Regular Features / Uncategorized Sandpit October 29, 2018 John Quiggin23 Comments A new sandpit for long side discussions, conspiracy theories, idees fixes and so on. Share this:TwitterFacebookLike this:Like Loading... Related
23 thoughts on “Sandpit”
I am just going to get on my soapbox and vent! Centrelink is a good place to start.
“Hundreds of Centrelink call centre jobs to be privatised to reduce wait times, increase efficiency”
This is a news headline for the latest idea from our LNP Federal Govt. How many times have we heard the “privatise to increase efficiency (of public services)” mantra and how many times has it been wrong? Hint, these two numbers are identical.
This comes at a time when Centrelink can’t even grant pensions on time for some people, even when they lodge 13 weeks early as stipulated, or at least as strongly advised. This is clearly a combination of excessive complexity, in terms of qualifying conditions and rate calculations, combined with inadequate staff, training and technical calculating power to get this job (new pension grants) done.
But the LNP don’t know how to fix things, only how to wreck things further. Of course, they are ideologically prevented from applying the necessary fixes. The necessary fixes are to increase Centrelink staff numbers, increase training and decrease pension and benefit qualification complexity. In the context of reducing unemployment and underemployment (still a whopping 5% and 10% respectively at least), an increase in the size of the public service would be beneficial – more jobs and better provision of public services; a win-win.
Where does the money come from? Well, the real question is where do the real resources come from? We have plenty of idle human and other resources. But since neoliberal brain-washed thinkers are obsessed with money and reify it so much that they believe money (a nominal value not a real value) is actually a real limiting factor then we have to say where the money is coming from. (See Note 1.) It can come from taxing the rich more and closing off all tax avoidance and economy-distorting tax minimisation lurks.
This is all very easy to contemplate and implement if you are not wearing neoliberal eyewash blinkers or if you are not a neo-liberal Machiavellian deliberately skewing the economy with economy distorting subsidies for the rich (yourself) with negative gearing, low capital gains taxes, diesel fuel subsidies for miners etc. etc.
I hope the public wakes up soon. Australian can’t take much more of the economic, social and environmental damage of neoliberalism. On the environmental damage issue, National Geographic notes “Half of the Great Barrier Reef has been bleached to death since 2016.” That is a very stark fact. Australia needs to set an example by rapidly phasing out all thermal coal mining and burning. (Sorry, couldn’t avoid an environmental example.)
Note 1. There is a real issue of currency stability but the dangers of inflation in a low wages, low interest rate era are much exaggerated. This continued monetary fixation on inflation fighting to the exclusion of all other goals (like full employment for all who want it) is clear case of (economic) generals fighting the last war (1970s stagflation) instead of the current war (near deflation, near recession, infrastructure lag and un- under-employment along with stagnant wages.
We have to get rid of the sclerotic LNP and hope a new government can think more clearly outside the neoliberal / monetarist paradigm.
My first reaction on reading about the cuts was to look up the history Minister Keenan’s seat of Stirling. Has been Labor in the past, not impossible for the ringmaster of the Department of Scourging and Banishment to be turfed out, WA though.
Ikonoclast asked: “Where does the money come from?”
Not from any DHS Minister Morrison originated Tudge-Keenan-Serco implemented dopey robodebt train-wreck of a scam!
I read today that amendments to the Banking Act made earlier this year mean that CBA savings account holders could now receive only ten cents in the dollar from the government banking guarantee. Likewise for deposits with other large Australian banks. I hadn’t heard this one before, so I googled the following and have some questions below.
APRA Financial Claims Scheme
CBA Savings/Time Deposits… $181,329,000,000
Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018
No. 10, 2018
An Act to amend the law in relation to the financial sector, and for related purposes
Schedule 1—Amendment of the Banking Act 1959
Part 1—Main amendments
Banking Act 1959
… 218 At the end of Subdivision C of Division 2AA of Part II
Banking Act 1959
Division 2AA—Financial claims scheme for account‑holders with insolvent ADIs
…Subdivision B—Declaration of ADI
16AD Declaration that Subdivision C applies in relation to ADI
…Declaration to specify amount for meeting entitlements
… (2) The declaration must also specify the amount (if any) that is to be credited to the Financial Claims Scheme Special Account in connection with the application of Subdivision C in relation to the declared ADI. If APRA’s application under section 16AAA was made on or after 12 October 2011, the amount must not be more than $20,000,000,000.
It indeed appears that following a Ministerial declaration the FCS maximum permissible payment that APRA may make in total to any ADI is $20billion, and that, for example, CBA accounts subject to FCS government guarantee currently may total $181billion.
In the event of a declaration following bank insolvency how many cents in the dollar is the government guarantee likely to pay to a CBA savings account holder? Is the Financial Claims Scheme government banking guarantee at the maximum permissible payment covering the CBA, for example, worth any better than 11 cents in the dollar?
How much lower than the maximum ADI $20B credit would APRA be likely to determine is adequate per ADI?
I just wrote this at my blog. It’s a solution to Australia’s house price crisis.
One Salient Oversight,
What about hedonic quality adjustment? Isn’t that one salient oversight? 😉
If houses are twice as big and have twice as many amenities or twice the quality, then isn’t a doubling in price, in effect, an inflation rate of zero percent for houses?
Better perhaps to measure house inflation relative to the median wage. If the median wage doubles over 20 years (say) and a house doubles in price in the same period then that could be called zero percent house inflation.
In my adult life, I have seen houses go from about 3.5 times the median annual wage to 7 times the median annual wage (very approximately). Home occupier-ownership is falling, renting is rising and rentier(landlord) wealth is rising.
These are all intentional outcomes (by capitalist class design) of late stage capitalism. The intention is to make 99% of people dirt poor and 1% very rich. Matters are still trending in that direction. It will lead to a stupendous disaster at some point. These trends are not sustainable.
Footnote to above, I am not a Mises Institute fan, nor am I an “Austrian” in economics. However, this points out some problems with hedonics;
My view is that property is like any other form of goods and services, namely that the cheaper they are, the better it is for the economy. Now because housing has an investment component, there is a balance between seeing property as something that can be consumed verses something that should be invested in.
The key is finding the sweet spot. Property prices can be too expensive, they can also be too cheap.
The policy I’m presenting is that if property maintains its price, but is neither growing nor shrinking in value over the long term, then it moves towards that sweet spot. This is because of the assumption that wages will continue to grow.
Improving the median wage (eg reducing the GINI index) is a separate issue.
However, if increases in housing quality are present, they can also be factored in. The inflation rate, for example, takes computer processing power into account. Faster computers have a deflationary effect upon how the inflation rate is determined. So even though CPUs and computers may have higher prices than before, the effect of the increase in processing power is factored into inflation results.
In the same way, if property grows in quality, the same can be done to the house price index which I am proposing be the basis of central bank decision making. If it can be shown that there is a growth in the quality of housing (both in terms of an increase in space but also an increase in other factors like solar panels) that exists apart from the basic price, then the stats people should get together and formulate an adjustment to the index to take this into account.
Some preliminary and rough thoughts on driverless car technologies and congestion based on an AFR article by Simon Evans 2 November:
A traffic engineer told me the other day that driverless car technology would largely replace the need for expanding road systems in urban centers. The general idea is that if car travel can be automated that there are plenty of roads for cars to make synchronized journeys on so congestion will disappear. There are now many studies that question the claim that driverless cars will reduce congestion – the latest is in today’s AFR page12. Let’s back up a bit and sort out the basic logic here.
Roads should be expanded, if congestion and other costs are appropriately priced, whenever roads display appropriate profitability – the exact definition of “appropriate” here depends on the “returns-to-scale of the road technology). Simply expanding roads when they are unpriced is unlikely to be sensible because the effort reflects the attempt to meet an excess demand for travel that is being sold at a zero financial price. Intuitively what happens here is that there are latent, unrealized demands for travel – people leave their cars at home simply because car travel is too time expensive and inconvenient/uncomfortable. When a new road is constructed these latent demands are released and congestion tends to return to its original level. There is a small welfare gain – new commuters get to travel from the poll of latent demands – but congestion is unaddressed. Anthony Downs (“Stuck in Traffic”, Brookings, 1992) described this release of latent demands as “triple convergence”. The only way of avoiding this offset and dealing effectively with congestion is to appropriately price car travel to reflect as marginal congestion costs and, if the road makes an appropriate profit, then just as with a private firm, its scale should be expanded.
With driverless cars two things happen to a car journey. First it becomes more pleasant – the opportunity cost of the time involved goes down because the commuter does not have to drive and can read, work or indeed, watch a Lady Gaga video if they like. This stimulates the demand for journeys since the cost of a journey declines. Second, the immediate time taken for travel will itself decline and more cars will be released onto the road on this account. This stimulation of the demand for travel will be quite strong because the time savings are also accompanied by an improvement in the convenience of the journey. Indeed, accounting for this latter effect equilibrium levels of congestion might be expected to increase beyond initial levels because commuters will ensure a bit more congestion given that their journeys are more pleasant.
As with an unpriced road expansion, there is a welfare gain – more people will get to travel and their journeys will be more convenient but the effect on congestion will be to worsen it. The net welfare effect is plausibly positive (and therefore welfare-increasing) but from the viewpoint of an individual driver that will not appear to be the case. His/her journeys may take longer but he/she can spend more time working or recreating in the car on these longer journeys.
The upshot: Even with driverless cars the best solution to urban congestion problems is to price it at marginal cost. Then desired road expansions and the development of driverless car technologies will avoid triple convergence issues and make commuting more convenient and pleasant in our large cities.
the opportunity cost of the time involved goes down because the commuter does not have to drive and can read, work or indeed, watch a Lady Gaga video if they like
You can do this now by taking an Uber.
Uber drivers are badly paid, and the Uber model makes money from them by providing finance for cars it strongly pushes them to buy. But using an Uber is not at all like a true driverless car because, well, you don’t have a driver and therefore don’t have to price one in, or subtract one passenger space from the vehicle for the driver.
There’s a (significantly) cheaper outlay for a trip. (And being a taxi or Uber passenger is not liberating in the way a passenger with privacy, in a true driverless vehicle, would be liberated.)
I still doubt true driverless vehicles are coming at all soon, if ever…
chrishod: “Uber drivers are badly paid”
Uber drivers in Oz make much less than the minimum wage and once you factor in costs like vehicle depreciation, some are working for next to nothing.
Eventually the courts will have to decide if gig economy workers are genuine independent contractors or employees. The Fair Work Ombudsman tried to run a test case with Foodora but they shut up shop and went in to liquidation, which is a deplorable yet very common tactic.
Hopefully Shorten will amend the Fair Work Act to give gig economy workers Award and FW Act coverage as employees even if they are arguably contractors. Otherwise the states will need to step in (Daniel Andrews in Vic is running an inquiry on the gig economy, not sure what is happening in other states).
By the time driverless cars are good to go, we might all be flying around like the Jetsons. With the height dimension available, congestion should be easily manageable.
Self driving cars are “good to go” for trials. Waymo is trialing driverless cars in Phoenix in the US. I’m satisfied the evidence is very strong their technology is safer than human driving. Also, I’m satisfied the evidence is strong that Uber executives should be in jail over their self driving testing program.
Anyway, I’m fine with self driving cars being trialed in Australia by any company with a similar safety record to Waymo. Note I am saying they are ready to be trialed, not that they are ready for general use.
Self driving cars will work and probably quite soon. They could be implemented for general use (after on-road trials) in as little five years. Progress is rapid as it is with solar technology. They will be considerably better than at least 90% of drivers. They might not be better than the top ten percentile. If you are over 50, you are most likely not in the top ten percentile. If you are under 25, you probably aren’t either. Soon enough, the need to drive a car will be as obsolete as the need to be able to ride a horse. Sure, you could do these things for fun or profit if you wish but for everyday transport needs they would be unnecessary.
The gig economy is a meaningless catch-phrase. The so-called gig economy is precarious (self)-employment promoted by late stage capitalists (neoliberals) to rob people blind.
Self driving cars will work and probably quite soon.
I doubt it; twenty years ago my uni had a research program on vision-based robot navigation, and based on reports on the current level of hand-mapping required to get the cars to work… we haven’t made a lot of progress. It’s AI; there’s fifty years of people continually overestimating how quickly improvement becomes harder and slower.
If a car needs detailed maps then obviously it can’t work if the maps are in error: since disruptions put the maps in error, a car that needs maps isn’t fit to handle disruptions and thus isn’t fit for use in uncontrolled spaces. A robot car is still a robot; it’s been fifty years, and we’re still putting robots in interlocked cages because the alternatives are and remain unsafe.
Collin, driverless cars are on roads and working now. While they aren’t as smart as insects — that would be crazy! They are about as smart as an insect ganglion which is a cluster of nerve cells. And that is really really smart. Basically humans are just ganglia with the added ability to feel stupid tacked on.
And robots are out of their cages. Caged robots are still around, but ones like South Australia’s Baxter are now available and far cheaper than their cage living predecessors.
Apropos of nothing.
The fundamental problem with heritage protection in this country is that it’s based on protecting that which is scarce. If you remove your valuable-thing before it becomes scarce, you do no wrong and incur no cost: the cost of heritage protection falls solely on those who delay removing the heritage. On the people who stop it vanishing entirely, not on the people who made it scarce in the first place.
We need to change this. I propose a mechanism based on rent valuation: to remove any sort of potential-heritage item you have to pay off other holders of similar heritage, who undertake to either keep that heritage or to include your payment in their payment if the heritage is lost.
(If it burns down accidentally you have’t kept the heritage, have you? Best hope your insurance covers reconstruction or the destruction payouts you’ll need to make)
That way heritage attracts its own value, increasing as it gets scarcer similar to a tontine. You’ll probably need a rigit scheme to protect the last few items but as a way of controlling attrition and setting up incentives towards preservation.
Work needed, obviously, but it’s a start.
Ronald, Ikon, the evidence shows Waymo’s autonomous vehicles are orders of magnitude away from being safer than the average human driver. Despite all the tech investment hype, they’re not even as competent as the average L plate driver.
On a more positive note, an example of an AI application that will save many lives:
“Siri/Alexa/Arlo [insert favourite anthropomorph], I’ve fallen and broken my hip and can’t reach the phone, and I think I may have had a stroke. Please call my daughter Joanne immediately.”
Nick, on a more realistic note:
Services such as ‘vital call’ (to name one) saved someone precious to me. Late onset vertigo (incurabke), expanded auorta (managed eventually) leading to regular collapse with verigo leading to nervous system to void all non essentials ( vomiting plus bowel movement within 30 secs – on the floor). If the pendant button around her neck was pressed magic happened. Ambo arrived within 10 mins usually. No yelling at siri with vomit altering voice. Upshot. After 7 + collapses a pace maker was fitted. 95% reduction in falls. The time from the first fall to pacemaker was seriously stressful. I was a first responder too.
Ok. Ok. Alexa now offering pendant. But! This is preemptively disrupting a VITAL life saving service. Testra out say 2 days per year over 20% network.
Those who are likely to yell at alexa are probably not going to have to strength and potentually ability. If induced an stroke /attack even less ability to speak as per siris limited voice recog algorithm.
What to do?
Not think “just technology” is the whole solution.
Don’t let disruptors threaten to lessen life saving services.
Legislate humans as well in such examples until tech option proven beyond;
“‘The requirement of extremely high quality is not limited to multiple-stage manufacturing processes. Consider what Three Sigma quality would mean if applied to other processes:
· Virtually no modern computer would function.
· 10,800,000 healthcare claims would be mishandled each year.
· 18,900 US Savings bonds would be lost every month.
· 54,000 checks would be lost each night by a single large bank.
· 4,050 invoices would be sent out incorrectly each month by a modest-sized telecommunications company.
· 540,000 erroneous call details would be recorded each day from a regional telecommunications company.
· 270,000,000 (270 million) erroneous credit card transactions would be recorded each year in the United States.””
Prove jeff bezos is going to save this person, at least 7 times without fail. Then I’ll be on a positive note too.
KT2, I’m glad to hear your loved one was saved. Peter Vogel has certainly done some cool things over the years. I was probably thinking more of my 73 year old mother who hasn’t had a stroke yet, rather than my 94 year old nanna who’s had 4-5, only one of which was as severe as you describe. She was subscribed to a pendant responder but kept taking the darn thing off, something Vogel is well aware is an issue with his service.
The point wasn’t disruption of pre-existing more targeted medical services for those who obviously need them (anyone keen to try an uber-ulance?). It was more about the integration and normalisation of AI into currently emerging home technologies. What I loosely and figuratively described off the cuff can already be of use without even the need for a specially designed app to be installed.
Thanks Nick. And thanks for the Peter Vogel reference.
Yes the ‘mobile phone is switched off problem’ ala I’m taking off my pendant.
I agree ai will be of value. AI for making a very good model. I don’t want the pendant one day to decide it has enough data to change it’s operations!
Let’s hope ai is like this:
“Rounding Corrections” by Sandra Haynes