Home-Grown Fruit and Stroppy 2019

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Nectarines

Today’s my birthday and therefore the day to announce the winner of this year’s Stroppy. But first I make will make another announcement: Mrs SG and I have harvested our nectarine crop! It amounted to 7.2kg after cutting off the rotten bits. St Bernard’s Market is selling yellow nectarines A$2.99/kg at the moment, giving our crop a retail value of A$21.50. Mrs SG wondered aloud whether that would cover the cost of watering the tree for a year.

I was reminded of an email circulated recently by my old friend Ron Allan. It was a picture of lots of tomatoes with the caption “Growing your own tomatoes is the best way to devote 3 months of your life to saving $2.17.” Well, Ron, even if that’s US$2.17, we did much better than that!

That curtain-raiser is little more than an excuse to display a colourful picture of our nectarines. Now to the main business. The winner of the 2019 Stroppy Award for Meaningless Drivel is … drumroll … the South Australian Academic Health Science and Translation Centre, for this passage from a report to the state government agency SA Health:

“What we can deduce from our work is that it is possible to generate a narrative around the experience of multiple stakeholders, going through a large-scale system change, in ways that both acknowledge the limitations of the data but support the emerging themes from the data, and from other (realist) literature reviews.”

A worthy winner! Thanks are due to Brad Crouch, the Advertiser’s Medical Reporter, who drew this to my attention.

Privatisation

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I was always a reluctant believer in the conventional wisdom of privatising everything that wasn’t nailed down, and much that wasn’t. Some services really should be provided by governments, I thought, especially in cases where:

  • There is a natural monopoly.
  • Access should not be restricted by ability to pay.
  • Private control may confer disproportionate power.

I deplored the rush to privatise utilities, transport infrastructure and a mind-boggling range of government activities including even prisons and aspects of the military.

Land Titles Office, South Australia

The stupidest example to come to my attention recently was the South Australian Land Titles Office in my home state of South Australia. Did the cash-hungry Labour government never pause to wonder why a consortium comprising a commercial bank and a foreign pension fund would be willing to part with A$1.6 billion for the right to run the LTO for 40 years?

Anyway, I have just read a concise and well-documented article by Ross Gittings, economics columnist with Fairfax Media, entitled ‘The Experts Told Us Not To Worry’. I recommend it – if you can find a way to read it without subscribing to the Sydney Morning Herald. He chiefly blames state governments and their supposedly expert advisors, who little dreamt of the depths to which private investors would sink in the pursuit of monopoly profits, or the enormity of the loopholes in the regulatory frameworks conscientiously erected in a vain effort to protect consumers.

Do you have a favourite privatisation horror story to share?

Hats Off to Hong Kong

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I was looking for tiny watch batteries, variously coded 377 and 626. By Googling I found a source in Australia that offered them at A$6.90 each; and two others that offered them at a mere A$2.90. But I ended up ordering six from Hong Kong for a total payment of A$5.94, including Australian sales tax (A$0.54) and postage (about A$1.35). They arrived and they work. Is this really the most efficient way to distribute consumer products?

Elite Education

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When I went to university there were places for only 10% of each age cohort. By implication, the cut-off IQ level was around 120. Selection was based on examination results and an interview. At my university (Cambridge) there were men’s colleges and women’s colleges and men outnumbered women 10-to-1.

Now the situation is very different, throughout the rich world. About 50% of school leavers go on to university, which means that the implied IQ threshold is around 100 and a university degree does not have the cachet it used to. So it matters more which university one has gained a degree from.

Oxford

In the UK there is the ‘Russell Group’, which includes Oxford and Cambridge; in the USA there is the ‘Ivy League’. Here in Australia the Australian National University (ANU) stands at the head of a handful of Australian universities in TopUniversities’ global Top 100. ANU is ranked 20 and the Universities of Melbourne, New South Wales, Queensland and Sydney are bunched between 40 and 50.

The University of Adelaide is ranked 109. This is not bad, but if a foreign student is looking for somewhere to gain a prestigious degree he/she will probably prefer one of the others. So what is the University of Adelaide doing to clamber up the rankings? According to recent reports it is:

  • Seeking to merge with the University of South Australia, which is ranked 264.
  • About to advertise eight academic posts, for which only women may apply. The pool of potential candidates, from which one hopes the university will select the best, has been reduced by 50%.

On top of that, I have just read an article in the Guardian Weekly saying that the Russell Group universities have been criticised for failing “to recruit students from neighbourhoods where few traditionally enter higher education.” Labour MP David Lammy is quoted as saying, “Real progress in this area will require radical and punitive action by the government and Office for Students.”

Cambridge

I know I risk being called an elitist, and perhaps I am. The kind of education that can and should be given to someone near the top of the intelligence bell curve is not the same as can and should be given to someone in the middle. Moreover, in even the most egalitarian of societies there must be a highly educated layer of leadership with exceptional qualities. Intelligence is not the only quality that matters, but it’s probably the most important and it correlates positively with some of the others. Fiddling with recruitment of staff or students in the interests of social engineering is dangerous and wrong and it makes me stroppy.

Does anyone disagree?

Why Are Wages Stagnant?

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EPSON MFP image

Governments around the world have been throwing money at their economies in an effort to accelerate inflation. Unemployment rates in the USA, Australia and elsewhere have been falling. And yet real wages have been stagnant for decades.

Well, let me qualify that last statement. Average wages have been stagnant. Some people’s wages have soared while some others’ have gone backwards.

So what’s going on? I have several theories, which are not mutually exclusive:

  • Inflation happens when supply is inelastic in response to demand.  But for many things that we buy nowadays supply is very elastic indeed. Think about software, on-line entertainment, information, e-books (subliminal ad: Buy my books! Buy my books!), pharmaceuticals and other hi-tech products that cost heaps to develop but very little to replicate.  (Conversely, inflationary efforts have been spectacularly successful in real estate markets.)
  • Consumers are still enjoying the benefits of shifting manufacturing from high-cost countries to low-cost countries. That process will continue for some time as China takes its turn at outsourcing low-skilled and/or high-polluting processes to poorer countries.
  • Outsourcing of services is in its infancy. We’re used to dealing with call centres and tele-scammers in low-wage places, but there’s still a long way to go in back-room financial and legal services, technical support, marketing, R&D…
  • There’s another kind of outsourcing too: to customers, who work for nothing. It’s most obvious in supermarkets, where we’re encouraged to scan and bag our own groceries. And have you ever tried to get technical help online from Microsoft? They refer you to other customers who may have worked out the solution to your problem

  • ‘Uberisation’ has entered the lexicon. Transmogrifying people from employees to self-employed contractors is one thread in a weave of digital platforms, casualisation, zero-hours contracts and exploitation of immigrants working illegally** which all tend towards erosion of wages.
  • Social policies and compliance requirements that discourage taking on staff. Outsourcing to a contractor, without inquiring about their employment practices, is safer and generally cheaper.

Six theories. Any more?

** I have in mind foreign students in Australia, who are allowed to work 20 hours per week but have been found working much longer hours for 20 hours’ pay. Their employers tend to be franchisees, who claim that the onerous terms of their franchises don’t allow them to pay legal wages. The franchisors hold up their hands in horror: “How terrible! We deplore this! We didn’t know!”

Location, Location, Location

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There were two stories in my local newspaper that included land values. Interestingly, the two values were almost identical, but the parcels were of very different sizes. A cattle station south of Birdsville, extending over 1.65 million hectares, was valued at $33 million. A commercial site occupying 7,535m2 in North Adelaide has been bought by the State Government for $34 million.

On a per-hectare basis, those values work out at $20 and $45 million respectively. Like the real estate agents always say – location, location, location!

The view near Birdsville, Australia

Consumption Tax

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In Australia we have one of the lowest consumption taxes in the world: 10%. It’s a value-added tax (VAT) but, like New Zealand, we call it a goods and services tax (GST)

In principle such taxes are supposed to be levied on everything, at as low a rate as possible, so as to be non-distorting. But when it was introduced in 2000 it had been mauled in Parliament and many goods and services were exempted. I blame the Greens for the mauling, but that may not be wholly fair.

One consequence has been that special interest groups have been able to characterise it as a ‘luxury tax’ because it’s not applied to things like fresh and minimally processed food (eg milk and cheese). I have posted before about the absurd campaign to exempt feminine hygiene products: the phrase ‘tampon tax’ is unfortunately alliterative, lending itself to sloganeering.

Out of interest, I have kept all my receipts over the past 5 weeks, to see how much GST I’m actually paying. Excluding household utilities, I have spent $598.74, of which $19.65 was GST. This means an average rate of 3.4%. If I hadn’t bought a case of wine it would have been 2.0%.

Doing Right by Sheep

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Australia exports about 2 million live sheep per year, 95% of them to the Middle East. Demand peaks before Eid-ul-Fitr, when devout Muslims slaughter animals in imitation of Abraham’s sacrifice of a lamb in place of his son Ishmael (Quran: Surah 37, verses 99–109) or Isaac (Bible: Genesis 22, verses 1–2). It’s a gruesome story, so don’t read it if you’re at all squeamish; in fact, don’t even look at the picture below.

Transporting live animals across large expanses of ocean is a gruesome business too. Every so often the Australian public is shown evidence of extreme cruelty to animals, whereupon government agencies and lobbyists express outrage and give assurances that rules will be tightened, enforcement will be strengthened and it will never happen again. And then it does.

The latest shock-horror story is about a shipload of sheep bound for the Middle East. We are told that more than 2,000 of them died of heatstroke and thirst.

I will not lapse into a diatribe against archaic, barbaric and horrific practices in the name of religion, which might attract accusations of antisemitism and islamophobia. I will simply draw a parallel between the export of live animals in appalling conditions, just so that they can be killed somewhere else, and the slave trade.

An interviewee from the livestock industry conceded that there was inevitable cruelty in the raising, transporting and slaughter of animals people like to eat, but pointed out that many Australian jobs depend on this economic activity. I imagine that slave traders were making similar statements 200 years ago.

Life Imitates Monty Python

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We’re used to life imitating art, but sometimes this goes right off any reasonable scale. In the past week I’ve seen four glorious examples, all reported in the good old Adelaide Advertiser.

First, there is the story about a sit-in by Saudi princes to protest against having to pay their own utility bills. The princesses were showing more decorum, it seems. Or perhaps they were otherwise occupied at the motor show for women, soon to be allowed to drive.

The second story to catch my eye was that Oprah Winfrey is being touted as a potential presidential candidate, on the basis of a speech she made about sexual abuse and harassment in the entertainment industry. Germaine Greer was asked what she thought about it on ABC Radio National, and said that if Ronald Reagan could be President, why not?

Next comes the appalling news that “Struggling families are being deterred from travelling overseas because of the high cost of leaving the country. … Australian passports are the second most expensive in the world, behind those of Turkey.” Has overseas travel really become a necessity of life, in the same category as a flat-screen TV or a smart ‘phone?

Finally, I read about a 50-year-old Australian man called Craig Whitall. He is/was a drug addict with a history of 10 driving disqualifications, 50+ other traffic offences, 9 convictions for unlicensed driving and a 9-year driving ban. While driving home from a methadone clinic he caused an accident that killed 3 people – all members of the Falkholt family. “At what point,” I wondered, “does a sane law enforcement system give up on somebody, lock them up and throw away the key in order to protect everyone else?”

Selfies – No, not that kind

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We’d all agree that self-discipline is the best kind of discipline; self-control is the best kind of control; and a degree of self-respect is necessary to win the respect of others.

But self-regard, self-importance, self-satisfaction and self-aggrandisement are to be treated with suspicion. So too, in the world of business anyway, are self-regulation and self-assessment.

This brings me to today’s stroppy-maker: a story in the Sydney Morning Herald about alleged rorting of an Australian tax-break for research and development – a tax-break that involves paying ‘tax offsets’ totalling A$3 billion per year. There is a list of R&D activities that qualify for these offsets.

The picture alongside is taken from that article. It shows Jamie McIntyre, one of the people against whom the allegation of rorting is made, a sum in excess of A$500,000 being mentioned.

“And how,” I hear you ask, “does the Australian Tax Office assess the validity of claims for these offsets?” Ah, well, there’s the rub. It seems the ATO relies on taxpayers to self-assess and, amazingly, some people are motivated by greed rather than an urge to add to the sum of useful human knowledge.

I’m sure you are amazed as I am – and as the ATO and the lawmakers who passed this piece of legislation must be. Who would have guessed that some people are prepared to tell lies in order to swipe an undeserved share from the public purse?

Let’s hope that this revelation – or allegation as I suppose I must call it – provides a valuable lesson in human nature to those who are responsible for managing honest taxpayers’ money.

The word ‘rort’ is an Australian colloquialism for a swindle; or, as a verb, to swindle.