Wednesday, October 28, 2009

Don't let bridge designers near our buses!

It has come to my attention that buses in Brisbane are, by international standards, slow.  There’s really no other way to put it.  And I think I have found a way to improve the speed of bus services at the smallest of costs.

Remove bus stops.

Wednesday, October 21, 2009

My economic philosophy of town planning

At the most broad level, the rationale for regulating land use is to minimise negative externalities to neighbouring owners of immobile property assets. This is why even ancient civilisations had strict rules attached to land.

Modern planning continues this tradition. There are few, if any, countries in the world that fail to regulate land uses (maybe the Vatican?) due to town planning’s success in addressing this fundamental externality problem. By regulating land use you can exclude development that will produce impacts such as noise, pollution, traffic, over-shadowing, and other externalities on other land owners. Protecting land rights, and subsequently land values, is essential to a functioning market economy.

This most basic principle is probably forgotten by many 21st century planners. It is one of my reasons for objecting to the proposed South Brisbane / West End plan. Allowing 30 storey developments creates severe externalities in terms of traffic, overshadowing, and use of public space such as parks. Another reason is based on the following second principle.

Thought of the day

I was intrigued by this question:

What are some examples of successful government bureaucracies?

Defining success in order to answer this question is the same problem that ultimately results in serious inefficiencies within government bureaucracies.  Without clear goals, governments end up stirring the pot but never actually cooking the meal.

To make matters worse, even unclear goals change unexpectedly on a political whim.

Imagine Steve Jobs one day promising in the media that Apple is now going to make running shoes and car tyres.  The whole Apple company would have to learn a new business, and the transition would be costly.  Then 3 years later, he is replaced by a newcomer who declares the shoe and tyre business a failure, and decides instead that Apple should run an airline.  Furthermore, the newcomer decides that the success of the new airline enterprise will not be defined by profits, but instead declares that success will be defined in terms of how much the airline is 'giving back to the community'.  It would be a disaster.

But that's the problem you see.  Tasks that have clear long term goals are no longer implemented by government, but by private contractors.  Governments are left with those tasks that are subject to pot stirring and political whim.  Hence, government bureaucracies never seem to get more efficient relative to private enterprise.

Tuesday, October 20, 2009

Town planning and organic growth – can we reconcile the two?

After a rather challenging discussion with a close friend last week about the necessity of town planning and the degree to which planning constraints impact property markets, I have decided to embark on what might become a detailed rant on the matter. This may the first of many posts on the topic.

The trigger for this planning discussion was a conversation about the proposed increase in height restrictions on former industrial land in the South Brisbane / West End area of Brisbane (see map below). Currently this area is a mix of light and heavy industrial uses, office and warehouse space, and new apartment developments. The area is earmarked as a new growth precinct, in the same vein as Newstead's transition from industrial to a mix of medium density urban uses.
The reason for the ensuing debate is that I oppose the 30 storey height restrictions being proposed in the neighbourhood plan, even though I support densification as a planning strategy. Instead, what I propose is a plan to allow for flexible organic growth.

Sunday, October 18, 2009

Lobbyists: If they are always wrong, why are they so influential?

The Property Council of Australia (PCA) is one of those lobby groups with a blatant disregard of the facts and a history of political influence – the kind we love to hate.

Just yesterday the PCA made a submission to the Queensland government outlining how planning laws that promote densification are likely to increase greenhouse gas emissions compared to planning for more urban sprawl. This is not a joke.

They cite a 2007 Australian Conservation Foundation study to give their position merit, but what the study actually says is that environmental benefits from increased density are wiped away by the wealth and consumption effect. Essentially, the data shows living in smaller dwellings closer to conveniences reduces households’ greenhouse gas emissions, but generally, these households are wealthier, and thus have higher greenhouse gas emissions overall. No surprises really.

Thursday, October 15, 2009


Only this week I wrote about cyclist resentment in Australia, with a detailed look into the arguments of the emotional cyclist v motorist debate that happens down under (but not in continental Europe I might add).

In today's local rag there is a snippet of news in the business section that epitomises the anti-cycling attitude of the typical Australian. For the life of me I can't find it online, so I will reproduce it here verbatim. 

You have to imagine this accompanied by a cartoon of a smiling Neil Summerson running over a cyclist, with bike parts, helmet and limbs flying out from under a precious collectable antique Mercedes.  It's true I swear - look on p40 of The Curious Snail. 

In the fast lane
Bank of Queensland chairman Neil Summerosn had a traumatic encounter of the cycling variety prior to fronting the media and analysts at the bank's record results presentation yesterday morning.
Summerson, a keen car buff with several automobiles in his garage, suffered the indignity of having a cyclist pass his car as he headed into the city for the press conference, estimating the speed of the cyclist at well over 40km/h.
The BoQ chairman pulled up at a stop sign only to see the cyclist whiz through the sign, prompting Summerson to call out, "Don't you obey road rules?" The two-finger salute followed and Summerson then pulled up alongside the bike rider, smiled, and put his foot full down on the accelerator of his Mercedes E500 V8, leaving our rider behind in a cloud of dust. Sticking to the speed limit of course.

My questions:
1. Why is having a cyclist pass you a 'traumatic event'?
2. Why is Summerson's hooning behaviour promoted as an acceptable response for motorists unhappy with other road users?
3. Is this how Summerson behaves every time he witnesses a road rule being breached?

Honestly, I couldn't believe what I was reading.

Wednesday, October 14, 2009

Coming up next - medicated air!

I couldn't think of a snappier title, but I wonder when we, as a society, decided that everything needs medicating.

Last year I wrote about Queensland's move to fluoridate the water supply, and how there are probably better drugs to put in water that fluoride.

It appears this is just the beginning.  It is now mandatory to add folic acid to bread flour in Australia.  You probably haven't even heard of this before.  Niether had I until I read this article, which argues why this heavy handed regulation is stepping way over the mark. 

Tuesday, October 13, 2009

100th post: Bicycle registration?

I wanted to write a beautiful piece reflecting on two years of blogging for this event – my 100th blog post. But instead, I’ll get down to some nitty gritty analysis of contemporary issues with an economic and environmental twist.

Today’s topic is cycling.

After a charity ride from Brisbane to the Gold Coast last weekend, the local rag has ignited the dry tinder of cyclist resentment present in the Australian motoring psyche (remember the Rex Hunt incident?). I want to deconstruct the emotional Cyclist V Motorist debate to see which positions hold merit, and what type of government intervention could provide benefits for all involved.

Sunday, October 11, 2009

Most rewarding careers?

To my loyal readers,

I want to take a break from the usual blog topics and talk about something a little more personal.  For those who don't know, I am an economist working in the public service but find the work most frustrating, intellectually dull, and completely unchallenging.  You may say that this is no surprise, and that I really should have been expecting this situation.  But the pay and conditions are great and these things were very important when I started the job.

I am now contemplating my next career move and am seeking some advice.  My next move should meet the following criteria:
1.  Intellectual challenge
2.  Rewarding - in the way that you feel like you accomplished something at the end of the day
3.  Potentially ourdoors and active

Another idea is to simply sell up the traditional life, buy a sail boat, and take the family around the world - picking up some unskilled work as we go. If not now, when?

I would really appreciate any thoughts and ideas, no matter how 'out there' they are.


I think the results of this online personality test sum things up, but don't know where that leaves me as far as a rewarding careers goes.

As a Groundbreaking Thinker, you are one of the extroverted personality types. Dealing with others, communication, discussions, and a little action are your life’s blood - and some of your strengths. You are very articulate and love variety personally as well professionally. New tasks, new projects, new people, fascinate you because you are always interested to increase your wealth of experience. Consequently, you have no problem dancing at several weddings; juggling parallel tasks to be accomplished electrifies you, and you are an accomplished improviser.

Your enthusiasm carries others along and enables you to create positive impulses in your team. Mountains of paperwork, endless e-mail correspondences, and solitary work tire you quickly, and bore and frustrate you. The appreciation of your work by others is more important for you than for the introverted Thinker types. You measure your own professional value by the admiring glances of your colleagues and superiors.

The psychologist Keirsey once described the Groundbreaking Thinker as the “soul of the company,” and that can be just as easily applied to an employee position, as to an independent chief of a company. Since risk represents less of a threat than excitement, freelance or self-employment are well suited to you. However, you must take care to have collaborating staff around you, or that you are able to work closely with other teams in order to satisfy your contact and communication needs. You are naturally suited for leadership positions because there you have the ultimate freedom making your decisions and choosing your tasks.

As a superior, you like to let your subordinates operate on a long leash as long as they do a good job, because it is not your thing to exercise power for power’s sake. Additionally, you don’t feel like worrying about the stuff of others. You much prefer that the person concerned disappears after you have handed him his/her task and later shows up with the finished (and naturally excellent) result. Based on your open way to communicate, then you are not parsimonious with praise.

If you are an employee, you should make sure that your company’s hierarchal structures are as level as possible because you have real trouble with authority for authority’s sake. Otherwise, you can handle critique or diverging opinions pretty well because you don’t take them personally, and are prepared to adapt if you can be convinced of the validity of an argument - if in your opinion it is “logical“.

Wednesday, October 7, 2009

The Value Problem

Economists believe they have solved the old Water-Diamond Paradox by showing how prices are determined at the margins. But how then do we value a large stock of resources when we only know the value of a marginal unit?

Consider this problem. A river catchment has 1,200 megalitres of tradeable water rights. The last trade occurred at a price of $2,000/megalitre. Essentially this means that the last megalitre (the marginal unit), out of the 1,200 megalitre stock of water in the catchment, is worth about $2,000. But are all the other 1,199 megalitres therefore worth $2,000 a pop? Quite simply no. If the government compulsorily acquired half of the water in the catchment, the 600th megalitre would be worth more than the 1200th megalitre – an example of declining marginal value.

Tuesday, October 6, 2009

Whether the weather increases volatility of markets

I recently read, and thoroughly enjoyed, the book Rigged. In one scene a young trader is asked what factor contributes most to changes in the price of oil - to which he responds, the weather. For example, a cold winter in North America or Europe signals an increased demand for oil and sends the price up. 

So my question is this. Given how weather dependent our agricultural industry, our energy industry, and other essential primaries industries can be, how much less volatile would financial markets be if we had predictable or constant weather?

Monday, October 5, 2009

UPDATE - Turning points

Recently I posted about the spike in population growth experienced in Australia over 2008, and how we cannot simply extrapolate the trend, or we will miss important turning points. I predicted that the rate of population growth will fall from this level over the next few years as a result of

1) reduced migration, and
2) a decline in birth rates due to the ‘bringing forward’ of births encouraged by the baby bonus.

I didn’t have to wait long for some supporting evidence. The ABS today released overseas arrivals and departures data showing a significant increase in departures, and decline in arrivals, since April 2009.  It looks like migration is on its way back down.  When the June 2009 release of the population statistics is published on 3rd December we might just see the turning point in population growth I forecast back in September. 

Sunday, October 4, 2009

iTunes v Foxtel

I know; there is no battle between iTunes and Foxtel (yet) but it seems like a good attention grabbing headline. The relevant point here is that Foxtel is releasing a new service where subscribers can download movies and TV programs. Although the service has its drawbacks, it sounds like the next big thing to me.

Whenever I see innovation like this, I can’t help but see it as another example of economics in action. It also makes me wonder what industries will be next to leap into the downloadable marketplace. Given that music and books have taken the leap, probably in response to pirated downloads, movies were an obvious candidate to jump soon. But what next?

Rebound effect in action

The image below is from an email sent by the Queensland Government Climate Smart program.  What an odd prize for a program designed to reduce energy consumption!

Thursday, October 1, 2009

Move over horoscopes, forget cold reading, here is… economics!

Derren Brown, famous British magician, mind reader, and all round deceptive yet entertaining fellow, has often discussed the tricks used by psychics and fortune tellers. One particular method, cold reading, involves suggesting non-specific messages, and letting the subject of the reading provide the meaning to the message.

For example, a psychic using cold reading techniques might suggest that there is an old male, or a dog, or another such subject of emotional connection, and let the subject say something like, “yes, my dog Spot died recently”, to which the psychic replies with something like, “I can feel you have a strong bond with those, human or otherwise, that you share your life with”. Essentially, the psychic says nothing except that you are close to the people you are close to. But the delivery of the message makes it appear that the psychic knows something about you that they couldn’t have – unless they have psychic ability.

I will get to economists under the fold.