Monthly Archives: July 2012

Chance

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Back in the day one of the first things I used to teach in my undergraduate biostatistics classes was that correlation is not causation.

For example, there may be a pattern between sun spot activity and the number of storks nesting in northern Europe, but you cannot conclude that sunspots cause nesting success. If it were that easy to assign a cause to all the patterns we see then a whole bunch of professions from currency speculation to climate change science would be unnecessary.

In my classes I used the presence of correlation to introduce the two main theme of my course: the concept of chance and the importance of the scientific method in helping us know when it is reasonably safe to ignore it.

Chance, and its measure probability, is a concept more intuited than taught. It was always fun to see the lights go on for a student who got it. More often though the pain of understanding likelihood was forsaken and students reverted to the age old standby of wrote learning.

All this recollection came about after I listened to a radio host who was recounting figures showing a significant spike in poker machine revenue in May and June 2012 (up 10 and 7%) across Australia. And in the same breath he reminded listeners that this coincided with cash payments to households from Federal government as compensation for cost of living rises from its introduction of a carbon price.

Now, of course, the radio host was smart. He didn’t imply or even hint that there was a causal relationship between the arrival of free cash and an increase in gambling revenue; but merely placing the two pieces of information together was enough.

My own emotions leapt to confirm gross inefficiency and lack of foresight in the government policy frame. Obviously people spent the money gambling.

Back in the classroom I would have berated my students for making the connection that I made. And really there is no evidence that a one-off cash payment to pensioners and low-income households ended up in slot machines, or even that some of it did.

Except that 10% of monthly poker machine revenue is roughly $100 million. This is a tidy sum and $500 more than usual in each and every poker machine.

Given that roughly 600,000 Australians play pokers machines weekly, that $100 million will be around $167 each.

The cash payments for families were $100 per child and for pensioners $250.

Chance is a fine thing.

Policies on the scrap heap

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alloporus has been a place where the topic of leadership has popped up consistently.

It is after all an intrinsically fascinating topic [leaders not heroes] but mostly it gets a mention because of the leadership vacuum in the political life of Australia [Wot, no politics | Leadership is tricky | Labour leaders].

An insightful article in the News Review section of the Sydney Morning Herald by Miriam Lyons, executive director of the Centre for Policy Development based in Sydney, showed what a lack of leadership could mean. Her idea, presented in a neat analogy with fantasy football, was that there have been many policies proposed by politicians that would be laughed at by their parties if presented to the current parliament.

The best one for me was Andrew Peacock who, as shadow environment minister, went to the 1990 election proposing a 20% cut in GHG emissions. The Liberals didn’t win. When they did, in 1996 under John Howard, there followed a decade of keeping well away from emission targets and ignoring the Kyoto protocol completely. Today such a target would be preposterous.

Lyons point was that policies are fickle things, easily left behind when the mood of the day makes them unpalatable. And that many a good idea languishes even when international moves are in favour.

In Australia the trend for rejection seems to have become so severe that there are few policy ideas left standing.

Except that policy is core business for politicians. We entrust our elected members to discuss, debate and land at the right balance between our personal freedom and the necessary efficiencies from the collective. And we allow them a small army of staffers to figure out and implement all the rules, regulations and incentives that chosen policy requires.

So why, when I read the list of policy options now considered laughable, do I cry?

I despair because all of those policies once proposed by parties from all persuasions but now on the scrap heap contain a kernel of leadership. Each one of them was just a little bit out there, sufficiently different to be on the edge. Their proponents needed to be bold and took a risk in putting them up because there was a chance that the policy would be unpopular.

And this is partly why they were cast aside, for on the edge can also be on the nose. It is easy then to retreat into the entrenched assumption that the public will bite you if you present unpopular policy.

But is this true?

Like Lyons, I don’t think so. Unpopular policy can easily become popular if it works. That is if it delivers balance on the public and private interest. But it needs to be told and sold, and that takes courage or, dare we say it, leadership.

Astonishing

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ImageImagine a Manchester United supporter on a commuter train to work. He sits next to a random person and, for once, starts a conversation. Turns out that the fellow passenger is a Manchester City supporter.

Outside the emotional pressure cooker of match day the exchange is civil.

Even though United are on a poor run of form and are trailing in the league, neither fan gives an inch. They spend a competitive half an hour talking up the virtues of everything from the merits of their best players to the quality of the meat pies at the grounds.

This is what we do when we declare our support… we support, talk up, cheer our team however lowly or troubled it may be at the time.

Maybe I am naive but I thought that a similar responsibility befell senior politicians when it came to talking about their jurisdiction.

So I nearly fell of my chair yesterday when on the radio was a recording of the Australian Prime Minister Julia Gillard complaining about transit times and departure congestion at Sydney airport. Every business traveller will tell you stories of long delays, she said.

What! Can you ever imagine a United supporter saying that Sir Alex is a bit slack, “came in late for work yesterday he did”? Or hear the City fan suggest that Balotelli should be dropped from the squad. Never, not in a million years.

The back story to the Gillard harangue was that the G20 leaders summit in 2014 was to be held in Brisbane and not Sydney, a choice made by the government for either political gain (the preferred media spin) or because the Sydney Convention Centre was scheduled for refurbishment and unavailable (a practical explanation not favourable to spin). Or maybe they just wanted to spread it around.

Whatever the real reason, the Prime Minister chose to claim airport inefficiency as her sound bite for why it was Brisbane over Sydney.

What a crazy call. Whatever your political motivation you don’t bag out your own team. In fact, I would say that Gillard, who has a loud public voice because of her position, was being irresponsible. She should be talking up Australia in every day in every way. It is in her job description.

If the Australian people ignore such gaffs and her inability to see the consequences of them and re-elect her to office, I reckon she would be one lucky lady.

And as a United supporter, I also hope and pray that she supports City.

Food security | What’s wrong with this ad?

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Check out this ad snapped on a recent rip to the local supermarket.

A handsome, young bloke stands with his arms wide to embrace his achievement, another nutritious crop of vegetables for the table. Good on him you think. A warm feeling creeps up on you as though you are being wrapped in a safety blanket. Thanks to strong dudes like this one, I know I am going to be fed with healthy nutritious food.

No doubt the ad, that also appeared as a full page spread in the Sunday magazines, would have cost several hundred thousand dollars to run has nothing much to do with bok choy, or even fresh vegetables for that matter.

It is all about putting the retailer front and centre.

By showing the farmer as a member of the team we are being made to think that our food comes from the supermarket and not the paddock. The retailer is now the supplier.

The messaging appears to be about fresh food, from local farms grown by young and, dare I say, virile farmers who may be in search of a wife. But really it is about the retailer being the source of our food security.

So what is wrong with this particular ad beyond the obvious sexism?

Here is a hint. I purchased the weekend paper in the supermarket and not far from the newspaper stand was a special in the vegetable isle: a net of onions for $1.

That is pristine, firm onions for 15c each.

Good food at great prices. It’s enough to close down the agencies on Madison Avenue. Who needs advertising when the prices are this cheap and the produce so enticing?

The reality is that farmers cannot supply produce sold out of the supermarket at 15c unless they are selling to one buyer who runs a monopoly over them. What is wrong is that the smiling farmer is actually walking a tightrope of viability. If fertilizer prices rise by 20% then they go out of business.

The market is failing them.

The profiteering opportunities and perverse competition of a retail duopoly (two supermarket chains supply most of the food to households across the country) creates huge risks for Australian production systems. Running at the price margin is a challenging way to run any business but in farming the corner cutting and frugality it severely limits sustainability.

It is well known that farmers look after their land best when they are doing well. When they are under pressure they tend to push the land harder to make ends meet.  We are at the point globally where we cannot afford for such structural risk. We need every acre of productive land to produce and to remain productive.

The message of food security provided by your friendly supermarket is false. It fails to take into account the risk that the farmer takes on when he has only one buyer of his produce.

And another thing, most farmers are over 50.