Sunday, April 26, 2009

Spending the way out of crisis

Olivier Blanchard, IMF chief economist, was interviewed by Kerry O'Brien a few days ago.

The chief issue was economic stimulation. If you accept this standard Keynesian approach to recession (and most do, in an orthodox economics context), then the question becomes simply one of where to direct the government spend, so as to provide the best targetted stimulation.

The old argument was that the most immediate stimulation comes from giving it directly to people. Infrastructure spends just circulate the money too slowly; quicker stimulation is needed.

But recently, we've seen people around the world have been saving rather than spending their government stimulation. In times of uncertain employment, this is quite understandable (governments just wish people would spend when told to, and save when told to!). The old tory chestnut, stimulation via tax cuts was quickly dismissed by Blanchard (even less useful than direct stimulation payments).

Blanchard's best suggestion was bringing forward existing infrastructure plans by several years. In effect, the indirect stimulation would shore up jobs, which would help most in restoring consumer (ie spender) confidence.

In fact, there is a far more obvious solution than any of those, if the aim is to start circulating money as quickly as possible. Simply give it to the most disadvantaged people: unemployed, underemployed, pensioners, etc. Those that have fewest resources will be most likely to spend quickly - on the necessities of life.

If that's enough to give a government the willies, another option is to channel such largesse through welfare and charitable agencies.

Blanchard was also expressing confidence in the current situation: although global recession had a way to go, he could see the light at the end of the tunnel. When asked if he'd be smiling at the situation in a month or two, he said he was smiling already. (I note, however, it is always hard to tell how accurate a picture is being painted by anyone in authority at times like this. Given economic confidence is the biggest issue, they would naturally exude as much confidence as possible.)

Friday, April 17, 2009

Stern, Obama, Wong on climate change

Overnight on BBC radio, I heard an interview with Nicholas Stern, author of the landmark report on the economic ramifications on climate change (the programme, One Planet, can be listened to here).

Stern was discussing in a less formal sense the outlook for climate change. What he had to say was little different to the thoughts expressed here. The situation is urgent but the outlook somewhat pessimistic; and it's in the hands of people to take action and world leaders to show leadership. The interviewer then asked opinions of his son (about 10 years old, from memory) and from a taxi driver. The responses were not entirely surprising. The boy was aware that everyone wasn't looking to the long term, and that people may care about their own kids, but don't see much beyond that. The taxi driver professed to be a global warming skeptic, but said he put energy efficient lights in the house (why? to do his part). On the one hand the problem was in his mind enough to do something simple, but on the other hand, it was too big for him to feel empowered to do more than that.

The answer is to vote, and to vote for someone sufficiently visionary.

In the same broadcast, I heard President Obama had announced plans to develop 100 very fast train links in the US. I didn't appreciate the import until I heard him speak, holding up European examples such as a train link between Madrid and Seville that was so good that more people travelled between those cities by train than by car and plane combined.

That is what I mean by visionary. Obama has the will and capacity to reshape the global political landscape.

Meanwhile in Australia, the Climate Change Minister Penny Wong is forced to defend the planned emission trading system from attacks from all quarters, right left and centre. The Senate inquiry also drew comment from Ross Garnault, who had been commissioned by the government to report on the issue and options for action. Even he said it was touch and go whether it was worth entirely scrapping the current plan - and incurring the consequent period of inaction while a new proposal was formulated. The present scheme is so hopelessly flawed that none of the non-government senators will support it - so it is doomed in its current incarnation. In any case, it sounds like government backbenchers are pressing for change, such that the efforts of individuals aren't co-opted by corresponding rewards to large industry. That is the least that could be changed. But it is unlikely to be enough to save it, and something better is needed.

Wednesday, April 08, 2009

Climate change: losing the pivotal moment

The Australian government's Carbon Pollution Reduction Scheme is deeply flawed, and in fact discourages individual pollution-saving measures by individuals - the benefits gained will be captured by polluting industries under this proposed emission trading scheme.

Legislation reached the Senate, which has sent it off to enquiry. Public submissions are called.

On current evidence of government and global response, I am very pessimistic about turning back this tide. There are three ironies here:

1) At a time where there is great willingness on the part of governments and electorate to spend large re-stimulating the economy, the government is not grasping the opportunity to target spending and industry incentives to avoid significant climate change;

2) When the sums are done, warming will be seen to slow down (albeit a temporary blip) specifically because of the global economic downturn - and this will lead to greater complacency about the urgency of the problem.

3) The confluence of crises reaches us just at the point where there is broad consensus that global warming is real and serious. Any student of history reading up to this point might make the automatic assumption that action would be taken, because the way forward is so clear.

Via GetUp, I put together a quick submission for the Senate enquiry, as follows:

Current Australian climate change targets truly do not reflect the gravity of the situation.
1) Human-induced change would be more catastrophic than any in history;
2) Upfront economic costs alone are trifling compared to later costs - verified by international reports;
3) Requisite change calls for economic upheaval; it is currently an ideal time to introduce change, for governments to back economic and industry restructure - at no other time will there be such opportunity and willingness for governments to invest - so this investment can be made in meeting both challenges at once;
4) Governments need to display leadership; show the electorate that long-term stability and prosperity is the aim, rather than short-term attempts at propping up dying industries.

It is clear to all that the government's climate change map is both weak and insufficient to effect the necessary change.

Why are we not taking action at the very best point where change can be achieved?

Economic stimulus can achieve both the long-term and short-term goals if it is specifically and entirely directed at initiatives - and industry-adjustment incentives - that protect the environment, species, and biodiversity that we currently have stewardship over.

Generations will otherwise remember this time as a pivotal moment of lost opportunity.

Stephen Simmonds

Tech: Data Provisioning

I grant that some of my technical pieces may be rather esoteric for a general audience. So I have sequestered them off to a separate blog for my professional pursuits. You'll find the first post here, on a neologistic use of the term Data Provisioning for a successor model to the Enterprise Data Warehouse.

Monday, April 06, 2009

Alternative medicine bites back

I was talking to a practitioner of Ayurvedic medicine. This is an Indian-originated wholistic/traditional/form, developed over a few thousand years.

He illustrated some of the problems with western medical practice, particularly the corruption by pharmaceutical companies, who routinely bias their research and bribe doctors to use their products. That's a fair cop, and I depicted this aspect as being one of the cruder manifestations of capitalistic infiltration of the western "tradition".

There are of course other aspects of evidence based treatment that are not so tainted, and in fact the analysis and research that takes place outside pressures of profit are manifestly more worthy of being taken seriously. I would also suggest in turn that tradition (stretching back for centuries) does not ipso facto amount to proof.

One interesting point he mentioned was that in his practice, he often referred his patients on to regular medical doctors when he felt it appropriate - and that they in turn sometimes referred patients to him. This was a new one on me - although I guess that amounts to the "complementary" in the term "complementary and alternative medicine". This is by no means the norm. I have in the past, at the urging of friends, tried a couple of alternative treatments. I vaguely recall an acupuncture session once that seemed to ease some flu symptoms. But another time, I attended a naturopath, who prescribed a homeopathic remedy for what seemed to be rashes on my legs and feet. However, they turned out to be mosquito bites (from exposing my feet in bed at night to keep cool). That experience greatly reduced my confidence in alternative treatment. Later, there was a case in the news about a naturopath in the Hunter region who, from memory, treated a girl who turned out to have major organ failure, and died because she wasn't given proper treatment. The naturopath, naturally, ended up before the courts.

My trust in alternative medicine is improved whenever I see that the practice is more properly integrated with the western stream which, whatever its faults, can generally tell when a horse is a horse. You get your cowboys in any profession. And how much more emphasis does that complementary/alternative medicine place on wholistic health - that is, keeping people in good health rather than treating the failures? Lord knows western medicine doesn't plough enough resource into prevention - which is far cheaper than cure.

Sunday, April 05, 2009

The Unteleported Man vs Lies Inc

Catalogues of Philip K Dick's output (particularly publisher versions) variously list two novels dating from the 1960s: The Unteleported Man and Lies Inc. They are effectively the same work.

The tortuous publishing history, when boiled down, relates to an extra section that Dick added to The Unteleported Man to make it Lies Inc. That later section adds little to nothing to the plot. Rather, it's a characteristically Dickian exposition on perceptions of reality.

The extra 30,000 words is a bit like an acid trip (although Dick had never indulged at the time of writing*). That is specifically in keeping with the narrative, as the passage is inserted at a point just after a protagonist is attacked with a weapon that injects LSD.

Thus we find ourselves immersed for some time in a chaotic universe where a number of different worlds are experienced, from Paraworld Blue to Paraworld Silver to The Clock World. It is never clear to the protagonist which construct is the real world; in each, the cast of characters is similar, but their motivation, situation - even outward form - differ. The most enduring image is the alien Mazdast, a tentacled cephalopod that periodically eats some of its own - replenishing - eyeballs for nutrition.

The extra section is a bit of a wade for those seeking specific meaning, or those who are unused to Dick's occasional ramblings. Yet it does give some flavour for his almost flippant habit of flipping the reader into a different reality, to the point where the end result cannot be deduced, but must be chased to exhaustion. This writing suggests that that point of exhaustion may sometimes be down to the writer's stamina, rather than the reader's.

I should make note that the edition I read - Gollancz, 1984 - had some annoying errors at times. Not so much typos, but mis-wordings perhaps emenating from an over-extended brain, and uncorrected by proofreaders - if in fact they existed - who ultimately may have read through Dick with eyes firmly glazed. Missteps range from the glaringly obvious to possibly clumsy excisions ("and" clearly needing to be replaced by "the"), to the egregious use of "light-year" as a measure of time rather than distance - later still, it is used as a proper measure of space; possibly Dick's, but it's rather academic where the error originated.

The plot itself relates to a three- (or four-) way struggle between different power factions, where the antagonistic party is not clear until late in the piece. Time travel and parallel universes are ultimately red herrings, although teleportation is not.

*Perhaps surprisingly, Dick's drugs of choice, particularly during the process of writing, had been amphetamine-related. Which prompts the thought that the philosophical state of mind that permeates almost all his work - that there is something more sinister behind perceived reality - was innate, as opposed to induced.

Friday, April 03, 2009

Woke up laughing

From the New Scientist, 14 Mar 09: "On four or five occasions over the past 20-odd years I have woken myself up [by] laughing. In a brief moment of dual consciousness, it appeared that my dreaming self continued to laugh whike the more conscious self tried to locate the source of the noise" (Chloe Barber).

Flying dreams, yes. Recurring dreams, yes (mine seem to have a strong theme related to my house/home, although different houses each time). Even lucid dreams. But waking yourself by laughing? As the writer herself says, "If there are people for whom this is a common occurrence, they might make interesting subjects for study".

Thursday, April 02, 2009

There is no recession in Australia

Economics is a funny ol business. It's all about confidence, which is what the G20 group of world leaders has been trying to do in London. That is, instill confidence in the rest of the world to spend, spend, spend. Consumers: buy stuff. Capital owners: invest. Reporter: "what would it take for this conference to be a success". World Leader: "for you to report it as a success".

For some reason, France and Germany have a different agenda. They want to develop a new economic order. Which is laudable, but the world is currently in panic mode, and first things need to come first. Meanwhile, America and China are working on that new order anyway at the highest level (at the London talks, Obama and Hu Jintao got together, releasing a joint communique twice the length of that of the US and Russia). Which is about what you'd expect, given the changing nature of global economics over the past 15 years.

Confidence took a tumble courtesy of the unstable nature of capitalism. That and a frenzy of unviable home lending in the US (subprime) which was subsequently wrapped into little-understood securities to spread poison thorought the world's financial institutions, which subsequently took a tumble, refused to trust one another, refused to lend to businesses, which business subsequently started laying off staff, which meant those that went stopped spending and those that stayed were too scared of layoffs to spend. Enough of them anyway.

Australia's a bit different: if you can't make the mortgage repayments, you still owe: you can't leave an empty house as complete settlement of debt. Further, the banks have greater asset-backing requirements, so are in good shape. Still, the global market downturn has greatly affected Australia's resource exports, and subsidiaries of foreign companies - such as GM-Holden - are not immune.

Confidence. Australia is not officially in recession yet. The government and other authorities have been at pains to point that out, trying to prop up confidence. But it has been as good as admitted that when the next quarterly figures are released, Australia will officially be in recession.

The government's financial stimulation packages (effectively giving away money) have had some effect. Consumer spending over the past quarter hasn't really sunk - as it has in other countries. But people have to a fair extent been squirrelling away the bounty. All it has really shown is that it can have an effect, but to have the desired affect needs a substantially greater sum than has been spent so far. So even if the World Bank and OECD can laud Australia's initiatives and give a tick to the (relative!) robustness of the economy, there is a lot further to sink before enough confidence returns.

* A note related to the title: OECD data confirms New Zealand has been experiencing negative GDP growth since the beginning of last year (and thus almost a year into recession). Quite a surprise to hear that on the radio yesterday. Australia, by comparison, has yet to hit the second quarter of contraction which officially defines recession.