A thought about gambling

John Quiggin55 Comments

Like a large proportion of the population (but unlike two lucky winners) I’m a little bit poorer after last week’s jackpot lottery. That might put me in the right frame of a mind for a visit to the Commonwealth Treasury next week where, among other things, I plan to talk about how to treat gambling in the context of the Henry Review of Taxation.

State governments are heavily reliant on revenue from gambling, which is a combination of explicit taxes and payments for monopoly privileges. But gambling (particularly casino gambling and racetrack betting) is socially destructive, since the majority of the revenue is derived from problem gamblers. And while restrictions on gambling were justified by these social ill-effects, the current structure of taxation actually makes things worse, by ensuring that gamblers lose faster. Policy must also deal with the fact that, for the great majority of participants (who only account for a minority of expenditure, however) gambling is harmless and pleasurable. That’s particularly true of non-instant lottery gambling.

I’ve been thinking about how to fix this, and I’ve had the idea of subjecting gaming enterprises like casinos to a (net) revenue cap. That is, rather than being restricted to a certain number of machines, tables and so on, they would be limited in the amount they could take from the machines in a given year. This would eliminate incentives to increase the take from gaming, and replace it with incentives to do more business selling food, drinks, entertainment and so on. It would also increase the incentive to comply with measures aimed at restricting the access of problem gamblers, since they would not change the gaming take and would presumably spend less on other goods and services. My worry, not fully worked out, is that gaming enterprises would just reduce service and extract their allowable revenue from the problem gamblers as cheaply as possible.

Any thoughts on this?

The Fabrication of Australian Vaporware

John Quiggin65 Comments

It’s now the second half of 2009, so it’s a convenient time to remember that, early last year, Keith Windschuttle published a piece in the Oz, touted as an extract from his “forthcoming, later this year” Volume 2 of The Fabrication of Australian History . This Volume 2, devoted to the Stolen Generations, and attacking historians such as Peter Read is different1 from the Volume 2 announced back in 2002 and promised for 2003, in which Windschuttle was supposed to make good his claims that Henry Reynolds had fabricated the history of frontier conflict in Queensland.

Neither promised Volume 2 has appeared, and there is no sign that either of them ever will. And there was even supposed to be a Volume 3 at one time, IIRC.

1 I’ll leave to the philosophers the question of whether two non-existent books can be said to be different or (as I suspect on reflection) all non-existent books are the same.

Skewness (Warning: statnerdery ahead)

John Quiggin20 Comments

I’m not all that good at remembering which way various standard distinctions go, especially when I have some underlying doubt about them. In classical hypothesis testing, for example, Type I error involves erroneously rejecting the null hypothesis, while Type II error involves erroneously failing to reject. Since I mostly think in Bayesian terms, I regard the whole classical setup as a fairly arbitrary social convention. One result is that I have to remind myself, fairly regularly, which type of error is which.

I have a different kind of problem with the terminology of skewness. Positive skewness is often called “right skewness”, but it seems to me this is the wrong way around. Suppose I started with a zero-mean symmetrical distribution (say normal) and reduced some of the values near the mode/mean/median. The result would be a distribution with negative mean, mode and median, and positive skewness. In visual terms, the peak of the distribution would be pushed to the left, while the right hand tail would now be long. In ordinary terms, I would say the distribution had been skewed to the left. Any comments?

Worst generation game piece ever?

John Quiggin25 Comments

Writing in today’s Oz, Greg Melleuish starts out with the observation

It is not common for the political leadership of the country to be discussed in generational terms

Having read the piece that follows, I’m not surprised. Silly as the usual generation game stuff is, the attempt to classify individual political leaders by their birth year is even sillier (which isn’t to say it hasn’t been done, particularly in the US). The burden of the piece is to attack Kevin Rudd for the heinous sin of having been born in 19571

It’s hard to know what’s silliest in this piece: there is, for example, the claim that boomers like Kevin Rudd were products of the “education revolution of the 1960s” – in reality, the schools of the 1960s and early 1970s were dominated by rote learning of tables and dates. As for the university radicalism of the era, it was confined to a minority of a minority, since few kids got past year 12 in the 1960s. And by the time Kevin Rudd went to ANU in the mid-1970s 2, the days of radical activism were well and truly over.

Or perhaps there is the idea that, as a baby boomer, Rudd is tarred with the brush of postmodernism. As anyone who has followed these intellectual games knows, postmodernism came to the fore in the late 1980s, and was much more associated with Gen X academics, who used it to undermine the “grand narratives” (Marxism, functionalism and so on) which had appealed to the boomers who were now blocking their career progress.

But I think, the clearest silliness is the pairings it produces. It is a commonplace of Australian political discussion that the great adversaries Whitlam and Fraser share more similarities than differences, but Melleuish absurdly pairs Whitlam with Holt and Fraser with Hawke. More recently, and fatally to Melleuish’s silly attack on Rudd, lots of people have observed that Rudd is, in many respects, a younger version of John Howard. But, in Melleuish’s theatre of the absurd, Howard is paired with Paul Keating (in many ways the ultimate embodiment of cliches about baby boomers) on the basis that both were born during World War II. He might want to check the bios of, say, John Lennon and Mick Jagger.

1For aficianados, this makes him a member of Generation Jones, but Melleuish appears to have got his knowledge of the subject at the pub, or by watching game shows on TV

2 I just found this out on Wikipedia. We were contemporaries, it seems, but I never met him

Two steps behind

John Quiggin4 Comments

Over the last week or two, there has been a lot of discussion of the idea of Obama leading from “two steps behind”, initially in relation to the Iran protests1, and then as a general description of his operating style. There’s an obvious link to the famous quote attributed to FDR, “I agree with you, I want to do it, now make me do it.”

But, how should Obama’s supporters respond to this, particularly on civil liberties issues such as detention withour trial where Obama is not only two steps behind but often appears to be going in the opposite direction? Suppose that Obama really wants to deliver on his campaign rhetoric about openness and due process, but is facing powerful resistance from within permanent power centres such as the CIA. Hence, it might be supposed, Obama has to put up a show of resistance, and needs his supporters to make enough noise to compel him to fulfil his promises

How, if at all does such a situation differ from one in which Obama is a natural centrist wants to backslide on promises made to secure his base in the election year, but can be held to his promises by sufficiently vociferous pressure?

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Even more good news

John Quiggin16 Comments

Via Paul Krugman and the Financial Times news that the World Trade Organization has indicated that it will endorse border taxes on imports from countries that don’t participate in an international agreement to reduce carbon dioxide emissions.

That means the end of the free rider problem. Provided the big players (US, EU and China) sign up to an agreement, any country that chooses to hold out will be committing economic suicide. And, in the initial bargaining between the developed countries and China, the pressure on China to reach an agreement has been greatly increased.

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Review of Capitalism Unleashed

John Quiggin13 Comments

Several years ago, Andrew Glyn sent me a copy of his new book, Capitalism Unleashed, which I promised to review. But with one thing and another, I didn’t get to it, and then I received the news of his premature death, which set me back still further. I promised myself that I would do the review as a tribute to Andrew’s memory, and now, I’ve finally managed to do it.

Of course the environment now is radically different to the one in which the book was written, and that means the review must be to some extent informed by the wisdom of hindsight. In the introduction, Andrew notes as the first of the big open questions thrown up by the unleashing of capitalism

Will the ever more complex financial system implode in a major financial crisis and bring prolonged recession

We all know the answer now.

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Good news!

John Quiggin9 Comments

The Waxman-Markey American Clean Energy and Security Act bill, establishing an emissions trading scheme for the US, has been passed by the US House of Representatives. The vote was close, and depended on the last vestiges of bipartisanship, with the 219-212 majority depending on 8 Republicans willing to save the planet (44 Democrats voted against, a few because they thought the bill was too weak). Since good actions by Republicans are so rare nowadays, I’ll salute all eight, as listed here Bono Mack (Calif), Castle (Del.), LoBiondo (NJ), McHugh (NY), Reichert (Wash.), Smith (NJ), Lance (NJ), Kirk (Ill.). My guess is that the narrowness of the majority is a little misleading. In cases like this, the Administration cuts enough deals to get a majority, but usually has a few votes in reserve.

I have no idea how things will go in the Senate, but I’m feeling optimistic that the bill will pass in the end. The Lieberman-Warner bill got 48 votes in 2008 (including 7 Reps) and the Senate is a lot better now than it was then.

Of course, this good news has the implication that Australia could be left at the back of the pack, among the last developed countries to sign on to emissions trading. That’s the price of having a delusional and disfunctional opposition, and of the Labor backroom deals that managed to give Steven Fielding the balance of power in the Senate.