I’m working on a longish piece on how to pay for the global financial crisis, and it seems like a good idea to deal with some side issues separately. One of the standard post-crisis responses of governments, i has been to increase the age at which people become eligible for public old age pensions. This change is likely to flow through to other policies, for example by shaping the presumptions around the tax treatment of private retirement income.
I want to step away from these financial positions and ask the question: does it make sense, in general, for people to retire at older ages than in the past? For those who want the “shorter” version, my answer, on balance, is “Yes, at least in Australia”.
There are two main factors that should influence the age at which we retire. First, improving productivity means that any given standard of living can be achieved with less work, and we would expect at least some of this benefit to take the form of an increase in leisure, including more years spent in retirement. Second, and going in the opposite direction, we are living longer and (because of higher education levels and increased difficulty of entry to the workforce) starting work later[1]. So, with a fixed retirement age, the number of years out of the workforce is increasing, while the number in the workforce is decreasing.
At least in the Australian context, the second of these factors is dominant. In the last 30 years, the expectancy of remaining life at 60 has risen from 18 years to 24. I’ll guess that average age of entry to the workforce has also risen by about 5 years, say from 17 to 22. That implies a “typical” 1980 life course for full-time workers retiring at 65 of 48 years with 30 years pre- and post-work. The comparable figures now are 43 and 41. So, a proportion of the productivity growth in this period has been used to reduce the proportion of lifetime years spent at work, from over 60 per cent to just over 50 per cent.
By contrast, at least for full-time workers, there has been no reduction in annual hours of work. Official full-time conditions were fixed in the early 1980s at 38 hours/week with four weeks annual leave + public holidays and some long-service leave. That hasn’t changed, but there was a big increase during the 1990s in people working longer hours, and that’s been . Given that prime-age adults also have responsibility for children, this doesn’t make a lot of sense.
Those who think employment conditions reflect voluntary bargaining might argue that this apparently unsatisfactory outcome must reflect the preferences of workers and employers. I don’t buy this, at least as far as workers are concerned. But even if it were true, preferences are affected by policy settings such as pension ages. Leaving the pension age unchanged when life expectancy changes pushes people to work harder since their required savings increase. This is, on the face of it, a bad outcome. So, it makes sense for public policy to encourage later retirement, and discourage ultra-long working hours.
fn1. This assumes that time spent at school/uni should not be regarded as “work”. There are some complex issues here I’ll try to discuss more.
John Quiggin 
Happy hiatus Freelander…..
@Freelander
There you go again – hiding behind stereotypes such as “Yet another extreme right wing delusional denialist”.
What is extreme right wing about the idea that legislation should be general and non-discriminatory – that equals should be treated equally – that government actions and policies are applied to everyone equally? I assume the left wing is for discrimination?
Political equality seems to terrify you. You prefer to use the democratic process to exploit people. More correctly, as you are rarely in power, you set-up and validate the instruments of distributional exploitation for your political rivals to use.
Your rhetoric about regulation being in public interest provides the moral and political cover for big business to suppress competition and line their pockets.
The fiscal burden of demographics will be solved by putting up the retirement age.
There will be a shift in political influence in the taxed and subsidised groups. Sub sets of subsidised groups – older retirees – will join with sub-sets of taxpayers to stem the fiscal burden.
A higher retirement age does not affect those already above it. The taxpayers expecting to work for longer will be less threatened by a higher retirement age from a social insurance perspective.
Of course, Freelander, how could I be so silly? The idea that the vast bulk of the people are intelligent, reasonably rational human beings fully capable of making most of their own decisions for themselves and that governments are there to serve those people and to help the very few that are genuinely not able to help themselves is of course in the same category as “…flat-earthers, creationists, members of various cults”.
Of course, with Freelander’s doubtless limitless capacity to know what we all really want from our own lives much better than we do ourselves, we should just hand everything over to the Great Leader, who will make us all happy.
I see it all now.
Happy hiatus.
@Andrew Reynolds
A democracy with the state sector as larger as that desired by Alice and Freelander would require an intelligent, well informed public with leaders of high moral character.
Hayek pointed out in 1944 that there are only a certain amount of topics that a democracy can handle and agree upon.
Once beyond that point, discretion must be delegated to political leaders.
The arbitrariness of the exercise of this power will require people at the top who are unscrupulous enough to live with the exercise of arbitrary power and to be able stay in power by appealing to common human weaknesses. It seems to be easier for people to agree on a negative programme – on the hatred of an enemy, on the envy of the better off – than on any positive task.
May as well let the sophists above have the last word JQ – kind host that you are…Im waiting for their thanks and their well wishes to you in your period of forthcoming hard work.
They get to have their say but Im waiting for the acknowledgement.
Call me old fashioned but you are an elegant and accommodating host to a variety of views, are you not?
and that means you Andy and Jim Rose…ill mannered creatures that you are…Ill be frank if no-one else will….and no-one else is likely to call you on youer shortcomings (which means treating people in this blog like people and not like empty iodeological enemies).
Thank JQ for giving you air time and wish him well for his work hard hiatus (didnt your mothers teach you any manners?).
There – Ive said it – anything less is just plain rude. What else do we expecty from the rude ill mannered hard right except a lesson in grace they havent managed to learn (Andy and Jim – sorry – but truly pathetic – how many posts of yours have JQ allowed over time??…and if I had control of the delete button you two hollow men would be gone instantly).
Sad, ungracious and just plain bad mannered (and no respect for people’s views who may disagree with you).
Update, Update, Update, the latest Polls have failed to sway Centrebet gamblers for a $1 investment on Federal Labor winning the next election will see you receive a measly $1.49, whilst the odds on the rabble within the Coalition will see you receive a more hefty return of $2.53 for the same amount. I suppose a six to four on winner is better than working till your old and grey.
@Michael of Summer Hill
Moshie – you are dreaming if you think NSW labor is going to win the next election. Barry is going to win in a landslide, as much as I hate the lunatic hardliners in his party…thats because not enough people have yet realised they can vote green….they may be slow but unless Barry fixes the trasnport mess (and lies) Labor created.through years of neglect and neoliberalism and infatuations with all things private sector…it aint going to go any other way.
Barry is a short term vote unless he can long term build…and as his party favours lower taxes on business and the rich, I dont see how Barry can build…its a terrible situation he will find himself in…all the dreams …none of the money ….even though he wants to…as Ive said before Barry is a good bloke and Moshie…I hate to disappoint you…but NSW Labor as it is now has outliberalled the liberals. They sold you out Moshie, and state assets. rather than the other way around. NSW labor are not what they used to be….they dont stand for the average working man and average working family. They are empty and past their used by date…oh and they lie and are corrupt to the core.
In all conscience Mosh..you should stop selling their services. Your party has let you down.
@Alice
I have never responded to any of your insults nor directed any at you. List the supposed insults and rudeness that I directed at you, if you dare.
You even claimed to be deeply insulted when I tried to agree with you. So much for respecting my search for common ground!
J.S. Mill said that someone who knows only his side of the argument knows very little.
You learn even less by arguing with people who agree with you and share your world view. That is why I find this blog interesting.
You seem to be unable to cope with people who dare to disagree with you. Voltaire would be disappointed.
@Michael of Summer Hill
what were the odds of Rudd losing when turnbull was opposition leader?
@Jim Rose you say “List the supposed insults and rudeness that I directed at you, if you dare.”
Not me JR…just thank JQ forn his hospitality. He is about to shut the site down for three months.
@Alice
The great merit of this blog is people of very different viewpoints can debate a wide range of issues. Some find that a little too much to handle.
The development of positive alternatives for the Left includes building the capacity to advance these proposals in open debate with competing viewpoints in a way that wins people to your side with evidence, reasoned arguments and anticipated consequences.
Offer real solutions to real problems. That is what still resonates with the swinging voter. They will switch off if you just tell them what to fear and who to blame.
Alice,
Perhaps you should thank PrQ for being as tolerant of you as he has been – only restricting you when you have become too much for even his tolerance. I have been coming here for many years and I think the worst I have received from him was a mild ticking off once, several years ago.
The only one of the three of us with a track record of being an “…ill mannered creature…” is you. Perhaps when he returns you will have learned some manners – but then I am known as an optimist.
.
Perhaps I am also optimistic enough to think that MoSH will be able to do a little more than cut and paste efforts on faxes from Sussex Street – or perhaps he will be up to emails by then.
.
Anyway, see you in three months.
Final Update, Update, Update, according to the chief executive, Pauline Vamos, of the Association of Superannuation Funds of Australia, Australians need not worry about the resources profits super tax or the bulldust coming forth from mining industry for ‘When you look at the overall percentage of superannuation fund monies invested on the resources sector, it is very small and as such the impact on super funds is minimal’. Enjoy the break.
@Andrew Reynolds
Update Mosh – it is bulldust coming from the mining industry – even Heather Ridout thinks the resources super profits tax is a good idea. Its only a start though if we really want to address our infrastructure problems. There are other industries extracting super profits to tax havens and tax free structures offshore and not contributing from their gains sufficiently here.
Andy – touche (ouch!) – most likely we will argue again as we do, in three months, so until then – sayonara to you – you economic war criminal!.
@Alice
There you go again. Showing insults to be the tools of trade of the inarticulate and discredited.
Your support of a powerful regulatory state with the ability to redistribute to the politically influential makes you a foot soldier of crony capitalism. You legitimise the distributive injustices of your political rivals.
The Left is lost for as long as it does not develop an approach to constitutional political economy that accepts that power rotates between political parties and tends to congregate around the moving feast that is the swinging voter.
If you are out of power frequently, and those wreckers on the opposition benches get more than an occasional turn in power, what type of constitutional structure would you prefer?
@Jim Rose
Jim Rose – Yes I support regulation and no Im not ashamed of it. Yes – the whole deregulation / privatisation / shrunken government / freedom to move profits offshore / low tax for the welathy and big firms is wrecking our infrastructure needs faster than speeding train. These are the erroneous policies of your type of right – and you seek “no compromise”.
Barry OFarrell is claiming he can turn the congestion around in Sydney, is promising more infrastructure and everyone from individuals to businesses wants to see it happen
but ask yourself Jim Rose, with people who have no regulation / minimal taxes / shrunken government views like yourself on the right – it wont happen (the infrastructure construction for now and the future). They have tried PPPs and too many have proved a costly disaster. There will be grossly insufficient money for it – we know that already – and private consortiums will fail one after the other or cheat the government and taxpayers. The right promises infrastructure – which everyone wants -yet the extremists in the party are prepared to castrate their own leaders.
You may one day look back, and say “what was I thinking?”. So will a lot of other people if we continue this way. Yours are the policies of destruction, not production. I am not a footsoldier to crony capitalism. You are because you think the government and the private sector can do deals together like an old married couple. They cant and they never could. Thats why we have bodies like ICAC. Thats why we need regulation. If you think the private sector a better master than government, just wait until you have no government.
@jquiggin
Just come in for a drink…
So privatisation, deregulation and tax cuts were a mistake!
The test of a mistake is, if you can, undo it.
The classic is Kim Beazley in 1998. He was asked by a journalist that if the GST is a mistake, as claimed, would he repeal the GST if he won office at some later time.
Beazley waffled about you can’t unscramble an egg and so on. He could not admit the truth.
If deregulation was a mistake, campaign for a reintroducing of the two-airline policy, the bank regulation that suppressed competition, high tariffs on cars, electrical goods and clothes, and media regulation that outlawed cable TV.
Campaign for a repeal of the GST and for 66% tax rates again on the middle class!
You must campaign for a buy back of the Commonwealth Bank, Qantas and Telecom. They will be a good buy. Public ownership is supposed to be as least as efficient as private ownership, and the cost of capital for state owned enterprises is allegedly less.
Go for it. It will ensure another 60 years is the wilderness for the Left.
@Jim Rose
you say
“So privatisation, deregulation and tax cuts were a mistake!”
YES! YES and YES….. to the extent it has been taken to. Are you getting close to what I object to JR? Are you getting close to understanding me? Are we getting close to agreement?
Its a question of “balance” Jim Rose. The single most important thing an economist should concern themselves with is balance. The dangers lie in the extremities (left or right). The strength lies in the middle …and it was ever thus …to find economists and governments who may appear boring but they are brave enough to seek equilibrium – and all extremist political discourse…be it left or right…. would be hastily avoided by such said brave souls.
@Alice
Governments must please the poor as well as they please the middle and the rich. Is this really such a hard objective?
oops talking to myself – nothing new about that – above post should be directed at you JR.
Im expecting any day to have no comment boxes…..from the Prof.
The end of the blog for three long months of darkness……come on JR…admit you love it here!
@Alice
You are still unwilling to campaign for:
• a reintroducing of the two-airline policy,
• bank re-regulation,
• high tariffs on cars, electrical goods and clothes,
• media regulation that outlawed cable TV,
• repeal of the GST,
• 66% tax rates again on the middle class, and
• a buy back of the Commonwealth Bank, Qantas and Telecom.
@Jim Rose
I want all of the above but you left out the most important things. I want free dental for kids and I want the same tax rates we had in the 1950s on the rich right now.
It will come – current directions unsustainable JR.
Yes – the rest I can deal with and would prefer – the two airline policy is what we have now anyway by any other name only Macbank stuck itself in as the middleman so now its mucb more expensive that when govt owned airports and we had a two airline policy. We may have low tariffs but we have cheap cheap and getting shoddier imports.
I dont mind protecting local manufacturing and paying more if it helps the economy JR. I dont mind more protection. I would like to see some nationalisations because what we have now isnt working. Australia – at the forefront of mindless privatisation – at the forefront of being one og the first countries to fall on its knees vbefore Chinese imports and globailsation and in son= doing wipe out our entire manufacturing segment, so that its now second or worse to the digger upperer’s – large capital intensive industries JR – so no small town small business producers there..
Admit it JR – you are the champion for large business (yet most of the country is employed by struggling small businesses).
Oh so tired…JR doesnt listen – he is just hell bent on changing my mind. What to do with such one track mind individuals?
Give e everything on your list now.
@Alice
And you objected when I said you were of the Left. The old Left by the looks of it!
My year 11 economics teacher took us on a field trip to a local carpet factory. The purpose was to motivate us to work hard and go to university.
He showed his economics class what a job was like in a factory: loud, dangerous, mind-numbly boring and poorly paid.
Those are your good old days. A poorly paid working class in mind numbing jobs while you sit in front of your imported computer in your office job worrying about the tax concessions on your super and pining for more free hand-outs for the middle class.
My commitment to equality under law has been stated repeatedly, which requires flat-rate taxes, equal per head transfers or demogrants and the uniform regulation of all industries. This generality norm would end special interest capture by big business and everyone else.
@Alice “the two airline policy is what we have now anyway by any other name only Macbank stuck itself in as the middleman so now its mucb more expensive that when govt owned airports and we had a two airline policy”
You have to be kidding Alice – flying is way cheaper now than before. Have a look at who is on the planes, normal people who wouldn’t have dreamed of flying back in the 60s and 70s
and Telecom were hopeless, expensive and inhibited technical innovation. Opening up telecommunications to competition was a positive – albeit not implemented well because govt did not listen to people who actually knew about the industry and tech change.
The problem with the ‘left’ is that in as much as they are linked to Labor, they are ideologically committed to a prescientific vision of life from the industrial revolution. That’s one up from the Libs who are nigh on pre-Enlightenment. The Greens are the only party that are ideologically situated in contemporary thought eg dynamical/complex systems
@gregh
And Telstra isnt hopeless, expensive and inhibits technical innovation now Gregh? Even its monumental share price slide over time is telling us that. One of the worst performing stocks. Telstra? Btw – Im not wedded to the ‘left’ and Im not wedded to ‘the right’ but some seem to want to keep waving these flags around.
The only sentence I agree with is your last one on the Greens and thats only for now.
gregh, I’m not sure what you are reading but the above is a very simplistic overview of Australia’s past economic history. In respect to the telecommunication industry, credit must be given to the Postmaster-General’s Department for being innovative and a world leader in communications. Governments were the only one capable of funding large projects and willing to take risks. The private sector only resorts to rent seeking once the foundations have been laid.
@Jim Rose
Ive heard everything JR and the assumptions you make about me when you dont even know me
“Those are your good old days. A poorly paid working class in mind numbing jobs while you sit in front of your imported computer in your office job worrying about the tax concessions on your super and pining for more free hand-outs for the middle class.”
Well – actually JR – yet another non factual comment. Those “mind numbing working class jobs” in carpet factories are gone from Australia Jim. So is a huge amount of manufacturing in Australia. A whole industry killed stone dead by neoliberalism. Those good old days saw unemployment much lower than now Jim – and saw people working in real jobs not casual jobs, with real benefits they could take home and spend on someone else’s goods. Now the debt Jim – you forgot to mention the level of household debt now which, like the US, threatens to blow up.
You will be sorry when the house is gone, the unit has slipped away, rent eats all your income and all you have left is your cheap computer.
@gregh
Gregh says
“You have to be kidding Alice – flying is way cheaper now than before.”
Of course it is…not because of your suggested de-regulation of the two airline policy but for the reason that plane technology – planes are larger and carry many more passengers per flight.
By the way – you forget who introduced the two airline policy. It was Menzies when Reg Ansett purchased the failing ANA airlines, resulting in Reg Ansett having a monopoly. The two airline policy was obviously intended to increase competition.
How many airlines have we had since 2, then 3, then a failure, then 2 then 3, another failure, now 2. Our small market is best serviced by two airlines and still is. De-regulation and nothing changed except people lost money on Compass.
BTW – JQ has already covered this territory and nothing much has changed since.
http://www.uq.edu.au/economics/johnquiggin/news95/airfares9508.html
@Michael of Summer Hill
i’d be interested in some specifics on the PMG Michael
@Alice
The performance of Telstra is irrelevant Alice – now there is a diverse set of suppliers rather than a monopoly. You have to compare the old system with the new system and the old monoploy was stifling and expensive. It was not a technological limit that made entry into phone ownership expensive in the old days – it was a cushy link between a monopoly and govt policy. Similarly for the cost of long distance calls.
re the airlines – JQ makes the point that rising incomes have made air travel more affordable. Do you seriously think the duopoly policy would have encouraged that? Furthermore it may be trivial to someone on JQs income that discount fares have greatly increased their share of the market, (up from 45% to 70%) but it is not trivial to those who are now able to fly because of that.
@Alice
@Alice
Cab fares to the airport these days can be more expensive than the air ticket. I do not recall $1 promotional air-fares under the two airline policy. Get real.
You say “How many airlines have we had since 2, then 3, then a failure, then 2 then 3, another failure, now 2. Our small market is best serviced by two airlines and still is.”
My count is Qantas, Jetstar, Virgin Blue and Tiger. Jetstar was a massive reorganisation in response to those non-existent cheap airfares you cannot see, but do buy.
Your Bogon like devotion to corporate capitalism is touching.
“De-regulation and nothing changed except people lost money on Compass.” Ansett went broke too, and Virgin Blue and Tiger entered. That is how capitalism is supposed to work – it is a profit AND loss system with no regulatory barriers to entry.
I assume you have never flown Jetstar nor Tiger because they do not exist.
@Michael of Summer Hill
You say that “Governments were the only one capable of funding large projects and willing to take risks”!
You may recall your many posts on the resource rent tax.
The rather large, massive actually, Australian natural resources sector is funded by private investment. That is why the government wants to tax its profits.
Do words like the north-west gas shelf ring a bell?
@Jim Rose
Forgot to mention. Tiger must exist. I am sure now.
My brother, his wife and 4 sons flew to the northern territory from a tasmanian regional airport for $20 each!!!! They declined to pay the $5 extra to ensure their seats were all together.
gregh, there has been hugh advances in technology since Australia’s first morse code telegraph line was opened in 1854 between Williamstown & Melbourne & overseas communication established in 1872. The introduction in 1911 of Wheatstone automated system between Sydney & Melbourne which was replaced in 1920s by the Murray multiplex telegraph system between Sydney & Melbourne & eventually in 1963 by the Tress automated telegraph system replacing morse code. But in my opinion it was the first Beam Wireless Picturegram which put Australia on the world stage. Just a few examples.
@Michael of Summer Hill
The early history in posts, telecommunications, water, electricity, oil and gas in the USA shows extensive private competition.
Naturally, the post office and the larger private utilities turned to government in the progressive era from 1900 to 1918 and before to suppress competition through state and municipal franchising.
The 1960s and 1970s New Left histories of the progressive era in the USA are very good on the use of regulation by big business to suppress those pesky smaller rivals.
Gabriel Kolko’s and James Weinstein’s books are especially good on the rise of political capitalism. As Kolko remarked back then, “The dominant fact of American political life at the beginning of this century was that big business led the struggle for the federal regulation of the economy.”
Self-styled progressive intellectuals such as you are now were vital propagandists in duping the public into thinking the suppression of competition was in their interests.
Regulation was not the result of market failure. It was intended to create monopoly power. While sounding well-intentioned, so-called progressive government interventions exploits the consumer in favour of the politically privileged.
The early history of invention in any area shows hundreds of people testing out different ideas by trial and error. Imagine where we would be if governments were in charge of introduced PCs, or governments gave IBM an exclusive franchise?
A state owned enterprise can try but a few new ideas and politics prevents them from admitting error. An obvious test is the turnover rates of CEOs of state owned enterprises is half that of private firms.
Good example – a cautious approach then buy in of a technology developed overseas. Or are you thinking of something else?
I think we have to retire later. I think we have no choice. Older people can work, but its a bit much for them to work two days running in a row. So you want a lot of 3 days a week and 2 days a week positions opening up. You want older people to be able to add this part-time income to their pensions without getting taxed beyond the GST.
@gregh
Good point.
As I recall, the first applications for TV and FM radio broadcast licences in Australia were made in the 1940s. Cable and colour TV applications were made in the 1950s, as I recall.
The AM radio industry interests delayed back-and-white TV until 1956; and god knows how many decades for FM radio.
Colour TV was delayed until 1973!!!!!!!!!
Cable TV came in the 1990s because the Asian satellite footprints made contunued regulatory resistance futile.
Neither state-owned enterprises nor regulators seemed to be leading the innovation charge.
The regulators were too busy pandering to the needs of the established firms, industry unions and a sub-set of viewers. The Left watched the ABC, so they did not care.
@Jim Rose
Well Im not left but all there is left to watch is the ABC – the rest is absolutely instrusive advertising and rubbish sitcoms and digital downloads of US garbage. Why would anyone want to watch the commercials now Jim. There is nothing on any of those channels worth watching and I could just as easily hook up to shopping channel. Australia has amongst the very highest advertising per minute interruptions in the world. If this is private sector commercialism – count me out. If the ABC goes Ill be switching off because I havent managed to deaden my brain enough yet to be interested in 7, 9 or 10 or fox’s poor excuse for pay tv.
@Jim Rose
Straight from the hymn book JR “Regulation was not the result of market failure. It was intended to create monopoly power.”
Lets look at airlines in Australia Jim Rose.
Menzies – a liberal pm created the two airline policy (yes – regulation) to stop Ansett having a Monopoly. Since deregulation – what have we got ? A two airline market. Maybe Menzies was smarter than the current crop of liberal (and labor come to think of it) hardliners.
Regulation isnt the evil you make it out to be and the GFC proved what a mess de-regulation of financial markets made in the US …but you have not yet taken on board the evidence or turned the page in your hymn sheet – maybe you are too old to change Jim Rose.
@Alice
Australia has had so many airlines since deregulation that I forget one.
I forgot about Impulse Airlines which traded from 1994 to 2001. You have not yet noticed Jetstar or Tiger Airways.
If it was not for media deregulation, you would not have the option of consoling yourself with the shopping channel or the rest of cable TV.
ABC has several channels now. Another spawn of deregulation!
You said that you were willing to pay again for tariff protection.
You should be willing to give up the benefits of media regulation and should only watch only one of the ABC1 and ABC2 channels. Which ABC channel do you limit yourself too?
@Jim Rose
I don’t know you can claim dereg is necessary for varied TV though – the UK has much better TV than we do (ie greater choice) – as do many other regulated environments. I don’t consider it greater choice to be able to select 4 varieties of the same cliche. Nor do I consider people choose what they watch divorced from their environment (ie people learn to accept any old crap – the evidence for that is overwhelming).
I guess it depends on what you mean by media regulation – I can’t agree with the proposition that broadcast access is solely determined by wealth – that seems very undeomcratic to me.
@gregh
The Chifley government prohibited commercial TV licenses. The Menzies government eventually gave them to established print media proprietors after legislative change in 1953.
The TV broadcasting licences became to be worth hundreds of millions because of an artificial scarcity contrived by media regulation. These regulations made access to the media the preserve of the politically well-connected rich.
The programme uniformity was the product of a limited number of channels.
Deregulation allowed the rise of numerous niche channels. These subscription-dependent and advertising-dependent cable channels survive because people watch them. Under regulation, these niche markets were too expensive to serve.
Consumers are very sensitive to TV advertising levels.
Cable viewers put up with more advertising because this is the price of actually getting to watch the programme types that better match their preferences. Their viewing preferences were are underserved or even overlooked prior to cable TV.
Free-to-air stations cast a broader net and dedicate less time to commercials in order to capture more viewers with programmes less tailored to the preferences of these more heterogeneous audiences. There are fewer ads because audiences are less attracted to the shows and will switch off quicker.
The exit of niche viewers to cable increased the homogeneity of viewing preferences of the remaining free-to-air audiences so advertising slots increased.
Advertising caps would deliver the same outcome as a TV stations advertising cartel. Few ads per hour with at a higher price per second of ad!
gregh, I’m not sure what you are referring to but the historic importance of AWA’s first Beam Wireless Picturegram which put Australia on the world stage was an Australian invention and the result of some twenty years R & D before the first radio-picturegram from London was received in Melbourne in 1934.
Flicked through 411 to 430 earlier today. Same movies as six months ago. There are still movies being shown that were on nearly three years ago, when I first gained access to Austar. And this is progress? And then on 601 (Sky News), nearly every ad-break has an anti-resource rent tax ad by the miners, in which they make some very unlikely claims about saving Australia from doom during the GFC.
No, deregulation is not the be all and end all, and what is it that a business sector can decide to “take out the government” through blatant bullsh*te in ads on TV I’ve already paid once for?
Pointing these things out does not make someone a “Lefty”, btw.
@Donald Oats
High rotation is one of the principles of cable TV so people do not have to worry about missing a show and never seeing it again.
Cable even have channels dedicated to repeats such as the comedy, UKTV, movie classics and the 1970s or 1980s channels and the like.
Some people like repeats. Others do not. Cable gives them choice.
The cable programme formats are arranged in the way they are because the platform owners will not survive if they ignore want their subscribers want.
Deregulation has brought an end to TV station ownership being a licence to print money.
@Michael of Summer Hill
have you got a reference for this Michael – everything i have read shows this is not the case and that the equipment used in the first was from Siemens-Karolus
But I have no problem with the idea that govt has value and govt structures can encourage innovation and provide high quality customer service – or the opposite . Same applies to the private sector.
gregh, you are correct in stating that the long-wave beam Siemens-Karolus was used in the 1920s between Sydney & Melbourne, but AWA modified the system and used short-wave beam wireless service to link the outside world. It wasn’t until 1929 that AWA was successful in transmitting pictures by wireless from Australia to England of then PM Scullin, English PM MacDonald & Mr, E. T. Fisk. Short-wave was cheaper and faster allowing beam wireless signals to travel at a speed rate of 186,000 miles per second whereby messages of 125 code words could be received in London in one minute after transmission commenced in Australia.