With people living longer and with societies becoming more forward-looking as to how to handle the long post-retirement years, the issue of optimal pension systems is big in Australia and elsewhere. Have a look at this excellent interview between John Piggott and Jan Libich where the issue of what the optimal system would look like is very knowledgeably debated.
According to the Australian, the Abbott government’s first budget will include tough new "learn or earn" Measures designed to force young people off the dole and into education, training or work. "One thing the government doesn’t want to do is to continue to pay people to stay at home and do nothing," a senior government source said.
There’s a sign on the wall
There’s a scene in the movie Wayne’s World where Wayne goes to a guitar store, picks up a Fender Stratocaster and starts playing Stairway to Heaven. The clerk grabs the guitar and points to sign on the wall – "No Stairway to Heaven" [video]. For decades, guitar students have been learning the song’s intro by heart and playing it to impress their friends. But guitar store staff are not impressed. They’ve heard it too many times.
In an everyday political sense I suppose we can’t really blame Little Bill Shorten for cynically and dishonestly demonising the Abbott government’s mooted tax increases and spending cuts. After all, Abbott cynically, dishonestly and very successfully demonised Labor’s carbon and mining taxes. What’s sauce for the goose is sauce for the gander, as they say.
On the other hand, perhaps we really can’t blame Tony Abbott for doing this either, because Labor and the trade union movement (prominently including Little Bill Shorten at the time) cynically and dishonestly demonised the Howard government’s Work Choices system, despite the fact that it was an entirely reasonable and fair one at least once the “no disadvantage” test was restored. Then, of course, there is Kim Beazley’s (and before that Paul Keating’s) even more cynical and dishonest demonising of Coalition GST proposals despite the fact that Keating himself had championed precisely such a tax back in the 1980s.
I guess the bottom line is that dishonestly demonising opponents’ policies is the everyday business of politicians. It’s the business of the government politicians of the day to sell their policies effectively and persuade the electorate that the Opposition’s arguments are indeed dishonest scaremongering.
That would seem clearly to be the case with the current budgetary situation. Economists largely agree that weak leaders from both political parties over the last decade (Howard, Rudd and Gillard) largely squandered the windfall of the China-driven resource boom by creating permanent spending programs (largely of a middle-class welfare nature under Howard) and equally permanent tax cuts despite knowing that they were being funded by the inherently temporary proceeds of the resource boom. Presumably they all knew what they were doing but hoped that the chickens would come home to roost on some later government’s watch. It looks like the chickens have arrived, because it is now unavoidably apparent that there is a long-term structural deficit which will not be repaired without tough measures both on the revenue and spending sides of the ledger.
No doubt Abbott and Treasurer Joe Hockey could, if they wished, have avoided taking the tough decisions by claiming (truthfully in a narrow sense) that there isn’t a “budget emergency” and that Australia’s net debt will only peak at around 17.5% of GDP in a few years time, which is much less than nearly all of our major western trading partners. But that would be ignoring the fact that it will indeed become a larger and larger problem over the years, with a high probability that deficits will continue indefinitely into the future and the interest burden continue progressively to increase until it really does become a significant impediment to government policy. Far better to grasp the nettle now and take the hard decisions while faced with a weak and discredited Opposition with a radically unimpressive and tainted leader in Little Bill Shorten.
Of course, it could all end in tears for the Abbott government, with the apparent decision to impose a temporary income tax levy on high income earners (and perhaps increases in fuel excise) being seen by history as Abbott’s “no carbon tax” moment and a courageous decision in a Sir Humphrey Appleby sense. Nevertheless, as someone who prefers sound policy to political theatre I certainly hope not. As far as one can tell from the budget leaks, it would appear that what Abbott and Hockey have in mind is very much sound economic policy. Fortunately, I think that Abbott is a much better political salesman than either Rudd or Gillard. Moreover, with any sort of luck the Coalition should be able to keep a figurative foot on Labor’s throat through an unending stream of embarrassing news stories emerging from former High Court Justice Dyson Heydon’s royal commission into trade unions. Mind you, the current ICAC hearings in New South Wales provide an amusing illustration of the propensity of independent inquisitions to end up biting the instigator that fed them as well as the intended target.
Moreover, in a somewhat perverse and paradoxical sense, a royal commission which exposes and dramatises the skulduggery of a significant minority of the trade union movement may actually be to the ALP’s benefit in the long term. Labor renewal in my opinion depends on reducing the almost complete dominance of a tiny cabal of union and faction leaders over both Party administration and preselection. They are unlikely to surrender power willingly, but may well be much easier to displace if preoccupied by defending themselves before a royal commission and avoiding imprisonment for corrupt activities.
Last night I attended the unveiling of a facsimile of a portrait of my father painted when he was fresh off the boat in 1941. Thanks go to Bruce Chapman above all, but to many others for organising. To Erwin Fabian, who pained the portrait all those years ago. It’s been over 16 years since Dad departed and I’ve made two other speeches reflecting on things, one at his memorial after he died, another, more general one using Dad as a foil to reflect on ‘the asylum seeker issue’. I needed to make another one!
When Heinrich Schliemann unearthed a gold mask in Mycenae, he was reputed to have said “I have gazed on the face of Agamemnon”. In a more modest way Erwin Fabian’s magnificent portrait allows us to gaze back through time – upon the face of a very different person to the one we all knew.
When Dad arrived in England in 1936, he was 15 and alone. He must have been scared. Met by a teacher from Herne Bay College where he was to board, Dad had no English. “Salve” he said, greeting the teacher in Latin. No dice: He was the gym instructor.
The portrait was painted just four months after the Dunera arrived. To find him in those days you just followed the signs in the main street of Hay to the “Concentration Camp”. Dad must have wondered where his mother Marianne was; how she was. She was taken to Theresienstadt. It was a way-station to Auscwitz.
It also had creepy similarities to Hay. Theresienstadt was Hitler’s home for Europe’s Jewish cultural elite. So, as the inmates quietly starved, it doubled as a set for Nazi propaganda showing how well Jewish ‘resettlement’ was going. As she waited to discover her fate, Marianne would sometimes have attended lectures, recitals, poetry readings, and concerts, just as Dad was doing in Hay.
I’ll return the person in the portrait shortly, but I thought I’d list some propositions I take from my father’s success.
My own university, the University of Queensland, has around 6 flagship courses that it puts online for free, in a deal that involves universities from around the world who put up the courses that they excel in. It typifies the current reality of online courses: it is free; it is relatively high-quality; and almost no-one uses them because it is not material that is worth something.
Online courses currently are much like bootlegged high-class literature: it enables those who are self-driven to learn something about everything without paying for it, but it does not tap into the money streams of the education market, which, after all, is a market of diplomas and accreditation. Until online courses come with accreditation, there simply is no money in online courses and we are looking at the academic equivalent of owning horses: a gentlemanly way to get rid of your money.
What would a future with accreditation look like? Since students want high-name brands, it would involve many thousands, perhaps millions, of students doing the same exam by a top-brand name at the same time, and receiving a diploma from that top-brand name based on the exam results.
How would this work? Well, since it is important for a top-brand name to maintain confidence in its brand, that top-brand would have to control the examination as it happens all around the world simultaneously. This means it will only send out the exam seconds before the start of the exam, but much more importantly, it will mean that the people doing the exam will be monitored by cameras and brand-accredited examiners all around the world.
In effect, we would thus be looking at a system of world-wide examination rooms in which one can do, say, 1st year biology from Harvard, 2nd year physics from Oxford, and 3rd year economics from a conglomeration of Dutch universities (like the Tinbergen Institute). The material on which the exam is based will then be online and for free, but local universities will have provided tutorials in which students get trained and in which their misconceptions get ironed out so that they understand the material: the ‘low-tier’ universities start to become a franchise of the high-tier universities and they mainly offer feed-back on the learning of their students.
What is in it for the high-tier universities? Lots and lots of money. Continue reading
Phase 1 Report (the one that’s caused most of the uproar).
Just a note to let people know of the unveiling of a magnificent portrait of my father, discovered some years after he died. It’s in Canberra on Tuesday afternoon.
Here’s the invitation. Perhaps I’ll see you there.
Professor Rabee Tourky
Professor Bruce Chapman
Emeritus Professor Bob Gregory
request the pleasure of your company on behalf of the
Research School of Economics and Crawford School of Public Policy
at the portrait unveiling ceremony of the late
Professor Fred H Gruen
to celebrate and recognise his significant contribution to
Economics and Australian Public Policy at The Australian National University
Launch talk by Dr Martin Parkinson, Secretary to the Treasury
5.30pm – 7.30pm Tuesday 6 May 2014
Venue
Ground Floor Foyer
ANU College of Business and Economics Building 26C
Kingsley Street, Acton
http://campusmap.anu.edu.au/displaybldg.asp?no=26c
Refreshments will be provided
Life is miserable: run, run, run
I’ve always been struck by how we debate flexibility in the labour market without paying attention to the other problem in the labour market which is that it’s extremely difficult to find out whether you’re really going to like a job until you take it, and then, if you don’t well it’s too late – lots of costs and general angst getting out and moving onto something better. (Will it be better, or just the same old, same old – I’d better stick it out where I am).
So I took the problem down to Troppo labs which came up with Windows on Workplaces which starred (not) at the 20:20 Summit. Hey why pay attention to something new when you can go with the same old same old same old same old Golden Gurus. (See the same article I just linked to.) The basic idea of Windows on Workplaces – quoted from the linked post is as follows:
Say you particularly value some aspect of a job you’re applying for – for instance a good career path, intrinsically rewarding work or flexible family friendly hours. If youre applying from outside the firm youre generally in the dark. . . .
Now firms regularly survey their employees regarding their satisfaction with these things. So it would be good if you could get a peek at their answers. [But] firstly, firms that did badly wouldn’t want to release their information. The second problem is trickier still. Even if you somehow compelled firms to release this data, their survey results cant be readily or reliably compared because they’re not reported against some common standard. I propose . . . not that governments mandate some standard, but rather that they organise and campaign to encourage a standard to emerge. . . . The best firms have an interest in such a standard emerging as it would advantage them in competing to attract employees. And governments are also major employers, so they could establish standards for their own agencies to report against, which, if deftly done might form the kernel around which more widely used standards might emerge.
I’ve never tried to do any empirical work on the extent to which this could improve productivity – though I think it would be large. Now, in the process of completing a major project on estimating the value of open data to the Australian economy, a colleague referenced this paper.
“Match Quality, Worker Productivity, and Worker Mobility: Direct Evidence From Teachers”
by C. Kirabo Jackson. Here’s the abstract. Extremely promising I reckon! Continue reading
