Gentlemen don't read other gentlemen's mail (repost from 2004)

John Quiggin37 Comments

One of the more tiresome points being made in relation to the revelations from Edward Snowden is that there is nothing really new here. And, of course, it’s true that, if you’ve been paying careful attention to all the news on this topic, disregarding both official assurances and the wilder conspiracy theories, and thinking through the implications, the material leaked by Snowden is more confirmation than revelation. But, sad to say, that’s not the case for most of us. I think I’ve been paying more attention than most, and I still learned a lot from the latest news.

That’s all a preamble for a repost of a piece I wrote in 2004, in relation to an earlier revelation along similar lines, with a link to an even earlier piece from 2001, making the general case that secret intelligence is useless.
Read More »

The obesity paradox paradox (crossposted at Crooked Timber)

John Quiggin26 Comments

I see lots of stories made up of handwringing over the “obesity paradox”, normally presented as saying that even though obesity is a risk factor for all kinds of diseases, obese people appear to have lower mortality than others. A typical finding is the one reported here

being overweight or slightly obese was linked to about a 6 percent lower risk of dying, compared to people considered “normal weight. Being severely obese, however, was still tied to an almost 30 percent higher risk of death.

People are tying themselves in knots over this, but it doesn’t seem to me that there is any paradox to be explained. The obvious reading of the data is that the Body Mass Index[^1] ranges used for the various categories (20-25 Normal, 25-30 Overweight etc) were set a bit too low when they were originally estimated, or rather, guessed. From my quick look at the data, if you bumped the ranges up by a couple of points, the paradox would disappear. People at the bottom of the current normal range, who tend to have high mortality, would be classed as underweight, while those currently classed as slightly overweight would be reclassified as normal.

Am I missing something?

[^1] This point is logically separate from the general problems of the BMI, regarding muscle mass and so on.

Non-core health promises

John Quiggin8 Comments

When campaigning for office, Campbell Newman promise public servants they had nothing to fear from an LNP government

Breaking that promise, and announcing 10-20 000 job cuts, Newman promised no cuts in staff delivering “frontline” services

Breaking that promise, and sacking large numbers of frontline staff, Newman promised that, even if staff were cut, frontline services would not be

Given this trajectory, it was only a matter of time before the word “core”, made infamous by John Howard’s “core promises”, appeared in government rhetoric. And here it is. Wide Bay Hospital and Health Service chief executive, Adrian Pennington, who is busy abandoning or privatising a wide range of preventative care services, services to the elderly and so on, says, of cuts to emergency staff

There have been no cuts to front-line services in our emergency departments in Bundaberg, Hervey Bay or Maryborough. Emergency departments are core services to keep our people safe.

Pennington’s claim is disputed in the article, but what’s notable here is the emergence, as with Howard, of the implied non-care category of services we will have to do without.

We can all expect plenty more of this under Abbott.

The failure of electricity market reform

John Quiggin58 Comments

As many readers will be aware, The Guardian now has an Australian edition, and I’ve just published an opinion piece in their Comment is Free section, looking at What lies behind the power price increases in Australia?. While there are plenty of factors, they are tied together by the misconceived reform of the industry undertaken in the early 1990s. Concluding paras

he free market assumptions of the reformers were simply inapplicable to a network industry like electricity, where every participant interact with one another through a distribution and transmission system that has all the characteristics of a natural monopoly. The assumption that a combination of profit-driven investment and regulation in the public interest could resolve these contradictions has proved unfounded.

Equally importantly, even though the COAG reforms coincided with the emergence of global concerns about climate change, the reform process took no account of the possibility of carbon pricing, and made no provision for renewable energy. In particular, the assumption that households could be regarded purely as consumers failed to consider the possibility of solar rooftops, or of any interactions between households and energy suppliers to promote energy conservation.

Fixing this mess will take many years. But the first step is to admit that electricity reform has been a failure, and to re-examine the whole system without any ideological preconceptions.

I’m hoping to write more on how to fix the system soon, perhaps even making a submission to the Newman government’s inquiry on the subject.

Reversing reverse parking

John Quiggin27 Comments

It’s safe to say that, little as I expected of the Newman government, the reality has generally been worse. Still, I’m going to give them credit on whenever it seems due, and here’s the first thing they’ve done that I can happily support. Following the recommendations of a study commissioned by the previous Labor government, it’s planned to drop the reverse parking component of the Queensland driving test. Ever since I failed my first driving test on this score 40 years ago, I’ve regarded it as a piece of utter stupidity. Why should anyone else be concerned whether I can reverse park, any more than they should care whether I can change my own oil? If anything, the worse I am at parallel parking, the better for everyone else – not only do I leave more spots for them, but they don’t face the risk of being jammed in a spot by someone who has skilfully parked their car with millimetres to spare.

This seems absolutely obvious. But, to give the contrary view, I turn the mike over to Paul Turner from motoring body RACQ, who manages to ignore the obvious contradictions in his statement.

“What we want is safer drivers, so we think the more it leans to a strengthening of the licensing system, the better,” Mr Turner said.

He said although reverse parking did not carry a high crash risk, it was still a “technical skill” that deserved a place in the driving test.

I’d suggest that a more relevant “technical skill” would be a stiff test in formal logic. That would clear an awful lot of bad drivers off the road.

Worst graph ever?

John Quiggin6 Comments

I just downloaded the Queensland government’s paper announcing, but not spelling out, a 30-year electricity strategy to be developed in the course of this year. I started with healthy scepticism about this, but scepticism turned to bemusement when, on page 5, I ran into one of the worst graphs I have ever seen.

EnergyGraph

This graph, taking up half a page, contains a total of six data points (energy intensity and gross state product for three states). The relevant data, such as it is, is contained in the three yellow bars. The legend describes them as “Electricity use (KwH) per $ of state product”, while the axis label claims that the measure is “Energy use (Mj) per $ of state product” Since a joule is a watt-second, it’s easy to check that a kilowatt-hour is 3.6 megajoules, but the difference isn’t large enough to work out which one is correct. It’s a fair bet, though not sure, that the quantity being measured is electricity use, and not all energy use. The only information conveyed is the unsurprising fact that Queensland’s economy is more electricity-intensive (or maybe more energy intensive) than those of NSW and Victoria.[1]

The real joke, though, is the second measure, of total state product. This is of no interest at all, since it just reports the well known fact that NSW has a larger economy than those of Victoria and Queensland. But the thing that would make Edward Tufte turn in his grave (if he were dead, which Wikipedia tells me he is not) is that this irrelevant information is reported in a line graph, making it appear that there is some sort of relevant order here.

The rest of the graphics are almost, but not quite, as bad. There’s an amusing one describing the “engagement and accountability model”. Three Venn-style intersecting circles representing market, government and customer are overlaid with an equilateral triangle, the vertices of which are labelled “Engaged”, “Efficient” and “Effective”. All stakeholders are invited by the government to “get on board and challenge current thinking”.

Eager as usual to be a team player, I’ll be contributing some thoughts on the failure of electricity market reform to the Guardian, hopefully appearing tomorrow. I will certainly challenge current thinking and look forward to being welcomed on board by the Newman government.

fn1. Since no more explanation is given, I’ll take a stab at explaining the significance of these numbers. Assuming the Kwh measure is correct, and taking an average price of 15c/KwH, electricity amounts to around 3.3 per cent (0.15*0.22) of the total Queensland economy. That sounds about right to em.

Urbanization in China (crosspost from Crooked Timber)

John Quiggin11 Comments

The NY Times has an interesting, but unsatisfactory, article, on government attempts to promote urbanization in China, with a target of 70 per cent by 2025. The story is mostly about farmers whose land has been acquired by fiat, which fits into well-established journalistic frames. The bigger issue, buried right near the end, is the fact that, under the hukou system of registration, people classed as rural can’t legally live in the city. So, while about 35 per cent of the population is legally urban, the true figure is more like 53 per cent. That makes nonsense of the figures quoted at the beginning of the article, and the suggestion of forced urbanization on a historically unparalleled scale. In reality, the announced target implies a modest slowdown in rural-urban migration, which has occurred despite official disapproval.

The big question, at least from the viewpoint of rural Chinese, is whether China can shift to a universal social welfare and retirement income system to replace the workplace-based system of social welfare, of which hukou was part, and which made sense with comprehensive state ownership. This topic is touched on in the NYT article, but in a fragmentary and confusing way, and it’s one about which I know little. I’d be grateful if anyone could point to a more comprehensive treatment.

From an Australian point of view, the continued construction of high-rise apartment buildings, highlighted in the article, is a big deal, since it drives much of the demand for steel, and therefore iron ore and coking coal, that has underpinned our amazing run of good economic fortune, along with the willingness of both Australian and Chinese governments to implement large-scale fiscal stimulus at the time of the global financial crisis.

Update Paul Romer makes much the same points, from a more informed perspective than mine.