As you say, expecting much from the market (without good regulation) is a ‘triumph of hope over experience’. And here I was thinking you never say anything sensible! How wrong I am.

  10. @Tony G

    I agree. Oddly, for the opposite reason you are celebrating. This was a giant polluter porkbarrell that would have radically set back the struggle putting an adequate price on CO2 pollution.

  11. Freelander,
    You are so predictable. Fran has been trying to make the point that somehow the government buying most of a hugely inflated output at a higher price than the prevailing market price while being willingly blind as to quality etc. is a normal market interaction. I find this idea odd at best.
    The market was, to an extent at least, unregulated prior to this misbegotten idea and it worked well. People had their homes insulated and no-one died. Purchasers got value for money.
    The government tipped a huge amount of money into the market and suddenly it did not work. Both of those are hardly surprising.

  12. @Andrew Reynolds

    Yet you fail to predict me. And now you show your banality by coping talk of predictability. I spoke to soon in interpreting what you had said as being sensible. Yet more market worship and the unregulated market had worked fine prior blah blah blah nonsense. Aren’t you getting sick of singing from that old hymn sheet? If you are not, why not try your hand on Australia’s got talent, or better still, Hey, Hey its Saturday. We are getting a bit sick of listening to your sorry refrain.

  15. @Salient Green

    We have to wait for judgment on Gillard. In Garretts case I understand from newspaper reports, and 4 corners, that warnings went up the line. Also Garrett refused to be interviewed by 4 corners.

    Gillard’s problem is sourced in fraud from corrupt capitalists that are difficult to avoid even with proper practices.

    Garrett could not even be bothered about proper practices.

    Garrett doesn’t even belong in the ALP, he was dragged in by Latham, like a political lost puppy or a travelling gypsy.

  17. The Four Corners program on the Insulation program didn’t spend much time examining the business side of the equation beyond the superficial questioning of one subcontractor. Why did so many small businesses and some not so small ones have people work in potentially dangerous electrical environments, without first providing adequate training (and on the job training is one way of doing this), and too often without the slightest knowledge of how electricity “works”? Why were they using insulation with metal foil backing *and* using metal staples, and why were people operating in an eletrically live environment in any case?
    Instead, blame is sheeted home mainly to the government for the actual fatalities and house fires, rather than to businesses who failed their new employees working on the frontline, so to speak?. What are the statistics concerning injuries and fatalities in the insulation installing business, before *and* after the introduction of the government program? While the government must take responsibility, along with the public service departments, for the policy implementation itself, that in no way absolves businesses from the obligations of providing a safe work environment for its staff. In the case of the insulation installers the safety factors include appropriate work attire, enforced safety protocols – such as isolation, current detection, portable alarmed thermometers, at least one experienced and trained staff member on site – it isn’t rocket science.
    The problem is that businesses will strip these things unless regulation and enforcement are there to prevent such behaviour. The short term nature of the scheme only heightened the business imperative to get in on the act much quicker than was wise from a public safety perspective, but that is what profit maximisation is all about in a finite duration market.

    Finally, it was interesting to see how some insulation installers sliced the batts into two “new” skinny batts, presumably to further increase profit now, at the expense of the consumer’s expected power savings. There will be some disappointed householders in winter when they discover that they own a roof full of skinny batts.

  20. @Andrew Reynolds

    Now that we’ve all had our regular piss take at your expense. And you have been given your customary and regular paddling. Why don’t you be a good naughty little boy and go away, and lose some of your imaginary clients’ imaginary money in your imaginary risk management business? That way, we can imagine that you are doing the world some good. Imagine, mind you; not believe.

  23. Salient Green: “it still goes back to the Rudd Government’s frantic, desperate attempts to look good on the economy.”

    Got it in one. It explains a great deal.

    Freelander: “customers … can’t be trusted”

    Hear that, people? Freelander knows best, everyone else are chumps. Consumers can’t manager their own affairs, they need someone to tell them what to do.

    More seriously, the problems of asymmetric information are genuine, but there’s no reason to think they are insurmountable (or compensatable) over the medium- to long-term. That people trusted the shonks is a cultural artifact of decades of relying on authority to ensure probity and safety. A different set of expectations would have greatly ameliorated the consequences of the insulation boondoggle.

  24. Well, there’s certainly a fair bit of heat in this debate. Lucky we are all insulated! For those like Freelander who don’t know me, I am left of centre in a social democratic way. This is the very reason that I am so disappointed with Kevin Rudd. (Though I predicted my own disappointment from the start.) Rudd has not done enough (anything?) on climate change. Now he’s wimped on the ETS.

    Mind you, the ETS was the wrong way to go. A simpler and more practical path was to;

    1. Progressively withdraw the billions in fossil fuel subsidies. In fact, once the global financial crisis was over, progressive withdrawal of fossil fuel subsidies could have been used instead of rate rises to damp the economy over the next up cycle.

    2. Implement a carbon tax and roll fuel excise into it. This would be simple adminstratively as the carbon content of fuels is grade 9 chemistry.

    3. Implement a carbon tariff on goods which do not have a carbon tariff (or ETS equivalent) built into their price in the country of origin.

  25. @Jarrah

    Obviously, some customers can’t be trusted, or they wouldn’t have hired shonks to poke around in their attics and burn their houses down. It isn’t necessary for all customers to be fools, and in fact, even if all were extremely smart, like you, it just may be less costly for the government through regulation to reduce the need to go through extensive checks to ensure that the person you are hiring is not your Arthur Daly, she’ll be right type shonk. I expect that you consider it worthwhile that not every clown can set themselves up as a medical doctor, give themselves some fake credentials and start operating. Or maybe you are of the free market school who believes that if someone manufactures defective parachutes or defective lifeboats, they are less likely to get repeat business from anyone who was unfortunate enough to use their product (because of their demised state)? And that this lessoning of business will result in them leaving the industry? But wait, if their customers are dead then surely the reduction in repeat business from them would be suffered by all businesses? That would mean the magical ‘market signal’ would be scrambled. Just like the poor parachute user.

  26. Donald Oats :
    Finally, it was interesting to see how some insulation installers sliced the batts into two “new” skinny batts, presumably to further increase profit now, at the expense of the consumer’s expected power savings. There will be some disappointed householders in winter when they discover that they own a roof full of skinny batts.

    Many good points. I wonder how many people installing insulation really know what they are doing. I have witnessed first hand builders incorrectly installing insulation when constructing new houses and leaving gaps because they can’t be bothered doing it properly.

    This is insulation fiasco is so depressing. It has demonstrated what a hollowed-out economy the minerals boom and a decade of poor economic management have created. The sad reality is that few people in Australia are able to do anything really productive in this 3rd world economy and why there were so many people available to make such a hash of what should have been a social good. Still the government should have simplified it. No foil and no installations in houses with downlights. What an indictment of the incompetent Australian building industry and stupid home owners that so many houses in this “developed” country needed insulation anyway.

  27. Jarrah :
    A different set of expectations would have greatly ameliorated the consequences of the insulation boondoggle.

    Isn’t that a fairly banal observaton though as there are an infinite number of sets of expectations that would have ameliorated the consequences…

    re asymmetric information – Symmetric information transfer is unlikely with the sorts of variation we know exists in the population.

  28. “it just may be less costly”

    That is a valid argument, one I myself have used to justify government action/regulation. Transaction costs are certainly something to be considered. Of course, what we have here is a case of the government’s own actions (suddenly pumping huge amounts into an industry) working against existing – and, arguably, any conceivably probable – regulations. In addition, the CBA re transaction costs simply wasn’t made!

    “if someone manufactures defective parachutes or defective lifeboats, they are less likely to get repeat business from anyone who was unfortunate enough to use their product”

    Hang on. At least when I lampoon a strawman of your arguments, I go on to address the realistic version. Anyone buying parachutes and lifeboats is going to go to a lot of trouble to make sure they aren’t buying duds, FFS.

    For the record, I do think that in a world where there is less regulation – and, importantly, that people are aware of the fact and adjust their behaviour accordingly – that we can get better outcomes, even with medical services and emergency supplies.

    Your are caught in the perennial mindset of anti-market advocates – only considering first-order effects. It’s a shallow way of approaching the problem.

    Think of it this way – YOU can think of these problems, therefore OTHER people can too, and take steps to protect themselves. I envision this would involve widespread non-governmental certification (like we already have with ISO, FLO-CERT, WHQL, just to mention a few), and reputation-protecting behaviour from firms. Companies that didn’t or couldn’t achieve such certification would have to rely on word-of-mouth, and/or charge less (which is a signal in itself). People who wanted to balance the risk with the lower cost could do so. To anticipate the obvious objection, such differentiation already occurs, it would just become more spread out.

    In essence, what I (and marketphiles generally) propose is to benefit from the currently-lost Harberger triangles, and thus minimise social waste, making a better world overall.

  29. “Isn’t that a fairly banal observaton”

    Well, yes, because it’s obvious once I’ve said it, but people are taking the current set of expectations as a given, so it’s fair to point out the overlooked banality.

  31. Also, if you knew anything about Standards Australia, then you would know that their standards aren’t worth anything. They really should be done for misrepresentation except they don’t misrepresent. Rather than being standards as in something implicitly good, if you talk to them you would find that they are quite happy to certify any standard you wish, as one of their standards, no matter how appallingly bad it is. Hence, it is no problem having a Standards Australia standard that is appallingly bad. The same goes for the International Standards. The ISO 9000 series, for example, are complete nonsense. They started off as a British Standard, that was developed simply as a device to exclude foreigners from competing for tenders, that is, it was developed as a non-price tariff barrier. The idea was that people would put a requirement that a firm had to have the British Standard (that later became an ISO standard) as a tender requirement. As these were issued in Britain and thus were not so easy to get if you had a foreign firm it was an excellent ruse. These standards were and still are a complete joke as they don’t really mean anything at all. They are simply not worth having except that you can put a sticker here and there saying you have it and foolish people might think it means something. A bit like an internet PhD.

    Any time I see an organisation has wasted money to get one of these, I know the organisation is likely to be all froth and bubble and no content. Just goes to show the failure of the private sector once more. And the gullibility of people who take various faux awards seriously. The dodgy brothers haven’t been round to your place installing insulation, by any chance?

  32. @Jarrah

    Here is a quote from a successful businessman instructing his staff on how to handle customers “Rip ’em off and rip ’em off big; they may not have come back anyway.”

    Some of the reputational arguments are a wee bit magical. Like muggers wouldn’t mug people because they wouldn’t come back to be mugged some more (hence, their mugging business would fail). But wait, what do they do? They simply mug someone else. And, as they say, a mug is born ever minute. That makes plenty of mugs for the entrepreneurial mugger. And mugs can be serially mugged by multiple muggers, thereby providing streams of revenue for the entrepreneurial mugging class. After a while, the mug takes mugging as quite exceptable service; they don’t know any better.

    I think you must have been reading to much of that Ayn Rand nonsense.

  33. The problem with word of mouth and reputation based on others experience and testing is that it is public good, suffers from free riders, is undersupplied and unreliable, because there are a variety of ways in which a firm can help its reputation without a commensurate improvement in its performance.

    Where do you think the source of journalist freebies comes from. Don’t you know that a large software company might put a lot of journalists in its pocket to hype its product? Not required so much if they have great products but it is certainly the best strategy for a company that does not.

    I am not anti-market at all. But I am a realist, and like to base my views soundly on the plentiful evidence available. Not some nonsense spouting from some of these dreamers, some of who like Ayn Rand, hardly ever set foot out of their houses and outside their carefully vetted little entourage and therefore had minimal engagement with the real world.

  34. Aren’t the qualifications for installers of insulation under state regulation? I really think the States are being let off the hook here for their failures to ensure safe work practices and fair trade (quality of goods and services).

  37. Freelander, first of all, I think Ayn Rand was a few sandwiches short of a picnic, and I avoided reading any more than a couple of her essays – I certainly never subjected myself to more than a few pages of her turgid ‘fiction’.

    Secondly, you seem to have missed the point. I don’t care what you think about private certifiers, I was just pointing out that government is not the sole arbiter of quality right now, and there’s no reason to think they should have a primary role at all. That is, there are no theoretical reasons why it should.

    Incidentally, this is from Wikipedia: “Certification to an ISO 9001 standard does not guarantee any quality of end products and services; rather, it certifies that formalized business processes are being applied.” So I guess you don’t know so much about them as you thought. (Emphasis mine)

    Thirdly, your mugging example is poorly thought out. It assumes no-one ever mentions being mugged to other people! In the real world (that you claim to base your arguments on, ironically), there are known no-go areas at night (for example) because of the greater risk of mugging. How does this fit with your theory that reputational effects are “magical”?

    PS, I can match your unattributed businessman’s quote with another’s – “Don’t be evil.” But competing anecdata won’t tell us anything. Far better to rely on the “plentiful evidence available” and logic. So far you have oscillated between strawmen arguments and reasons why human systems aren’t perfect (to which I say… well, duh!)

  39. @Jarrah

    Doesn’t matter what I think about private certifiers but if you assert that they are adequate to task, the fact that the evidence is profoundly that they are not, is something that does matters. Matters, at least to those who are fact, rather than fantasy based. If you don’t want to be fact based, then you can believe anything is true and you apparently do. “Don’t be evil” are not the words of a business man or men as it so happens as there are two of them. They are the words of two people who happened to re-invent, for the umpteenth time, a ranking method which they applied to the internet and got amazing results. As they are not really professional business people, and they do enjoy a massive advantage over their rivals, and they are good people, they do run their business in a very unbusiness like manner, and that business is doing well for them and their staff and for us. Yes, facts matter. The world is an even more amazing place, sans your own fantasy and magic, than you seem to think, because it is far more amazing than anything that comes out of your imagination.

  40. As for mugging… Yes. There are no go areas. People are still mugged there. And they are also regularly mugged outside of the no go areas.

    How does that fit in with my facts (not theory) and what I have said?

    Perfectly.

    Thanks for pointing those additional points out. So kind. Yes. Much of the great claims about reputation are magical.

    Duh! Indeed.

  42. On the topic of talking points for bogans, one thing about the lower half (of the evolutionary chain) representative, Tony Abbott, comes to mind.

    I have often thought that the reason Tony Abbott likes boxing is simply that he enjoys wearing boxing gloves. As a knuckle dragger, wearing boxing gloves protects his knuckles from harm.

  43. Michael,

    Next you will be telling me that Jones (CRU), NOAA and NASA are not colluding with their proxy temperature reconstructs to maintain their funding and that AGW is not a fraud.

  44. @Tony G
    no Tony they are all colluding to pull the wool over your eyes except masterminds like you and Mcrann are too smart for that. Damn.

  45. “if you assert that they are adequate to task, the fact that the evidence is profoundly that they are not,”

    I’m sorry, you still don’t get it. Pointing out the flaws in one existing certifier says nothing about the concept of private certifiers in general. Also, it presumes that government certification is superior, and what does your “plentiful evidence” say about that? Exactly.

    So far I have proposed that private certifiers could act to provide certainty about various standards, as they do to a reasonable extent anyway, without relying on government oversight, and you have presented precisely zero valid objections.

    Your arguments about reputation protection have much more force – vis the substitutability of spin for information, lawsuits for genuine reasons, etc – but they are not cut-and-dried. There are multiple complications, ie the informational restrictions on government, regulatory capture, one-solution-fits-all problems, etc. A complex topic, one I’m not qualified to talk about in more than a superficial way… nor yourself, I suspect.

    As an aside, your evidence-free speculation regarding my reading habits, command of the facts and paucity of imagination are starting to look like breaches of this blog’s comments policy, so I’d ask that you would please consider this in future responses.

    “Yes. There are no go areas.”

    So you admit that reputational effects exist and have… well, an effect. (Sorry, no time to make that a graceful sentence). Therefore, your comment re their magical quality can only be false.

    Are they perfect? Obviously not. Even in the area of mugging, where there is only a government regulator! See my first paragraph for the delicious irony.

  46. @Jarrah

    “So I guess you don’t know so much about them as you thought.” You quote about ISO 9001 is perfectly consistent with what I said, and was something I knew anyway. The ISO 9000 series is totally worthless. The formal process can be, for example, that every time you say a sentence you dance around your desk. Therefore, it is a certification of nothing at all, or at least, nothing necessarily worthwhile. Which means it is really worthless. You just make it up. They certify it and then you get to put on the stickers. If you are impressed by that as a standard then I must say I am not.

    AS for don’t get it I get it perfectly. Magic thinking. The old Government bad, unfettered market good mantra. Not a likely way to get to Nirvana. Instead try, Om…

  47. Jarrah,
    Freelander appears to regularly breach this site’s comments policy – the several purely ad hom comments above provide ample evidence of that. Not, of course, that I am in a position to judge that as it is not my site.
    Don’t let it worry you – it just shows how weak his arguments are that he seems to have to resort purely to abuse.

  49. @Andrew Reynolds

    Oh and the naughty little boy is not a regular spewer of invective. Give me a break. At least I am entertaining, rather than as some others, committed to engaging in a banalathon. As you note “Not, of course, that I am in a position to judge that as it is not my site.” As for how weak, I think we are fully aware that most of what is talked about on this blog go right over your head.

    I am still intrigued about your current occupation?

  50. @Jarrah

    As for “are starting to look like breaches of this blog’s comments policy, so I’d ask that you would please consider this in future responses”… If I were super sensitive like some, I could start claiming the same about “Hear that, people? Freelander knows best, everyone else are chumps.” “you still don’t get it.” “your evidence-free speculation” “example is poorly thought out” etc. but as I am not super sensitive, don’t mind robust discussion, so who cares? Now, understanding what a sensitive soul you are, I may treat you with tender gloves….

    Or maybe I should try to assist you to overcome your impediment with some shock therapy. It is my natural tendency to always rush to the assistance of the less fortunate…

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