It was one year ago today that we arrived in Brisbane. Like everyone, I’ve had my ups and downs, but this has definitely been one of the best years I’ve had. I’ve liked just about everything about Brisbane, but especially the friendliness of the people here.

Among the jobs associated with moving, we finally got around to transferring the registration of our trailer, today, which entailed a trip in to the Queensland Transport office. In my experience this is a job which ranges from stressful and frustrating (most places in Australia) to the day from hell (my one experience in the US). But everyone was friendly and helpful, and the girl behind the counter was positively bubbly. We find this all the time.

In addition to the general pleasantness of life, there have been some big positive life-events, including some career successes and the marriage of my son. All in all, a very good year.

It’s time, as usual, for the Monday Message Board. Post your comments on any topic (as always, civilised discussion and no coarse language, please).

Master and Commander by Patrick O’Brian. I’ve had good recommendations to read the series of historical novels of which this is the first instalment and the impending release of Peter Weir’s film (of which I’ve read mixed reviews) gave me the prod I needed. If I’m going to read a book, I prefer to do so before seeing a film of it. I enjoyed Master and Commander, but will need to read a couple more to see if I really get hooked.

I’ve also started the long task of converting my vinyl records to digital formats, going through AIFF to MP3. This is actually more work than converting to cassette, a task I once began, but never carried through. The process I’m using takes about six error-prone stages before the music ends up on my iPod. After the triviality of converting CD’s – stick it in the slot, download the info from CDBB and Bob’s your uncle – this all seems very slow. I estimate that, at one side a day, an discarding old stuff I’ll never listen to, the whole thing should take me about a year. And I’m clearly going to run out of disk space if I try to keep the lot in AIFF.

Against all that, there’s the amazing flexibility of digital music, at every level. I can do any kind of editing I want (for example, skipping over cracks in my old records and stripping out white noise) and rearrange the songs in any way I like.

This Buttonwood column from the Economist deplores the fact that house prices in London are being bid up by City types who, he suggests, have enriched themselves at the expense of their customers (he’s referring to the mutual funds scandals, but these are just the latest of many). He doesn’t, however, ask the obvious question: Why do these City types crowd together in London (and New York). After all, the same City types are busy telling us about a globalised world, linked instantaneously by the Internet. And, as Warren Buffett has shown, they are right. You can get all the information you need to formulate market-beating investment strategies while sitting in Omaha, Nebraska.

The two halves of Buttonwood’s observation are linked by the much older observation of Adam Smith (quoting from memory here)

Men of the same trade seldom gather together, even for innocent merriment, but the meeting ends in some conspiracy against the public.

The work that financial institutions are supposed to perform, trading assets and allocating risk in transparent markets, can be done anywhere on the planet. It’s the stuff they want to do without any inconvenient records, and with the kind of trust that’s needed for conspiracy that requires clustering in a central location where social bonds can be cemented by eating, drinking and sleeping together.

Nathan Lott has a good analysis of the latest Al Qaeda outrages in Turkey. I argued here that terror attacks in Islamic countries will prove counterproductive for Al Qaeda and Lott generally agrees.

In fact, ideological terrorism has an almost perfect record of failure from 19th century Anarchists to the Weather Underground and similar groups (on both the right and the left) in the 1970s. The most any of these movements achieved was to bring authoritarian governments to power or to force governments to curtail civil liberties.

For a nationalist movement, bombings and assassination can work because the victims are seen as being on the other side, and because the weapons are the only ones available. As long as Al Qaeda was attacking targets in Western (or at least non-Muslim) countries, they could draw on Arab/Muslim nationalism as well as Islamism for support. But attacks in Muslim countries are a different matter. Inevitably, the majority of victims will be ordinary people going about their business, and it is the terrorists who will appear as demonic outsiders.

As Lott notes, Al Qaeda propaganda is trying to neutralise this effect, for example by claiming that the victims of the Saudi attacks were CIA translators. But this sort of stuff only convinces people who want to believe. Lots of Muslims wanted to believe that Mossad was tangled up with the World Trade Centre attacks. Not many will be motivated to believe spurious justifications for attacks where they themselves could easily have been among the victims.

Looking at longer term strategic implications, the big impact will be on Turkey’s case for admission to the EU. Supporters will undoubtedly push harder – Jack Straw has already made this clear. While some of the opponents, who don’t want a Muslim country to join Christian Europe, will be hardened in their opposition, it’s going to be very difficult for opponents like the German Christian Democrats to articulate this kind of line without being viewed (correctly IMO) as capitulating to terrorism. Of course, there’s still the perennial problem of Cyprus, but I expect the Turkish government will finally see the need to dump Denktash and support reunification without quibbling too much over terms.

I couldn’t resist reporting this bit from the Hearsay column of the AFR (subscription required), sourced to the Annual Report of the NSW Legal Services Commissioner, Steve Mark

When her husband Frank died, Margaret was touched when she received a card and a phone call from their lawyer, expressing his sympathy for Margaret and her family. The solicitor assisted Margaret with the execution of Frank’s will and she was happy with the service she received. That is, until she received the bill She was astonished to find that the lawyer had charged for both the telephone call and the card (emphasis added)

And no, it wasn’t a mistake.

This lengthy piece by Nicholas Confessore, (link via Brad de Long) gives plenty of insight into the operations of James Glassman’s Tech Central Station, which is among other things, a leading purveyor of global warming contrarianism. In essence, the site is a commercial lobbying venture, which pushes the political interests of its sponsors. Sponsors of the site mentioned in the article include ExxonMobil and General Motors.

Among the contrarians affiliated with the site are Sallie Baliunas and Willie Soon, astronomers, lead authors of the recent “Harvard study” a survey of historical studies of climate which yields findings totally contrary to those reported by scientists who are actually qualified to study the topic.

While I’m on this topic, I’ll pass on these links supplied by Robert Parson, which give a good idea of Baliunas’ general approach. These are Congressional reports from one of the previous contrarian campaigns in which she was a leading advocate, denying the impact of CFCs on the ozone layer. (larchived version of “http://www.house.gov/science_democrats/archive/envrpt96.htm” from Wayback archive) and making the usual claims about scientific conspiracies as well as gross overestimates of economic costs of mitigation.

A while ago, I noted that a US prosecutor was going after methamphetamine “cooks” on terrorist charges, on the theory that “drugs are chemical weapons”. I’m pleased to see that this piece of nonsense did not impress a North Carolina judge. I wonder if the US Supreme Court will display the same backbone with respect to “enemy combatants”, Guantanamo Bay etc.

Talking of stretching definitions, I’ll offer this free theory to any US prosecutors who may be reading this blog. Guns (like all weapons based on explosives) work by means of an exothermic chemical reaction, and are therefore chemical weapons.

(If you really feel like pushing your luck, you might want to observe that knives and clubs are made entirely of chemical elements, as are fists and boots.)

My column in today’s Fin (subscriprtion required) argues that the best explanation for our current good performance and low unemployment is the trivial one – we haven’t had a recession, and that microeconomic reform and productivity growth have nothing much to do with it. This is fortunate since the rapid growth in multifactor productivity experience in the mid-1990s has ground almost to a halt in the last four years.

I reject the idea that microeconomic reform ‘fireproofed’ us against going into recession during the Asian crisis. As I observe

To refute this claim, we need only look across the Tasman. New Zealand had much the same microeconomic reform as Australia; if anything the reforms were more radical. And the Asian crisis produced the same immediate outcome, a currency depreciation. But the NZ Reserve Bank raised interest rates to offset the depreciation, while the Australian Reserve Bank allowed our dollar to decline. The result was recession in New Zealand and a smooth adjustment here.

Interestingly, while wandering through the blogs this morning, I linked (via Stephen Kirchner) to this piece in the Oz by Alex Robson (formerly a colleague of mine when I was at ANU, and also a former econoblogger), who says

Taking low unemployment for granted is understandable, given that it has been consistently low for such a relatively long time. But it is a risky position for economic policy-makers to take. The primary factor behind the sustained growth in job creation is the stunning success of commonwealth-driven reforms during the past two decades – much derided as “economic rationalism” by the likes of economist John Quiggin, sociologist Michael Pusey and political scientist Robert Manne. It is these market-oriented policies that have led to substantial improvements in individual economic freedom for all Australians.

Robson is correct to nominate the past two decades as the period of substantial microeconomic reform. But there are a couple of problems with his claims about unemployment. The official unemployment rate now is only marginally below that of the previous cyclical minima in 1989 and 1979. When you take into account the growth in various forms of disguised unemployment (such as disability benefits) the rate is actually quite a bit higher. The proportion of men engaged in full-time employment has plummeted. So the growth in job creation has been anything but “stunning”.

So I expect I’ll be watching the RWC Final like everybody else, but there’s still a basic point about the game I don’t understand, especially after the France-England game (I’m from the AFL half of the country, but I’ve watched a reasonable amount of rugby league). It seems as if it’s a lot easier to kick three goals than to score and convert a try. (This is certainly true in rugby league which is why you only get one point for a field goal.) So the obvious strategy seems to be to go for goals.(On standard game-theoretic grounds, you should make the occasional attempt at a try, just to force the other side to defend against it).

But most teams seem to have only one player who’s any good at kicking. If a team had three or four players who could regularly kick goals from 40 metres, the task of the defence would be just about impossible. As soon as the attacking side got to within, say, 30 metres, they could pass it back to a randomly chosen kicker for a set shot at goal. Even with 50 per cent accuracy, this ought to bring in 30+ points a game, which is usually enough.

Chicago-style reasoning (Isn’t that a $50 bill on the pavement? No, if it was, someone would have picked it up) says there’s something wrong with this analysis. Can someone set me straight before Saturday?