17 thoughts on “Weekend reflections

  1. the inability of australia to play cricket at the moment is beyond words.

    many cricket teams and business firms seem are unable to replicate success when key players move on. yet some football teams rein supreme for decades. why?

  2. I read in this week-end smh that Mr Blankfein, CEO of Goldman Sachs came to town with 2 private bodyguards to talk to the initiated against the background of soft candlelight. Mr Blankfein is apparently at a loss to understand why Australians are pessimistic about the future.

    I’d like to offer a possibly helpful hypothesis to Mr Blankfein. My hypothesis is that if Mr Blankfein would take back to his home his body guards all those who invited him then the mood in Australia will improve.

    PS To the credit of the smh, the paper published also a few examples from Mr Blankfein’s depressing performance history.

  3. @Jim Rose

    First time I have ever seen sport discussed on JQ’s blog. I have always been afraid to break this unwritten law but now it’s (temporarily) broken I am happy to comment.

    Cricket is a statistician’s and probability mathematician’s dream. So J.Q. could offer us some theories on the probabilities of this. It seems to me that cricket more than most team games is paradoxically an individual’s game. Individual batting or bowling performance is considerably, though not entirely, in the individual’s hands especially with batting but even with bowling if the team is at least competent at fielding and keeping.

    Thus it is a game of 11 individuals. A great team will be a team that has an unusual concentration of “once in a generation” players. It is clear that Glen McGrath, Shane Warne, Ricky Ponting and Adam Gilchrist were “once in a generation” players; four in one team! Shane Warne was in fact a once in a 100 years spinner. McGrath, Ponting and Gilchrist were arguably once in 50 years players. Ponting was the best Aussie bat since Bradman. McGrath and Lillee were the greatest Aussie quicks ever. The stats say this. Has Australia ever before seen a keeper-batsman who could blast runs like Gilchrist? I don’t think so.

    To have had them all in one team made a huge difference. The laws of probability say that won’t happen again for a quite a while. JQ can probably tell us how often it will be likely to happen. Don’t hold your breath until 2025 or maybe even until 2050.

  4. @Ernestine Gross

    Mr. Blankfein uttered complete, self-serving rubbish. “His bank was a key player in the sale and purchase of complicated financial products that were linked to the US subprime mortgage market”; said the SMH article.

    His claim that Wall St pay is linked to performance is ludicrous. It was very common in most financial quarters to see that Wall St and financial CEO pay went up after the Global crash in 2008. So, you crash the world economy, get a huge bailout and a huge pay rise. It would be hilarious if it was not so obscene.

    Goldman Sachs, the banks and GM get huge bailouts. Detroit gets to go bankrupt. Ordinary people get to lose most of their health benefits and most of their pensions (most likely). This is obscenity to the nth degree. The infinite capacity of these people for effrontery, arrogance, lies and outright theft is beyond all belief.

    I am not saying Mr. Blankfein in particular has broken US law. But there are many cases in the financial industry where companies and people break Federal Law and the company fines are token and the individuals escape all prosecution. The US at that level is totally corrupt. It can never recover economically with that level of financial corruption eating it away like a cancer.

    Real production and real employment in the US are suffering as the financial industry catabolises the economy and production is moved off shore. Meanwhile, the position of the middle class, the backbone of America, is crumbling. I seriously doubt the US can ever recover from this. The rot, the cancer, has simply gone too far. There is no sign of any reformist movement having the slightest chance.

  5. @Ikonoclast
    Ian preston wrote the chapter on cricket in the handbock of sports economics. Chapter 61.
    More tommorow on the great value of sport to economic analysis

  6. Is anyone else troubled by Bowen’s insistence to return to surplus in 16/17 based on a Treasury estimate? Hasn’t Labor learned from Gillard’s disastrous promise to return to surplus during the 2010 election, also based on a Treasury forecast.

    Perhaps they should take a page out of the Federal Reserve’s move a year ago to change from calendar-contingent monetary policy to state-contingent monetary policy. The government should change it’s message from calendar-contingent fiscal policy to state-contingent fiscal policy. E.g. we’ll move to a surplus when unemployment falls steadily towards, say, 5.2% and the RBA is increasing interest rates.

    They’re setting themselves up for possibly another epic flip-flop and political disaster.

  7. “The government should change it’s message from calendar-contingent fiscal policy to state-contingent fiscal policy.”

    Well put. The same applies for management in general, corporate, un-incorporated business and households.

    There is a well developed and logical theoretical framework for state-contingent decision making but there is none, to the best of my knowledge, for calendar-contingent decision making. The latter is, however, evidenced in areas such as creative accounting and (manipulable) performance management schemes (bonus payments are a special case) with perverse outcomes.

    Making payments on time (calendar-dependent) does not involve a decision making problem, although it may involve a financial management problem. (I learned over time that stating the obvious is easier than engaging in lengthy ‘debates’.)


  8. @Kevin

    Kevin I agree with your points except the unemployment target.

    Why set the standard at 5.2% unemployment? Surely the standard should be about 2% unemployment (i.e. the frictional unemployment level). And this should include reducing under-employment and hidden unemployment to the range of 0% to 2% as well. We set ourselves too easy a task if we accept 1 in 20 persons unemployed. This is a huge number of people. Add in our hidden unemployment and under-employment and it’s more like 1 in 10 unemployed. That is abysmal and a total failure of economic policy.

    Honestly, I can’t believe that people these days casually accept that 5% unemployment plus another 5% hidden and under-employed is okay. It’s not. It’s a total disgrace.

    Our youth unemployment is now spiking at over 24%. That is another disgrace. We will end up a total mess if we don’t solve this.

    “Australian youth unemployment has exploded in the last year as the number of young people seeking a job and living on welfare has climbed sharply, according to The Australian.

    The newspaper reported that data from the Department of Education, Employment and Workplace Relations shows over 50,000 young people unsuccessfully sought work in May – 15,000 more than the same month last year.

    The department’s monthly labour market and related payments report revealed the number of jobseekers who receive Youth Allowance (other) increased by 41.8 per cent from 35,404 in May last year to 50,204.”- Business Spectator.

    It’s time to use the Public Service as the reserve employer. We need to introduce MMT budgetary principles, a Job Guarantee and dirigist policies to implement full transition of the national infrastructure to sustainables and renewables. Anything less is gutless and visionless and reeks of half-measures. Anything less will lead to total collapse in the challenging times to come.

  9. During the 1950s many if not most households had 1 person only in the work force (the ‘breadwinner’, usually male). This is no longer the case. Therefore, the unemployment rate today has different implications for household income.

    It is the income and wealth distribution over the life-cycle of households (single as well as various versions of multiple member households) that matters, rather than the unemployment rate per se.

  10. @Ernestine Gross

    Our politicians lack the courage and vision to try a radical new plan. Our current strategy has us drifting nowhere rather than setting a clear course.

    I don’t think bringing women into the workforce is any excuse for tolerating higher unemployment. Every new wage is spent and becomes somebody else’s income. Provided there are resources to use and work to do (both of which are still true in Australia) then full employment is always possible with the right macroeconomic settings and the right dirigist policies.

    If we can mobilise an entire nation for war (many young men went to war and many young women worked in factories and on farms) then we can mobilise the entire nation for the “war” on climate change and the “war effort” on switching to renewables. We have to stop treating the economy like it only runs hands-off on some sort of auto-pilot. We have to get hands-on and mandate full employment via a Job Guarantee and mandate the change to renewables. We must control and direct the economy not just let it run itself. Leave the economy to entirely run itself and it just runs itself off the rails.

    I mean the above within the context of a 75% private enterprise and 25% public enterprise mixed economy. Furthemore, ownership of private enterprise must be shifted from corporate plutocratic ownership to worker cooperative ownership. Likewise the mangerial class, as a specialised oppressive class, must be abolished and replaced by workplace democracy and worker management.

  11. @Ikonoclast the economics of sport is data rich. where else is every worker and supervisor known by name with their entire careers documented ball by ball in loving detail.

    sport is a good place to study the nature of competition, leap-frogging and decline, superstars and innovation such as moneyball.

  12. Do you follow AFL? Luke Darcy, channel 7 commentator, is promoting his interview this Wed 845 pm Melb time with Dean Robinson, a central figure in the Essendon drug scandal. This will be a test of 1. Channel 7’s objectivity in news presentation and therefore 2. whether the commercial news business model can deliver the information base needed in modern society to support good quality democratic decisionmaking.

    Luke Darcy is an ex-footballer (son of Dave, another Footscray player and a remarkable photo likeness) who on TV is clearly uncomfortable with female commentators like Samantha Lane, and stresses his “loyalty” to the players repeatedly, rather than to journalistic independence. As the Essendon saga heats up and the ASADA report is about to be published, it is likely that Robinson has chosen Darcy as his vehicle to promote his own case.

    This is the dark side of the increased use of ex-players as commentators – yes they bring special insights and trash the prejudice of players as “dumb cattle” on the park, but their professional ability to grill those who want to “spin” their role for self-interest will be tested. Darce says he asks Robinson all the hard questions – we shall see – but AFAIK he has no journalistic training.

    For those who say “it’s only sport”, obviously it’s also central for many people in constructing how society works and connects with their values. When I looked at the Sunday Herald Sun yesterday, the sport section seemed to be about 45 pages – as the classifieds disappear, the “soma” drug of sport chatter seems to expand.

  13. @Ikonoclast

    “It seems to me that cricket more than most team games is paradoxically an individual’s game.”

    Ikon, paradoxically, I think that’s what actually makes it more of a team sport.

    With any team sport, the better the quality of the individual players, the better the quality of the team, assuming they can all work well together. That goes for cricket as much as it does football or water polo.

    Examine the batting averages of the 2002/2003 Ashes side: seven batsmen with averages between 44 and 51. That’s exceedingly impressive. Ignoring their bowlers for a second, it’s very much why they were a world-beating side, and had been since the mid-90s.

    And yet – even with such a strong side, if just two of those batsmen had failed to perform in an innings – and the other five only batted their average – they’d still have been lucky to score more than 250. That’s barely defensible in a Test match.

    The point is this: in cricket, for every individual who performs below par, significantly more pressure is placed on the rest of the team to have to over-perform to compensate. That doesn’t hold true nearly so much in football – at least, not in the same way, or quite so dramatically.

    It’s why batsmen are often visibly holding back tears after being dismissed cheaply, especially if they’ve thrown away their wicket…the thought of walking back inside and facing team mates who now know *they* have a harder road ahead…

    In short: lots of individual performances, everyone gets their chance in the spotlight. But it’s very much the team you’re letting down if you have a bad day. As a result *you feel the pressure of being in a team more*.

    In footy, on a bad day, you can just blend in with the pack, avoid the ball, and at worst end up on the bench…you can just about get away with only pretending to be a part of the team…there’s your paradox, perhaps 🙂

  14. There is talk that a future Rudd government would continue with a tax hike on cigarettes but the current Rudd government Treasurer hasn’t confirmed that. Allegedly, the official story is to combat cigarette smoking related sickness while the unofficial story is to help fill a budget hole.


    Being an economist, the current Treasurer may remember something about addictive consumables. Furthermore, I would expect he will first check whether the official data confirms what has been written in newspapers quite a while ago, namely that the tax revenue on cigarettes has not increased after the then latest major tax increase.

  15. Politics is always in motion, but here is what the crystal ball currently reveals to me: Labor will win the election with Rudd, then the left will pine for Gillard and say that Rudd won by becoming like the enemy.

  16. MP: “Politics is always in motion, but here is what the crystal ball currently reveals to me: Labor will win the election with Rudd … ”

    You need a new crystal ball. Abbott will win easily and no-one apart from Larry Pickering will miss Gillard.

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